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2016-06-14 Agenda with Backup
Tuesday, June 14, 2016 City of Denton Meeting Agenda City Council 11:30 AM City Hall 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com Work Session Room The City Council of the City of Denton, Texas will have lunch on Tuesday, June 14, 2016 at 11:30 a.m. in the Council Work Session Room. After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Closed Meeting at 12:00 noon at which the following item will be considered: 1. Closed Meeting A. ID 16-763 Deliberations regarding a Personnel Matter under Government Code Section 551.074 - Consultation with Attorneys under Government Code Section 551.071. Consultation, discussion, and deliberation about the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the City Manager or hear a complaint or charge regarding the City Manager; consultation with the City's attorneys regarding associated legal issues where discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. Following the completion of the Closed Meeting, the City Council will convene in a Work Session at which the following items will be considered: 1. Work Session Reports A. ID 16-615 Receive a report; hold a discussion, and give staff direction regarding the preliminary FY 2016-17 Proposed Budget, Capital Improvement Program, and Five Year Financial Forecast. Attachments: Exhibit 1 Powerpoint Presentation B. ID 16-695 Receive a report, hold a discussion, and give staff direction regarding the Renewable Denton Plan, the financing thereof, and activities related to the future power supply for Denton. Attachments: Exhibit 1 - Brattle Group Final Report Exhibit 2 - DME Debt Presentation Exhibit 3 - DME Debt Service Comparison 20 YR 06 09 2016 $240 mm Exhibit 4 - Old & New Rev Bond Ord Comparision Exhibit 5 - DME Denton Renewable Plan Resolution City ofDenton Page 1 Printed on 6/14/2016 City Council Meeting Agenda June 14, 2016 Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, or as otherwise allowed by law. 1. Closed Meeting: A. ID 16-692 Consultation with Attorneys - Under Texas Government Code, Section 551.071 Consultation, discussion, deliberation and receipt of information from the City's attorneys involving legal matters relating to A-1 American Fence Incorporated's appeal to the award of a contract for substation precast security fences for the City of Denton, and to provide the City's attorneys with direction, where a public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. B. ID 16-696 Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Discuss, deliberate, and give staff direction regarding the Renewable Denton Plan, including public power competitive and financial matters pertaining to plans, strategies, opportunities, and developments for generation improvements to the DME system; discuss and deliberate strategies regarding same; discuss and deliberate opportunities and strategies for the City to acquire purchased power and enter into agreements regarding the same, in order to meet its future energy needs. C. ID 16-754 Consultation with Attorneys - Under Texas Government Code Section 551.071. Consult with the City's attorneys regarding the present status of pending litigation entitled: The City of Denton, Texas v. NRG Power Marketing, LLC, et al, Cause No. 15-01404-16, now pending before the 16th Judicial District Court in and for Denton County, Texas; discuss, deliberate and provide the City's attorneys with direction and any recommendations regarding such legal matter. A public discussion of this legal matter would conflict with the duty of the City's Attorneys to the City of Denton, Texas under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. D. ID 16-765 Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Receive a presentation from staff regarding public power competitive and financial matters related to the City's participation in, and the overall operational and financial aspects of, the Texas Municipal Power Agency; discuss and deliberate strategies regarding same; discuss, deliberate and provide staff with direction. [TMPA] Following the completion of the Closed Meeting, the City Council will convene in a Special Called Meeting at which the following items will be considered: City ofDenton Page 2 Printed on 6/14/2016 City Council Meeting Agenda June 14, 2016 1. Items for Individual Consideration A. ID 16-282 Consider adoption of an ordinance accepting competitive proposals and awarding a public works contract for construction of Substation Pre -Cast Security Fences for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (RFP 5963 -awarded to Walsh's Hawk Construction Company, LLC in the three (3) year not -to -exceed amount of amount of $6,200,000). The Public Utilities Board recommends approval (5-0). Attachments: Exhibit 1 -Evaluation and Ranking sheet Exhibit 2 -PUB Minutes Exhibit 3 -Ordinance Exhibit 4 -Contract 2. Concluding Items A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of , 2016 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1 -800 -RELAY -TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. City ofDenton Page 3 Printed on 6/14/2016 City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 16-763, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding a Personnel Matter under Government Code Section 551.074 - Consultation with Attorneys under Government Code Section 551.071. Consultation, discussion, and deliberation about the appointment, employment, evaluation, reassignment, duties, discipline, or dismissal of the City Manager or hear a complaint or charge regarding the City Manager; consultation with the City's attorneys regarding associated legal issues where discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. City of Denton Page 1 of 1 Printed on 6/10/2016 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON Legislation Text File #: ID 16-615, Version: 1 Agenda Information Sheet DEPARTMENT: Finance ACM: Bryan Langley Date: June 14, 2016 SUBJECT Receive a report; hold a discussion, and give staff direction regarding the preliminary FY 2016-17 Proposed Budget, Capital Improvement Program, and Five Year Financial Forecast. BACKGROUND The purpose of this Work Session item is to provide the City Council with some preliminary information regarding the FY 2016-17 Proposed Budget, Capital Improvement Program, and Five Year Financial Forecast. The financial planning process is still in the early stages and, as a result, the forecast should not be considered complete. Over the next several weeks, staff will work to finalize the FY 2016-17 Proposed Budget and Five Year Financial Forecast recommendations. The final version of the financial plan will be submitted to the City Council with the City Manager's recommended budget at the end of July. In addition to the General Fund, the attached presentation details the preliminary budget information for a number of other key funds in the City. In particular, various rate adjustments are proposed for the Electric, Water, Wastewater and Solid Waste funds. The Public Utilities Board (PUB) is nearing completion of their budget recommendations for the Utility funds. These recommendations will be included in the City Manager's recommended budget. I want to again emphasize that the information discussed above is preliminary. Staff will be working over the next several weeks to finalize our projections and, as we obtain more data, we will keep the City Council fully informed. I look forward to discussing this information in detail with you. If you have any questions, or need additional information, please let me know. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Organizational Excellence Related Goal: 1.1 Manage financial resources in a responsible manner City of Denton Page 1 of 2 Printed on 6/10/2016 povveied by I_egivt9i IN File M ID 16-615, Version: 1 EXHIBITS Exhibit 1 - PowerPoint Presentation Respectfully submitted: Chuck Springer, 349-8260 Director of Finance City of Denton Page 2 of 2 Printed on 6/10/2016 povveied by I_egist9i I;, 4 a` a--) 4-% L Q O 70 N � '— E V LL •_ L V O ru L Ul) O Q) U ru ._U Ln 4- aj O a--) a--) O L Q ru a--) ru '— E V � O L � ru L Q V a--) a--) O O O (n '> 70 V � � O N M L _ Lr) a -J 4-J 0) io 0 V L- L O 4-J c 00 O U) x(6 Ofu L/) _U U L U N O a -j N LO N L � (6 _N Q E � fo � m U a-+ O = aO-+ U) N Q (a x "� U DC N (a (n L O 4-+ > >>� > -O E 4-Jro L �7 t.6 `U i -0L > N -0' U) ate+(6 C E (U 4 Q U fo =$4-C G N N^ (n a) U c U N > Ol (n N +' N 0) :�, 4 -JL ra U -v N N ° W U 4 -JN f N ° a + fu a -J L O ~ a --j U fu in > O O 0 X L "a O N M U i O L U (n > a� ru fU (f) L 4– O L °' ro a °1 C 0 01 a� � fu N a -J O I'D X •- ro N O _ — (6 N 0 co � fo (6 L (6 L O °>4-J fo c Q) Q) > W (n C � O N OL °- N N Ura -� U 00Q �L- -W > "a U r� O= L(n (n Z$ (6 a -J - U >- fo N +' _a -0 co o > a- i c >... 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L o/G 0 a aO a G� 0 G o� ai Ln ai a-0 �6s u Qi ?10 a!�i a J dl/ fu Ln) 8 8 8 8 8 8 8 8 8 �°:' Lr o n o n o Lr o n \Y u .zt M M N N N N a1 OL C Q EO L lDLn N lD N N O 00 Ln Ln m lD N m O n lD N N d I, 00 00 00 N 01 m 01 � A 00 c -I -1 N 00 N lD I, M M 00 M m lD O I, M O O m O O Ln 00 N v V CL a c -I c -I c -I c -I c -I c -I c -I c -I c -I c -I Nm N N rl c -I ^L 10 W Q U } {/} i/} iA• iA• ) V a) v E C � O a) > + aJ 4J (a L 7 ra T O > ( Uv c a u c _0 w rL O v O L, al - m M D M •E U •� Caj C 0a) LL J c� c U [D 0 o- (D ("D Q U J M cU c G_ LL Q Z (D .-I N M�t Ln w n 00 0) O c -I N M�t Ln lD n c -I c -I c -I c -I c -I c -I c -I c -I City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 16-695, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: City Manager's Office CM/ ACM: George C. Campbell, City Manager Date: June 14, 2016 SUBJECT Receive a report, hold a discussion, and give staff direction regarding the Renewable Denton Plan, the financing thereof, and activities related to the future power supply for Denton. BACKGROUND In response to City Council direction for increased renewables while maintaining competitive rates and financial and physical reliability, DME proposed the Renewable Denton Plan in October 2015. The Renewable Denton Plan would increase renewable energy portfolio to 70%; provide for rate decreases beginning in 2020; reduce portfolio emissions by 75%; and build two energy centers with quick start gas generation units. In addition to public presentations to the City Council and the Public Utilities board, DME held two open house meetings on October 19 and 27, 2015; a public hearing on the Renewable Denton Plan on December 15, 2015, and a public question and answer session on January 23, 2016. On March 22, 2016, the Council approved a contract with Brattle Group to perform the following scope of work: o Review Renewable Denton Plan o Review other options considered by DME to serve load with an increasingly renewable portfolio o Determine what alternatives should be considered that would meet the Council direction regarding renewables, rates, and reliability. o Report findings to the Denton City Council The City received several questions from the public and from members of the City Council for consideration of the Brattle Group within the existing scope of work. Those questions or comments were forwarded to the consultant for consideration as they conducted their analysis. The Brattle Group has completed the scope of work and presented their findings on June 7, 2016. Additional backup for this item will be posted by the end of business Monday, June 13, 2016. PRIOR ACTION/REVIEW City of Denton Page 1 of 3 Printed on 6/10/2016 povveied by I_egivt9i IN File #: ID 16-695, Version: 1 Public Utilities Board February 24, 2014 - Generation Briefing March 24, 2014 - TMPA 2018 Plan April 14, 2014 - TMPA 2018 Plan June 2, 2014 - Generation Briefing (Joint Session) December 8, 2014 - Future Power Supply Options Briefing January 12, 2015 - Power Supply Strategy Briefing May 4, 2015 - Power Supply Strategy Briefing August 10, 2015 - Power Supply Briefing: Status Update & Financing August 10, 2015 - Project Communication Plan Briefing December 14, 2015 - Public Hearing on Renewable Denton Plan February 1, 2016 - Discussion of Renewable Denton Plan (Joint Session) June 7, 2016 - The Brattle Group Presentation City Council April 1, 2014 - Generation Briefing April 1, 2014 - TMPA 2018 Plan May 6, 2014 - TMPA 2018 Plan June 2, 2014 - Generation Briefing (Joint Session) January 1, 2015 - Future Power Supply Options Briefing January 13, 2015 - Power Supply Strategy Briefing May 5, 2015 - Power Supply Strategy Briefing August 25, 2015 - Power Supply Briefing: Status Update & Financing August 25, 2015 - Project Communication Plan Briefing November 10, 2015 - Discussion of Renewable Denton Plan December 1, 2015 - Discussion of Renewable Denton Plan December 15, 2015 - Public Hearing on Renewable Denton Plan January 5, 2016 - Discussion of Renewable Denton Plan January 26, 2016 - Discussion of Renewable Denton Plan February 1, 2016 - Discussion of Renewable Denton Plan (Joint Session) February 16, 2016 - Discussion of Renewable Denton Plan March 22, 2016 - Award of contract to Brattle Group, Inc. June 7, 2016 - The Brattle Group Presentation Public Meetings/Open Houses October 6, 2015 - Press Conference October 19, 2015 - Open House October 27, 2015 - Open House January 23, 2016 - Question & Answer Session STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. City of Denton Page 2 of 3 Printed on 6/10/2016 povveied by I_egist9i I;, File #: ID 16-695, Version: 1 The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Related Goal: EXHIBITS Public Infrastructure 2.3 Promote superior utility services and facilities Exhibit 1 - Brattle Group Final Report Respectfully submitted: George C. Campbell City Manager City of Denton Page 3 of 3 Printed on 6/10/2016 povveied by I_egist9i I;, Review of the Renewable Denton Plan -inal Report This report is intended to assist the City of Denton ("Client") in understanding the potential economic benefit of the Renewable Denton Plan that is being proposed by Denton Municipal Electric. The report is not meant or permitted to be a substitute for the exercise of the Client's own business judgment or considered in any way to be investment advice. The analyses and report necessarily involve the use of assumptions and projections with respect to conditions or events that may or may not exist or occur in the future. While we believe these assumptions to be reasonable for purposes of the report, the actual future outcomes are significantly dependent upon future events that are outside of the authors' control, and therefore could differ materially from the scenarios described herein. Indeed, the purpose of the analyses is not to anticipate actual events but to provide an understanding of some possible economic benefits from a range of possibilities. The assumptions the authors used also may differ from those which other economic experts specializing in the industry might present. As such, The Brattle Group does not accept liability for any reliance on the report and cannot be held responsible if any conclusions drawn from this report by others should prove to be inaccurate. All results and any errors are the responsibility of the authors and do not represent the opinion of The Brattle Group or its clients. Acknowledgement: We acknowledge the valuable contributions of many individuals to this report and to the underlying analysis, including members of The Brattle Group for peer review. Copyright © 2016 The Brattle Group, Inc. I. Executive Summary.....................................................................................................................1 II. Background................................................................................................................................11 A. Today's System.................................................................................................................11 1. The Generation Portfolio.......................................................................................11 2. Qualified Schedule Entity Services........................................................................12 B. The Renewable Denton Plan...........................................................................................12 1. Renewable PPAs.....................................................................................................13 2. The Denton Energy Center....................................................................................14 3. Timing of Decision.................................................................................................16 III. Assessing the Economic Feasibility of the Renewable Denton Plan......................................17 A. The Renewable Denton Plan vs Status Quo...................................................................17 1. Potential Benefits of RDP and DEC.......................................................................17 2. Method for Quantifying the Comparative Economic Benefits ............................ 20 Prepare a forward price curve for power.............................................................. 20 Assess the cost of serving energy under the different options .............................22 3. Quantified Comparative Economic Benefits.........................................................23 B. Alternatives to The Denton Energy Center.................................................................... 33 1. Flexibility Needed for the RDP and DEC Capabilities ......................................... 34 2. Alternative Options................................................................................................ 36 C. Can Denton Move to 100% Renewables?....................................................................... 39 D. Other Qualitative Considerations................................................................................... 41 1. Water Usage Limitations and Drought Risks ........................................................ 42 2. Hedging Market Operations and Execution Related Risks .................................. 42 3. Optionality Value for PPAs....................................................................................43 4. Optimal Capacity of DEC....................................................................................... 43 IV. Conclusion................................................................................................................................. 46 V. Appendices.................................................................................................................................48 A. Denton Energy Center Characteristics........................................................................... 49 B. Analyses Assumptions and Methods...............................................................................50 C. Uncertainty for the SQ-TMPA Strategy......................................................................... 59 i I brattle.com Executive Summary The City of Denton asked The Brattle Group ("Brattle") to review Denton Municipal Electric's ("DME"'s) proposed Renewable Denton Plan ("RDP"), which calls for increasing the renewable generation in DME's portfolio (mostly wind and solar resources) from the current 40% of energy served to 70% by 2019. This report reviews the RDP and alternative options analyzed by DME, and performs an independent economic feasibility assessment of the RDP. DME currently has two sources of power supply besides market purchases — a 100 MW power sales agreement with the Gibbons Creek Steam Electric Station ("Gibbons Creek") operated by the Texas Municipal Power Agency ("TMPA") and a wind power purchase agreement ("PPA") with NextEra. A 30 MW solar PPA is scheduled to start in 2019 (together with the NextEra wind PPA, "existing renewable PPA"). Therefore, under the status quo portfolio ("Status Quo" or "SQ') DME will have multiple PPAs with the balance being purchased from the ERCOT market in 2019. The Gibbons Creek power sales agreement will expire in the next few years and DME must decide whether to extend it. DME designed the RDP to increase Denton's renewable generation without creating additional costs for ratepayers. The RDP is designed to lower costs relative to Status Quo. The RDP calls for DME to sign long-term renewable PPAs and make an investment in the new Denton Energy Center ("DEC"), which will consist of two separate plants with six reciprocating engines ("RICE" or "RICE units") at each site. By design, the PPAs and the DEC will complement each other. The PPAs will lower emissions and reduce costs, while the DEC will "firm" the intermittent renewable power supply. The term "firm" describes power supply sources that dependably generate a pre -determined amount of energy. Quick responding dispatchable units can "firm" intermittent renewables by providing back-up generation when renewable output falls. "Firm" power insures that DME physically matches supply and demand in real time and limits customers' exposure to the volatile Electric Reliability Council of Texas ("ERCOT") Real -Time energy market. The physical balancing requirement is particularly important for DME and its customers. As an ERCOT 1 I brattle.com qualified scheduling entity ("QSE"), DME shares ERCOT's obligation to maintain system reliability and faces financial penalties if it fails to perform as required, or as directed by ERCOT. The RDP is time sensitive for several reasons. First, the Gibbons Creek power sales agreement renewal is approaching. Second, the newly extended federal tax incentives for renewable resources (production tax and investment tax credits) will be phased out starting in 2017. These favorable government policies, combined with low natural gas prices, and low interest rates have pushed prices for renewable PPAs to historic lows. DME has concluded that it can sign long- term renewable PPAs on terms that will fix energy prices below both current energy prices and expected future energy prices. Finally the current exchange rate (US dollar against the Euro) is favorable for purchasing the Euro -denominated RICE units. Approximately 10% of Denton's current physical power supply comes from intermittent renewable resources.' Raising the share of physical power from intermittent renewable resources to 70% by 2019 will make it significantly more challenging for DME to maintain the physical supply -demand balance. Figure ES -1 (Hourly Net Load and Ramping Needs) shows the estimated DME load (blue line), production from renewable resources (red line), and the resulting net load (green line) for a day in May 2019. ' Renewable Energy Credits ("RECs") increase the renewable portion of DME's portfolio to 40%. 2 1 brattle.com 250 200 150 so o_ .50 1 2 3 4 5 6 7 8.. 9 10 11 12 13 14 fly 16 17 13 1.9 20 21 22 23 24 The net load (green line) variation of over 100 MW in less than two hours illustrates the difficulty of balancing the system. The variability of DME's renewable resources (and hence net load) will be highly correlated with the variability in ERCOT's renewable energy resources as a whole. While the increasingly large portfolio of ERCOT wind resources has some geographic diversity, the overall net load variability has increased with wind penetration. When wind resources drop off suddenly, the overall supply becomes short and prices tend to rise, at times sharply. When wind resource output is low, DME will be more likely to experience a physical imbalance between its supply and demand, and will need to purchase energy on the ERCOT wholesale market. In other words, DME is most likely to need to buy energy from the ERCOT market during times when prices are expected to be high. We understand from DME that not having the firming capability inherent in the DEC, or the equivalent provided by a third party would put DME's QSE status in jeopardy. To firm its power supply, DME must either pay a premium to purchase flexible power products from the market, or it can develop its own flexible power supply (the DEC). 3 1 brattle.com If DME firms its renewable portfolio through market purchases, it will need to pay a premium for flexible power throughout the duration of the PPAs. By developing the DEC, DME will have access to a flexible power supply (each RICE unit can provide its full capacity in 5 minutes and can ramp at 15 MW/minute) that will firm DME's entire renewable portfolio. While the DEC requires upfront debt financing, it will significantly reduce DME's future costs associated with firming renewables. Moreover, potential revenue from market sales of energy and ancillary services will help pay the DEC's debt service charges. DME has alternatives to the DEC for firming its power supply by obtaining flexible power from a third party. Currently, we are not aware of any contracting options that match the flexibility of the physical hedge provided by the DEC. A fixed quantity firming contract for renewable resources would provide a less flexible, but an otherwise similar hedge. However, pricing on existing firm arms -length contracts indicate such costs would be very high. Going without any hedging mechanisms will create financial risks and further may lead to unwanted consequences, such as jeopardizing the QSE status of DME.z The Brattle analysis compares three potential power supply Strategies an RDP-DEC Strategy and two Status Quo Strategies In the RDP-DEC Strategy, the RDP with DEC is implemented to achieve 70% renewable penetration. In the SQ-TMPA Strategy, the DME generation portfolio remains Status Quo including Gibbons Creek. Finally, in the SQ -Market Strategy, Gibbons Creek is no longer part of the DME portfolio and DME purchases the needed additional power from the ERCOT market. Under the two Status Quo Strategies, DME's renewable penetration level remains at the current 40% level, enabled by existing renewable PPAs and RECs. An economic analysis was performed using two different natural gas scenarios. Both scenarios use natural gas price forecasts from the latest ERCOT Long Term System Assessment ("LTSA"). The Base Scenario uses the LTSA reference natural gas price forecast and the Low Gas Scenario uses the LTSA low gas forecast, which effectively assumes that current low gas prices prevail in real terms for the foreseeable future. Figure ES -2 (Historical and Forecasted Natural Gas Prices) 2 DME serving as its own QSE and managing its own energy portfolio has saved the City of Denton several million dollars per year. For example, the savings in the first year of serving as its own QSE was around $13.5 million. 4 1 brattle.com and Figure ES -3 (Forward Power Price Curves) show the natural gas prices and power prices derived for the two scenarios. 3 Figure ES -2: Historical and Forecasted Natural Gas Prices $15 514 $12. $10 2 ss _c Base Scenario E (tTSA Current Trends) a $6 z $4 Historical Future Ol QQ M 4pph ph IIQ1 H M N P Ql. N CM1 U'4 h m H 1 N N N N N N N N N N N N N N N N N N N ., . $80 RAca Lranacin $70 $60 s $50 $40 $30 $20 $10 $0 rn O r -i N m cY L,T Lo r` W m 0 -1 N m st n to n W c -i N N N N N N N N N N m m m m m m m m m 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N The Brattle analysis confirms that the RDP-DEC Strategy is the most cost efficient option among the three Strategies. Figure ES -4 (Base Scenario Cost Comparison) and Figure ES -5 (Low Gas Scenario Cost Comparison) show the estimated cost for DME to serve its customers under the 3 The electricity price projections were derived from a recent Brattle analysis of the ERCOT market. 5 1 brattle.com two scenarios. Costs for the RDP-DEC Strategy fall further in 2036 after the full repayment of DEC's outstanding debt. ZWIIT�41 # �,,, � $200 $20 so ,11 01-,1 It LP} 'D F W a, 0 .-5 .N Cry -4 0 W 1-- .0 ci 'i CA iia Com!Iq 01 N Cal C In n rl, I', � M 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N (`v N N 1V CV I'N N C� N fN N N fN " N 14 CA N FV $200 $186 $1.60 $140 $20 ffI0 11 1� s `, If, � IT, 0 n - 11 11,n D N " �4 q q rq rV r, C, M cM1 M M M M CM1 M " 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N CA rq Com" -q 11 I'l N IN -V Cq N rq r4 N Cti ri I"I N CV 6 1 brattle.com Both the renewable PPAs and the DEC are integral parts of the RDP. The DEC physically hedges the variability brought by the increased renewable resources, while maintaining DME's QSE status, and is therefore necessary to implement the RDP-DEC Strategy. In the Base Scenario, the RDP-DEC Strategy costs approximately $975 million less than the SQ - Market Strategy over 20 years and $750 million less than the SQ-TMPA Strategy. In the Low Gas Scenario, the RDP-DEC Strategy costs approximately $410 million less over 20 years than either Status Quo Strategies. These results show that even at current natural gas prices the RDP-DEC Strategy will reduce DME's costs. Furthermore the RDP-DEC Strategy acts as a hedge against rising natural gas prices, likely yielding even greater savings when gas prices rise. Savings from the renewable PPAs drive the lower DME customer costs. Figure ES -6 (Base Scenario Cumulative Cost ($000) Difference by Components) and Figure ES -7 (Low Gas Scenario Cumulative Cost ($000) Difference by Components) compare the RDP-DEC Strategy to the SQ - Market Strategy and break down the components of the cumulative savings of the RDP-DEC Strategy. These Figures show that in both scenarios, Energy Market/PPA cost (the green portion of the bars) is the dominant contributor to the cost savings. Other Portfolio Savings enabled by the DEC include avoided REC purchases and optimization of DME's purchases in the Day -Ahead and Real -Time markets. In addition to these savings, DEC can offset the DME cost through market sales. Under current market protocols, DEC will sell energy and ancillary services to the ERCOT market. DME will then buy back from the market the amount needed to serve its load. The net revenue of the amount DEC sold and DME bought back will offset DME's cost to serve load. In the Base Scenario, the Total Portfolio Savings (solid blue line) is higher than the combined savings of Energy Market/PPA and Other Portfolio Savings because this net revenue from market sales exceeds DEC's financing costs (the red portions of the bars in the negative direction). The Low Gas Scenario shows similar observations, although the Total Portfolio Savings (solid blue line) is slightly lower than the combined savings of Energy Market/PPA and Other Portfolio Savings. Note that this analysis only extends 20 years. The DEC is able to provide additional benefits to DME customers well beyond 20 years. 7 1 brattle.com $1,000,000 5800,000 00Other Portfolio Savings Energy Market/ P PA $600,000 ME DEC Financing —Total Portflo, Savings AA 5400,000 $200,000 $(200,000) $(400,000) -p p co, 'p S, .;V -p "0 -p -P, 'p, 4" -0, � T T -p -p -igure ES -7: Low Gas Scenario Cumulative Cost ($000) Difference by Componeng 8 1 brattle.com In addition to providing these economic benefits, the RDP-DEC Strategy will lower fossil fuel usage and associated air emissions. If the DEC operates at a 20% capacity factor (averaging approximately 33,000 MWh of power generated per RICE unit), it will reduce approximately 325 tons of SO2, 180 tons of NOx, 120 tons of VOC, and over 40,000 tons of CO2 per year compared to purchasing power from the ERCOT market. The net -load analysis in Figure ES -1 (Hourly Net Load and Ramping Needs) shows that a minimum of nine RICE units are required. This is based on one year of projected data (for 2019) and not assuming future load growth or forecast deviations of the renewable resources. Under the RDP, DME will have nearly 500 MW of variable renewables and greater net -load ramps are certainly probable. In addition, individual RICE units will at times be out for planned and forced outages. These two factors indicate that 12 RICE units provide a good balance from an operational perspective. Each of the DEC stations is planned to have six units to provide added reliability. The two major cost components of a station are the engines themselves and the "balance of plant." The balance of plant consists of the land, gas pipeline, transmission to the plant and the substation, the building and controls. Having more or less units at a site does not change the balance of plant costs. Thus in going from 9 to 12 units (in total) the cost will not increase by 33%. Quotes DME received indicate that building six units rather than 12 will only lower the cost by 35%, not 50%. Thus, based on operational need and cost, we conclude 12 units to be appropriate for DME's needs as part of the RDP. The RDP-DEC Strategy provides other benefits that are not quantified, such as minimal water usage compared with other thermal capacity. Overall, the RDP-DEC Strategy appears to be the lowest cost and most reliable option for achieving the City of Denton and DME's goal of higher renewable penetration. It is important to note that DME needs to make changes to the ongoing electricity delivery services to customers without any disruption—both physically and financially—and having physical options to hedge the renewable variability is important. The remainder of this report is organized as follows: Section II (Background) provides an overview and background of DME, the RDP, and DEC; Section III (Assessing the Economic Feasibility of the Renewable Denton Plan Metrics) discusses the modeling methodology, 9 1 brattle.com assumptions, and analysis results; and Section IV (Conclusion) summarizes the findings once again. Further details of the study analysis and assumptions are included in the Appendices. All monetary values in this report are shown in nominal dollars, unless specified otherwise. 10 1 brattle.com The City of Denton, located on the north end of the Dallas—Fort Worth metroplex in North Texas, has grown rapidly in recent years. Between 2010 and 2011, it was the seventh fastest- growing city with a population over 100,000 in the United States. Today, the estimated population of approximately 140,000 continues to grow. Denton Municipal Electric ("DME"), owned by the City of Denton, has been the provider of reliable and affordable energy for the greater Denton area since 1905. DME maintains competitive and stable rates and is recognized as a national leader in public power .4 Denton's current peak load is anticipated to grow at approximately 2% per year for the foreseeable future, and its peak is expected to exceed 380 MW by 2019. Today, the industrial customers (approximately 12% of the customer base) provide 60% of DME's revenues with the remaining 88% (mostly residential customers) providing the balance. The generation portfolio serving Denton's load includes 100 MW from the 473 MW coal—fueled Gibbons Creek Steam Electric Station ("Gibbons Creek"), a "firmed" Wind Power Purchase Agreement ("PPA") with NextEra (i.e., DME receives a constant amount of power regardless of the wind conditions), and purchases from the Electric Reliability Council of Texas ("ERCOT") markets.' DME can choose to cease the firming provision in the NextEra Wind PPA, which will lower the PPA cost, at any time .6 With this portfolio and through purchases of Renewable Energy Credits ("REC"s), DME achieves a 40% renewable penetration level today. The current Gibbons Creek power sales agreement is scheduled to expire in the next few years and DME must decide if it wants to renew. A new Solar PPA starts in January of 2019. Therefore, 4 DME is also designated as a Reliable Public Power Provider by the American Public Power Association and received the U.S. Department of Energy 2011 Wind Power Award. 5 The Gibbons Creek Steam Electric Station, also known as the Texas Municipal Power Agency ("TMPA"), was first put in service in October 1983. It is currently jointly operated by the four cities of Bryan (21.7% ownership), Denton (21.3% ownership), Garland (47% ownership), and Greenville (10% ownership). The four cities need to decide on their intentions of extending the Gibbons Creek agreement for an additional two years by September 2016 and TMPA has issued an RFP to sell its ownership. Gibbons Creek provides about 140 full time jobs to the local community. 6 If firming is no longer needed, the PPA price will drop by approximately 40%. 11 I brattle.com under the status quo ("Status Quo" or "Status Quo world"), DME's generation portfolio in 2019 will consist of power from various PPAs (Gibbons Creek, the NextEra Wind PPA, and the new solar PPA). DME will need to purchase the balance of its energy needs from the ERCOT market .7 DME's vision is to increase the renewable penetration level to 70%. The comprehensive Renewable Denton Plan ("RDP") was developed for this purpose. As an ERCOT market participant, DME must either contract for Qualified Scheduling Entity ("QSE") services or provide them on its own." With the goal of lowering ongoing operational costs, DME has created the Energy Management Organization ("EMO") to function as its own QSE and optimize power purchases. Creating the EMO to act as its QSE has produced significant economic benefits, saving the City of Denton a net of $13.5 million during its first year of operations alone. The EMO also gives DME flexibility to increase renewable penetration through PPAs. To maintain its QSE status, DME must follow strict operational guidelines set by ERCOT and the Public Utility Commission of Texas ("PUCT"). DME must maintain the supply and demand balance schedule at all times and manage the supply uncertainty associated with its intermittent renewable PPAs. Expanding DME's renewable energy portfolio, as called for under the RDP, will create new operational challenges for the EMO. As discussed later in this report, the Denton Energy Center ("DEC") will help the EMO address the operational challenges created by the new renewable portfolio. DME estimates that in 2019 approximately 1,150,000 MWh of energy (out of the estimated 1,620,000 MWh of energy served) will come from renewable resources. The goal of the RDP is to increase the physical renewable penetration level to 70% by 2019 without increasing costs to customers. Under the RDP, DME will further increase the renewable portion of its portfolio to account for future load growth. Associated goals include reducing fossil fuel usage, water consumption and air emissions. These goals are achieved through signing multiple PPAs with renewable resources and developing the DEC facilities. The RDP calls for Denton's energy supply Denton is located near ERCOT's Northern Hub. " Generators and customers cannot interact directly with ERCOT. A QSE acts as the intermediary. 12 1 brattle.com to come from 52% wind, 17% solar, and 1% landfill gas, thus bringing the renewable share of the portfolio to 70%. The remaining 30% of the city's energy needs will come from the DEC and purchases from the ERCOT market, whichever is cheaper. Current market and regulatory conditions are very favorable for signing renewable energy PPAs. Interest rates are generally low (although expected to rise in the near future) and lead to lower capital costs for developing renewable resources. The production tax credit ("PTC") and investment tax credit ("ITC") for renewable resources have been extended but benefits begin to decline in 2017.9 10 Therefore, renewable resource developers have strong incentives to build now rather than later and the potential over -supply puts downward pressure on PPA prices." Furthermore, historically low natural gas prices provide low cost power alternatives that further suppress PPA prices. Wind PPA costs are approximately 20% lower than the average ERCOT Northern Hub energy price observed over the past three years. As a coarse indication, with 200 MW of Wind PPAs producing about 700,000 MWh per year (roughly a 40% capacity factor, which is lower than the developers' projected capacity factors), DME will save about $4.2 million per year in energy costs, compared to the alternative of purchasing from the ERCOT market. In reality, 200 MW of Wind PPAs will likely provide more power but wind produces more during off-peak hours and therefore the savings from these PPAs may differ from this illustrative calculation. However, it is important to recognize that the renewable resource PPAs come with challenges caused by the variability and intermittency of power production. Operators cannot dispatch 9 Congress extended the PTC and ITC in December 2015. Solar ITC will continue at the current 30 percent rate through 2019, after which it will fall to 26 percent in 2020, 22 percent in 2021, and 10 percent in 2022. An additional commence -construction clause will extend the credit to any project in development before 2021 (as long as the project is in service before the end of 2023). The wind PTC will be retroactively applied to units that started construction in 2015 and extended through 2016, after which it will decline each year by 20% per year until it fully expires in 2020. 10 DME is a tax exempt municipality and cannot take advantage of these tax incentives or accelerated depreciation. Therefore signing PPAs for renewable resources becomes the practical option for DME. 11 Texas provides an excellent ground for developing renewable resources. The state has some of the best wind and solar resources in the country. The Competitive Renewable Energy Zone ("CREZ") transmission system enables wind from west Texas and the Panhandle to reach load centers such as Dallas -Fort Worth. The CREZ system might also enable solar resources in the future. 13 1 brattle.com wind and solar facilities; the output depends on weather patterns. During periods when the forecast shows renewables resources generating at low output levels, operators must obtain back- up power supply from other resources. Further complicating operations, wind and solar forecasts do not perfectly predict actual operations. To ensure reliability in real-time, back-up to cover forecast error (i.e., the difference between the forecast and actual operations) is needed. Thus, operators must overcome the dual challenges of matching supply from intermittent resources with demand and the scheduling difficulties associated with forecast uncertainty. Adding significant renewable resources to a system, as intended under the RDP, will increase the challenges associated with variability. The current DME portfolio relies in part on Gibbons Creek to balance the supply and demand. The flexibility—i.e., ramping provided by Gibbons Creek—of only 1 MW per minute is just enough to address the current load variability, but would not be sufficient to address the flexibility needs created by the RDP. Load variations are fairly predictable and are not very rapid or large. However, the output of renewables can vary dramatically from minute to minute as wind speed and cloud coverage changes.1z The variability of DME's renewable resources (and hence net load) will be highly correlated with the variability in ERCOT's renewable energy resources as a whole. The growing portfolio of ERCOT wind resources has some geographic diversity, but overall system net load variability has risen as wind generation has increased. Prices tend to rise when wind resources drop off sharply. This is especially true when the decreased wind output is not expected. At these times DME would be most exposed to the physical imbalance of supply and demand and also to the ERCOT wholesale market to augment the supply shortage. Therefore, DME would be exposed to the need to buy significant quantities of power at high prices from the ERCOT market. The planned DEC provides a solution—both physically and financially—to this variability issue. The DEC consists of two natural gas fired power plants that have access to multiple natural gas pipelines at each plant site. Each plant will have six quick -start capable reciprocating engines ("RICE" or "RICE units") with 18.75 MW of capacity per unit, adding up to a total capacity of iz Solar has a large morning ramp (up) and evening ramp (down) that makes for operational challenges as well. But these ramps are at least somewhat predictable. 14 1 brattle.com 225 MW (112.5 MW per plant).13 Each RICE unit will have a minimum operating level of 3.75 MW (20% of full capacity) and is capable of providing Energy, Responsive Reserve ("RRS"), Non - Spinning Reserves ("NSRS"), and Regulation Up ("RUS") services to the ERCOT market within a minute's notice when the units are synchronized. 14 Regulation Down ("RDS") service can also be provided if any RICE units are dispatched for energy above a certain level. The operational flexibility provided by the RICE units is a hedge against the variability/intermittency of power generated by the renewable resources. In addition to providing flexibility, the RICE units will contribute to reducing fossil fuel usage and air emissions. The RICE units have full load heat rates of approximately 8,300 Btu/kWh, which is lower than ERCOT's current implied market heat rate of about 9,000 Btu/kWh, as shown in Table 1 (ERCOT Northern Hub Implied Market Heat Rate)." Therefore, at a macro level, generation from the RICE units will be more efficient and thus consume less fossil fuel than the average generator that sells into the ERCOT market. 16 13 The analysis performed simulates use of Wartsila 50SG engines. 14 Regulation Up and Down services respond every four seconds, either increasing or decreasing as necessary to fill the gap between energy produced by generators and actual system load. Responsive and Non -Spinning Reserves are to protect the system against unforeseen contingencies, such as unplanned generator, transmission, and substation outages, and ensure that the system frequency can quickly be restored to appropriate levels following the contingency event. Responsive Reserves must be provided within ten minutes while Non -spinning Reserves can be provided from slower responding generation capacity within 30 minutes. 1s Table 1 (ERCOT Northern Hub Implied Market Heat Rate) was calculated using historical ERCOT Northern Hub Real -Time prices and daily Henry Hub natural gas prices. 16 The marginal fuel type in the ERCOT market is predominantly natural gas. Typically, approximately 90% of the variable cost of a thermal generator is fuel cost and therefore variable costs will be correlated highly with heat rates of the thermal generators. Under this assumption, when ERCOT dispatches the RICE units, they are reducing fossil fuel usage by displacing higher cost generators that will likely burn more fuel. 15 1 brattle.com ERCOT Northern Hub Implied Year Market Heat Rate (Btu/kWh) 2011 10,200 2012 9,376 2013 8,216 2014 8,451 2015 9,080 Ave rage 9,065 13 The analysis performed simulates use of Wartsila 50SG engines. 14 Regulation Up and Down services respond every four seconds, either increasing or decreasing as necessary to fill the gap between energy produced by generators and actual system load. Responsive and Non -Spinning Reserves are to protect the system against unforeseen contingencies, such as unplanned generator, transmission, and substation outages, and ensure that the system frequency can quickly be restored to appropriate levels following the contingency event. Responsive Reserves must be provided within ten minutes while Non -spinning Reserves can be provided from slower responding generation capacity within 30 minutes. 1s Table 1 (ERCOT Northern Hub Implied Market Heat Rate) was calculated using historical ERCOT Northern Hub Real -Time prices and daily Henry Hub natural gas prices. 16 The marginal fuel type in the ERCOT market is predominantly natural gas. Typically, approximately 90% of the variable cost of a thermal generator is fuel cost and therefore variable costs will be correlated highly with heat rates of the thermal generators. Under this assumption, when ERCOT dispatches the RICE units, they are reducing fossil fuel usage by displacing higher cost generators that will likely burn more fuel. 15 1 brattle.com Environmentally, the RICE units use minimal water (approximately 12 gallons a week) and have very low air emission rates compared to other thermal generators. 17 Detailed characteristics of the RICE units are included in Appendix -A (Denton Energy Center Characteristics). While the current RDP with DEC will likely achieve the goals discussed earlier, the 225 MW DEC does require a $220 million investment, which DME plans to finance through municipal bonds. The schedule assumes DEC to be constructed during the first two years and start commercial operation in the third year. We address two questions: 1) Can the City of Denton go to 70% renewables and maintain DME's competitive retail rates; and 2) is the RDP a good way to achieve the 70% goal?. The timing of the RDP decision cannot be delayed. The Gibbons Creek power sales agreement will expire in the next few years and DME must decide soon if they want to extend it. Denton's current load growth (at approximately 2% per year) requires DME to secure more energy sources in the immediate to near future, either by purchasing from the market, signing PPAs, or developing its own resources. Options include extending the Gibbons Creek power sales agreement, building the DEC, and signing new PPAs. These options will take time to finalize and implement and will be directly impacted by the decisions regarding the DEC investment. Market conditions are favorable —including the aforementioned opportunities to secure low cost renewable PPAs and the current exchange rate between Euros and US dollars for purchasing the RICE units—indicates a prompt decision to be beneficial. The choice that the City of Denton must make is whether to pursue the RDP, or remain as today. The next section discusses the benefits and costs associated with each of these options. We then discuss alternatives for achieving 70% renewables. 17 Emissions accounted for 30% of the decision criteria for the Denton Energy Center RFP issued by DME. 16 1 brattle.com The economic feasibility of DME pursuing the RDP with the DEC can be assessed by comparing the cost of serving the DME load against the anticipated future system if that system were to remain at "Status Quo" (as of today). This section compares the various options available to DME today, then quantifies the comparative net benefits where possible using a production simulation model. We will then address the various options that may be available for pursuing the RDP. Finally, we will discuss qualitative assessments of these options. liq As discussed earlier, the RDP goal is to increase renewable penetration and reduce fossil fuel usage and associated air emissions while maintaining both financial and physical reliability, and without increasing customer costs. DME believes that the RDP does exactly this. The first question is how RDP compares to the Status Quo. To assess this question, we compared the costs and benefits of the Status Quo with the RDP. The renewable PPAs allow DME to provide power at a likely lower cost than the Status Quo while simultaneously reducing fossil fuel usage and associated air emissions. The DEC allows DME to hedge market and operational risks that emerge from a large reliance on renewable resources with variable outputs. Power from renewable resources is variable. The DEC can provide a back-up option for power and firm this variability. The alternative is to purchase it from the ERCOT energy and ancillary service markets or sign contracts that provide services similar to what the DEC would provide. This back-up option is beneficial in both the scheduling timeframe (Day -Ahead when one decides on unit commitment and the amount to purchase from the market etc.) and in the operational timeframe (Real -Time when one faces the consequence of forecast deviations, including those for renewable resources). It is particularly valuable when production from wind resources is over -forecasted in the Day -Ahead timeframe (i.e. actual production from wind resources in Real -Time is less than what was forecasted Day -Ahead) when DME makes irreversible (in general) decisions for the next day operation. Over -forecast of wind often results in price spikes (because the lack of generation in Real -Time requires ERCOT to call on expensive units) and purchasing from the ERCOT Real -Time energy market under such conditions can be expensive. In addition to the market prices they may be subject to Reliability Unit Commitment 17 1 brattle.com charges. Forecast deviation on solar resources will have similar effects. DEC can hedge such risks because the RICE units effectively provide a "firming" service to the renewable PPAs. This back- up option also allows DME to lower the current NextEra wind PPA cost. The NextEra wind PPA is firmed and NextEra provides a constant amount of power regardless of the wind conditions. However, if the firming through the PPA is no longer needed, the PPA price can be reduced by approximately 40%. In addition, owning and operating the flexible RICE units can provide DME with the following additional benefits: 1. Potential Revenue Streams DEC can sell energy and ancillary services to the ERCOT market. It is important to note that when the RICE units are generating (i.e., dispatched by ERCOT), they are likely reducing both the ERCOT-wide fossil fuel consumption (they have lower heat rates, otherwise they would not be dispatched) and air emissions (they have a lower emission rate than most thermal generators) on a macro level (looking at the entire ERCOT generation portfolio), thereby augmenting the RDP's goals. 2. Day -Ahead and Real -Time Market Optimization Historical observations of the ERCOT market indicate that Day -Ahead energy prices are higher than Real -Time energy prices. Figure 1 (Day -Ahead and Real -Time Price Spreads for All -Hours) shows the monthly average of historical differences between Day -Ahead and Real -Time prices. As this Figure shows, the price difference for all hours averaged around $2/MWh. However, the Real -Time price is much more volatile than the Day - Ahead. Figure 2 (Day -Ahead and Real -Time Positive Price Spreads) shows the average price difference between Day -Ahead and Real -Time when the difference is positive, i.e., when the Real -Time price is higher (teal dotted line) and when the Day -Ahead price is higher (dark blue line). These two Figures show that while on average the Day -Ahead prices are higher than Real -Time, when the Real -Time prices do become higher than Day -Ahead, the magnitude of the difference becomes much larger because the Real -Time prices are much more volatile. To hedge against this high Real -Time price volatility (such as those caused by wind forecast deviation discussed above), risk -averse entities including DME usually secure most of the power in the Day -Ahead market. The DEC will allow DME to increase the purchase from the generally lower-priced but more volatile Real - Time energy market because the DEC provides insurance against any Real -Time energy 18 1 brattle.com market price spikes. As an illustrative estimate, if DME procures 10% of its energy needs for 2019 (estimated annual energy is around 1,620,000 MWh) from the market and most of that is from the Day -Ahead market, there can be over $300,000 in potential savings per year (assuming $2/MVa difference in Day -Ahead and Real -Time market prices) by optimizing the Day -Ahead and Real -Time procurement. In reality, the potential savings will be larger because the $2/MVa difference is the average differences for all hours, including hours when the Real -Time prices are higher than Day -Ahead. $20 $15 M $10 CL V1 $5 $ AP _ "l�!Ili 111MIUMBUM $(10) 2012 2012 2012 2012 2012 2012 2013 2013 2.013 2013 2013 2013 2.014 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 2015 -01 -03 -05 -07 -09 -11 -0 - 03 -05 -a, -09 -11 -01 -03 - 05 -07 -09 -11 -01 .03 -05 - 07 -09 -11 $60 $50 $40 Average DA - RT when DA > RT '0M $30 to U .= $20 0. $20 201220122012201220122012201320132013201320132013201420142014201420142014201520152015201520152015 -01 -03 -05 -07 -09 -11 -01 -03 -05 -07 -09 -11 -01 -03 -05 -07 -09 -11 -01 -03 -05 -07 -09 -11 19 1 brattle.com These potential benefits are quantified in the following sections and compared with the $220 million investment that is not needed in the Status Quo. Therefore, we compare the net economic benefits of the RDP including these benefits against the Status Quo. The first step in assessing the comparative economic benefits of RDP is to define the Status Quo. With the Gibbons Creek power sales agreement scheduled to expire in 2018 or later, there are potentially two Status Quo views in 2019—one that includes Gibbons Creek as part of the generation portfolio, and another without Gibbons Creek. Therefore, we looked at the following three Strategies • SQ-TMPA Strategy. This Strategy represents Status Quo (same as today) with Gibbons Creek (TMPA) continuing as part of the portfolio. No additional renewable PPAs are signed (other than the solar PPA that starts in 2019). • SQ -Market Strategy. This is the same strategy as SQ- TMPA Strategy but without Gibbons Creek as part of the portfolio. It relies more heavily on purchases from the ERCOT market. • RDP-DEC Strategy: This Strategy represents RDP with various renewable PPAs enabled by the DEC that are signed to achieve the 70% renewable target. DME prepared an Excel -based model to analyze these Strategies While the Excel -based model produced similar results and was analytically sound, it was limited in its ability to optimize the DEC's operations. Therefore, we felt it important to perform an independent assessment of the economic benefits of the three Strategies using production simulation tools. This assessment was performed in the following two-steps. 1. Prepare a forward price curve for power. 2. Assess the cost of serving DME customers under the different Strategies Details of each step are discussed next. In the ERCOT market power prices are highly correlated to natural gas prices. For this assessment, we created two scenarios using the natural gas price forecast from the 2016 ERCOT Long -Term System Assessment ("LTSA") report. The first scenario, the Base Scenario, uses the LTSA's current trend forecast that represents a reasonable view of future natural gas prices. The second scenario, the Low Gas Scenario, uses the LTSA's low forecast. In the Low Gas Scenario, 20 1 brattle.com the natural gas price does not change from today's price in real terms (in other words prices only grow by future inflation). Figure 3 (Historical and Forecasted Natural Gas Prices) below shows these two natural gas price forecasts. Figure 4 (Forward Power Price Curves) shows the corresponding power price forecasts developed using these natural gas prices for this assessment. The method and tools used for developing the forward price curves are discussed in Appendix -B (Analyses Assumptions and Methods). $16 $14 $12 m 51� E Base Scenario {trsa currentrrenas) z Se $a Sz 5o Historical Future m $80 Rica tOn3Rln $70 $60 s $50 $40 $30 $20 $10 50 rn O r -i N rn cP L,T tD n W m 0 -1 N rn st a.n to n W c -i N N N N N N N N N N r�r nn m rn r�r m m m r�r 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N N 21 1 brattle.com The second step is to use the forward price curves and existing/future PPAs to assess and compare the cost of serving energy under the three Strategies listed above (SQ-TMPA, SQ - Market, and RDP-DEC Strategies). To address varying system conditions, this two-step analysis is repeated under varying assumptions derived from historical (2012 through 2015) market observations. Based on historical prices from these four years, we prepared four distinct hourly Day -Ahead and Real - Time energy price forecasts. Price forecasts for ancillary services (RRS, NSRS, RUS, and RDS) were also developed, using price ratios of each ancillary service and energy from the historical years. Differences in the prices developed reflect variations in market conditions, load, wind and solar output, generator and transmission outages, and other various factors that a deterministic model cannot easily capture. Table 2 (Historical Energy and Ancillary Service Prices) below shows the annual average price for energy and ancillary services and the ratios derived (and applied to energy price forecasts). As a general trend, using later year profiles (2014 or 2015) resulted in a higher ancillary service to energy price ratio. We also varied the RICE units' capability to provide regulation. The RICE units are technically capable of providing regulation up to its full capacity (i.e., 15 MW per unit) when 22 1 brattle.com Profile Years Average Prices 2012 2013 2014 2015 Historical Day -Ahead $ 27.58 $ 31.86 $ 38.13 $ 25.34 Energy Prices Real -Time $ 25.19 $ 30.45 $ 36.26 $ 22.87 RRS $ 8.72 $ 8.13 $ 11.27 $ 9.96 Historical NSRS $ 3.63 $ 3.43 $ 5.18 $ 6.35 Ancillary RUS $ 4.23 $ 4.89 $ 9.74 $ 5.35 Services Prices RDS $ 8.94 $ 8.57 $ 12.43 $ 10.25 Derived Ratio RRS 31.6% 25.5% 29.6% 39.3% of Ancillary NSRS 13.2% 10.8% 13.6% 25.1% Services and RUS 15.3% 15.3% 25.5% 21.1% Energy Price IRDS 1 32.4% 26.9% 32.6% 40.4% We also varied the RICE units' capability to provide regulation. The RICE units are technically capable of providing regulation up to its full capacity (i.e., 15 MW per unit) when 22 1 brattle.com synchronized."' However, today's ERCOT regulation market size is only about 600 MW. Allowing all 12 RICE units to provide regulation up to their full capability would potentially result in a combined 180 MW of capability, and can result in market saturation where prices fall. To address this concern, we modeled the RICE units with three varying capabilities of providing regulation services (i.e., 100% Regulation Capability, 20% Regulation Capability, and 0% Regulation Capability) and used the 20% Regulation Capability as our default assumption. Detailed methodology and assumptions used for this two-step analysis are also discussed in Appendix -B (Analyses Assumptions and Methods). Values presented in this report are the average values of the four historical profiles and assumes 20% Regulation Capability for the RICE units. We indicate the potential range of the results presented by observing all the different sensitivities (profile years and RICE unit characteristics) later. - - - By using the aforementioned approach, we observed that the RDP-DEC Strategy to cost less to the DME customers than the SQ- TMPA Strategy or SQ -Market Strategy. Figure 5 (Base Scenario Cost Comparison) and Figure 6 (Low Gas Scenario Cost Comparison) below compares the net cost of serving energy among the three Strategies for the two scenarios (Base Scenario and Low Gas Scenario) discussed above. The minimum generation level of the RICE units is 20% of its full capacity of 18.75 MW, or 3.75 MW. Therefore the operational range where a RICE unit can provide regulation would be between 3.75 MW and 18.75 MW, allowing each unit to provide up to 15 MW of regulation. 23 1 brattle.com i ♦ . i $ 200 $18Q $160 $140 � v $1.20 Sid T1 P4 Stralegy ROS DEC Silaiegy+ $100 (Adverse RLnewabfo Candisions) �. nr e� - - yw e> $40 $ 20 so n M C11--C,10D1=0 1C)C)I ry ry - ^J rY- v eY eY v2 ry tY ry IY 101 :0 7Y� The adverse renewable conditions shown here illustrate the downside potential for years with lower production from renewable re -sources. These conditions may occur sporadically and would not continue over the 26 year period analyzed here. $ 200 $180 $1.60 $140 $1.20 5100 a' v SO TMPA Strategy tl S80 r S60, S40 PO DEC Strstegy t� r S20 RDPiDEC c r[atcgy (APS'4`47' S RLLO(-=?ya We (. CJ 7?'Clftii3FAY! $0 i«Jw, r 0 0 +1 o 0 0 0 o e�n - at D rcc n rn In cn M til 0 0 o i210 0 0 21 21 The adverse renewable conditions shown here illustrate the downside potential for yearswith lower production from renewable resources. These conditions may occur sporadically and would not continue over the 20year period analyzed here. As these figures show, the RDP-DEC Strategy (solid grey line) shows the lowest cost compared to the SQ-TMPA Strategy (dark blue line) and SQ -Market Strategy (tea] line) in both Scenarios. The comparative benefits grow even larger after 2036 when the DEC debt is paid off. In the Base Scenario, the RDP-DEC Strategy costs approximately $975 million less than the SQ -Market 24 1 brattle,com Strategy over 20 years and $750 million less than the SQ TMPA Strategy. The Low Gas Scenario shows a much smaller difference of approximately $410 million between the RDP-DEC Strategy and either of the Status Quo Strategies Note that the impact of extending the Gibbons Creek power sales agreement diminishes with lower gas prices. The Low Gas Scenario, which assumes the natural gas price to be roughly constant at today's level in real dollar terms, represents a reasonable "down -side case" Scenario for the DEC investment. These results show that even at current natural gas prices the RDP-DEC Strategy will reduce DME's costs. Furthermore, the comparative benefit of the RDP-DEC Strategy increases with higher gas prices indicating that this Strategy effectively provides a hedge against rising gas prices. This is because the RDP-DEC Strategy utilizes fixed price renewable PPAs while the cost for the two Status Quo Strategies that rely heavily on the ERCOT market increase with natural gas prices. Both the renewable PPAs and the DEC are integral parts of the RDP. The DEC physically hedges the variability brought by the increased renewable resources and is therefore necessary to implement the RDP-DEC Strategy. In addition, the DEC can offset DME's cost through market sales. Under current market protocols, DEC will sell energy and ancillary services to the ERCOT market and DME buys back what is needed to serve its load. Any net revenue from these transactions (i.e., the difference between what DEC sold and what DME bought back, or "net - sales") will help the RDP-DEC Strategy further offset their cost. The amount DME needs will depend on the renewable resource profile that varies year to year. In the future, there may be years with adverse renewable conditions when production from renewable resources are lower or the variability is higher. Under such conditions, DME may need to buy back more power from ERCOT and the net revenue of the net -sales may potentially drop to zero in some hours. It is important to note that such adverse conditions occur sporadically and would not be sustained for a longer period, such as over a full year. The dotted grey lines in Figure 5 (Base Scenario Cost Comparison) and Figure 6 (Low Gas Scenario Cost Comparison) represents extreme cases with adverse renewable conditions that lead to zero profits from net -sales. It should be viewed as the potential down -side case that may occur in any given year, but not through the entire 20 year period. Even under the extremely unlikely future where these adverse conditions are sustained, the RDP-DEC Strategy costs approximately $710 million less than the SQ -Market Strategy over 20 years and $490 million less than the SQ-TMPA Strategy under the Base Scenario. In the Low Gas Scenario, the RDP-DEC Strategy costs approximately $170 million less over 20 years than either Status Quo Strategies The actual 25 1 brattle.com comparative benefit will vary by year and likely lie closer to the solid grey lines of Figure 5 (Base Scenario Cost Comparison) and Figure 6 (Low Gas Scenario Cost Comparison). Figure 7 (Base Scenario Cumulative Cost and Savings ($000) Comparison) and Figure 8 (Low Gas Scenario Cumulative Cost and Savings ($000) Comparison) compare the RDP-DEC Strategy to the SQ Market Strategy and break down the components of the cumulative savings of the RDP- DEC Strategy. 19 $1,000,000 Other Portfolio Savings $80o'000 " Energy Market/ PPA WM DEC Financing � ----Tota i Portfolio Savings $600,0oo ..,... .Total) Portfolio Savings (Adverse Renewable Conditions) $400,000 r $200,0()0 ; $ "L4 � "10 16 4 4 "� le", .y4 le ,�v "yU �9 %O 'i'J 410 ,� "Ia 11 The adverse renewable conditions shown here illustrate the downside potential for years with lower production from renewable resources These conditions may occur sporadically and would not continue over the 20 year period analyzed here. 19 Under the Base Scenario, the SQ -Market Strategy shows higher costs than the SQ-TMPA Strategy. The comparative benefit of the SQ-TMPA Strategy over the SQ -Market Strategy is in excess of $230 million over twenty years. However, it is important to note that the SQ- TMPA Strategy cost may be higher than what is represented here. Given the uncertainty surrounding coal assets, the remainder of this section will compare the RDP-DEC Strategy to the SQ -Market Strategy. An example of such uncertainty is discussed in Appendix -C (Uncertainty for the SQ-TMPA Strategy). 26 1 brattle.com Fa ■ ■ ■ 111 ■ a. ■ 0100 other Portfollo Savings. $80tP,04JQ Energy Market/ PPA DEC Financing Cost —Total Portfolio Savings $600,000 .Total Portfolio Savings (Adverse Renewable Conditions) $200,000 S- S(200,000) o kQ3 4v �L 4 L4 Lf ta ! 4 oi f) b •t° _, is ° �° %° �° _wy_�1is _0y _ .9zya The adverse renewable conditions shown here illustrate the downside potential for years with lower production from renewable resources. These conditions may occur sporadically and would not continue over the 20 Year period analyzed here.. These figures show that in both scenarios, Energy Market/PPA cost (the green portion of the bars) is the dominant contributor to the cost savings. Other portfolio savings enabled by the DEC include avoided REC purchases and optimization of DME's purchases in the Day -Ahead and Real -Time markets. Details of REC savings are included in Appendix -B (Analyses Assumptions and Methods). Under the Base Scenario, the Total Portfolio Savings (solid blue line) is higher than the combined savings of Energy Market/PPA and Other Portfolio Savings because the net -sales offsets are larger than the DEC's Financing Costs (the red portions of the bars in the negative direction). The Low Gas Scenario shows similar observations, although the net -sales offset does not fully cover the DEC Financing Cost. Under adverse renewable conditions, the Total Portfolio Savings (dotted blue line) becomes lower but the cumulative value is still positive and covers the DEC Financing Costs (the red portions of the bars in the negative direction) in both the Base and Low Gas Scenarios. Note that this analysis only extends 20 years. The DEC is likely to be in service and providing additional benefits to DME customers well beyond that point in time. Figure 9 (Base Scenario DEC Market Sales ($000) by Product) and Figure 10 (Low Gas Scenario DEC Market Sales ($000) by Product) show the revenues and profits from selling energy and ancillary services to the ERCOT market, and associated operating costs of DEC. 27 1 brattle.com $1,000,000 $800,000 Ancillary Service Revenue Energy Revenue DEC Market Benefits $600,000 DEC Cash Flaw $400,000 5200,000 $(200,000) �1 LbC yx1 y 1y^s �4a nb4 �f tia 16 'YQ ,4 4 ,y0 .yCl `i "lfa 'yJ R6 `Si1 ry+a 'bfl �O ..yS2 ,y9 `L4 ,y6 IIZI 1 ■, ■ t 111 • ' a 1 $1,000,000 $800,000 Ancillary Service Revenue Energy Revenue DEC Market Benefits $600,000 DEC Cash Flaw $400,000 5200,000 $(200,000) Ancillary services include RRS, NSRS, RUS, RDS, and Black -Start services. Energy, RRS, NSRS, RUS, and RDS were optimized using the production simulation. Energy revenues (light green bars) include energy sold Day -Ahead and any conversion from NSRS converted to Energy in 28 1 brattle.com Real -Time when the market price is higher than $75/MWh. The dotted orange line shows the combined profit from both energy (light green bar) and ancillary services (light blue bar) after subtracting DEC operating costs, which include fuel and operating and maintenance costs. The dotted orange line of Figure 9 (Base Scenario DEC Market Sales ($000) by Product) would equal the difference between the dotted blue line and solid blue line of Figure 7 (Base Scenario Cumulative Cost and Savings ($000) Comparison). Similarly, the dotted orange line of Figure 10 (Low Gas Scenario DEC Market Sales ($000) by Product) would equal the difference between the dotted blue line and solid blue line of Figure 8 (Low Gas Scenario Cumulative Cost and Savings ($000) Comparison). Finally, the red line compares the net revenue (dotted orange line) against the principal and interest that DME must pay for the DEC. Under the Base Scenario, the cumulative value becomes positive indicating that DEC can show a net positive cash flow even as a standalone plant with the potential net -sales. This is not the case for the Low Gas Scenario, as we observed in Figure 8 (Low Gas Scenario Cumulative Cost and Savings ($000) Comparison). The benefits discussed above are for the average conditions for our default assumptions. Table 3 (Base Scenario Total Portfolio Benefits ($000) by Profile Year) and Table 4 (Low Gas Scenario Total Portfolio Benefits ($000) by Profile Year) below show the potential range of the comparative benefits of the RDP-DEC Strategy (compared to the SQ -Market Strategy) with net - sales. Assuming the historical four years' conditions, the comparative benefit of the RDP-DEC Strategy portfolio can vary by 10% or so in the Base Scenario and by nearly 18% in the Low Gas Scenario. The maximum downside variations in both Scenarios are about 75% of the potential upside. If more weight is put on recent years, estimated benefits become larger. Regardless, the observation that the RDP-DEC Strategy is the lowest cost option for DME remains intact. 29 1 brattle.com .:+ a ■ '■ ■ ■ 111 + r Year Profile Year Year 2013 2012 2013 2015 2014 2015 Average $ 2019 $ 11,019 $ 10,166 $ 12,876 $ 15,234 $ 12,324 2020 $ 6,589 $ 5,991 $ 8,908 $ 11,281 $ 8,192 2021 $ 11,271 $ 10,767 $ 13,628 $ 16,831 $ 13,124 2022 $ 15,662 $ 15,258 $ 18,283 $ 21,804 $ 17,752 2023 $ 21,136 $ 20,450 $ 23,910 $ 27,720 $ 23,304 2024 $ 24,050 $ 23,364 $ 27,119 $ 30,686 $ 26,305 2025 $ 28,229 $ 27,754 $ 31,284 $ 35,306 $ 30,643 2026 $ 32,540 $ 31,955 $ 35,571 $ 39,859 $ 34,981 2027 $ 35,485 $ 34,813 $ 38,640 $ 43,070 $ 38,002 2028 $ 39,128 $ 38,238 $ 42,447 $ 46,667 $ 41,620 2029 $ 42,985 $ 42,297 $ 46,423 $ 50,991 $ 45,674 2030 $ 44,810 $ 44,116 $ 48,364 $ 52,983 $ 47,568 2031 $ 50,562 $ 49,725 $ 54,533 $ 59,201 $ 53,505 2032 $ 56,295 $ 55,168 $ 60,674 $ 64,978 $ 59,279 2033 $ 62,698 $ 62,018 $ 67,382 $ 72,394 $ 66,123 2034 $ 71,927 $ 71,539 $ 77,288 $ 82,395 $ 75,787 2035 $ 78,074 $ 77,049 $ 82,819 $ 88,174 $ 81,529 2036 $ 81,595 $ 80,093 $ 86,630 $ 91,628 $ 84,986 2037 $ 101,763 $ 100,688 $ 106,486 $ 112,357 $ 105,323 2038 $ 105,014 $ 103,948 $ 109,630 $ 115,758 $ 108,587 Total $ 920,834 $ 905,396 $ 992,894 $1,079,317 $ 974,610 Dev. from Avg. -12.7% -5.5% -7.1% 17.5% 1.9% 10.7% 0.09/. Year Profile Year 2012 2013 2014 2015 Average 2019 $ 13,031 $ 12,186 $ 14,768 $ 16,981 $ 14,242 2020 $ 7,293 $ 6,304 $ 9,297 $ 11,344 $ 8,559 2021 $ 9,382 $ 8,409 $ 11,348 $ 13,807 $ 10,737 2022 $ 10,807 $ 9,801 $ 12,825 $ 15,571 $ 12,251 2023 $ 11,718 $ 10,668 $ 13,780 $ 16,597 $ 13,191 2024 $ 10,010 $ 8,971 $ 12,384 $ 14,834 $ 11,550 2025 $ 12,050 $ 11,089 $ 14,268 $ 17,110 $ 13,629 2026 $ 12,995 $ 12,008 $ 15,201 $ 18,140 $ 14,586 2027 $ 14,149 $ 13,158 $ 16,354 $ 19,371 $ 15,758 2028 $ 15,222 $ 14,128 $ 17,564 $ 20,346 $ 16,815 2029 $ 15,804 $ 14,963 $ 18,222 $ 21,305 $ 17,573 2030 $ 17,555 $ 16,614 $ 19,971 $ 23,144 $ 19,321 2031 $ 19,025 $ 18,043 $ 21,456 $ 24,676 $ 20,800 2032 $ 20,179 $ 19,200 $ 22,731 $ 25,671 $ 21,945 2033 $ 21,756 $ 20,835 $ 24,268 $ 27,565 $ 23,606 2034 $ 24,385 $ 23,531 $ 27,018 $ 30,291 $ 26,306 2035 $ 25,368 $ 24,540 $ 28,059 $ 31,407 $ 27,343 2036 $ 26,375 $ 25,332 $ 29,138 $ 32,264 $ 28,277 2037 $ 46,189 $ 45,248 $ 48,782 $ 52,411 $ 48,157 2038 $ 47,460 $ 46,419 $ 50,016 $ 53,656 $ 49,388 Total $ 380,753 $ 361,447 $ 427,451 $ 486,489 $ 414,035 Dev. from Avg. -8.09/. -12.7% 3.2% 17.5% 0.09/. 30 1 brattle.com Table 5 (Base Scenario DEC Market Sales and Cash Flow ($000) by Profile Year) and Table 6 (Low Gas Scenario DEC Market Sales and Cash Flow ($000) by Profile Year) below show the potential range of the DEC cash flow of the RDP-DEC Strategy (compared to the SQ Market Strategy). The red lines in Figure 9 (Base Gas Scenario DEC Market Sales ($000) by Product) and Figure 10 (Low Gas Scenario DEC Market Sales ($000) by Product) show the average numbers of the last column. Under the Base Scenario the cash flow for DEC including the DEC financing cost is mostly positive while the Low Gas Scenario shows a potential to drop by nearly $50 million from the average prediction. The total cash flow over 20 years can potentially drop to negative $80 million, although this is much smaller than the Portfolio -wide benefits. Furthermore, the cash flow does not include any scarcity payment, which is a feature of the ERCOT market that enables the market participants to collect their investment costs. Should such revenues be included, the net cash flow for DEC as a standalone would likely be positive for both the Base and Low Gas Scenario. However, as previously mentioned, the DEC and the PPAs are complementary and the combined net benefits are estimated in the $400 million to almost $1 billion range, depending on gas prices. .. . R ■ 111 . . 31 1 brattle.com Profile Year Year 2012 2013 2014 2015 Average 2019 $ 216 $ ( 210) $ 2,602 $ 4,780 $ 1,847 2020 $ (8,088) $ (8,122) $ (5,187) $ (2,818) $ (6,054) 2021 $ (7,178) $ (7,098) $ (4,132) $ (1,148) $ (4,889) 2022 $ (6,399) $ (6,132) $ (2,997) $ 288 $ (3,810) 2023 $ (5,197) $ (5,106) $ (1,528) $ 2,030 $ (2,450) 2024 $ (4,830) $ (4,769) $ (1,017) $ 2,634 $ (1,995) 2025 $ (4,377) $ (4,097) $ (470) $ 3,382 $ (1,390) 2026 $ (3,553) $ (3,298) $ 408 $ 4,526 $ (479) 2027 $ (3,121) $ (2,887) $ 1,027 $ 5,283 $ 75 2028 $ (2,563) $ (2,384) $ 1,803 $ 6,126 $ 745 2029 $ ( 2,094) $ (1,968) $ 2,220 $ 6,720 $ 1,220 2030 $ (2,084) $ (1,937) $ 2,365 $ 6,920 $ 1,316 2031 $ (1,121) $ (1,049) $ 3,800 $ 8,405 $ 2,509 2032 $ (336) $ (326) $ 5,061 $ 9,673 $ 3,518 2033 $ 801 $ 1,184 $ 6,589 $ 11,531 $ 5,026 2034 $ 1,593 $ 1,997 $ 7,755 $ 12,996 $ 6,085 2035 $ 3,002 $ 2,809 $ 8,571 $ 14,094 $ 7,119 2036 $ 3,004 $ 2,569 $ 8,814 $ 14,531 $ 7,229 2037 $ 21,017 $ 20,869 $ 26,612 $ 32,711 $ 25,302 2038 $ 21,211 $ 21,149 $ 26,778 $ 33,119 $ 25,564 Total $ (98) $ 1,192 $ 89,074 $ 175,784 $ 66,488 Diff. from Avg. $ (66,586) $ (65,296) $ 22,586 $ 109,296 $ - 31 1 brattle.com Table .: Low Gas Scenario DEC. Cash Flow111 by r Table 7 (DEC Market Sales and Cash Flow ($000) by RICE Regulation Capability) below shows the potential range of the DEC cash flows when we change the RICE units' regulation capability assumptions. Obviously being allowed to provide up to full capacity provides a more preferred cash flow. It should be noted that the impact to cash flow with the 0% Regulation Capacity is relatively small and the potential downside risk of the regulation market saturation is mitigated. Regulation Profile Year Scenario Year 2012 2013 2014 2015 Average 2012 2019 $ 1,255 $ 925 $ 3,613 $ 5,623 $ 2,854 2020 $ (7,013) $ (7,352) $ (4,342) $ (2,339) $ (5,261) 2021 $ (6,541) $ (6,876) $ (3,828) $ (1,595) $ (4,710) 2022 $ (6,367) $ (6,692) $ (3,556) $ (1,045) $ (4,415) 2023 $ (6,321) $ (6,646) $ (3,422) $ (845) $ (4,309) 2024 $ (6,261) $ (6,604) $ (3,218) $ (713) $ (4,199) 2025 $ (6,251) $ (6,556) $ (3,280) $ (605) $ (4,173) 2026 $ (6,246) $ (6,535) $ (3,248) $ (481) $ (4,127) 2027 $ (6,164) $ (6,407) $ (3,120) $ (279) $ (3,992) 2028 $ (6,209) $ (6,414) $ (3,008) $ (181) $ (3,953) 2029 $ (6,185) $ (6,352) $ (3,015) $ (27) $ (3,895) 2030 $ (6,059) $ (6,280) $ (2,849) $ 225 $ (3,741) 2031 $ (5,899) $ (6,116) $ (2,631) $ 487 $ (3,540) 2032 $ (5,956) $ (6,015) $ (2,557) $ 530 $ (3,499) 2033 $ (5,719) $ (5,785) $ (2,299) $ 899 $ (3,226) 2034 $ (5,210) $ (5,346) $ (1,810) $ 1,471 $ (2,724) 2035 $ (5,362) $ (5,425) $ (1,867) $ 1,489 $ (2,791) 2036 $ (5,526) $ (5,638) $ (1,955) $ 1,463 $ (2,914) 2037 $ 12,847 $ 12,764 $ 16,322 $ 19,970 $ 15,476 2038 $ 12,877 $ 12,753 $ 16,365 $ 20,022 $ 15,504 Total 1 $ (76,311) $ (80,595) $ (13,703) $ 44,070 1 $ (31,635) Diff. from Avg. 1 $ (44,676) $ (48,960) $ 17,932 $ 75,704 1 $ - Table 7 (DEC Market Sales and Cash Flow ($000) by RICE Regulation Capability) below shows the potential range of the DEC cash flows when we change the RICE units' regulation capability assumptions. Obviously being allowed to provide up to full capacity provides a more preferred cash flow. It should be noted that the impact to cash flow with the 0% Regulation Capacity is relatively small and the potential downside risk of the regulation market saturation is mitigated. Overall, the RICE units by themselves are roughly at break-even and if more weight is put on recent years, the cash flow could be estimated to become more positive. Regardless of the cash flow for DEC as a standalone, the RDP-DEC Strategies is the least cost option for DME with the renewable PPAs being the largest contributor, as shown in Figure 7 (Base Scenario Cumulative 32 1 brattle.com Regulation Profile Year Scenario Capability 2012 2013 2014 2015 Average 0% $ (8,163) $ (6,906) $ 78,751 $ 163,265 $ 56,737 Base 20% $ (98) $ 1,192 $ 89,074 $ 175,784 $ 66,488 Scenario 100% $ 47,520 $ 49,002 $ 150,026 $ 249,701 $ 124,062 Average $ 13,086 $ 14,430 $ 105,950 $ 196,250 $ 82,429 0% $ (82,445) $ (86,621) $ (21,423) $ 34,886 $ (38,901) Low Gas 20% $ (76,311) $ (80,595) $ (13,703) $ 44,070 $ (31,635) Scenario 100% $ (40,089) $ (45,014) $ 31,880 $ 98,291 $ 11,267 Average $ (66,282) $ (70,744) $ (1,082) $ 59,082 $ (19,756) Overall, the RICE units by themselves are roughly at break-even and if more weight is put on recent years, the cash flow could be estimated to become more positive. Regardless of the cash flow for DEC as a standalone, the RDP-DEC Strategies is the least cost option for DME with the renewable PPAs being the largest contributor, as shown in Figure 7 (Base Scenario Cumulative 32 1 brattle.com Cost and Savings ($000) Comparison) and Figure 8 (Low Gas Scenario Cumulative Cost and Savings ($000) Comparison). In addition to providing comparative economic benefits discussed above, the RDP-DEC Strategy reduces fossil fuel consumption and air emissions compared to the alternative of purchasing from the market. Table 8 (DEC Average Emissions) below compares the estimated RICE units' average emissions for the 20 year period (2019 – 2038) simulated by profile years (2012, 2013, 2014, and 2015) against the actual historical average of ERCOT for 2012 through 2015. The RICE units produce a significantly lower amount of air emission compared to purchasing from the ERCOT market. For example, if one RICE unit generates 33,000 MWh (approximately 20% capacity factor) in a given year, the corresponding reduction of air emission will be approximately 27 tons Of SO2, 15 tons of NOx, 10 tons of VOC, and over 3,300 tons of CO2. Year/Pollutant 2012 2013 2014 2015 Average SO2- RICE (Ibs/MWh) 0.005 0.005 0.005 0.005 0.005 SO2- ERCOT (Ibs/MWh) 2.000 1.800 1.800 1.600 1.800 NOx - RICE (Ibs/MWh) 0.081 0.081 0.082 0.083 0.082 NOx - ERCOT (Ibs/MWh) 1.100 1.000 1.100 1.000 1.050 VOC- RICE (Ibs/MWh) 0.151 0.151 0.151 0.153 0.151 VOC- ERCOT (Ibs/MWh) 0.891 0.782 0.864 0.843 0.845 CO2- RICE (Ibs/MWh) 1065.0 1065.1 1067.5 1082.0 1069.9 CO2- ERCOT (Ibs/MWh) N/A 1299.0 1307.0 1279.0 1295.0 Finally, the comparative economic benefit values discussed above assumes that DEC enables the renewable PPAs. However, DEC does require a $220 million investment and that raises the question of alternatives to the DEC as part of the RDP.20 The next section will discuss the necessity of DEC and potential alternatives to DEC and their indicative costs. The largest benefit of RDP is from the renewable PPAs enabled by the DEC. DEC hedges the largest risk DME faces with the RDP—the variability of renewable resources. Can the variability be hedged through alternative means, such as through contracts or by simply relying on the ERCOT market to provide the needed flexibility through Real -Time energy and ancillary 20 There are risks associated with investing $220 million. Potential risks include short-term changes in exchange rates, and in municipal bond rates for financing the DECs. In the longer-term, DME faces the risk that market revenues may not be as high as projected. 33 1 brattle.com services? We address these questions by first assessing the quantity of flexibility needed, then review the DEC and alternative options. Table 9 (Net Load Variability) below compares the estimated net load (i.e., load minus renewable generation) variability for 2019 between Status Quo and the RDP plan. This metric measures the combined effect of load variation and variable renewable output that DME must plan for. We see that adding the various renewable resources will increase the flexibility needs by more than three times.zl Assumed 2019 Conditions Max Hour -to -Hour Net Load Variability (MW) Status Quo 39 With RDP and Renewable PPAs 123.2 Figure 11 (Hourly Net Load and Ramping Needs) below shows the estimated hourly DME load (blue line), production from the various renewable resources (red line), and DME's effective net load (green line) for May 21St, 2019. 21 Table 9 (Net Load Variability) is calculated based on hourly profiles (estimated hourly load and production from renewable resources for 2019 provided by DME), and therefore the maximum net load variability on a minute -by -minute basis will likely be higher than what is shown here. 34 1 brattle.com 250 200 150 100 so o_ .50 1 2 3 4 5 6 7 8.. 9 10 11 12 13 14 fly 16 17 13 1.9 20 21 22 23 24 This figure shows several contiguous hours of ramping needs, starting around hour ending 15 when production from renewable resources surge and net load drops to be negative, followed by around hour ending 17 when the production from renewable resources drop and the net load surges. These events are followed by another surge in production from renewable resources around hour ending 21. These ramping events, which in this example fluctuate by over 120 MW, need to be addressed by DME in both planning and operation as the generation portfolio changes to include large amounts of renewable resources. In the Day -Ahead timeframe, DME needs to schedule its operation for the next day based on this estimated net load (green line in Figure 11). In the Real -Time timeframe, DME needs to respond to any deviations of renewable production (red line in Figure 11) from its forecast and resulting change in net load (green line in Figure 11). DEC's ability to provide power quickly when needed allows DME to address these flexibility needs. This Back-up Power option provides a physical hedge against the variability of the renewable resources in both the Day -Ahead and Real -Time. If DME wishes to secure all the flexibility needs as indicated in Table 9 (Net Load Variability) from DEC, DEC will need at least nine RICE units assuming the full range of flexibility is available from all units when needed. A 35 1 brattle.com larger number of units may be preferable to account for the fact that some units' flexibility may be restricted because it is providing energy or experiencing outages at any given time." There are several alternative options including seeking contracts or simply relying on the ERCOT market without any hedging. Having no new hedge—an extreme alternative to DEC—ties the City of Denton and DME to Gibbons Creek—the primary source of generation flexibility today. However, the flexibility from Gibbons Creek is limited and is just enough to cover today's net load variability. In the future, when net load variability increases with increased renewable resources, having no hedge is not a viable option. It immediately exposes DME to the more volatile Real -Time market that can result in higher rates for DME customers. Figure 12 (ERCOT High Price Hours) below shows the prices for the top 5% hours from 2011 through 2014 and the frequency of high priced hours during these years .21 The Operating Reserves Demand Curve implemented by ERCOT in June 2014 allows energy prices to jump up to $9,000/MWh at any given time when operating reserves become scarce, indicating that future energy prices may be more volatile than what was observed in the past.24 Furthermore, DME's QSE status, which has produced savings of several million dollars a year ($13.5 million in its first year and less in the following years), can be jeopardized. ERCOT can revoke DME's QSE status if DME cannot meet operating criteria. If QSE status were lost, realizing the RDP goals (increasing renewables, reducing fossil fuel usage and air emissions, while not raising customer rates) would become more difficult and costlier because DME will have to pay an external QSE to manage the generation portfolio. 22 Each RICE unit can provide about 15 MW (80% of its 18.75 MW capacity) of flexibility. Although the net load variation can go up or down, we anticipate that downward variability can also be controlled by curtailing some renewable resources and therefore not need to double the flexible capacity. 23 With the exception of 2011—a year with extreme temperature variations —we see that the number of high priced hours increasing between 2012 and 2014, with 2014 being significantly larger than 2012 or 2013. Source: Potomac Economics, LTD., 2014–ERCOT–State–of–the–Market – Report, available at https://www.potomaceconomics.com/uploads/ercot_documents/2014_ERCOT_Stte_of the_Market_ Report.pdf 24 The ERCOT market is designed to have these high priced hours so generators can collect their investment costs. Without the high priced hours, the market may not be sustainable in the long -run. 36 1 brattle.com Currently there are no real hedging mechanisms that are provided directly through the ERCOT markets and therefore the valuation of such hedge needs to rely on arms -length contracts of similar kinds. Firming contracts of renewable resources can potentially replace part of the hedging functions provided DEC. However, most firming contracts are for a fixed quantity and do not provide the load following capabilities provided by DEC. Only if the load served by DME is a fixed quantity for all hours (i.e., flat load), could firming contracts entirely replace the hedges provided by DEC. DME has an ongoing contract with NextEra that firms the power from wind resources. This contract supplies DME with a constant quantity of power, regardless of the wind conditions. The premium for firming is approximately 66% higher than without firming (without firming is about 40% cheaper than with firming). This premium equates to the actual power procured for firming purposes to be priced above $60/MWh, illustrating how expensive the back-up power is. By comparison the marginal production cost of the RICE units are approximately between $25/MWh and $40/MWh today, depending on the operation level (full load is more efficient than at partial load) and natural gas prices (assumed to be in the $3/MMBtu—$4/MMBtu range today). The NextEra contract indicated firming renewable power costs about 66% more (i.e., without firming the cost goes down by 40%). If we conservatively assume the future cost of firming 37 1 brattle.com $5,000 $4,500 'wear' Frequency of High Paced Hours 2011 .-. $4,000 2011 _ >$100 >5207>$30D 219 124 89 2012 $3,500 2012', 93 31 172013, 20113 UA Ski 2[7 CL $3,000 2014 193 63 34 -2.014 $z,Soo o. $2,000 $1,500 u '$1,000 LU $500 ., $4 0 100 200 300 400 Hours Currently there are no real hedging mechanisms that are provided directly through the ERCOT markets and therefore the valuation of such hedge needs to rely on arms -length contracts of similar kinds. Firming contracts of renewable resources can potentially replace part of the hedging functions provided DEC. However, most firming contracts are for a fixed quantity and do not provide the load following capabilities provided by DEC. Only if the load served by DME is a fixed quantity for all hours (i.e., flat load), could firming contracts entirely replace the hedges provided by DEC. DME has an ongoing contract with NextEra that firms the power from wind resources. This contract supplies DME with a constant quantity of power, regardless of the wind conditions. The premium for firming is approximately 66% higher than without firming (without firming is about 40% cheaper than with firming). This premium equates to the actual power procured for firming purposes to be priced above $60/MWh, illustrating how expensive the back-up power is. By comparison the marginal production cost of the RICE units are approximately between $25/MWh and $40/MWh today, depending on the operation level (full load is more efficient than at partial load) and natural gas prices (assumed to be in the $3/MMBtu—$4/MMBtu range today). The NextEra contract indicated firming renewable power costs about 66% more (i.e., without firming the cost goes down by 40%). If we conservatively assume the future cost of firming 37 1 brattle.com renewables to be about 40% more, the RDP energy from renewables per year would cost over $17 million per year for the firming premium alone.25 Note that the NextEra type of firming contracts will not provide all of the additional benefits of owning the DEC discussed earlier. These benefits include the Day-Ahead/Real-Time optimization benefits ranging from nearly $3 million to over $10 million a year totaling $130 million in 20 years under the Base Scenario, the potential net revenues from the RICE units that is about half of the Day-Ahead/Real-Time optimization benefits over 20 years, and the reduction of emissions that are not monetized and discussed in Table 8 (DEC Average Emissions). The firming contracts will also be for a fixed quantity so DME will still need other means to follow the load, which changes hour by hour, and day by day. Therefore contracting for flexibility will likely cost much more than DEC .26 Other technologies can also provide hedging. Potential technologies include demand-side participation and storage. Demand-side resources can provide Regulation services (many thermal loads can provide this service) and have some capability to deal with net load uncertainty, but only limited capacity is available. The experience of many jurisdictions indicates that 10% of peak load would be a very large penetration level of demand-side resources. All demand-side resources programs reduce but only a few increase demand. Thus these resources could partially address net load ramp up events (output from generators need to increase rapidly to balance demand) but would have limited ability to address net load down events. Finally, there are many demand-side measures, each with different characteristics. Many are voluntary actions taken by participants.27 DME would need direct control of these resources in order for them to provide the same services as the DEC and customers would have to be willing to give partial control of their 21 This is not extremely expensive. If the counter -party needs to provide firming through physical generators similar to the RICE units, the cost of providing firming would be in the $75/MWh to $90/MWh range. This assumes $25/MWh to $40/MWh variable cost ($3/MMBtu - $4/MMBtu natural gas prices with 8,300 Btu/kWh heat rate) and a $50/MWh fixed cost (assuming the RICE units carrying charge is $100/kW-year, or $100,000/MW-year, and operate at 23% capacity factor, which is roughly equivalent to running at full capacity for 2000 hours. Note that firming to follow load that changes over time will cost more than simply firming against a nominal quantity, as is the case with the NextEra wind contract. It is also questionable if such contracts are readily available at arms - length. 26 The firming contract counter -party will likely have a higher cost of capital than DME and therefore any contract that requires physical assets, including firming power, will likely cost more than DEC. 27 Demand response programs are usually implemented by contracts between a utility and demand response aggregators. 38 1 brattle.com devices to DME and to ERCOT. Thus, demand resources are at best a very limited source of hedging what DME needs. Storage today is very expensive. For example, battery technologies are still in the several thousand dollars per kW range, compared with approximately $1,000AW for RICE units.2' The longevity of batteries will depend on how and how often they are charged and discharged but are typically much shorter than the lifespan of the RICE units. In actual operation, storage must be charged—ideally with excess wind or solar because charging with fossil fuels is counterproductive. Charging by fossil fuel resources will simply increase fossil fuel usage and air emissions by roughly 20%-25% because of round-trip efficiency (losses in the charge -discharge cycle). Furthermore, batteries have limited energy storage capability–typically in the three to four hours range, and that may not be enough for DME with the large renewable portfolio. Even if these operational limitations are not an issue, DME will likely need over 100 MW of storage capacity to address the variability brought by the renewable resources. To put this quantity into perspective, the total capacity of utility -scale batteries with storage capacities of 2 -hours or more in the U.S. that is currently online or under construction is about 65 MW.29 Battery storage at the levels needed by DME is not practical or economic today.30 A few cities around the country have targeted 100% renewables. This can mean one of two things: 1) having renewables under contract equal to expected average annual customer demand; or 2) having sufficient renewables under contract to meet customer demand in every hour so that no fossil fueled -generation is ever used. Option 1 is less restrictive than option 2 because option 1 allows fossil -fueled plants to provide energy when renewable output is low. Two of the cities seeking to be 100% renewable are Georgetown, TX and Burlington, VT. We will discuss Georgetown later in this section. Burlington has a very different resource base than 28 DOEXPRI 2013 Electric Storage Handbook in Collaboration with NRECA. Battery costs vary greatly by size, technology and storage capacity. 29 DOE Global Energy Storage Database, accesses June 1, 2016. 30 Many Compressed Air Energy Storage or Liquid Air Energy Storage technologies ultimately use natural gas as a fuel in the discharge cycle. These technologies therefore have carbon emissions even if they are charged with renewable energy. If they are charged with fossil -fired generation, the charge - to -discharge cycle losses can result in significant carbon emissions in addition to the direct carbon emissions from the use of natural gas in the discharge cycle. 39 1 brattle.com Denton or Georgetown. It has hydro, biomass and wind.31 Hydro output can be controlled to match load. Hydro can also be used for storage. Biomass is dispatchable like a gas plant. Thus, Burlington has only a limited amount of variable output resources in its portfolio; while all of Denton's renewable power will be variable. The only way to have 100% renewable power from wind and solar with no fossil -fueled generation while maintaining reliability is to contract for a great deal more capacity than is actually needed to serve customers' expected demand. For DME to have no reliance on anything but renewable power, it would need to contract for many times its peak load to ensure that under the most adverse wind and solar conditions that can occur, the portfolio of PPAs would still provide enough power to meet the citizens' of Denton's demand. Figure 11 shows the hourly output of the proposed 300 MW renewable PPAs and DME's expected hourly load over the course of a day in May 2019. During hour ending 19, when load reaches its peak level of 200 MW, PPA output is only 100 MW. During hour ending 3, when PPA output falls to its nadir of 25 MW, DME load is 110 MW. A simple calculation shows that to have enough power to cover demand during every hour of the day, DME would need several times more renewable power under PPA. During its peak demand hour (hour ending 19), DME would need 600 MW of PPA capacity under contract. To meet demand when PPA output is lowest (hour ending 3), DME would need more than 1,300 MW under contract. Of course, this analysis would have to be done for every 5- or 10 -minute interval of the year with a scaled up portfolio to determine how much power might be needed. In addition, a wide range of weather patterns would have to be evaluated. Under this hypothetical situation, DME would have much more energy than DME's demand. DME would become a very large seller in the ERCOT real time market. The EMO would not be able to sell forward under contract or in the Day -Ahead market. It would need to reserve all of its power for Denton's citizens until Real -Time, when it would either sell excess power into the Real -Time market or refuse to take excess purchased PPA power. Large quantities of storage would allow DME to store some of the excess power for later use. To ensure the storage system only relies on renewable energy, energy would need to be stored when PPA output exceeded DME load, as opposed to when storing was least expensive. Since the 31 Burlington is 50% hydro, 30% biomass and 20% wind. Source: SNL. 40 1 brattle.com storage system would be charged with renewable power, it would use no fossil fuel.32 The amount of storage required and the required hours of storage capability would need to be designed in conjunction with an analysis of DME's future load and the set of PPAs. If battery storage technologies become cost-effective and available in large scale systems, which they are not today, a true 100% renewable strategy will become feasible. Until then, a reliable 100% renewable strategy using this approach is simply not feasible. To achieve 100% renewables in terms of expected total energy (and rely on fossil generation to keep costs under control and maintain expected reliability standards) would still require DME to have much more power under contract than 70%. To reach a 70% renewable level, DME plans to sign PPAs for 300 MW of renewable capacity, which is at about 80% of the 2019 expected peak load. Based on the experience of Georgetown, TX, to achieve 100%, DME might need to contract for twice as much renewable capacity as its expected peak load.33 At that level, the firming requirements using RICE units or contracts will also be greater. While we have not analyzed the cost, a recent study found that reaching 100% renewable penetration can cost twice as much as achieving an 80% renewable target. 14 D. OTHER QUALITATIVE SI I In addition to the economic benefits identified above, there are other factors that should be considered qualitatively. The objective of this section is to assess these factors that were not analyzed quantitatively in the balance of this study. The analysis herein is primarily qualitative. The qualitative analysis considered includes the following: • Water Usage Limitations and Draught Risks • Hedging Market Operations/Execution Related Risks • Optionality Value for PPAs • Optimal Capacity of DEC 31 As noted above, many Compressed Air Energy Storage or Liquid Air Energy Storage technologies use natural gas as a fuel and could not be used as part of a 100% plan. 33 Georgetown's goal is 100% renewable energy. Details are limited but Georgetown plans to have about 294 MW of renewable PPAs for their 145 MW peak. 34 Flexibility mechanisms and pathways to a highly renewable US electricity future, Bethany A. Frew, Sarah Becker, Michael J. Dvorak, Gorm B. Andresen, and Mark Z. Jacobson, Energy, 2016.) 41 1 brattle.com In recent years, the ERCOT market has experienced moderate to rather severe drought conditions.35 In 2011, 98% of the state of Texas was in moderate to worse drought conditions, followed by 2012 when 85% of the state was in moderate to worse drought conditions. While the drought conditions occurred in these years had limited impact on power production from thermal generators, it did flag the potential of up to 3,000 MW of thermal resources potentially becoming impacted and raised concerns over the long -run, especially as the resource adequacy margin in ERCOT get tighter. The RICE units require very little water for operations (around 12 gallons a week for DEC, compared to more than 20 million gallons per week for a typical combined cycle plant) and will likely not be impacted even if severe drought conditions last for multiple years, as it has back in 1950 — 1957.36 Owning and operating DEC relieves DME from potential risks related to market operations and execution. For example, the forward curve for the upcoming season (especially the summer peak period when the prices are typically highest) may be in excess of what DME believes it to be. There is a risk of paying too much by accepting that high priced forward curve. The DEC would allow DME to stay limit forward purchases under these circumstances by using the DEC to limit exposure to potential high prices. In the future where the total variability of net load becomes higher with the increased renewable resources (as Figure 11 (Hourly Net Load and Ramping Needs) illustrates), having no other means to provide flexibility can potentially jeopardize DME's QSE status. ERCOT can revoke DME's QSE status if DME cannot maintain its Generation Resource Energy Deployment Performance. If DME's QSE status were to be lost, realizing the RDP goals (increasing renewables, reducing fossil fuel usage and air emissions, while not raising customer rates) will become a harder and costlier challenge because DME will have to pay an external QSE to manage the generation portfolio. 3s Source: 36 Source: 42 1 brattle.com As discussed earlier, the Gibbons Creek power sales agreement is scheduled to expire in 2018 and the four owners (cities of Bryan, Denton, Garland, and Greenville) can express their intent of extension or termination starting September 2016. Having DEC will provide DME with the optionality value regarding Gibbons Creek but also for other contracts including the renewable PPAs. Without DEC, the termination date of Gibbons Creek and starting day of other PPAs must be adjusted so that no gap exists. Furthermore, in the case that Gibbons Creek power sales agreement is extended, the current unfavorable regulatory policy surrounding coal units will likely lead the plant to retirement, requiring DME to seek alternative power sources again. The optimal capacity of DEC needs to be considered. As discussed earlier, a high level analysis of flexibility needs based on net load fluctuation indicates at least nine RICE units (and perhaps 10 or 11 if outages are accounted for). However, this analysis only looks at hourly data for a single year of 2019 and future load growth is not considered. The highest net load variability may also occur within an hour. And the analysis did not consider forecast deviations for the renewable resources. Furthermore, the net load variability will depend on the resource type and location, and vary by season and year. These factors suggest that nine units may not be enough to cover DME's operational needs. Also installing additional units in the future will necessarily disturb the operations of the existing (in the future) units. 17 12 RICE units provide a good balance from an operational perspective. At the same time, there are economies of scale for purchasing 12 RICE units compared to nine units. Two major cost components of the DEC are the RICE units by themselves and the "balance of plant." The balance of plant consists of land, gas pipelines, transmission lines to the plant and substations, buildings and controls, among other common equipment and facilities needed. The change in the number of RICE units does not significantly change the balance of plant costs. Quotes DME received from the vendor indicate that reducing the number of RICE units from 12 to six would only reduce the total price by 35%. Similarly, the incremental cost reduction from changing the total number of units by three (from the currently planned 12 to nine units) will only be around $30 to $35 million, rather than $55 million—a quarter of the $220 million 37 Gas pipeline interconnection needs are such examples. 43 1 brattle.com investment. This $30 to $35 million may only pay for one or two units if installed at a later time.38 These factors indicate that 12 RICE units provide a good balance from an economic perspective as well. Reducing the number of RICE units by three will impact two factors. First, the net -sales benefit (margins from the energy and ancillary services sold to the ERCOT market) will be reduced by approximately 25% (three out of 12 units). This indicates foregoing margins of approximately $70 (under the Low Gas Scenario) to $95 million (under the Base Scenario) generated by the RICE units over 20 years. Secondly, nine units may not be enough to keep up with changing future system conditions. The RDP includes additional renewable PPAs to be signed every five years as the DME demand grows. Table 10 (RICE Unit Count and Estimated Renewable Penetration Level) shows the estimated renewable level for the proposed RDP. The renewable penetration level for the RDP with 12 RICE units, shown in the second column, increases every five years (2024, 2029, and 2034) as new renewable PPAs are added ("post -2019 PPAs") to account for DME's growing demand. Increases in renewables through post -2019 PPAs and load growth will lead to more variability. It is unclear whether nine RICE units can adequately hedge such increased variability. If that uncertainty precludes signing the post -2019 PPAs, ratepayers will lose the expected savings associated with those PPAs. We estimate the PPAs would result in savings as high as $80 million over 20 years. Furthermore, Denton will not be able to achieve the 70% renewable goal in the long-term. The last column in Table 10 (RICE Unit Count and Estimated Renewable Penetration Level) below shows the estimated renewable level for Denton, if it is decided that 9 units cannot accommodate any post -2019 PPAs. 38 The average per-unit cost is slightly higher than $18 million when 12 units are installed (i.e. $220 million / 12 units = $18.3 million per unit). 44 1 brattle.com In short, developing only nine RICE units will reduce upfront capital costs by $30 to $35 million. However, we estimate that without the additional three RICE units, DME risks losing between $70 million and $175 million in future savings and potentially not achieving the RDP goals. 45 1 brattle.com Renewable Level (%) Year Current Plan Reduced Plan (12 RICE Units) (9 RICE Units) 2019 77.9% 77.9% 2020 76.4% 76.4% 2021 74.9% 74.9% 2022 73.4% 73.4% 2023 72.0% 72.0% 2024 77.6% 70.4% 2025 75.5% 68.4% 2026 ` 74.0% 67.1% 2027 72.6% 65.8% 2028 71.2% 64.5% 2029 76.3% 63.2% 2030 74.8% 62.0% 2031 73.3% 60.7% 2032 71.9% 59.6% 2033 ' 70.5% 58.4% 2034 76.2% 57.2% 2035 74.7% 56.1% 2036 73.3% 55.0% 2037 's 71.8% 53.9% 2038 s 70.4% 52.9% In short, developing only nine RICE units will reduce upfront capital costs by $30 to $35 million. However, we estimate that without the additional three RICE units, DME risks losing between $70 million and $175 million in future savings and potentially not achieving the RDP goals. 45 1 brattle.com �• -• Brattle has reviewed the City of Denton's plan to increase its reliance on renewable energy. The proposed RDP increases the City's physical renewable energy portfolio to 70% of energy served and significantly reduces costs relative to the status quo. DME achieves these outcomes under the RDP by entering long-term PPAs for low priced renewable energy, while developing the DEC to "firm" the power supply from these intermittent renewable resources. Contracting for renewable capacity will lower energy costs, but integrating a high level of intermittent resources creates operational challenges. As an ERCOT QSE, DME shares ERCOT's obligation to maintain system reliability. If it fails to do so, DME risks losing its current QSE status (estimated to be saving Denton's ratepayers several million dollars a year) and could face further financial penalties. To avoid risking its QSE status while increasing its intermittent renewable energy purchases, DME must either contract for responsive, dispatchable capacity or develop its own. The DEC would provide the sort of highly flexible capacity that DME needs to "firm" the intermittent renewable PPAs. Although the DEC requires substantial debt financing, profits from the sale of energy and ancillary services will likely cover most or all of the debt service. DME could contract for similar capacity from the market, but based on data from existing "firm" renewable PPAs that would likely cost more than the DEC over the 20 year study horizon. This makes the DEC an integral part of the RDP to provide cleaner, lower-cost power for the citizens of Denton. In analyzing the economic benefits of the RDP, this report compares three future Strategies the RDP-DEC Strategy in which the RDP with DEC achieves 70% renewable penetration, the SQ- TMPA Strategy in which the DME generation portfolio remains the same as the status quo including Gibbons Creek, and the SQ -Market Strategy in which Gibbons Creek is no longer part of the DME portfolio and DME purchases additional power from the ERCOT market. In both Status Quo Strategies, DME's renewable penetration level remains at the current 40% level, enabled by existing renewable PPAs and RECs. The report analyzes the Strategies using two different natural gas prices forecast from ERCOT's LTSA. The Base Scenario uses the LTSA reference case natural gas price forecast, and the Low Gas Scenario uses the LTSA low gas forecast, which effectively assumes the current low gas prices prevail in real terms for the foreseeable future. 46 1 brattle.com The analyses confirm the RDP-DEC Strategy is the most cost efficient option among the three Strategies. In the Base Scenario, the RDP-DEC Strategy costs $975 million less over 20 years than the SQ Market Strategy and $750 million less than the SQ-TMPA Strategy. In the Low Gas Scenario, the RDP-DEC Strategy costs approximately $410 million less over 20 years than either Status Quo Strategy. These results show that even at current natural gas prices, the RDP-DEC Strategy will reduce DME's costs. The RDP-DEC Strategy acts as a hedge against rising natural gas prices and yields even greater savings when gas prices rise. Both the renewable PPAs and the DEC are integral parts of the RDP. The DEC physically hedges the net load variability caused by the increased renewable resources that bring about the cost savings shown in the RDP-DEC Strategy. Without the DEC, or comparable flexible capacity, incorporating large amounts of intermittent resources would expose rate payers to the price volatility of the ERCOT wholesale energy market and jeopardize DME's economically important QSE status. An existing arms -length firming contract indicates the cost of obtaining comparable capacity from the market would be high. Based on this observation, the DEC is the lowest cost option for "firming" the renewable energy. Overall, the RDP-DEC Strategy appears to be the lowest cost and most reliable option for achieving the City of Denton and DME's goal of higher physical renewable penetration. It is important to note that DME needs to make changes to its ongoing electricity delivery services to customers without any disruption—either physical or financial—and therefore having physical options to hedge the renewable variability is important. Both the physical and financial factors indicate that the investment decision should not be delayed. Physically, DME needs generation resources in the near future, as the load grows (by approximately 2% per year) and the Gibbons Creek power sales agreement approaches its renewal time. Financially, the extended tax incentives for renewable resources and the historically low gas prices provide a favorable opportunity for signing renewable PPAs. These tax incentives will phase out starting in 2017 and various natural gas price forecasts indicate prices may begin to rise. Finally, the current exchange rate (US dollars against Euros) is favorable for purchasing the Europe -made RICE units. With all these factors considered, we find that the RDP is an effective strategy to increase Denton's clean, physical renewable energy while reducing its electricity costs. Because it is the cheapest option to "firm" the renewable PPAs, the DEC is an integral component of implementing the RDP while keeping costs at a minimum and complying with ERCOT's reliability standards. 47 1 brattle.com Appendix -A: Denton Energy Center Characteristics Appendix -B: Analyses Assumptions and Methods Appendix -C: Uncertainty for the SQ-TMPA Strategy 48 1 brattle.com The RICE units were assumed to have a minimum generation level of 3.75 MW (20% of full capacity). For future years, we assumed a heat rate degradation of 0.5% per year, which totals to 10% degradation over the 20 year period analyzed. This is higher than the 0.3% per year suggested by the manufacturer, making the results conservative. For ancillary services, consistent with the ERCOT market rules of today, we assumed that each RICE unit could provide 3.75 MW (20% of full capacity) of RRS and up to full capacity of NSRS. For regulation (RUS and RDS), we modeled the RICE units using three varying capabilities: • 100% Regulation Capability: The RICE units can provide regulation up to 100% of its capability (15 MW). • 20% Regulation Capability: The RICE units can provide regulation up to 20% of its capability (3.75 MW). • 0% Regulation Capability: The RICE units cannot provide any regulation (0 MW). The 100% Regulation Capability best represents the actual capability of the RICE units. However, the ERCOT regulation market is limited—it only requires 600 MW of regulation today. DEC's 12 RICE units can provide a combined 180 MW of regulation services (15MW * 12 units). Offering this amount in the relatively small regulation market may have impacts to market clearing prices. Therefore we assumed that on average, a RICE unit can only provide up to 20% of its capacity (3.75 MW) into the regulation market. This limits the total regulation services being provided by the 12 RICE units to 45 MW, and therefore assumes minimal price impacts. 49 1 brattle.com This Appendix summarizes the various assumptions and models used for the economic feasibility analyses. The economic feasibility analyses prepared hourly forward price curves from the natural gas forwards to assess the comparative benefits of the Status Quo Strategies and RDP- DEC Strategy, then further used the hourly forward curves to assess the performance of the RICE units. The RICE units' performance was assessed by dispatching the RICE units against the forward price curves. This was done through the PSO model, a production simulation tool. The forward natural gas price forecast from the ERCOT LTSA was used as an input to the Xpand model to produce a long term power price curve. Xpand is a linear programming model that simulates electric generation system expansion over multi -decade time horizons. Its objective function minimizes the present value of total system costs, including capital cost, fixed O&M, variable O&M, fuel and emission costs while meeting electricity demand and complying with environmental policy limits, operating reserve constraints and reserve margin constraints (where applicable). It is designed to operate as if all generation decisions are market-driven. As part of the cost -minimizing solution, Xpand produces forecasts of short-term and long-term decisions such as new capacity additions, retirements, generation and fuel mix levels, and energy prices. Table APP -BI (Natural Gas Price Forecast) below shows the natural gas prices used and shown in Figure 3 (Historical and Forecasted Natural Gas Prices). 50 1 brattle.com Year Scenarios Base Low Gas 2017 $ 2.930 $ 2.930 2018 $ 2.981 $ 2.981 2019 $ 3.075 $ 3.075 2020 $ 3.534 $ 3.277 2021 $ 4.043 $ 3.444 2022 $ 4.520 $ 3.564 2023 $ 5.070 $ 3.631 2024 $ 5.220 $ 3.676 2025 $ 5.405 $ 3.722 2026 $ 5.650 $ 3.769 2027 $ 5.800 $ 3.816 2028 $ 5.975 $ 3.863 2029 $ 6.095 $ 3.912 2030 $ 6.195 $ 3.961 2031 $ 6.505 $ 4.010 2032 $ 6.830 $ 4.060 2033 $ 7.155 $ 4.111 2034 $ 7.500 $ 4.162 2035 $ 7.820 $ 4.214 2036 $ 8.130 $ 4.267 2037 $ 8.430 $ 4.320 2038 $ 8.725 $ 4.374 The power price forecast from Xpand corresponds to Day -Ahead prices, which we shaped using historical hourly prices for both Day -Ahead and Real -Time. Xpand operates on a seasonal basis using load duration curves and provides projected prices for 72 tranches per future year; these prices reflect the average across all the hours that are in a particular tranche. We calculated the historic average Day -Ahead price for the hours in each tranche. We then multiplied the historic Day -Ahead price for each particular hour by the ratio of the projected average tranche price and the historic average tranche price. We further adjust this price by inflation to get a final Day -Ahead price. We then applied the historical Real -Time and Day -Ahead price ratio to this final Day -Ahead price to derive the Real -Time price. 51 1 brattle.com To account for varying market conditions, we prepared four distinct hourly power price forecasts using price profiles from 2012, 2013, 2014, and 2015. Differences in these shapes reflect changes in market conditions, load, wind and solar output, generator and transmission outages, and other various factors. For each of the four power price forecasts, the Day -Ahead Xpand forward prices remain the same for each tranche, but the hour by hour Day -Ahead energy prices (largely driven by load conditions), the difference between Day -Ahead and Real -Time prices, and the difference between the various ancillary services prices (derived from the relationship with the energy prices), vary based on differences in the hourly price profiles from the four historical years (2012, 2013, 2014, and 2015). We also analyzed sensitivities based on the quantity of ancillary service the RICE units can provide, as discussed in Appendix -A (Denton Energy Center Characteristics). This is because assuming that all the 12 RICE units can provide their full capability of ancillary services to the market may over-estimate the benefits of DEC. Table APP -132 through Table APP -135 below lists the monthly average Day -Ahead and Real - Time power prices derived using the four different historical years' profiles for the two Scenarios, as shown in Figure 4 (Forward Power Price Curves). 52 1 brattle.com Profile Years Years 2012 2013 2014 2015 Average 2019 $ 30.49 $ 30.49 $ 30.49 $ 30.49 $ 30.49 2020 $ 33.79 $ 33.80 $ 33.83 $ 33.78 $ 33.80 2021 $ 37.53 $ 37.53 $ 37.53 $ 37.53 $ 37.53 2022 $ 40.94 $ 40.94 $ 40.94 $ 40.94 $ 40.94 2023 $ 44.93 $ 44.93 $ 44.93 $ 44.93 $ 44.93 2024 $ 46.24 $ 46.26 $ 46.28 $ 46.24 $ 46.26 2025 $ 47.93 $ 47.93 $ 47.93 $ 47.93 $ 47.93 2026 $ 50.21 $ 50.21 $ 50.21 $ 50.21 $ 50.21 2027 $ 51.79 $ 51.79 $ 51.79 $ 51.79 $ 51.79 2028 $ 53.60 $ 53.62 $ 53.64 $ 53.59 $ 53.61 2029 $ 54.95 $ 54.95 $ 54.95 $ 54.95 $ 54.95 2030 $ 55.76 $ 55.76 $ 55.76 $ 55.76 $ 55.76 2031 $ 58.70 $ 58.70 $ 58.70 $ 58.70 $ 58.70 2032 $ 61.48 $ 61.48 $ 61.53 $ 61.46 $ 61.49 2033 $ 64.89 $ 64.89 $ 64.89 $ 64.89 $ 64.89 2034 $ 68.01 $ 68.01 $ 68.01 $ 68.01 $ 68.01 2035 $ 70.63 $ 70.63 $ 70.63 $ 70.63 $ 70.63 2036 $ 72.34 $ 72.34 $ 72.42 $ 72.31 $ 72.35 2037 $ 73.56 $ 73.56 $ 73.56 $ 73.56 $ 73.56 2038 $ 75.10 $ 75.10 $ 75.10 $ 75.10 $ 75.10 52 1 brattle.com Years Profile Years Profile Years 2012 2013 2013 2014 Average 2015 Average 2019 $ 28.73 $ 29.28 $ 28.66 $ 29.39 $ 29.01 2020 $ 31.85 $ 32.45 $ 31.76 $ 32.63 $ 32.17 2021 $ 35.34 $ 36.03 $ 35.26 $ 36.18 $ 35.70 2022 $ 38.53 $ 39.29 $ 38.46 $ 39.46 $ 38.94 2023 $ 42.26 $ 43.11 $ 42.20 $ 43.31 $ 42.72 2024 $ 43.49 $ 44.39 $ 43.44 $ 44.65 $ 43.99 2025 $ 45.07 $ 46.00 $ 45.02 $ 46.19 $ 45.57 2026 $ 47.19 $ 48.19 $ 47.15 $ 48.38 $ 47.73 2027 $ 48.66 $ 49.69 $ 48.63 $ 49.90 $ 49.22 2028 $ 50.41 $ 51.45 $ 50.34 $ 51.74 $ 50.99 2029 $ 51.69 $ 52.74 $ 51.61 $ 52.95 $ 52.25 2030 $ 52.48 $ 53.52 $ 52.38 $ 53.75 $ 53.03 2031 $ 55.27 $ 56.33 $ 55.16 $ 56.58 $ 55.84 2032 $ 57.91 $ 59.01 $ 57.79 $ 59.37 $ 58.52 2033 $ 61.14 $ 62.29 $ 61.00 $ 62.57 $ 61.75 2034 $ 64.16 $ 65.29 $ 63.95 $ 65.60 $ 64.75 2035 $ 66.67 $ 67.82 $ 66.43 $ 68.16 $ 67.27 2036 $ 68.35 $ 69.46 $ 68.08 $ 69.94 $ 68.96 2037 $ 69.51 $ 70.64 $ 69.22 $ 71.02 $ 70.09 2038 S 70.96 S 72.14 S 70.67 S 72.51 S 71.57 Years Profile Years 2012 2013 2014 2015 Average 2019 $ 31.37 $ 31.37 $ 31.37 $ 31.37 $ 31.37 2020 $ 33.32 $ 33.32 $ 33.35 $ 33.31 $ 33.33 2021 $ 34.91 $ 34.91 $ 34.91 $ 34.91 $ 34.91 2022 $ 35.98 $ 35.98 $ 35.98 $ 35.98 $ 35.98 2023 $ 36.66 $ 36.66 $ 36.66 $ 36.66 $ 36.66 2024 $ 37.17 $ 37.18 $ 37.21 $ 37.16 $ 37.18 2025 $ 37.69 $ 37.69 $ 37.69 $ 37.69 $ 37.69 2026 $ 38.22 $ 38.22 $ 38.22 $ 38.22 $ 38.22 2027 $ 38.82 $ 38.82 $ 38.82 $ 38.82 $ 38.82 2028 $ 39.32 $ 39.32 $ 39.35 $ 39.30 $ 39.32 2029 $ 39.89 $ 39.89 $ 39.89 $ 39.89 $ 39.89 2030 $ 40.56 $ 40.56 $ 40.56 $ 40.56 $ 40.56 2031 $ 41.26 $ 41.26 $ 41.26 $ 41.26 $ 41.26 2032 $ 41.74 $ 41.75 $ 41.78 $ 41.73 $ 41.75 2033 $ 42.57 $ 42.57 $ 42.57 $ 42.57 $ 42.57 2034 $ 43.60 $ 43.60 $ 43.60 $ 43.60 $ 43.60 2035 $ 44.10 $ 44.10 $ 44.10 $ 44.10 $ 44.10 2036 $ 44.49 $ 44.50 $ 44.54 $ 44.48 $ 44.50 2037 $ 45.29 $ 45.29 $ 45.29 $ 45.29 $ 45.29 2038 $ 45.82 $ 45.82 $ 45.82 $ 45.82 $ 45.82 53 1 brattle.com Years Profile Years 2012 2013 2014 2015 Average 2019 $ 29.45 $ 30.11 $ 29.45 $ 30.18 $ 29.80 2020 $ 31.27 $ 31.98 $ 31.28 $ 32.10 $ 31.66 2021 $ 32.75 $ 33.50 $ 32.77 $ 33.57 $ 33.15 2022 $ 33.76 $ 34.52 $ 33.77 $ 34.60 $ 34.16 2023 $ 34.39 $ 35.17 $ 34.40 $ 35.25 $ 34.81 2024 $ 34.89 $ 35.68 $ 34.90 $ 35.81 $ 35.32 2025 $ 35.37 $ 36.17 $ 35.38 $ 36.25 $ 35.79 2026 $ 35.86 $ 36.68 $ 35.87 $ 36.76 $ 36.29 2027 $ 36.42 $ 37.26 $ 36.44 $ 37.34 $ 36.86 2028 $ 36.89 $ 37.74 $ 36.91 $ 37.87 $ 37.35 2029 $ 37.43 $ 38.29 $ 37.44 $ 38.36 $ 37.88 2030 $ 38.06 $ 38.94 $ 38.08 $ 39.01 $ 38.52 2031 $ 38.71 $ 39.60 $ 38.73 $ 39.68 $ 39.18 2032 $ 39.18 $ 40.07 $ 39.21 $ 40.22 $ 39.67 2033 $ 39.95 $ 40.86 $ 40.00 $ 40.94 $ 40.44 2034 $ 40.91 $ 41.85 $ 40.96 $ 41.93 $ 41.41 2035 $ 41.38 $ 42.33 $ 41.42 $ 42.41 $ 41.88 2036 $ 41.76 $ 42.71 $ 41.81 $ 42.86 $ 42.29 2037 $ 42.51 $ 43.48 $ 42.56 $ 43.57 $ 43.03 2038 $ 43.00 $ 43.99 $ 43.05 $ 44.07 $ 43.53 Prices for ancillary services, nominally RRS, NSRS, RUS, and RDS, were assumed to be proportional to the energy prices for any historical profile. Figure APP -Bl through Figure APP - B4 compares the energy prices and various ancillary service price ratios against the energy prices. 40% 35% 12 30% 25% is __ 20% a 15% 10% 5% 0% III Median 54 1 brattle.com mnz��= 40% 35% 30% L 25% 1 201yo 15% low, 5% 0% 40% 35% 30% L 25% 1 201y 15% lux, 5% 0% mm Median 823��= � Median Table APP -B6 (Historical Price Ratio — Ancillary Services/Energy) shows the statistics of the various ancillary service values, including those in the Figures above. These figures and table indicate that on average ancillary service prices were lowest (compared to energy prices) in 2012 and highest in 2015. 2013 overall showed the largest volatility although 2014 had higher volatility for RUS. 55 1 brattle.com Ancillary Service Type Profile Year Min Max Average Median A nci I lary Services 2012 2% 813% 27% 23% Real -Time 2013 4% 14313% 28% 23% RRS RDS 2012 $ 27.58 2014 0% 310% 32% 27% $ 2015 5% 1867% 39% 29% 31.86 2012 0% 98540 8% 5% 3.43 2013 1% 14313% 10% 5% NSRS 38.13 $ 36.26 11.27 $ 2014 0% 614% 11% 6% 2015 2015 1% 190% 17% 12% 9.96 2012 0% 292% 24% 21% 10.25 2013 0% 14315% 25% 20% RUS 2014 0% 19029% 29% 20% 2015 0% 1433% 35% 25% 2012 0% 929% 20% 18% 2013 0% 873% 19% 12% RDS 2014 0% 1383% 32% 20% 2015 0% 1746% 30% 17% Finally, Table APP -137 (Average Prices for the Four Profile Years) shows the average prices for energy, RRS, NSRS, RUS, and RDS for the four profiles. TableProfile Profile Energy A nci I lary Services Years Day -Ahead Real -Time RRS NSRS RUS RDS 2012 $ 27.58 25.19 $ 8.72 $ 3.63 $ 4.23 $ 8.94 2013 $ 31.86 $ 30.45 $ 8.13 $ 3.43 $ 4.89 $ 8.57 2014 $ 38.13 $ 36.26 11.27 $ 5.18 9.74 $ 12.43 2015 S 25.34 S 22.87 S 9.96 S 6.35 S 5.35 S 10.25 Power Systems Optimizer ("PSO") is an advanced production cost simulation tool developed by Polaris Systems Optimization, Inc. Traditional production cost models were designed to model controllable thermal generation and focus on the energy markets. PSO was built to focus on the variability needs of the current and future electrical system. The model is able to simultaneously optimize energy and multiple ancillary services markets on a sub -hourly timeframe. PSO also allows for the modeling of forecast uncertainty and uses mixed -integer programming techniques 56 1 brattle.com to solve the commitment and dispatch problem. The model is designed to mimic market operations software and market outcomes in competitive energy and ancillary services markets. Given PSO's unique features, we first analyzed the RICE units' performance by modeling the Day -Ahead market on an hourly basis and Real -Time market on a 5 minute basis for historical years of 2012, 13, 14, and 15. We also modeled the historical years' Real -Time on an hourly basis to see if the results were significantly different. This is because simulating 5 minute interval significantly increases the computational complexity and time required. Table APP -138 (Real - Time Simulation Results Comparison) below compares the two results for the four different historical profiles. As this table shows, modeling Real -Time on an hourly basis provides a slightly lower revenue outlook, mostly because it does not fully capture the units' capability of releasing NSRS and selling energy in Real -Time when the energy price is above $75/MWh, as ERCOT rules allow today. Given the small deviations showing conservative, we modeled the Real -Time on an hourly basis rather than on 5 -minute basis for all future years (2019 through 2038). As discussed earlier, the PSO simulations were repeated using four different historical year profiles to account for the variability in system conditions. Table !- Real -Time SimulationComparison Profile Years 2012 2013 2014 2015 Total All Years Total Annual Energy Revenues with Hourly Average RT Prices ($000): $ 2,082 $ 1,914 $ 2,929 $ 1,057 $ 7,983 Total Annual Energy Revenues with 5 - Minute RT Prices ($000): $ 2,140 $ 1,947 $ 2,998 $ 1,078 $ 8,164 Delta Hourly -5 Min ($000) $ (58) $ (33) $ (69) $ (21) $ (181) Percent Delta -2.7% -1.7% -2.3% -1.9% -2.2% Total RT adjustment for NS release with Hourly Average RT Prices ($000): $ 18 $ 163 $ 139 $ 87 $ 407 Percentage of Annual Energy Revenues: 0.9% 8.5% 4.7% 8.2% 5.1% Total RT adjustment for NS release with 5 - min Average RT Prices ($000): $ 76 $ 197 $ 208 $ 108 $ 589 Percentage of Annual Energy Revenues: 3.6% 10.1% 6.9% 10.09/0 7.2% Table APP -139 (REC Payments) below shows the REC payment schedule for the two Status Quo Strategies (SQ-TMPA Strategy and SQ -Market Strategy) and the RDP-DEC Strategy. REC 57 1 brattle.com purchases for thetwo Status Quo Strategies e tnJ beyond 22 when the current k£C purchase agreement e pirs k£C payments do no change b\ Scenario. Year Status Quo Futures RDGDEC Slee 2019 $ (\+$+q $ (\a8:£$ 2020 $ (1,904,631) $ (\a8: £$ 2021 $ (1,2$473) $ (1,382 £$ 20£ $ (1,962,894 $ (1,382£$ 2023 $ (1,22,90$ $ (\a8:£$ 2024 $ (2,02$+3 $ (\a8:£$ 2025 $ (1,910,63$ $ - 2oy $ (1,948,39 $ - 2027 $ (1,+7,98) $ - 2Ga $ (2,027,585) $ - 2o£ $ (2,78,137) $ - 2o+ $ (2,461,082) $ - 2031 $ (2,51¢304) $ - 2032 $ (2,56¢51$ $ - 2o£ $ (2,611,22$ $ - 2ok $ (%+$±W $ - 2035 $ (%#%a\ $ - 2SB $ (2,011,9$ $ - 2oy $ (2,97,01$ $ - a $ (2,883,550) $ - 58 Abe%scorn Under the Base Scenario, the SQ -Market Strategy shows higher costs than the SQ-TMPA Strategy. The comparative benefit of the SQ-TMPA Strategy over the SQ -Market Strategy is in excess of $230 million over twenty years. However, it is important to note that the SQ-TMPA Strategy cost may be higher than what is represented here. For example, Gibbons Creek may have to go comply with future environmental policies that are likely to be put in place. The most significant policy is likely to be a carbon policy. A recent study ERCOT study of EPA's Final Clean Power Plan examines two scenarios with carbon prices as shown in Figure APP -Cl (ERCOT CO2 Price Assumptions) below.39 _CO2 Price Scenario _CO2 CO2 Price & Regional. Haze Scenario $25.40 0 V 55.00 2422 2023 2424 2025 2426 2027 2028 2429 2034 Year Under the Low Gas Scenario—the down -side case—the RDP-DEC Strategy will provide a positive cash flow of over $400 million over twenty years, or over $200 million in net present value, when compared against either Status Quo Strategies Again, the SQ-TMPA Strategy may face higher costs as discussed above. 39 ERCOT Analysis of the Impacts of the Clean Power Plan - Final Rule Update, dated October 16, 2015, available at: http://www.ercot.com/content/news/presentations/2015/ERCOT_Analysis_of the_Impacts_of the_Cl ean_Power_Plan-Final_.pdf 59 1 brattle.com H N a� a� O N O U O \ '� a� U O U J t-4-4 -4241 41 4 H U N 4-j ct .4-j 9) U V n4- 4 ct a� a� 1 � � N N •� Q O 4.1 +, '4 N O +� cd } t O +� �d 4-� O -d U i (L) bJJ O 4= N O R1 U O y Ztl C:) a� O a" U 4-1 U rd p O O ;-4 a) a� O E3 N 7� N N 4-) CL4 c� N bblp O '5 O 75 u 7� a� c� ¢, s- i 4-) a� � � cn U u cn O ccn OU sU� O N bolo O 7� `� O cn 4- s., cn cn O (4-4a� �' cn (-4-4 N 0 N U blo � U a� "' O '� O U U U o O u W 0 ui 4u U U � � p v J O Uu D u O cd t d 4� U U Q 7 +� U O u t4-4 u ') U N p U 4� ;-4U YD t4-4 C 7� fn ^� U � M (t Lr) toe O u W 0 ui 0 • W �J 9 S �J 4� O •� U U � U O U O ) 75 bap p ¢ O U '5 C ¢ sal 4-J bJ0 U Ij �O 0) ar 1 1 1 HHIIp mH�ow0wm0wmp mm�o HHp c oom0101OrIM0WN0WN0W W H W 00 01 00 0 M m I 0 N m rI m 0 lA m 0 y fe lG C) i P I f6 $ P f6 6 1 1 Ol u1 u1 C) $ o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 m *) H N N N N N N N N N N N N N N N N N 1 4.0 0) 0 0 m m 0 0 w H I w 1 0 0 1 1 0 m OLnLno 3 a OIlDr1O0lDI11O0000Im0 000 1 N N 0NLnoo r NH I 1+ rl L6 N m N 0 0 rl N N i r6 0 N Ill Ill W rl rl r6 i fV 1 0 0 W 0 rl 1 r6 fV o N Ill 0 N N I 0 00 0 06 06 lG 0) 01 000000000000000000 N 0 m 11 00 y fM1 Z U 00 N N N N N N N N N N N N N N N N N m 0 Ol N H V N Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol Ol u1 o rl N qi rlrlrlrlrlHHHHHHHHHHHHm NN N C m C u ,m VI a v Ln 0' a Q a W lD r 11 0 m 0 0 1 0 0 00 0 01 0 1 1 0 m m 0 Ill 0 0 rl m N 0 0 Ill N 1 0 Ill m N 0 Ill 1 0 N 0 N 0 N 0 N minmr`n w « �woNoiojoi06dLi06r,�ui06r, R r` In 00mIm0wm010 OmmN udL6 o06rl i o v ar 00H000000H000000H0m N0000000000000000000 01NN 0 0 W VI C N Z,u N y 0U �01 0101010101 0101010101 0101010101 010 Or nlm "m"mF v>v rrrrrrrrrrrrrrrrrm NN N w,m, 6 0 o v u Q a a W :n Ln Q) L 'lO Q) v N W M 0 N M 1 0 W N W M 0 N M 1 0 W . 41rlrlrlrlNNNNNNNNNNmmmmmmm N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N \\\\\\\\\\\\\\\\\\\\\ N N N N N N N N N N N N N N N N 7vU 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 LL N Q) mmmmmmmmmmmmmmmmmmmmm mmmmmmmmmmmmmmmmmmmmm cvf0� Q3 oLro Ln 41 d U N 0 LL a� O tic U O ,� Lo �d O a� N ' � O � u Q) O cd U U u Ste" U O p u 4�N a� U Ste- �d 4� U cd cd Y +u � U �+ O v o o' U p 4-� 41 SOU U ;~ U -C4 O O ,u/�Oj �O O U Z 4-1 O cn Y) Ov U O C E E 0 N I O 00 n n m u 00 0 r.0 rl 0 m u r.0 io O C N rl O N 'a Il 0 i 0^j cmi -ii m u w N N •� c-1 ri u EA W '� M. 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Debt Service Reserve Fund Required for all bonds. Optional on a series by series basis. DSRF requirement equal to average annual Can combine multiple series under a single debt service on all outstanding bonds. DSRF if desired. Option to fund at closing with bond proceeds DSRF requirement used may be any amount or over time with revenues as determined at the time of bond issuance (average annual debt service, one-half average annual debt service, fixed amount, etc.). Option to fund at closing with bond proceeds or over time with revenues. Option to fund with surety bond, letter of credit or other credit facility. Extension and Improvement Fund Extension and Improvement Fund required to Not required. be maintained for the purpose of paying capital improvements and for unexpected or extraordinary repairs, replacements or O&M for which other System funds are not available. Must make annual deposit of at least 8% of Adjusted Gross Revenues (gross revenues less fuel costs for electric energy production and costs of electric energy purchases). Emeruncy Fund Emergency Fund of $250,000 required to be Not required. maintained for the purpose of paying unexpected or extraordinary repairs, replacements or O&M for which other System funds or funds in the Extension and Improvement Fund are not available. Rate Stabilization Fund Each year, the City must transfer an amount from the RSF to the System Fund sufficient for the City to meet the Rate Covenant. Amount to be transferred from RSF has to be included in the annual budget for each fiscal year and transferred on the first day of the fiscal year. No other use of money in RSF allowed. June 11, 2016 City may transfer money in RSF to the System Fund at any time during fiscal year for the purpose of enabling the City to meet the Rate Covenant for that fiscal year Money in RSF may also be used to pay costs of capital additions and improvements, or any other lawful purpose. Rate Covenant Net revenues in each fiscal year at least equal to the greater of (1) 1.25x average annual debt service for all outstanding bonds, and (2) 1.25x the succeeding fiscal year's actual debt service requirement. Net revenues in each fiscal year at least 1.00x annual debt service for all outstanding bonds. Additional Bonds Test May issue additional bonds if net revenues for preceding fiscal year or 12 months out of prior 18 months are at least (1) 1.25x average annual debt service requirements, and (2) 1.1Ox maximum annual debt service, in each case after issuance of the additional bonds. May assume rate changes in effect for part of the fiscal year/12 month calculation period effective for the entire period. May issue additional bonds if one of the following two tests are met: 1. Historical Net Revenue Test Net revenues for preceding fiscal year or 12 months out of prior 15 months are at least (A) 1.25x average annual debt service requirements, or (B) 1.1Ox maximum annual debt service, in each case after issuance of the additional bonds. June 11, 2016 All bonds must mature on December 1. 2. Projected Net Revenue Test for Capital Addition (1) net revenues for preceding fiscal year or 12 months out of prior 15 months are at least (A) 1.25x average annual debt service requirements, or (B) 1.1Ox maximum annual debt service on then outstanding bonds (not including the additional bonds), and (2) projected net revenues for each of the 5 years after new project becomes operational are at least (A) 1.25x average annual debt service requirements, or (B) 1.1Ox maximum annual debt service on then outstanding bonds and additional bonds issued to finance the project. For either test, may assume rate changes in effect for part of the fiscal year/12 month calculation period effective for the entire period. No requirement that all bonds mature on a particular date. Subordinate Lien Bonds Subordinate lien bonds may be issued but Subordinate lien bonds may be issued with debt service only payable after I&S Fund, debt service payable periodically during the DSRF, Extension and Improvement Fund and fiscal year after periodic transfers to I&S Emergency Fund fully funded for the fiscal Fund and DSRF. year. Investments Investment of money in the various funds Authorized investments includes any generally limited to certificates of deposit and investments allowed under state law. U.S. or U.S. agencies. h:\special projects\bond issuance info\dme generation\dme denton renewable plan resolution.docx RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS REGARDING THE PROPOSED "RENEWABLE DENTON PLAN" ADOPTED AS AN INTEGRAL PART OF PROVIDING ELECTRIC SERVICE TO RATEPAYERS IN THE DENTON MUNICIPAL ELECTRIC SERVICE TERRITORY. WHEREAS, the City Council of the City of Denton, Texas has previously directed the City of Denton's electric department, Denton Municipal Electric ("DME"), to develop a comprehensive plan to increase the amount of renewable energy in DME's energy portfolio, while at the same time, maintaining competitive rates and maintaining reliable electric power; and WHEREAS, DME has diligently examined and re-examined numerous possible scenarios for increasing the amount of renewable energy in DME's portfolio and has presented projected rate impacts and reliability issues, as well as the risks that are associated with each scenario; and WHEREAS, after extensive briefings by DME staff, considerable discussions and deliberations of the City Council, this "Renewable Denton Plan" ("RDP") information was first publicly presented to the citizens of Denton and the DME ratepayers by means of a press conference held on October 6, 2015. This press conference was followed by DME's development and implementation of an information website and comment form. DME has conducted open house meetings on October 19, 2015 and October 27, 2015; a Public Hearing was held by the Public Utilities Board ("PUB") on December 14, 2015; and WHEREAS, the City Council in an effort to provide an opportunity for discussion by the public and to gather more information for itself about the RDP, Council conducted a Work Session, a Public Hearing and a Closed Meeting on December 15, 2015; a Work Session followed by a Closed Meeting was held on January 4, 2016; a Closed Meeting was held on January 12, 2016 by the Council; a Work Session and a Closed Meeting were held on January 26, 2016 by the Council; a Public Meeting was held on Saturday, January 23, 2016, after notice, in order to provide members of the public an opportunity to ask questions and receive answers from subject matter experts; a Work Session was held on February 1, 2016 by the Council; and a Work Session was held on February 16, 2016 by Council; and the Council at that time recommended that a reputable outside consultant be selected by the City Manager, with the advice and consent of the Council in order to provide a disinterested assessment of the RDP; and WHEREAS, thereafter, on March 22, 2016, on its Consent Agenda, the Council considered and approved a Professional Services Agreement with The Brattle Group, Inc. for consulting services to examine and to study and analyze the RDP; and WHEREAS, on May 24, 2016 the Council conducted a Closed Meeting regarding the RDP; the Brattle Group presented a draft of its report to the Council in early June 2016, and an Executive Summary of the draft report was made public on June 7, 2016; on June 7, 2016, the Council held a Work Session and received the draft report of the Brattle Group and a presentation from The Brattle Group staff regarding the RDP; and later held a Closed Meeting on that date; the Council then additionally agreed to hold a Work Session on June 14, 2016 to discuss said RDP, particularly the issues of the methods of financing the RDP; and the Council, on June 21, 2016 considered the RDP; and hAspecial projects\bond issuance info\dme generation\dme denton renewable plan resolution.docx WHEREAS, the Public Utilities Board, as the duly -appointed citizen's Board by the City Council to consider all matters pertaining to utility operations, after considering all public comment and having heard and considered the recommendations of DME staff, by a vote of 7-0, recommended approval of the "Renewable Denton Plan" to the City Council at the PUB's Closed Meeting of December 14, 2015; the Public Utilities Board was in attendance for the Joint Meeting of the Council and the PUB on June 7, 2016; and WHEREAS, the City Council, after considering all of the relevant facts and circumstances, is of the opinion that the "Renewable Denton Plan" will enable DME to supply power to the City of Denton, Texas in such a way which maintains Denton's position as a national leader in the area of renewable energy, while having a positive effect on emissions, as well as a positive effect on electric rates as well as providing electric reliability to the ratepayers of the City; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The recitals which are set forth in the preamble of this Resolution are incorporated herein and are made a part of this Resolution for all purposes. SECTION 2. The City Council hereby approves the "Renewable Denton Plan," which includes the following elements: 1. Achieve seventy (70%) percent renewable energy for all DME ratepayers through the execution of Power Purchase Agreements from varying sources of wind and solar power by 2019; 2. Financing as necessary and appropriate for the construction of two quick -start generation facilities; 3. Secure necessary environmental permits for implementation of the Renewal Denton Plan. SECTION 3. Nothing expressed herein shall be deemed to limit the City's use of renewable energy in the future, to the amount of seventy (70%) percent of its load, as the City Council specifically recognizes and endorses the maximum use of renewable energy, while continuing to offer competitive electric rates and electric reliability to its customers. SECTION 4. This resolution shall take effect immediately from and after its adoption. PASSED AND APPROVED this the day of , 2016. ATTEST: JENNIFER WALTERS, CITY SECRETARY CHRIS WATTS, MAYOR Page 2 h:\special projects\bond issuance info\dme generation\dme denton renewable plan resolution.docx APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY :• Page 3 City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON Legislation Text File #: ID 16-692, Version: 1 Agenda Information Sheet SUBJECT Consultation with Attorneys - Under Texas Government Code, Section 551.071 Consultation, discussion, deliberation and receipt of information from the City's attorneys involving legal matters relating to A -I American Fence Incorporated's appeal to the award of a contract for substation precast security fences for the City of Denton, and to provide the City's attorneys with direction, where a public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton Page 1 of 1 Printed on 6/10/2016 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 16-696, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Discuss, deliberate, and give staff direction regarding the Renewable Denton Plan, including public power competitive and financial matters pertaining to plans, strategies, opportunities, and developments for generation improvements to the DME system; discuss and deliberate strategies regarding same; discuss and deliberate opportunities and strategies for the City to acquire purchased power and enter into agreements regarding the same, in order to meet its future energy needs. City of Denton Page 1 of 1 Printed on 6/10/2016 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 16-754, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Consultation with Attorneys - Under Texas Government Code Section 551.071. Consult with the City's attorneys regarding the present status of pending litigation entitled: The City of Denton, Texas v. NRG Power Marketing LLC, et al, Cause No. 15-01404-16, now pending before the 16th Judicial District Court in and for Denton County, Texas; discuss, deliberate and provide the City's attorneys with direction and any recommendations regarding such legal matter. A public discussion of this legal matter would conflict with the duty of the City's Attorneys to the City of Denton, Texas under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton Page 1 of 1 Printed on 6/10/2016 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 16-765, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations Regarding Certain Public Power Utilities: Competitive Matters - Under Texas Government Code Section 551.086. Receive a presentation from staff regarding public power competitive and financial matters related to the City's participation in, and the overall operational and financial aspects of, the Texas Municipal Power Agency; discuss and deliberate strategies regarding same; discuss, deliberate and provide staff with direction. [TMPA] City of Denton Page 1 of 1 Printed on 6/10/2016 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 16-282, Version: 1 Legislation Text AGENDA INFORMATION SHEET DEPARTMENT: Materials Management ACM: Bryan Langley AGENDA DATE: June 14, 2016 SUBJECT Consider adoption of an ordinance accepting competitive proposals and awarding a public works contract for construction of Substation Pre -Cast Security Fences for Denton Municipal Electric; providing for the expenditure of funds therefor; and providing an effective date (RFP 5963 -awarded to Walsh's Hawk Construction Company, LLC in the three (3) year not -to -exceed amount of amount of $6,200,000). The Public Utilities Board recommends approval (5-0). RFP INFORMATION Denton Municipal Electric (DME) has several substation projects approved in its five (5) year Capital Improvement Plan (CIP). Recent CIP projects have included precast concrete security/screening fences, with three of those projects successfully completed by Walsh's Hawk Construction Company. RFP 45963 was prepared to solicit proposals for the construction of security fences during the next three (3) years. Construction of the precast concrete fences is necessary to provide the required perimeter security for the substations. The substation fences will be constructed using Verti-Crete precast concrete panels. The panels will be supported by concrete columns mounted on engineered pier foundations. The panels will have a Ledge Stone pattern. The columns will have an Ashlar Stone pattern. The panels and columns will be permanently stained with colors previously selected by DME staff and will match existing precast fences. The estimated total length of fence construction required for the next three (3) years is 27,500 linear feet. The average substation fence will be approximately 1500 to 2500 linear feet. The perimeter fences will be 10 feet in height and do not include gates. Gates will be procured and installed separately. Request for Proposals were sent to 485 prospective suppliers. Three (3) proposals meeting the minimum qualifications were received. The committee reviewed each proposal and determined that Walsh's Hawk Construction Company (Walsh's Hawk) provided the best value. Although Walsh's Hawk was not the lowest cost proposal, they provide the shortest delivery time at only 42 days. The quick delivery assists in DME meeting their construction timelines. In addition, Walsh's Hawk has provided quality construction on four (4) previous projects with the City. The lowest cost firm has not completed a project with the City, and proposed a wall construction type that isn't as flexible as the solution provided by Walsh's Hawk. A Best and Final Offer (BAFO) was requested from the highest ranked proposer, Walsh's Hawk Construction Company, LLC. The BAFO resulted in a three (3) year estimated savings of $33,752 (Exhibit 1). PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) City of Denton Page 1 of 3 Printed on 6/10/2016 povveied by I_egivt9i IN File #: ID 16-282, Version: 1 On February 22, 2016, the Public Utilities Board recommended approval to forward this item to the City Council for consideration. On March 1, 2016, City Staff was prepared to make an award recommendation, however, one of the RFP proposers, A-1 American Fence, LLC, notified the City Council that it was filing a formal protest as against City Staff's award recommendation. A- I's formal protest, as well as its appeal to the City Manager, were denied. Now, this award recommendation may proceed to City Council for its consideration. RECOMMENDATION Award to Walsh's Hawk Construction Company, LLC in the three (3) year not -to -exceed amount of amount of $6,200,000. PRINCIPAL PLACE OF BUSINESS Walsh's Hawk Construction Company, LLC Princeton, TX ESTIMATED SCHEDULE OF PROJECT This is an initial one (1) year contract with options to extend the contract for two (2) additional one (1) year periods, with all terms and conditions remaining the same. FISCAL INFORMATION The costs for services provided under the proposed agreement will be funded out of amounts budgeted for specific CIP projects. The majority of work proposed will be in the transmission category. Therefore, these costs for transmission projects will ultimately be recovered through the Public Utility Commission of Texas, Transmission Cost of Service Program (TCOS). Separate purchase orders will be issued for each individual project based upon the unit prices and the engineer's estimate of the work required for each project site. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Public Infrastructure Related Goal: 2.3 Promote superior utility services and facilities EXHIBITS Exhibit 1: Evaluation/Ranking sheet Exhibit 2: Public Utilities Board Draft Minutes Exhibit 3: Ordinance City of Denton Page 2 of 3 Printed on 6/10/2016 povveied by I_egist9i I;, File M ID 16-282, Version: 1 Exhibit 4: Contract Respectfully submitted: Chuck Springer, 349-8260 Director of Finance For information concerning this acquisition, contact: Chris Lutrick at 349-7152. City of Denton Page 3 of 3 Printed on 6/10/2016 povveied by I_egist9i I;, a cq �, F w va va va va va va va va va va va va va Fn � ;� W eL' G a a w F w U1. a n N 000 0 0 io 0 O W a Q O d 9 r T F k W U O v CC� co co 6 6 Ir M -5 n q p, P. N '^4MIIn W .z gz co co 16 W P h � a O U F d k � C � o .d p o x W G 0 'zt19 z N b h a 9 a _ m CL c yy ° ° N uo ry N > CUC z uu b F F o 3 ¢ a p saa 9 Iz C o o zzt N a ¢ ¢ F F a U U � zz zz 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 EXHIBIT 2 DRAFT MINUTES PUBLIC UTILITIES BOARD February 22, 2016 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on Monday, February 22, 2016 at 9:01 a.m. in the Service Center Training Room at the City of Denton Service Center, 901 A Texas Street, Denton, Texas. Present: Chair Randy Robinson, Vice Chair Phil Gallivan, Charles Jackson, Barbara Russell, and Brendan Carroll Absent: Susan Parker and Lilia Bynum Ex Officio Members: George Campbell, City Manager; Howard Martin, ACM Utilities OPEN MEETING CONSENT AGENDA A. PUB16-039 - Receive a report, hold a discussion, and give staff direction regarding a recommendation that the City Council approve a contract with Walsh's Hawk Construction Company, LLC, a limited liability corporation, Princeton, Texas, for constructing precast concrete security/screening fences, in an amount not to exceed $5,900,000 over the course of a three year period. (RFP 45963) Chris Lutrick, Engineer IV DME, gave the presentation for this item. Within the last three years DME has brought five individual projects to this Board to construct the security and screening walls for the substations. The presentation included CIP substation project requiring fence construction, summary of proposals, and completed projects constructed by Hawk. A map of 13 CIP Substation Projects was shown. There was three qualified respondents to the RFP. A BAFO was requested of Hawk and they lowered their price and was awarded the contract which was not to exceed $5.9 million. Hawk has completed three major projects for DME which included Cooper Creek Substation (2013), McKinney Substation (2015) and Pockrus Substation (2014). The Linda McNatt Animal Shelter wall was also constructed by Hawk with volume pricing. There was a motion by Board Member Russell to approve this item and a second by Board Member Gallivan. Vote 5-0 approved. Adjournment 10:53 a.m. EXHIBIT 3 ORDINANCE NO. AN ORDINANCE ACCEPTING COMPETITIVE PROPOSALS AND AWARDING A PUBLIC WORKS CONTRACT FOR CONSTRUCTION OF SUBSTATION PRE -CAST SECURITY FENCES FOR DENTON MUNICIPAL ELECTRIC; PROVIDING FOR THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE (RFP 5963 -AWARDED TO WALSH'S HAWK CONSTRUCTION COMPANY, LLC IN THE THREE (3) YEAR NOT -TO - EXCEED AMOUNT OF AMOUNT OF $6,200,000). WHEREAS, the City has solicited, received and tabulated competitive proposals for the construction of public works or improvements in accordance with the procedures of State law and City ordinances; and WHEREAS, the City Manager or a designated employee has received and recommended that the herein described proposal is the highest scored proposal for the construction of the public works or improvements described in the Request for Proposal (RFP) document and plans and specifications therein; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The following competitive proposal for the construction of public works or improvements, as described in the "Request for Proposals" or plans and specifications on file in the Office of the City's Purchasing Agent filed according to the RFP number assigned hereto, are hereby accepted and approved: RFP NUMBER CONTRACTOR AMOUNT 5963 Walsh's Hawk Construction Company, LLC $6,200,000 SECTION 2. The acceptance and approval of the above competitive proposals shall not constitute a contract between the City and the person submitting the proposal for construction of such public works or improvements herein accepted and approved, until such person shall comply with all requirements specified in the Notice to Proposers including the timely execution of a written contract and furnishing of performance and payment bonds, and insurance certificate after notification of the award. SECTION 3. The City Manager is hereby authorized to execute all necessary written contracts for the performance of the construction of the public works or improvements in accordance with the proposals accepted and approved herein, provided that such contracts are made in accordance with the Notice to Proposers and Request for Proposals, and documents relating thereto specifying the terms, conditions, plans and specifications, standards, quantities and specified sums contained therein. EXHIBIT 3 SECTION 4. The City Council of the City of Denton, Texas hereby expressly delegates the authority to take any actions that may be required or permitted to be performed by the City of Denton under RFP 5963 to the City Manager of the City of Denton, Texas, or his designee. SECTION 5. Upon acceptance and approval of the above competitive proposals and the execution of contracts for the public works and improvements as authorized herein, the City Council hereby authorizes the expenditure of funds in the manner and in the amount as specified in such approved proposals and authorized contracts executed pursuant thereto. SECTION 6. This ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of , 2016. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY: EXHIBIT 4 141 A 9QN1MX"d6-yA&1k11191ZJ CITY OF DENTON, TEXAS AND WALSH'S HAWK CONSTRUCTION COMPANY, LLC (RFP 5963) THIS CONTRACT is made and entered into this day, by and between Walsh's Hawk Construction Company, LLC a limited liability corporation, whose address is 5002 Highway 380, Princeton,—TX 75407, hereinafter referred to as "Contractor," and the CITY OF DENTON, TEXAS, a Texas Municipal Corporation and Home - Rule City, hereinafter referred to as "City," to be effective upon approval of the Denton City Council and the subsequent execution of this Contract by the Denton City Manager or his duly authorized designee. For and in consideration of the covenants and agreements contained herein, and for the mutual benefits to be obtained hereby, the parties agree as follows: SCOPE OF SERVICES Contractor shall provide construction services in accordance with the City's RFP # 5963 Substation Precast Security Fence Construction Services, a copy of which is on file at the office of Purchasing Agent and incorporated herein for all purposes as "Exhibit C". The Contract consists of this written agreement and the following items which are attached hereto and incorporated herein by reference: (a) Special Terms and Conditions (Exhibit "A"); (b) Individual Project Initiation Process (Exhibit "B"); (c) City of Denton Request for Proposal # 5963 (Exhibit "C") (d) City of Denton Standard Terms and Conditions (Exhibit "D"); (e) Insurance Requirements (Exhibit "E"); (f) Certificate of Interested Parties Electronic Filing (Exhibit "F"); (g) Contractor's Proposal. (Exhibit "G"); These documents make up the Contract documents and what is called for by one shall be as binding as if called for by all. In the event of an inconsistency or conflict in any of the provisions of the Contract documents, the inconsistency or conflict shall be resolved by giving precedence first to this written Contract, and then to the contract documents in the sequential order in which they are listed above. These documents shall be referred to collectively as "Contract Documents." IN WITNESS WHEREOF, the parties of these presents have executed this agreement in the year and day first above written. Contract 5963 EXHIBIT 4 Walsh's Hawk construction D SIlgTied by; &k V114 By: F� AU -IAS —l6'-WPb"'- GNATURE Pat walsh TYPED NAME: President APMM-T-11?� PHONE NUMBER pat@hawkconst.com E-MAIL ADDRESS 2016-11800 Rag] ta I IV M.11 I NOW910 I I* m lll� mmolmom m-$ - =m - III v#;'r'lI I I I I It" I 9r, I 1I I m v I q Lei I I m ATTEST: JENNIFER WALTERS, CITY SECRETARY Un F."Ir-mam -"m I WE"Wo "m mim"JI DocuSigned by: v F.11101ftly-91 91 1 EXHIBIT 4 SPECIALEXHIBIT A 1 CONDITIONS Total Contract Amount The contact total for services shall not exceed $6,200,000. Pricing shall be per Exhibit G attached. Contract Term The contract term shall be for a one (.1) year from the date of award. The City and the Awarded Contractor shall have the option to renew this contract for an additional two (2) one-year periods. The Contract shall commence upon the issuance of a Notice of Award by the City of Denton and shall automatically renew each year, from the date of award by City Council, unless either party notifies the other prior to the scheduled renewal date in accordance with the Exhibit B. At the sole option of the City of Denton, the Contract may be further extended as needed, not to exceed a total of six (6) months. Price Adjustments Prices shall increase 3% annually at the renewal date.. Scope Modification The scope as defined in the RFP 5963 (Exhibit C) shall be modified or clarified to include: • In the event that ground water is encountered during pier drilling, dewatering and caissons may be required. These are excluded from the contract pricing and will be negotiated on a case by case basis dependent on the extent of the required services. • Hydro -vacuum excavation by others if needed, compaction by others to 95% • Gates to be manufacture red and installed by others. • Temporary fencing to be installed and removed by others. • DME to locate and expose any underground utilities. Contract 5963 EXHIBIT 4 Exhibit B Individual Project Initiation Process Construction of Substation Precast Security Fences This section establishes the process whereby individual construction projects will be initiated. It is a general outline of the steps to be taken in setting project construction schedules and establishing project prices. The steps are generally in order of occurrence; however, nothing herein precludes the parties from agreeing to an amended approach for any given project. 1. The starting point for the process shall be when the project plans are delivered to the contractor by DME with indication of a preferred start date. The preferred start date shall not be less than 30 calendar days from the date the plans are delivered to the contractor. Longer planning periods are permissible. Project plans shall include a list of owner furnished material and projected dates of availability and a status of the site preparation. DME and the contractor will coordinate, to the extent feasible, in the development phases of projects to better facilitate planning for both parties. Benefits could be realized in long range budget forecasting, better project timing, constructability planning, and in coordinating and optimizing contractor resources and availability. 2. The contractor shall acknowledge receipt of the plans, indicate acceptance of the planned start date or propose an alternate start date, and shall propose a preconstruction conference to discuss the project. The preconstruction conference shall be scheduled not less than 14 calendar days before the preferred start date. 3. At the preconstruction conference, the following actions are expected: a. The contractor shall provide: 1) A formal estimate of the cost based on the contract unit costs in force at the time of the notice based on the units shown on the project plans 2) A proposed time to be allowed for construction at the preconstruction conference 3) A project plan for the construction 4) A list of classification and quantity of expected personnel that will be assigned to the project 5) A list of the type and quantity of expected equipment that will be assigned to the project 6) Indicate a date when bonds may be expected to be received by Purchasing if the project is over $50,000 7) Raise any issues of concern b. DME shall provide: 1) Revised project plans, if any 2) A description of the project and constraints and answer questions 3) An updated list of owner furnished materials and projected dates of availability if there have been any changes from the initial list 4) An estimate of cost based on the units shown on the plans 5) An update to the status of site preparation if there have been any changes Contract 5963 EXHIBIT 4 6) Raise any issues of concern c. Jointly, both . parties shall (some items may require additional time after the preconstruction conference for resolution. Resolution must be achieved before the purchase order can be issued): 1) Review the project plan 2) Attempt to arrive at a final cost estimate 3) Establish a formal project start for mobilization 4) Establish A formal project time -for construction 5) Attempt to resolve concerns on all issues or agree on a process and time for resolving issues C',. After a formal start date and pricing are established: a. DME will enter the requisition for the purchase order based on the agreed pricing. b. The contractor shall provide bonds equal to 100% of the project estimate to Purchasing at 901B Texas Street, Denton TX 76209. c. Purchasing shall acknowledge receipt of bonds via email to the contractor and DME. d. Purchasing shall issue the purchase order with 5% retainage which shall serve as the official notice to proceed. NOTIUMMV, M EXHIBIT 4 EXHIBIT D City of Denton's Standard Terms and Conditions Invoices, Payments, and Releases Payment processing: The City review, inspection, and processing procedures for invoices ordinarily require thirty (30) days after receipt of invoices, materials, or services. Proposals which call for payment before thirty (30) days from receipt `of invoice, or Hash -discounts given on such payment, will be considered only if, in the opinion of the Purchasing Manager, the review, inspection, and processing procedures can be completed as specified. It is the intention of the City of Denton to make payment within thirty days after receipt of valid invoices for which items or services have been received unless unusual circumstances arise. The 30 day processing period for invoices will begin on the date the invoice is received or the date the items or services are received, whichever is later. Direct deposit for payments: Contractors are encouraged to arrange for receiving payments through direct deposit. Information regarding direct deposit payments is available from the City of Denton Purchasing website: www.dentonpurchasing.com. Invoices: Invoices shall be sent directly to the City of Denton Accounts Payable Department, 215 E McKinney St, Denton, TX, 76201-4299 with a copy to the attention of Chris Lutrick, City of Denton Electric Department, 1701C Spencer Road, Denton, TX 76209. The copy may also be emailed to Mr. Lutrick at chris.lutrick@cityofdenton.com. Invoices must be' fully documented as to labor, materials, and equipment provided, if applicable, and must reference the City of Denton Purchase Order Number in order to be processed. No payments shall be made on invoices not listing a Purchase Order Number. Invoices for partial payments on construction projects should normally be presented for payment within the first five days of the month, and submitted on the Pay Application Form. The City of Denton qualifies for sales tax exemption pursuant to the provisions of Article 20.04 (F) of the Texas Limited Sales, Excise and Use Tax Act. Any Contractor performing work under this contract for the City of Denton may purchase materials and supplies and rent or lease equipment sales tax free. This is accomplished by issuing exemption certificates to suppliers. Certificates must comply with State Comptroller's ruling #95-0.07 and #95-0.09. A. Upon presentation of valid invoices, which should be within the first week of each month, the Owner shall make partial payments to the Contractor for construction accomplished during the preceding calendar month on the basis of completed construction certified to by the Contractor and approved by the Owner and Architect/Engineer solely for the purposes of payment: Provided, however, that such approval shall not be deemed approval of the workmanship or materials. Only ninety- five percent (95%) of each payment request approved during the construction of the Contract 5963 EXHIBIT 4 project shall be paid by the Owner to the Contractor prior to completion of the project. Upon the approval by the Owner of the Contractor's "Final Invoice for Payment" showing the total cost of the construction performed, the Owner shall make payment to the Contractor of all amounts to which the Contractor shall be entitled there under which shall not have been paid: Provided, however, that such final payment shall be made not later than ninety (90) days after the date of completion of construction of the project, as specified in the Final Invoice for Payment, unless withheld because of the fault of the Contractor. B. The Contractor shall be ` paid on the basis of the percentage of the 'work- actually completed for each construction item. The total amount paid for periodic billings shall not exceed the maximum contract price for the construction of the project as set forth in the contract, unless such excess shall have been approved in writing by the Purchasing Agent as part of a change order. C. No payment shall be due while the Contractor is in default in respect of any of the provisions of this contract, and the Owner may withhold from the Contractor the amount of any claim by any third party against either the Contractor or the Owner based upon an alleged failure of the Contractor to perform the work hereunder in accordance with the provisions of this contract. This includes alleged failure of the Contractor to make payments to subcontractors. Upon award of the contract, the Contractor shall inform the Owner of the subcontractors and material sources that will be used. Upon the completion by the Contractor of the construction of the project, but prior to final payment to the Contractor, the Contractor shall deliver to the Owner releases of all liens, and of rights to claim any lien, from all manufacturers, material -men, and subcontractors furnishing services or materials for the project, to the effect that all materials or services used on or for the project have been paid for and indicating that the Owner is released from all such claims. The Contractor shall pay each material -men, and each subcontractor, if any, not later than five (5) days after receipt of any payment from the Owner, the amount thereof allowed the Contractor for and on account of materials furnished or construction performed by each material -men or each subcontractor. A. Completion of Contractor's Default If default shall be made by the Contractor or by any subcontractor in the performance of any of the terms of this proposal, the Owner, without in any manner limiting its legal and equitable remedies in the circumstances, may serve upon the Contractor and the Surety or Sureties upon the Contractor's bond or bonds a written notice requiring the Contractor to cause such default to be corrected forthwith. Unless within twenty (20) days after the service of such notice upon the Contractor such default shall be corrected or arrangements for the correction thereof satisfactory to the Owner and/or Engineer shall be made by the Contractor or its Surety or Sureties, the Owner may take over the Contract 5963 EXHIBIT 4 construction of the project and prosecute the same to completion by contract or otherwise for the account and at the expense of the Contractor, and the Contractor and its Surety or Sureties shall be liable to the Owner for any cost or expense in excess of the contract price occasioned thereby. In such event the Owner may take possession of and utilize, in completing the construction of the project, any materials, tools, supplies, equipment, appliances, and plant belonging to the Contractor or any of its subcontractors, which may be situated at the site of the project. The Owner in such contingency may exercise any rights, claims or demands which the Contractor may have against third persons in -connection with this contraot-and for such purpose the Contractor does, hereby assign, transfer and set over unto the Owner all such rights claims and demands. B. Liquidated Damages The time of the completion of construction of the project is of the essence of the contract. Should the Contractor neglect, refuse or fail to complete the construction within the time herein agreed upon, after giving effect to extensions of time, if any, herein provided, then, in that event and in view of the difficulty of estimating with exactness damages caused by such delay, the Owner shall have the right to deduct from and retain out of such money which may be then due or which may become due and payable to the Contractor the sum of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500.00) per day for each and every day, including weekends, that such construction is delayed on its completion beyond the specified time, as liquidated damages and not as a penalty; if the amount due and to become due from the Owner to the Contractor is insufficient to pay in full any such liquidated damages, the Contractor shall pay to the Owner the amount necessary to effect such payment in full: Provided, however, that the Owner shall promptly notify the Contractor in writing of the manner in which the amount retained, deducted or claimed as liquidated damages was computed. C. Cumulative Remedies Every right or remedy herein conferred upon or reserved to the Owner shall be cumulative, shall be in addition to every right and remedy now or hereafter existing at law or in equity or by statute, and the pursuit of any right or remedy shall not be construed as an election. Provided, however, that the provisions of the REMEDIES SECTION shall be the exclusive measure of damages for failure by the Contractor to complete the construction of the project within the time herein agreed upon. Contract 5963 EXHIBIT 4 r1 11 1, 111 11 , 11 GE.nERAL DEFINITIONS 1.1 The following definitions apply throughout these General Conditions and tq the other Contract Documents: a) THE CONTRACT DOCUMENTS The Contract Documents consist of the formal Building Construction Services Agreement between the Owner and the Contractor, these General Conditions and other supplementary conditions included by special provisions or addenda, drawings, specifications, addenda issued prior to execution of the Contract, other documents listed in the Contract, and Amendments issued after execution of the Contract. For purposes of these General Conditions, an Amendment is: (1) a written Supplemental Agreement to the Contract signed by authorized representatives of both parties; (2) a Change Order, including Change Orders signed only by the Owner as described in Subparagraph 7.1(b) and Subparagraph 7.1(e); or (3) a written order for a minor change in the Work issued by the Architect/Engineer as described in Paragraph 7.3. The Contract Documents also include bid documents such as the Owner's Instructions to Bidders, sample forms, the Contractor's Bid Proposal and portions of addenda relating to any of these documents, and any other documents, exhibits or attachments specifically enumerated in the Building Construction Services Agreement, but specifically exclude geotechnical and subsurface reports that the Owner may have provided to the Contractor. b) THE CONTRACT The Contract Documents, as defined in Paragraph 1.1, are expressly incorporated into and made a part of the formal Building Construction Services Agreement between the Owner and the Contractor by reference in this Paragraph and Paragraph 1.1 (which documents are sometimes also referred to collectively in these General Conditions as the "Contract"). The Contract Documents represent the entire and integrated agreement between the Owner and the Contractor and supersede all prior negotiations, representations or agreements, either Written or oral. The terms and conditions of the Contract Documents may be changed only by an Amendment. The Contract Documents shall not be construed to create a contractual relationship of any kind: (1) between the Arch itect/Engineer and Contractor; (2) between the Owner and a Subcontractor or Sub -subcontractor; or (3) between any persons or entities other than the Owner and Contractor. Contract 5963 EXHIBIT 4 The Architect/Engineer shall, however, be entitled to performance and enforcement of obligations under the Contract Documents intended to facilitate performance of the Architect/Engineer's duties. c) THE WORK The term "Work" means the construction and services required by the Contract Documents, whether completed or partially completed, and includes all labor, materials, equipment, and services provided or to be provided by the Contractor, or any Subcontractors, Sub -subcontractors, material suppliers, or any other entity for whom the Contractor is responsible, to fulfill the Contractor's obligations. The Work may constitute the whole or a part of the Project. d) THE PROJECT The Project is the total construction more particularly described in the Building Construction Services Agreement, of which the Work performed under the Contract Documents may be the whole or a part of the Project and which may include construction by the Owner or by separate contractors. All references in these General Conditions to or concerning the Work or the site of the Work will use the term "Project," notwithstanding that the Work may only be a part of the Project. THE DRAWINGS The Drawings (also known as the "Plans") are the graphic and pictorial portions of the Contract Documents, wherever located and whenever issued, showing the design, location and dimensions of the Work, generally including plans, elevations, sections, details, schedules, and diagrams. f) THE SPECIFICATIONS The Specifications are that portion of the Contract Documents consisting of the written requirements for materials, equipment, construction systems, standards, and workmanship for the Work, performance of related services, and other technical requirements. g) THE PROJECT MANUAL The Project Manual is the volume or volumes which contain the bidding requirements, sample forms, General Conditions for Building Construction, special provisions, and Specifications. The Project Manual may be modified by written addendums issued by the Owner during bidding, in which case the written addendurns become part of the Project Manual upon their issuance, unless otherwise indicated by the Owner in writing. h) ALTERNATE' An Alternate is a variation in the work on which the Owner requires a price separate from the City Building General Conditions Base Bid. If an Alternate is accepted by the Owner, the variation will become a part of the Contract through the execution of a change order or amendment to the Contract and the Base Bid will be adjusted to include the amount quoted. If an alternate is accepted by the Owner, and later deleted prior to any Work under the alternate being performed or materials delivered to the Project site, the Owner will be entitled to a credit in the full value of the alternate as priced in the Contractor's Bid. Contract 5963 EXHIBIT 4 i) BASE BID The Base Bid is the price quoted for the work before alternates are considered. j) HAZARDOUS SUBSTANCE The term Hazardous Substance is defined to include the following: (1) any asbestos or any material which contains any hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite or actinolite, whether friable or non -friable; (2) any polychlorinated biphenyls ("PCBs"), or PCB -containing materials, or fluids; (3) radon; (4) any other hazardous, radioactive, toxic or noxious substance, material, pollutant, or solid, liquid or gaseous waste; (5) any pollutant or contaminant (including but not limited to petroleum, petroleum hydrocarbons, petroleum products, crude oil or any fractions thereof, any oil or gas exploration or production waste, any natural gas, synthetic gas or any mixture thereof, lead, or other toxic metals) which in its condition, concentration or area of release could have a significant effect on human health, the environment, or natural resources; (6) any substance that, whether by its nature or its use, is subject to regulation or requires environmental investigation, monitoring, or remediation under any federal, state, or local environmental laws, rules, or regulations; (7) any underground storage tanks, as defined in 42 U.S.C. Section 6991(1)(A)(I) (including those defined by Section 9001(1) of the 1984 Hazardous and Solid Waste Amendments to the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Texas Water Code Annotated Section 26.344; and Title 30 of the Texas Administrative Code Sections 334.3 and 334.4), whether empty, filled or partially filled with any substance; and (8) any other hazardous material, hazardous waste, hazardous substance, solid waste, and toxic substance as those or similar terms are defined under any federal, state, or local environmental laws, rules, or regulations. k) OTHER DEFINITIONS As used in the Contract Documents, the following additional terms have the following meanings: (1) "provide" means to furnish, install, fabricate, deliver and erect, including all services, materials, appurtenances and other expenses to complete in place, ready for operation or use; (2) "shall" means the action of the party to which reference is being made is mandatory; Contract 5963 EXHIBIT 4 (3) "as required" means as prescribed in the Contract Documents; and (4) "as necessary" means all action essential or needed to complete the work in accordance with the Contract Documents and applicable laws, ordinances, construction codes, and regulations. (a) The Building Construction Services Agreement shall be signed by duly authorized representatives of the Owner and Contractor as provided in the Agreement. (b) Execution of the Building Construction Services Agreement by the Contractor is a representation that the Contractor has visited the site, become familiar with local conditions, including but not limited to subsurface conditions, under which the Work is to be performed and correlated personal observations with requirements of the Contract Documents. (c) The intent of the Contract Documents is to include all items necessary for the proper execution and completion of the Work by the Contractor. The Contract Documents are complementary, and what is required by one shall be as binding as if required by all; performance by the Contractor shall be required only to the extent consistent with the Contract Documents and reasonably inferable from them as being necessary to produce the intended results. (d) Organization of the Specifications into divisions, sections, and articles, and arrangement of Drawings shall not control the Contractor in dividing the Work among Subcontractors or in establishing the extent of Work to be performed by any trade. (e) Unless otherwise stated in the Contract Documents, words which have well-known technical or construction industry meanings are used in the Contract Documents in accordance with such recognized meanings. (f) The Drawings and Specifications are intended to agree with one another, and Work called for by Drawings and not mentioned in Specifications, or vice versa, shall be furnished as if set forth by both. Specifications shall govern materials, methods and quality of work. In the event of a conflict on the Drawings between scale and dimension, figured dimensions shall govern over scale dimensions and large scale drawings shall govern over small scale drawings. Conflict between two or more dimensions applying to a common point shall be referred to the Architect/Engineer/Engineer for final adjustment. If discrepancies or cohflicts occur within or between the Drawings and Specifications regarding the Work, or within or between other Contract Documents, the Contractor shall not perform' such Work without having obtained a clarification from the Architect/Engineer and resolution by the Owner. The Owner's decision as to the appropriate resolution of a conflict or discrepancy shall be final. Should the Drawings or the Specifications disagree within themselves or with each other; the Base Bid will be based on the most expensive combination of quality and quantity of Work indicated. Contract 5963 EXHIBIT 4 (g) Deviations from Contract Documents shall be made only after written approval is obtained from Architect/Engineer and Owner, as provided in Article 7. (h) The intention of the Contract Documents is to include all materials, labor, tools, equipment, utilities, appliances, accessories, services, transportation, and supervision required to completely perform the fabrication, erection and execution of the Work in its final position. (i) The most recently issued Drawing or Specification takes precedence over previous issues of the same Drawing or Specification. In the event of a conflict, the order of precedence of interpretation of the Contract Documents is as follows: (1) Amendments (see Paragraph 7.2 for order of precedence between Amendments); (2) the Building Construction Services Agreement; (3) addenda, with those addenda of later date having precedence over those of an earlier date; (4) the Supplementary General Conditions and Special Provisions, if any; (5) the General Conditions for Building Construction; (6) the Specifications and Drawings. 1.3 OWNERSHIP AND USE OF ARCHITECT/ENGINEER'S DRAWINGS, SPECIFICATIONS AND OTHER DOCUMENTS All Drawings, Specifications, and copies thereof furnished by the Architect/Engineer are and shall remain the property of the Owner and are, with the exception of the Contract set for each party, to be returned to the Owner upon request at the completion of the Work. 1.4 CAPITALIZATION Terms capitalized in these General Conditions include those which are: (1) specifically defined in these General Conditions (except the terms defined in Subparagraph 1.10), which terms are of common grammatical usage and are not normally capitalized); (2) the titles of numbered articles and identified references to Paragraphs, Subparagraphs, and Clauses; (3) the titles of other documents published or used by the Owner as manuals or official policy statements; or (4) proper nouns or other words required under standard grammatical rules to be capitalized. 2.1 DEFINITION OF OWNER The Owner is the City of Denton, a Texas municipal corporation, and is identified as such in Contract 5963 EXHIBIT 4 the Building Construction Services Agreement, and is referred to throughout the Contract Documents as if singular in number. The term "Owner" means the Owner or the Owner's authorized representatives. (a) The Owner shall furnish the most recent survey describing the physical characteristics, legal limits, utility locations, and a permanent benchmark for the site of the Project. The Owner shall also furnish any environmental site assessments that may have been given to the Owner or conducted for the property upon which the Project is to be constructed. THIS INFORMATION IS FURNISHED TO THE CONTRACTOR ONLY IN ORDER TO MAKE DISCLOSURE OF THIS MATERIAL AND FOR NO OTHER PURPOSE. BY FURNISHING THIS MATERIAL, THE OWNER DOES NOT REPRESENT, WARRANT, OR GUARANTEE ITS ACCURACY EITHER IN. WHOLE, IN PART, IMPLICITLY OR EXPLICITLY, OR IN ANY OTHER WAY, AND THE OWNER SHALL HAVE NO LIABILITY FOR THIS MATERIAL. (b) Except for permits and fees which are provided for in Subparagraph 3.7(a), the Owner shall secure and pay for necessary approvals, easements, assessments, and charges required for construction, use, or occupancy of permanent structures or for permanent changes in existing facilities. (c) Information or services under the Owner's control shall be furnished by the Owner with reasonable promptness to avoid delay in the orderly progress of the Work. It is incumbent upon the Contractor to identify, establish, and maintain a current schedule of latest dates for submittal and approval, as required in Paragraph 3.10, including when such information or services must be delivered. If Owner delivers the information or services to the Contractor as scheduled and Contractor is not prepared to accept or act on such information or services, then Contractor shall reimburse Owner for all extra costs incurred of holding, storage, or retention, including redeliveries by the Owner to comply with the current schedule. (d) Unless otherwise provided in the Contract Documents, the Contractor will be furnished electronic copies of the Drawings and Specifications for bid purposes and one hard copy approved by Building Inspections upon execution of the Contract. Contractor may obtain additional copies by paying the cost of additional printing or reproduction. (e) The obligations described above are in addition to other duties and responsibilities of the Owner enumerated in the Contract Documents and especially those in respect to Article 6 (Construction by Owner or by Separate Contractors), Article 9 (Payments and Completion), and Article 11 (Insurance and Bonds). (f) The Owner shall forward all instructions to the Contractor through the Architect/Engineer, except for the Owner's Notice to Proceed and the Owner's decision to'carry out Work as described in Paragraph 2.4. (g) The Owner's employees, agents, and consultants may be present at the Project site during performance of the Work to assist the Architect/Engineer in the performance of the Architect/Engineer's duties and to verify the Contractor's record of the number of workmen employed on the Work, their occupational classification, the time each is engaged in the Work, the equipment used in the performance of the Work, and for purpose of verification of Contractor's Applications for Payment. Contract 5963 EXHIBIT 4 If the Contractor fails to correct any portion of the Work which is not in accordance with the requirements of the Contract Documents as required by Paragraph 12.2 or refuses or fails to carry out all or any part of the Work in accordance with the Contract Documents, the Owner, by written order, may order the Contractor to stop the Work, or any portion of the Work, until the cause for the order has been eliminated. The right of the Owner however, to stop the Work shall not create or imply a duty on the part of the Owner to exercise this right for the benefit of the Contractor or any other person or entity. The rights of the Owner under this Paragraph 2.3 shall be in addition to, and not in restriction of, the Owner's rights under Paragraph 12.2. 2.4 OWNER'S RIGHT TO CARRY OUT THE WORK If the Contractor fails or refuses to carry out the Work or perform any of the terms, covenants, or obligations of the Contract Documents, and fails or refuses to correct any failure or refusal with diligence and promptness within fourteen (14) days after receipt of notice from the Owner, the Owner may correct the Contractor's failure or refusal or cause such failure or refusal to be corrected, without affecting, superseding, or waiving any other contractual, legal, or equitable remedies the Owner has, including but not limited to the Owner's termination rights under Article 13. In that case, an appropriate Change Order will be issued deducting the Owner's cost of correction, including Architect/Engineer's compensation for additional services and expenses made necessary by the failure or refusal of the Contractor from payments then or thereafter due to the Contractor. The cost of correction is subject to verification (but not approval) by the Architect/Engineer. If payments then or thereafter due the Contractor are not sufficient to cover the cost of correction, the Contractor shall pay the difference to the Owner. After final execution of the Contract and receipt and approval of the required performance and payment bonds and evidence of required insurance, the Owner will issue a written notice to proceed with the Work, including the designated Contract Time within which Substantial Completion of the Work must be achieved. If the Owner unreasonably delays issuance of a written notice to proceed through no fault of the Contractor, the Contractor shall be entitled only to an equitable adjustment of the Contract Time, if properly claimed pursuant to the requirements of Paragraph 4.3; but the Contractor shall not be entitled to any increase to the Contract Sum whatsoever for this reason. The Contractor is the person or business entity identified as such in the Building Construction Services Agreement, and is referred to throughout the Contract Documents as if singular in number. The term "Contractor" means the Contractor or the Contractor's authorized employees or representatives. 3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS i \ -s. (a) The Contractor shall carefully check, study, and compare the Contract Documents with each other and shall at once report to the Architect/Engineer in writing any inconsistency, Contract 5963 EXHIBIT 4 ambiguity, error, omission, conflict, or discrepancy the Contractor may discover. The Contractor shall also verify all dimensions, field measurements, and field conditions before laying out the Work. The Contractor will be held responsible for any subsequent error, omission, conflict, or discrepancy which might have been avoided by the above- described check, study, comparison, and reporting. In the event the Contractor continues to work on an item where an inconsistency, ambiguity, error, omission, conflict, or discrepancy exists without obtaining such clarification or resolution or commences an item of the Work without giving written notice of an error, omission, conflict, or discrepancy that might have been avoided by the check, study, and comparison required above, it shall be deemed that the Contractor bid and intended to execute the more stringent, higher quality, or state of the art requirement, or accepted the condition as is in the Contract Documents, without any increase to the Contract Sum or Contract Time. The Contractor shall also be responsible to correct any failure of component parts to coordinate or fit properly into final position as a result of Contractor's failure to give notice of and obtain a clarification or resolution of any error, omission, conflict, or discrepancy, without any right to any increase to the Contract Sum or Contract Time. (b) The Contractor shall perform the Work in accordance with the Contract Documents and submittals approved pursuant to Paragraph 3.12. (a) The Contractor shall supervise and direct the Work, using the Contractor's best skill and attention. The Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences, and procedures and for coordinating all portions of the Work, unless the Contract Documents set forth specific instructions concerning these matters. (b) The Contractor shall be responsible to the Owner for the acts and omissions of the Contractor's employees, Subcontractors, Sub -subcontractors, and their respective agents and employees, and any other persons performing portions of the Work under a subcontract with the Contractor or with any Subcontractor, and all other persons or entities for which the Contractor is legally responsible. All labor shall be performed by mechanics that are trained and skilled in their respective trades. Standards of work required throughout shall be of a quality that will bring only first class results. Mechanics whose work is unsatisfactory, or who are considered careless, incompetent, unskilled, or otherwise objectionable shall be dismissed promptly from the Work and immediately replaced with competent, skilled personnel. Any part of the Work adversely affected by the acts or omissions of incompetent, unskilled, careless, or objectionable personnel shall be immediately corrected by the Contractor. (c) The Contractor shall not be relieved of its obligation to perform the Work in accordance with the Contract Documents either by activities or duties of the Architect/Engineer in the Architect/Engineer's- administration of the Contract, or by tests, inspections, or approvals required or performed by persons other than the Contractor. (d) The Contractor shall be responsible for inspection of portions of Work already performed under this Contract to determine that such portions are in proper condition to receive subsequent Work. The Contractor's responsibility under this paragraph will not in any Contract 5963 EXHIBIT 4 way eliminate the Architect/Engineer's responsibility to the Owner under the Architect/Engineer/Owner Agreement. (e) Any Contractor, Subcontractor, Sub -subcontractor, or separate contractor who commences Work over, in, or under any surface prepared by the Owner or by any other contractor, subcontractor, sub -subcontractor or separate contractor without the Contractor having given written notice to the Architect/Engineer of the existence of any faulty surface or condition in the surface that prevents achieving the quality of workmanship specified by the Contract Documents and without having obtained the prior approval of the Arch itect/Engineer and the Owner to proceed is deemed to have accepted the surface or condition in the surface as satisfactory at the commencement of such Work. Any unsatisfactory Work subsequently resulting from such a faulty surface or condition in the surface that was not pre -approved by the Arch itect/Engineer or the Owner after notice as provided above may be rejected and replacement required, without any increase to the Contract Sum or Contract Time. (f) All grades, lines, levels, and benchmarks shall be established and maintained on an ongoing basis by the Contractor. The Contractor is solely responsible for any errors made in establishing or maintaining proper grades, lines, levels, or benchmarks. Each Contractor for his own Work shall verify all grades, lines, levels, and dimensions as indicated on Drawings. He shall report any errors, omissions, conflicts, or inconsistencies to Arch itect/Engineer before commencing any Work affected by these conditions. Contractor shall establish and safeguard benchmarks in at least two widely separated places and, as Work progresses, establish benchmarks at each level and lay out partitions on rough floor in exact locations as guides to all trades. The Contractor shall, from the permanent benchmark provided by the Owner, establish and maintain adequate horizontal and vertical control. 3.4 LABOR AND MATERIALS (a) Except as is otherwise specifically provided in the Contract Documents as being the responsibility of the Owner, the Contractor shall provide and pay for labor, materials, equipment, tools, construction equipment and machinery, water, heat, utilities, transportation, and other facilities and services necessary for proper execution and completion of the Work, whether temporary or permanent and whether or not incorporated or to be incorporated in the Work. (b) The Contractor shall enforce strict discipline and good order among the Contractor's employees and other persons carrying out the Contract. The Contractor shall not permit employment of unfit persons or persons not skilled in tasks assigned to them. (c) The Contractor shall give preference,' when qualified labor is available to perform the Work to which the employment relates, to all labor hired for the Project in the following order: (1) to bona fide residents of the City of Denton, Texas; (2) to bona fide residents of the County of Denton, Texas; (3) to bona fide residents of the State of Texas; Contract 5963 EXHIBIT 4 (4) to bona fide residents of the United States. 3.5 WARRANTY (a) General Warranty. The Contractor warrants to the Owner that all Work shall be accomplished in a good and workmanlike manner and that all materials and equipment furnished under the Contract will be of good quality, new (unless otherwise specified), and free from faults or defects, and that the Work will otherwise conform to the Contract Documents. Work not conforming to these requirements, including substitutions not properly approved and authorized, will be considered defective or nonconforming. The Contractor's warranty excludes any remedy for damage or defect caused by abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear under normal usage. If required by the Architect/Engineer, the Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment. The commencement date, duration, and other conditions related to the scope of this general warranty are established in Subparagraphs 9.9 (a) and 12.2(b) of these General Conditions. THE GENERAL WARRANTY PROVIDED IN THIS SUBPARAGRAPH IS IN ADDITION TO AND DOES NOT LIMIT OR DISCLAIM ANY OTHER WARRANTY OR REMEDY REQUIRED OR PROVIDED BY LAW OR THE CONTRACT DOCUMENTS AND SUCH WARRANTY SHALL REQUIRE THE CONTRACTOR TO REPLACE DEFECTIVE MATERIALS AND RE -EXECUTE DEFECTIVE WORK THAT IS DISCLOSED BY THE OWNER TO THE CONTRACTOR WITHIN A PERIOD OF ONE (2) YEAR AFTER SUBSTANTIAL COMPLETION OF THE ENTIRE WORK OR, IF A LATENT DEFECT, WITHIN TWO (2) YEARS AFTER DISCOVERY BY THE OWNER OF THE LATENT DEFECT. (b) Special Warranties. The Contractor shall assign to the Owner in writing, as a condition precedent to final payment, the terms and conditions of all special warranties required under the Contract Documents. 3.6 TAXES The Owner qualifies for exemption from state and local sales and use taxes, pursuant to the provisions of Section 151.309 of the Texas Tax Code, as amended. Therefore, the Owner shall not be liable for, or pay the Contractor's cost of, such sales and use taxes which would otherwise be payable in connection with the purchase of tangible personal property furnished and incorporated into the real property being improved under the Contract Documents or the purchase of materials, supplies and other tangible personal property, other than machinery or equipment and its accessories and repair and replacement parts, necessary and essential for performance of the Contract which is to be completely consumed at the job site. The Contractor shall issue an exemption certificate in lieu of the tax on such purchases. (a) The Architect/Engineer will apply and arrange for the issuance of the City of Denton Building Permit. The Contractor and Subcontractors will apply and arrange for the issuance of all other required permits, and will not be required to pay a fee for any City of Denton permits required for the Project. The Owner will pay all service extension charges, including tap fees, assessed by the Water Utilities Department. Contract 5963 EXHIBIT 4 (b) The Contractor shall comply with and give notices required by laws, ordinances, rules, regulations, and lawful orders of governmental entities or agencies applying to performance of the Work. (c) Except as provided in Subparagraph (d) below, it is not the Contractor's responsibility to ascertain that the Contract Documents are in accordance with applicable laws, ordinances, construction codes, and rules and regulations. However, if the Contractor observes that portions of the Contract Documents are at variance with applicable laws, ordinances, construction codes, rules or regulations, the Contractor shall promptly notify the Architect/Engineer and the Owner in writing, and necessary changes shall be accomplished by appropriate Amendment. (d) If the Contractor performs Work knowing it to be contrary to laws, ordinances, construction codes, or rules and regulations without notifying the Architect/Engineer and the Owner, the Contractor shall assume full responsibility for the Work and shall bear the attributable costs of the correction of the Work and any other Work in place that may be adversely affected by the corrective work. 3.8 ALLOWANCES (a) The Contractor shall include in the Contract Sum all allowances stated in the Contract Documents. Items covered by allowances shall be supplied for the amounts identified in the Contract and by persons or entities as the Owner may direct, but the Contractor shall not be required to employ persons or entities against which the Contractor makes reasonable objection. (b) Unless otherwise provided in the Contract Documents: (1) materials and equipment under an allowance shall be selected promptly by the Owner to avoid delay in the Work; (2) the amount of each allowance shall cover the cost to the Contractor of materials and equipment delivered at the site less all exempted taxes and applicable trade discounts; (3) the amount of each allowance includes the Contractor's costs for unloading and handling at the site, labor, installation costs, overhead, profit, and other expenses contemplated for stated allowance Work; (4) whenever costs are more than or less than allowances, the Contract Sum shall be adjusted accordingly by Change Order. The amount of the Change Order shall reflect: (i) the difference between actual costs and the allowances under Clause (b) (2); and (ii) changes in Contractor's costs under Clause (b) (3); (5) the Owner retains the right to review and approve Subcontractors selected by the Contractor to perform work activities covered by allowances. Contract 5963 EXHIBIT 4 The Contractor shall employ a competent superintendent and necessary assistants who shall be in attendance at the Project site during performance of the Work. The superintendent shall represent the Contractor, and communications given to the superintendent shall be as binding as if given to the Contractor. Important communications shall be confirmed in writing. Other communications shall be similarly confirmed on written request in each case. The Owner reserves the right to request that the Contractor replace its superintendent at any time and the Contractor will replace said superintendent at the Owner's direction. ' 3.1-0 CONTRACTOR'S CONSTRUCTION SCHEDULES (a) The Contractor shall, immediately after award of the Contract and before submittal of the first Application for Payment, prepare and submit the construction schedule for the Architect/Engineer's and Owner's information, review, and approval in accordance with the following provisions: (1) Unless otherwise approved in writing by the Owner, the construction schedule shall not exceed the Contract Time limits currently in effect under the Contract Documents and shall provide for expeditious and practicable execution of the Work. (2) The construction schedule shall include all shop drawing and submittal data requirements, indicating for each: (i) the latest date to be submitted by the Contractor; and (ii) the latest date for approval by the Architect/Engineer. (3) The construction schedule shall be in the form of a critical path management schedule, and shall indicate each critical task (the "predecessor") of all the major construction activities of the Work in a logical and sequential order (the "project network") which requires completion prior to commencement of the task next following (the "successor"). Each task shall be identified with: (i) actual work time, exclusive of slack time, for accomplishment; (ii) the latest start date; (iii) the latest finish date; (iv) the amount of float associated with each task; (v) the amount of labor, material, and equipment associated with each task; and (vi) the percentage of completion as of the date of the current schedule.. (4) The construction schedule shall be revised and updated monthly to reflect the actual status of the Work and shall be submitted with each Application for Payment. (5) On or before the first day of each month, following the date of commencement of the Work as stated in the notice to proceed, the Contractor shall prepare and submit to the Architect/Engineer and the Owner an up-to-date status report of the progress of the various construction phases of the Work in the form of an updated construction schedule. This status report shall consist of a time scale drawing indicating actual Contract 5963 EXHIBIT 4 progress of the various phases of the Work and the percentage of completion of the entire Work. The original construction schedule shall be updated or changed to indicate any adjustments to the Contract Time granted by the Owner. The updated schedule must be submitted with the Contractor's Application for Payment. No application will be certified without a satisfactory update to the construction schedule. (6) The construction schedule will also be revised to show the effect of change orders and other events on Contract Time. No request for an increase in Contract Time will be considered unless it is accompanied by a schedule revision demonstrating the amount of time related to the cause of the request. If the Contractor's status schedules reflect that the Contractor has fallen behind the pace required to complete the Work within the Contract Time, through no fault of the Owner, the Contractor shall prepare a recovery schedule demonstrating how it intends to bring its progress back within the Contract Time. This recovery schedule shall be in a form acceptable to the Owner. (7) Costs incurred by the Contractor in preparing and maintaining the required construction schedule, any updated schedule, and any recovery schedule required by the Owner will not be paid as an additional or extra cost and shall be included in the Contract Sum. (8) The Contract Sum is deemed to be based upon a construction schedule requiring the full Contract Time. NO CLAIM FOR ADDITIONAL COMPENSATION SHALL BE ALLOWED AS A RESULT OF THE CONTRACTOR BASING HIS BID ON AN EARLY COMPLETION SCHEDULE, OR AS A RESULT OF DELAYS AND COSTS ATTRIBUTABLE TO COMPLETION LATER THAN THE PLANNED EARLY COMPLETION DATE. (b) The Contractor shall also prepare and keep current, for the Architect/Engineer's approval, a schedule of submittals which is coordinated with the Contractor's construction schedule and allows the Architect/Engineer reasonable time to review submittals. (c) The Contractor shall conform to the most recent schedules approved as to form by the Architect/Engineer and the Owner. Any subsequent revisions made by the Contractor to schedules in effect shall conform to the provisions of Subparagraph 3.10(a) (d) If the Work falls behind the approved construction schedule, the Contractor shall take such steps as may be necessary to improve his progress, and the Architect/Engineer and the Owner may require him to increase the number of shifts, overtime operations, days of work, or the amount of constructiori plant, and to submit for approval revised schedules in the form required above in order to demonstrate the manner in which the agreed rate of progress will be regained, all without additional cost to the Owner. 3.11 DOCUMENTS AND SAMPLES AT THE PROJECT SITE The Contractor shall maintain at the Project site for the Owner one record copy of the Drawings, Specifications, addenda, and Amendments in good order and marked currently to record changes and selections made during construction, and in addition shall maintain at Contract 5963 EXHIBIT 4 the Project site approved Shop Drawings, Product Data, Samples, and similar required submittals. These shall be available to the Architect/Engineer and shall be delivered to the Architect/Engineer for submittal to the Owner upon completion of the Work. 3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES (a) Shop Drawings are drawings, diagrams, schedules, and other data specially prepared for the Work by the Contractor or a Subcontractor, Sub -subcontractor, manufacturer, supplier, or distributor to illustrate some portion of the Work. (b) Product Data are illustrations, standard schedules, performance charts, instructions, brochures, diagrams, and other information furnished by the Contractor to illustrate materials or equipment for some portion of the Work. (c) Samples are physical examples which illustrate materials, equipment, or workmanship and establish standards by which the Work will be judged. (d) Shop Drawings, Product Data, Samples, and similar submittals are not Contract Documents. The purpose of their submittal is to demonstrate for those portions of the Work for which submittals are required the way the Contractor proposes to conform to the information given and the design concept expressed in the Contract Documents. Review by the Architect/Engineer is subject to the limitations of Paragraph 4.2. (e) The Contractor shall review, approve and submit to the Architect/Engineer Shop Drawings, Product Data, Samples, and similar submittals required by the Contract Documents with reasonable promptness and in such sequence as to cause no delay in the Work or in the activities of the Owner or of separate contractors. Submittals made by the Contractor which are not required by the Contract Documents may be returned without action. (f) The Contractor shall perform no portion of the Work requiring submittal and review of Shop Drawings, Product Data, Samples, or similar submittals until the respective submittal has been approved by the Architect/Engineer. Work requiring this submittal and review shall be in accordance with approved submittals and any identified exceptions noted by the Architect/Engineer. (g) By approving and submitting Shop Drawings, Product Data, Samples and similar submittals, the Contractor represents that the Contractor has determined and verified materials, field measurements, and related field construction criteria, or will do so, and has checked and coordinated the information contained within submittals with the requirements of the Work and of the Contract Documents. The Contractor's attention is directed to Paragraph 3.2 of these General Conditions and the requirements stated in that Paragraph. (h) The Contractor shall not be relieved of responsibility for deviations, substitutions, changes, additions, deletions or omissions from requirements of the Contract Documents by the Architect/Engineer's approval of Shop Drawings, Product Data, Samples, or similar submittals unless the Contractor has specifically informed the Architect/Engineer in writing of such substitutions, changes, additions, deletions, omissions, or deviations involved in the submittal at the time of submittal and the Architect/Engineer, subject to a formal Change Order signed by the Owner, Architect/Engineer and Contractor, has given written approval to the specific substitutions, changes, additions, deletions, omissions, or deviations. The Contractor shall not be relieved of responsibility for errors or omissions in Shop Drawings, Product Data, Samples, or similar submittals by the Architect/Engineer's approval thereof. Further, notwithstanding any approval of a submittal by the Architect/Engineer, the Contractor shall be responsible for all associated Contract 5963 EXHIBIT 4 Project costs, including costs of coordination's, modifications, or impacts, direct or indirect, resulting from any and all substitutions, changes, additions, deletions, omissions, or deviations, whether or not specifically identified by the Contractor to the Architect/Engineer at the time of the above-mentioned submittals, including additional consulting fees, if any, in any and all accommodations associated with such substitutions, changes, additions, deletions, omissions, or deviations to the requirements of the Contract Documents. (i) The Contractor shall direct specific attention, in writing or on resubmitted Shop Drawings, Product Data, Samples, or similar submittals, to additional revision's other than those requested by the Architect/Engineer on previous submittals. In the absence of such written notice, the Architect/Engineer's approval of a resubmission shall not apply to the additional revisions not requested. (j) Informational submittals upon which the Architect/Engineer is not expected to take responsive action may be so identified in the Contract Documents. (k) When professional certification of performance criteria of materials, systems, or equipment is required by the Contract Documents, the Architect/Engineer shall be entitled to rely upon the accuracy and completeness of such calculations and certifications. 3.13 USE OF THE PROJECT SITE The Contractor shall confine operations at the Project site to areas permitted by law, ordinances, permits, and the Contract Documents and shall not unreasonably encumber the Project site with materials or equipment. 3.14 CUTTING AND PATCHING (a) The Contractor shall be responsible for cutting, fitting or patching required to complete the Work or to make its parts fit together properly. (b) The Contractor shall not damage or endanger a portion of the Work or any fully or partially completed construction of the Owner or separate contractors by cutting, patching, or otherwise altering the construction, or by excavating. The Contractor shall not cut or otherwise alter the construction by the Owner or a separate contractor except with the written consent of the Owner and of the separate contractor; consent shall not be unreasonably withheld. The Contractor shall not unreasonably withhold from the Owner or a separate contractor the Contractor's consent to cutting or otherwise altering the Work. (c) A Hot Work Permit must be obtained from the City of Denton's Facilities Management Department, 869 S. Woodrow Lane, Denton, Texas (940 349-7200) for any temporary operation involving open flames or producing heat and/or sparks. This includes, but is n6t limited to: Brazing, Cutting, Grinding, Soldering, Torch Applied Roofing and Welding. 3.15 CLEANING UP (a) The Contractor shall keep the Project site and surrounding area free from accumulation of waste materials or rubbish caused by operations under the Contract. Upon the completion of the Work the Contractor shall remove from and about the Project site all waste materials, and rubbish, and all of the Contractor's tools, construction equipment, machinery, and surplus materials. Contract 5963 EXHIBIT 4 (b) If the Contractor fails to clean up as provided in the Contract Documents, the Owner may clean up and the Owner's cost of cleaning up shall be charged to the Contractor. 3.16 ACCESS TO WORK The Contractor shall provide the Owner and the Architect/Engineer access to the Work in preparation and progress wherever located during the course of construction. 3.17 TESTS AND INSPECTIONS (a) Tests, inspections, and approvals of portions of the Work required by the Contract Documents or by laws, ordinances, rules, regulations, or orders of governmental entities or agencies having jurisdiction over the Work shall be made at appropriate times. Unless otherwise provided, the Contractor shall make arrangements for such tests, inspections, and approvals with an independent testing laboratory or entity selected or contracted by the Owner or with the appropriate governmental entity or agency, and the Owner shall bear all related costs of tests, inspections, and approvals. The Contractor shall give the Architect/Engineer timely notice of when and where tests and inspections are to be made so the Architect/Engineer may observe such procedures. The Owner shall bear costs of tests, inspections, or approvals which become requirements after bids or proposals are received. (b) If the Architect/Engineer, the Owner or other public authorities having jurisdiction over the Work determine that portions of the Work require additional testing, inspection or approval not included under Subparagraph 3.17(x), the Architect/Engineer will, upon written authorization from the Owner, instruct the Contractor to make arrangements for such additional testing, inspection or approval by an entity acceptable to the Owner, and the Contractor shall give timely notice to the Architect/Engineer of when and where tests and inspections are to be made so that the Architect/Engineer may observe such procedures. The Owner shall bear such costs except as provided in Subparagraph 3.17(c). (c) If procedures for testing, inspection, or approval under Subparagraphs 3.17(x) and 3.17(b) reveal deficiencies or nonconformities in the Work, the Contractor shall bear all costs made necessary to correct the deficiencies or nonconformities, including those of repeated procedures and compensation for the Architect/Engineer's services and expenses, if any. The Contractor shall bear the costs of any subsequent testing, inspection, or approval of the corrected Work. (d) Required certificates of testing, inspection or approval shall, unless otherwise required by the Contract Documents, be secured by the Contractor and promptly delivered to the Architect/Engineer. (e) If the Architect/Engineer is to observe tests, inspections or approvals required by the Contract Documents, the Architect/Engineer will do so promptly and, where practicable, at the normal place of testing or inspection. (f) Tests or inspections conducted pursuant to the Contract Documents shall be made promptly to avoid unreasonable delay in the Work. Contract 5963 EXHIBIT 4 ilk hk"A�wl I&N I IN or -01 Vj RHO 19191 0610'em VIA 1140V IN • ,►'; OF PATENT ► ►' ►' • • ' • ';► • DESIGN,� OWNER OR THE ARCHITECT/ENGINEER SPECIFIED A PARTICULAR PROCESS • OR PRODUCT • ' •' DOCUMENTS BE THE SUBJECT OF A PATENT INFRINGEMENT OR OTHERWISE ACTIVELY INDUCED • ► CONTRIBUTED TO THE INFRINGEMENT.• • design,has reason to believe that a particular infringes [tatent, the Contractor shall immediately notify the Owner and the Architect/Engineer of (b) In claims against any person or entity indemnified under this Paragraph 3.19 by an employee of the Contractor, a Subcontractor, anyone directly or indirectly employed by Contract 5963 EXHIBIT 4 them or anyone for whose acts they may be liable, the indemnification obligation under this Paragraph 3.19 shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the Contractor or a Subcontractor under workers compensation acts, disability benefit acts or other employee benefit acts. (c) Indemnification under this Paragraph 3.19 shall include, but is not limited to, liability which could result to or be created for the Owner, its officers, agents, or employees, or the Architect/Engineer pursuant to State or Federal laws or regulations relating to pollution of the environment and State or Federal laws or regulations relating to the occupational safety and health of workers. The Contractor specifically agrees to comply with the above-mentioned laws and regulations in the performance of the Work by the Contractor and that the obligations of the Owner, its officers, agents, and employees, and the Architect/Engineer under the above-mentioned laws and regulations are secondary to those of the Contractor. (a) The design professional is the person lawfully licensed to practice architecture or engineering or a firm or other business entity lawfully practicing architecture/engineering identified as such in the formal Building Construction Services Agreement and is referred to throughout the Contract Documents as if singular in number. The term "Architect/Engineer" means the Architect/Engineer or the Arch itect/Engineer's authorized representative. The Owner may, at its option, designate a qualified Owner representative to serve as the Architect/Engineer on the Project instead of an outside firm or person. In such event, the references in these General Conditions that refer to the Architect/Engineer shall apply to the Owner -designated Architect/Engineer representative and the Owner -designated Architect/Engineer representative shall be accorded that same status by the Contractor. (b) In the event the Architect/Engineer is an outside person or firm and the Arch itect/Engineer's employment is terminated, the Owner may, at its option, contract with a new outside Architect/Engineer to replace the former, or may designate a qualified Owner representative to serve as the Architect/Engineer. The replacement Architect/Engineer, whether an Owner representative, an independent Architect/Engineer or any other qualified person or entity, shall be regarded as the Architect/Engineer for all purposes under the Contract Documents and shall be accorded that same status by the Contractor. Any dispute in connection with such appointment shall be reviewed and settled by the Owner, whose decision shall be final and binding. (c) Owner reserves the right to appoint a representative e ' inpowered to act for the Owner during the Construction Phase and to supersede the Arch itect/Engineer's Construction Phase responsibility. Similarly, from time to time the Owner may expand or reduce the Owner's delegation of powers to the Architect/Engineer, with the Owner notifying the Contractor of any such changes. The Architect/Engineer shall not be construed as a third party beneficiary to the Contract and can in no way object to any expansion or reduction of powers as set forth in this Subparagraph (c). In no event, however, shall the Owner have control over charge of, or be responsible for, construction means, methods, Contract 5963 EXHIBIT 4 techniques, sequences, or procedures, or for safety precautions or programs in connection with the Work since these are solely the Contractor's responsibility. The Owner will not be responsible for the Contractor's failure to carry out the Work in accordance with the Contract Documents. The Owner will not have control over or charge of and will not be responsible for acts or omissions of Contractor, Subcontractors, or their agents or employees, or of any other persons performing portions of the Work. .� C (a) The Architect/Engineer will administer the Contract as described in the Contract Documents and in accordance with the terms of the Architect/Engineer's agreement with the Owner, where applicable, subject to the direction and approval of the Owner. If requested by the Contractor, the provisions of the Owner/Architect/Engineer Agreement will be made available to the Contractor. (b) The Architect/Engineer shall provide, during performance of the Work, adequate and competent periodic on-site construction observation, periodically visiting the Project site to the extent necessary to personally familiarize themselves with the progress and quality of the Work, and to determine if the Work is proceeding in accordance with the Contract Documents. The Architect/Engineer shall not, however, be required to make continuous on-site inspections to check the Work. Field reports of each visit shall be prepared by the Architect/Engineer and submitted to the Owner. The Architect/Engineer shall employ all reasonable measures to safeguard the Owner against defects and nonconformities in the Work. The Architect/Engineer shall not be responsible for the construction means, methods, techniques, sequences of procedures, nor for the safety precautions and programs employed in connection with the Work. The Architect/Engineer will, however, immediately inform the Owner whenever defects or nonconformities in the Work are observed, or when any observed actions or omissions are undertaken by the Contractor or any Subcontractor which are not in the best interests of the Owner or the Project. (c) The Architect/Engineer and the Owner will not have control over or charge of and will not be responsible for construction means, methods, techniques, sequences, or procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor's responsibility as provided in Paragraph 4.3. The Architect/Engineer and the Owner will not be responsible for the Contractor's failure to carry out the Work in accordance with the Contract Documents. The Architect/Engineer and the Owner will not have control over or charge of and will not be responsible for acts or omissions of the Contractor, Subcontractors, Sub -subcontractors, or their respective agents or employees, or of any other persons performing portions of the Work for which the Contractor is responsible. (d) Except as otherwise provided in the Contract Documents or when direct communications have been specially authorized, the Owner and Contractor shall endeavor to communicate through the Architect/Engineer. Communications by and with the Architect/Engineer's consultants shall be through the Architect/Engineer. Communications by and with Subcontractors and material suppliers shall be through the Contractor. Communications by and with separate contractors will be through the Owner. The Contractor shall provide written confirmation of communications made directly with the Owner and provide copies of such confirmation to the Architect/Engineer. Contract 5963 EXHIBIT 4 (e) Based on the Architect/Engineer's observations and evaluations of the Contractor's Applications for Payment, the Architect/Engineer will review and certify the amounts due the Contractor and will issue Certificates for Payment in such amounts. (f) The Architect/Engineer and the Owner will each have authority to reject Work which does not conform to the Contract Documents. Whenever the Architect/Engineer considers it necessary or advisable for implementation of the intent of.the Contract Documents, the Architect/Engineer will have authority to require additional inspection or testing of the Work in accordance with Subparagraphs 3.17(b) and 3.17(c), whether or not such Work is fabricated, installed or completed. However, neither this authority of the Architect/Engineer nor a decision made in good faith either to exercise or not to exercise such authority shall give rise to any duty or responsibility of the Architect/Engineer to the Contractor, Subcontractors, material and equipment suppliers, their agents or employees, or other persons performing portions of the Work. (g) The Architect/Engineer will review and approve or take other appropriate action upon the Contractor's submittals such as Shop Drawings, Product Data, and Samples, but only for the limited purpose of checking for conformance with information given and the design concept expressed in the Contract Documents. The Architect/Engineer's action will be taken with such reasonable promptness as to not delay the Work or the activities of the Owner, Contractor, or separate contractors. Review of such submittals is not conducted for the purpose of determining the accuracy and completeness of other details such as dimensions and quantities, or for substantiating instructions for installation or performance of equipment or systems, all of which remain the responsibility of the Contractor as required by the Contract Documents. The Architect/Engineer's review of the Contractor's submittals shall not relieve the Contractor of any obligations under Paragraphs 3.3, 3.5, and 3.12. The Architect/Engineer's review shall not constitute approval of safety precautions or, unless otherwise specifically stated in writing by the Architect/Engineer, of any construction means, methods, techniques, sequences, or procedures. The Architect/Engineer's approval of a specific item shall not indicate approval of an assembly of which the item is a component. (h) The Architect/Engineer will prepare Change Orders and may authorize minor changes in the Work as provided in Paragraph 7.3. (i) The Architect/Engineer will conduct inspections to determine the date or dates of Substantial Completion and the date of final completion, will receive and forward to the Owner for the Owner's review and records written warranties and related documents required by the Contract and assembled by the Contractor, and will issue a final Certificate for Payment upon compliance 'with the requirements of the Contract Documents. (j) If the Owner and Architect/Engineer agree, the Architect/Engineer will provide one or more Project representatives to assist in carrying out the Architect/Engineer's responsibilities at the site. The duties, responsibilities, and limitations of authority of such Project representatives shall be as set forth in an exhibit to be incorporated into the Contract Documents. Contract 5963 EXHIBIT 4 (k) The Architect/Engineer will interpret and make recommendations to the Owner concerning performance under and requirements of the Contract Documents upon written request of either the Owner or Contractor. The Architect/Engineer's response to such requests will be made with reasonable promptness and within any time limits agreed upon. The Architect/Engineer shall secure the Owner's written approval before issuing instructions, interpretations, or judgments to the Contractor which change the scope of the Work or which modify or change the terms and conditions of any of the Contract Documents. (1) Interpretations and decisions of the Architect/Engineer will be consistent with the intent of and reasonably inferable from the Contract Documents and will be in writing or in the form of Drawings. When making such interpretations and decisions, the Arch itect/Engineer will endeavor to secure faithful performance by the Contractor. (m)The Arch itect/Engineer's decisions on matters relating to aesthetic effect will be final if consistent with the intent expressed in the Contract Documents provided that the Arch itect/Engineer has prior written approval of the Owner. 4.3 CLAIMS AND DISPUTES (a) Definition; General Notice of Claim Procedure. As used in these General Conditions, a "Claim" means a demand or assertion by one of the parties to the Contract seeking an adjustment of the terms of the Contract Documents, of the Contract Sum, of the Contract Time, or some other relief in respect to the terms of the Contract Documents. The term also includes all other disputes between the Owner and the Contractor arising out of or relating to the Project or the Contract Documents, including but not limited to claims that work was outside the scope of the Contract Documents. The responsibility to substantiate the Claim and the burden of demonstrating compliance with this provision shall rest with the party making the Claim. Except where otherwise provided in the Contract Documents, a Claim by the Contractor, whether for additional compensation, additional time, or other relief, including but not limited to claims arising from concealed conditions, MUST BE MADE BY WRITTEN NOTICE TO THE ARCHITECT/ENGINEER AND THE OWNER WITHIN FOURTEEN (14) DAYS AFTER OCCURRENCE OF THE EVENT OR EVENTS GIVING RISE TO THE PARTICULAR CLAIM. Every Claim of the Contractor, whether for additional compensation, additional time, or other relief, including but not limited to claims arising from concealed conditions, shall be signed and sworn to by an authorized corporate officer (if not a corporation, then an official of the company authorized to bind the Contractor by his signature) of the Contractor, verifying the truth and accuracy of the Claim. THE CONTRACTOR SHALL BE DEEMED TO HAVE WAIVED ANY CLAIM NOT MADE STRICTLY IN ACCORDANCE WITH THE PROCEDURE AND TIME LIMITS SET OUT IN THIS PARAGRAPH. (b) Referral to the Architect/Engineer. Claims, disputes, and other matters in question between the Contractor and the Owner relating to the progress or execution of the Work or the interpretation of the Contract Documents shall be referred to the Arch itect/Engineer for recommendation to the Owner, which recommendation the Architect/Engineer will furnish in writing within a reasonable time, provided proper and adequate substantiation has been received. Failure of the Contractor to submit the Claim Contract 5963 EXHIBIT 4 to the Architect/Engineer for rendering of a recommendation to the Owner shall constitute a waiver of the Claim. (c) Continuing Contract Performance. Pending final resolution of a claim the Contractor shall proceed diligently with performance of the Work and the Owner shall continue to make payments in accordance with the Contract Documents. (d) Claims for Concealed or Unknown Conditions. No adjustment in the Contract Sum or Time associated with concealed or unknown conditions will normally be considered or allowed; provided, however, that the Contract Sum or Time may be adjusted by the Owner in such circumstances only if: (1) a concealed subsurface condition is encountered in the course of performance of the Work; (2) a concealed or unknown condition in an existing structure is at variance with conditions indicated by the Contract Documents; or (3) an unknown physical condition is encountered below the surface of the ground or in an existing structure which is of an unusual nature and materially different from those ordinarily encountered and generally recognized as inherent in the character of the Work; and (4) a notice of claim with proper and adequate substantiation is presented pursuant to Subparagraph 4.3(a) of these General Conditions; and (5) the Owner and the Architect/Engineer determine that: (i) prior to submitting its bid for the Work, the Contractor used reasonable diligence to fully inspect the portion of the Project site where the condition was discovered; and (ii) the work caused or required by the concealed or unknown condition at issue can be considered extra work to the extent that additional new Drawings must be prepared and issued and new construction beyond the scope of the Contract Documents is required. (e) Disclaimer of Warranties as to Reports, Drawings, and Specifications. PROJECT SITE INFORMATION AND REPORTS (INCLUDING BUT NOT LIMITED TO SOILS TESTING REPORTS, GEOTECHNICAL REPORTS, OR ENVIRONMENTAL SITE ASSESSMENTS) PROVIDED BY THE OWNER AND THE ARCHITECT/ENGINEER IN THE PROJECT MANUAL OR BY OTHER MEANS SHALL BE UTILIZED BY THE CONTRACTOR AT THE CONTRACTOR'S OWN RISK. THE OWNER AND THE ARCHITECT/ENGINEER DO NOT GUARANTEE OR WARRANT ANY INFORMATION SHOWN IN THE PROJECT SITE INFORMATION AND REPORTS. (f) Claims for Additional Cost. If the Contractor wishes to make a claim for an increase in the Contract Sum, written notice as provided in this Paragraph 4.3 shall be given before proceeding to execute the Work. Prior notice is not required for claims relating to an emergency endangering life or property arising under Paragraph 10.3. In addition, the Contractor's request for an increase in the Contract Sum for any reason (other than work performed under emergency conditions) shall be made far enough in advance of required work to allow the Owner and the Architect/Engineer a sufficient amount of time, without Contract 5963 EXHIBIT 4 adversely affecting the construction schedule, to review the request, prepare and distribute such additional documents as may be necessary to obtain suitable estimates or proposals and to negotiate, execute and distribute a Change Order for the required work if the Contractor believes that additional cost is involved for reasons including but not limited to: (1) a written interpretation from the Architect/Engineer; (2) a written order for a minor change in the Work issued by the Architect/Engineer; (3) failure of payment by the Owner; (4) termination of the Contract by the Owner; (5) the Owner's temporary suspension of all or any portion of the Work where the Contractor was not at fault; or (6) other reasonable grounds. (g) Injury or Damage to Person or Property. If the Contractor suffers injury or damages to person or property because of an act or omission of the Owner, or of any of the Owner's officers, employees or agents, written, sworn -to notice of any claim for damages or injury shall be given as provided in Subparagraph 4.3(a). The notice shall provide sufficient detail to enable the Architect/Engineer and the Owner to investigate the matter. (h) Subcontractor Pass -Through Claims. In the event that any Subcontractor of the Contractor asserts a claim to the Contractor that the Contractor seeks to pass through to the Owner under the Contract Documents, any entitlement of the Contractor to submit and assert the claim against the Owner shall be subject to: (1) the requirements of Paragraph 4.3 of these General Conditions; and (2) the following additional three requirements listed below, all three of which additional requirements shall be conditions precedent to the entitlement of the Contractor to seek and assert such claim against the Owner: (ii) The Contractor shall either (A) have direct legal liability as a matter of contract, common law, or statutory law to the Subcontractor for the claim that the Subcontractor is asserting or (B) the Contractor shall have entered into a written liquidating agreement with the Subcontractor, under which agreement the Contractor has agreed to be legally 'responsible to the Subcontractor for pursing the assertion of such claim against the Owner under the Contract and for paying to the Subcontractor any amount that may be recovered, less Contractor's included markup (subject to the limits in the Contract Documents for any markup). The liability or responsibilities shall be identified in writing by the Contractor to the Owner at the time such claim is submitted to Owner, and a copy of any liquidating agreement shall be included by the Contractor in the claim submittal materials. (ii) The Contractor shall have reviewed the claim of the Subcontractor prior to its Contract 5963 EXHIBIT 4 submittal to Owner and shall have independently evaluated such claim in good faith to determine the extent to which the claim is believed in good faith to be valid. The Contractor shall also certify, in writing and under oath to the Owner, at the time of the submittal of such claim, that the Contractor has made a review, evaluation, and determination that the claim is made in good faith and is believed to be valid. (iii) The Subcontractor making the claim to the Contractor shall certify in writing and under oath that it has compiled, reviewed and evaluated the merits of such claim and that the claim is believed in good faith by the Subcontractor to be valid. A copy of the certification by the Subcontractor shall be included by Contractor in the claim submittal materials. (3) Any failure of the Contractor to comply with any of the foregoing requirements and conditions precedent with regard to any such claim shall constitute a waiver of any entitlement to submit or pursue such claim. (4) Receipt and review of a claim by the Owner under this Subparagraph shall not be construed as a waiver of any defenses to the claim available to the Owner under the Contract Documents or law. (i) Owner's Right to Order Acceleration and to Deny Claimed and Appropriate Time Extensions, in Whole or in Part. The Contractor acknowledges and agrees that Substantial Completion of the Work by or before the Scheduled Completion Date is of substantial importance to Owner. The following provisions, therefore, will apply: (1) If the Contractor falls behind the approved construction schedule for whatever reason, the Owner shall have the right, in the Owner's sole discretion, to order the Contractor to develop a recovery schedule as described in Paragraph 3.10 or to accelerate its progress in such a manner as to achieve Substantial Completion on or before the Contract Time completion date or such other date as the Owner may reasonably direct and, upon receipt, the Contractor shall take all action necessary to comply with the order. In such event, any possible right, if any, of the Contractor to additional compensation for any acceleration shall be subject to the terms of this Subparagraph (i). (2) In the event that the Contractor is otherwise entitled to an extension of Contract Time and has properly initiated a Claim for a time extension in accordance with Subparagraph 4.3(a) above, the Owner shall have the right, in the Owner's sole discretion, to deny all, or any part, of the Claim for extension of Contract Time by giving written notice to the Contractor provided within fourteen (14) days after receipt of the Contractor's Claim. If the Owner denies the Contractor's claim' for an extension of Contract Time under this Clause (i)(2), either in whole or in part, the Contractor shall proceed to prosecute the Work in such a manner as to achieve Substantial Completion on or before the then existing Scheduled Completion Date. (3) If the Contractor would have been entitled to a time extension for a reason specifically allowed under the Contract Documents, for an amount of time that would have justified approval by the Owner if not for the need and right to Contract 5963 EXHIBIT 4 accelerate, the Contractor may initiate a Claim for acceleration costs pursuant to Subparagraph 4.3(a). Any resulting Claim for acceleration costs properly initiated by the Contractor under Subparagraph 4.3(a) above shall be limited to those reasonable and documented direct costs of labor, materials, equipment, and supervision solely and directly attributable to the actual acceleration activity necessary to bring the Work back within the then existing approved construction schedule. These direct costs include the premium portion of overtime pay, additional crew, shift, or equipment costs if requested in advance by the Contractor and approved in writing by the Owner. A percentage markup for the prorated cost of premium on the existing performance and payment bonds and required insurance, not to exceed 5%, will be allowed on the claimed acceleration costs. NO OTHER MARKUP FOR PROFIT, OVERHEAD (INCLUDING BUT NOT LIMITED TO HOME OFFICE OVERHEAD) OR ANY OTHER COSTS WILL BE ALLOWED ON ANY ACCELERATION CLAIM. The Owner shall not be liable for any costs related to an acceleration claim other than those described in this Clause (i)(3). (i) Waiver of Claims; Final Payment. The making of final payment shall constitute a waiver of claims by the Owner except those arising from: (1) claims, security interests, purported liens, or other attempted encumbrances arising out of the Contract and remaining unsettled; (2) defective or nonconforming Work appearing after Substantial Completion; (3) latent defects, as defined in Subparagraph 12.2(d), appearing after Final Completion; or (4) the terms of general and special warranties required by the Contract Documents or allowed or implied by law. (k) THE CONTRACTOR SHALL NOT BE ENTITLED TO RECOVER ATTORNEY'S FEES AS A PART OF ANY CLAIM MADE UNDER THE CONTRACT DOCUMENTS OR IN ANY SUBSEQUENT LAWSUIT OR ALTERNATIVE DISPUTE RESOLUTION PROCEEDING. (1) No Waiver of Governmental Immunity. NOTHING IN THE CONTRACT DOCUMENTS SHALL BE CONSTRUED TO WAIVE THE OWNER'S GOVERNMENTAL IMMUNITY FROM LAWSUIT, WHICH IMMUNITY IS EXPRESSLY' RETAINED TO THE EXTENT IT IS NOT CLEARLY AND UNAMBIGUOUSLY WAIVED BY STATE LAW. (a) A Subcontractor is person or entity who has a direct contract with the Contractor to perform a portion of the Work at the Project site or to supply materials or equipment to the Contractor by purchase or lease for use in performance of or incorporation into the Contract 5963 EXHIBIT 4 Work. The term "Subcontractor" is referred to throughout the Contract Documents as if singular in number and means a Subcontractor or an authorized representative of the Subcontractor. The term "Subcontractor" does not include a separate contractor or subcontractors of a separate contractor. (b) A Sub -subcontractor is a person or entity who has a direct or indirect contract with a Subcontractor to perform a portion of the Work at the Project site or to supply materials or equipment to the Subcontractor or another Sub -subcontractor by purchase or lease for use in performance of or incorporation into the Work. The term "Sub -'subcontractor" is referred to throughout the Contract Documents as if singular in number and means a Sub - subcontractor or an authorized representative of the Sub -subcontractor. 6.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS THE O' (a) Immediately after the award of the Contract by the Owner, and before the Building Construction Services Agreement is signed by the Contractor and the Owner, the Contractor shall furnish to the Architect/Engineer in writing, for acceptance by the Owner and the Architect/Engineer, a list of the names, addresses, telephone numbers, M/WBE certification numbers (where applicable), and type of work of the Subcontractors (including those who are to furnish materials or equipment fabricated to a special design), proposed for the principal portions of the Work, including furnishings when made a part of the Contract. The Contractor shall immediately notify the Owner in writing of any changes in the list as they occur. The Architect/Engineer will promptly reply to the Contractor in writing stating whether or not the Owner or the Architect/Engineer, after due investigation, has reasonable objection to any such proposed person or entity. Failure of the Owner or Architect/Engineer to reply promptly shall constitute notice of no reasonable objection. (b) The Contractor shall not contract with a proposed person or entity to whom the Owner or Architect/Engineer has made reasonable and timely objection. (c) Architect/Engineer's and Owner's approval of or objection to any Subcontractor or of a particular process or material will not relieve the Contractor of his responsibility for performance of Work as called for under the Contract Documents, and shall not provide a basis for any claim for additional time or money on the part of the Contractor. Approval shall not be construed to create any contractual relationship between the Subcontractor and either the Owner or Architect/Engineer. In no event shall the Contract Sum be increased as a result of the rejection of any Subcontractor. (d) The Contractor shall not change a Subcontractor previously selected if the Owner or Architect/Engineer makes reasonable objection to such change. 5.3 SUBCONTRACTUAL RELATIONS (a) By appropriate agreement, written where legally required for validity, the Contractor shall require each Subcontractor, to the extent of the Work to be performed by the Subcontractor, to be bound to the Contractor by the terms of the Contract Documents (including but not limited to these General Conditions), and to assume toward the Contractor all the obligations and responsibilities which the Contractor, by the Contract Contract 5963 EXHIBIT 4 Documents, assumes toward the Owner and the Architect/Engineer. Each subcontract agreement shall preserve and protect the rights of the Owner and the Architect/Engineer under the Contract Documents (including but not limited to these General Conditions) with respect to the Work to be performed by the Subcontractor so that subcontracting will not prejudice the rights of the Owner and the Architect/Engineer. Where appropriate, the Contractor shall require each Subcontractor to enter into similar agreements with Sub - subcontractors. The Contractor shall make available to each proposed Subcontractor, prior to the execution of the subcontract agreement, co ' pies of the Contract Documents to which the 'Subcontractor is to be bound. Subcontractors shall similarly make copies of applicable portions of such Documents available to their respective proposed Sub - subcontractors. (b) The Contractor is solely responsible for making payments properly to the Contractor's Subcontractors on the Project. During performance of the Work, the Contractor shall comply with the following additional rules regarding Subcontractor payments: (1) The Contractor shall submit, beginning with the Second Application and Certificate for Payment, a Subcontractor Payment Report (the "Report") with each Application and Certificate for Payment. The Report shall show all payments made to date by the Contractor (plus existing retainage) to each Subcontractor involved in the Project. The Report shall be made on a form approved and supplied by the Owner. As an alternative to the Report, the Contractor may furnish Affidavits of Payment Received with the Application and Certificate for Payment, which affidavits shall be executed by each Subcontractor owed money and paid during the previous progress payment period for work or materials furnished on the Project. RECEIPT BY THE OWNER OF THE REPORT OR AFFIDAVITS OF PAYMENT RECEIVED SHALL BE A CONDITION PRECEDENT TO PAYMENT ON ANY APPLICATION. (2) If, for any reason, the Contractor is withholding payment to a Subcontractor due to a dispute or other problem with performance, the Contractor shall note the amount withheld and that payment is in dispute. The Owner may require the Contractor to document and verify the dispute or other problem in question. (3) The Owner reserves the right in its sole discretion, to withhold payment to the Contractor pursuant to Paragraph 9.5(a) of the General Conditions, should it appear from the Report, statements of payment received or other information furnished to the Owner that: (i) the Report has not been properly completed; (ii) the Contractor has knowingly pfovided false information fegarding payment of any Subcontractor; or (iii) the Contractor has otherwise failed to make payments properly to any Subcontractor. (4) THE CONTRACTOR SHALL NOT HAVE ANY RIGHT TO MAKE A CLAIM FOR ADDITIONAL TIME OR ADDITIONAL COMPENSATION AS A RESULT OF THE OWNER'S OR ARCHITECT/ENGINEER'S ENFORCEMENT OF THIS Contract 5963 EXHIBIT 4 SUBPARAGRAPH 5.3(b). NO PROVISION OF THIS SUBPARAGRAPH OR ANY OF THE CONTRACT DOCUMENTS SHALL BE CONSTRUED TO CREATE A CONTRACTUAL RELATIONSHIP, EXPRESS OR IMPLIED, BETWEEN ANY SUBCONTRACTOR AND EITHER THE OWNER OR THE ARCHITECT/ENGINEER AND SHALL NOT BE CONSTRUED TO MAKE ANY SUBCONTRACTOR OR ANY OTHER PERSON OR ENTITY A THIRD PARTY BENEFICIARY OF THE CONTRACT BETWEEN THE OWNER AND THE CONTRACTOR. 5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS In the event of a termination of this Contract by the Owner under Article 14, the Contractor shall, if requested in writing by the Owner, within fifteen (15) days after the date notice of termination is sent, deliver and assign to Owner, or any person or entity acting on the Owner's behalf, any or all subcontracts made by Contractor in the performance of the Work, and deliver to the Owner true and correct originals and copies of the subcontract documents. In the event assignment is not requested by the Owner, Contractor shall terminate all subcontracts to the extent that Owner has not directed assignment of same and to the extent that they relate to the performance of Work terminated by the notice of termination. 6.1 OWNER'S RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS (a) The Owner reserves the right to perform construction or operations related to the Project with the Owner's own forces, and to award separate contracts in connection with other portions of the Project or other construction or operations on the Project site under Conditions of the Contract identical or substantially similar to these General Conditions, including those portions related to insurance and waiver of subrogation. If the Contractor claims that delay or additional cost is involved because of such action by the Owner, the Contractor shall make a claim as provided elsewhere in and in accordance with the Contract Documents. (b) When separate contracts are awarded for different portions of the Project or other construction or operations on the Project site, the term "Contractor" in the Contract Documents in each case shall mean the Contractor who executes each separate Building Construction Services Agreement with the Owner. (c) The Owner shall provide for coordination of the activities of the Owner's own forces and of each separate contractor with the Work of the Contractor, who shall cooperate with them. The Contrdctor shall participate with 'other separate contractors and the Owner in reviewing their construction schedules when directed to do so. The Contractor shall, with the approval of the Owner, make any revisions to the construction schedule deemed necessary after a joint review and mutual agreement. The construction schedules shall then constitute the schedules to be used by the Contractor, separate contractors, and the Owner, until subsequently revised by mutual agreement or by written Change Order. If the Contractor believes it is entitled to an adjustment of the Contract Sum under the circumstances, the Contractor shall submit a written proposal for a Change Order pursuant to Article 7 of the General Conditions. In the event the Contractor's Change Contract 5963 EXHIBIT 4 Order proposal is denied by the Owner, the Contractor must submit any Claim pursuant to Paragraph 4.3 of the General Conditions. (d) Unless otherwise provided in the Contract Documents, when the Owner performs construction or operations related to the Project with the Owner's own forces, the Owner shall be deemed to be subject to the same obligations and to have the same rights which apply to the Contractor under these General Conditions, including, without excluding others, those stated in Article 3, this Article 6, and Articles 10, 11 and 12. (a) The Contractor shall afford the Owner and separate contractors' reasonable opportunity for access to and storage of their materials and equipment and the performance of their activities and shall coordinate the Contractor's construction and operations with the separate contractors as required by the Contract Documents. (b) If part of the Contractor's Work depends for proper execution or results upon construction or operations by the Owner or a separate contractor, the Contractor shall, prior to proceeding with that portion of the Work, promptly report to the Architect/Engineer apparent discrepancies or defects in the other construction that would render it unsuitable for proper execution and results. Failure of the Contractor to so report shall constitute an acknowledgment that the Owner's or separate contractors completed or partially completed construction is fit and proper to receive the Contractor's Work, except as to defects not then reasonably discoverable. (c) The Owner shall not be liable to the Contractor for damages suffered by the Contractor due to the fault or negligence of a separate contractor or through failure of a separate contractor to carry out the directions of the Owner or the Architect/Engineer. Should any interference occur between the Contractor and a separate contractor, the Architect/Engineer or the Owner may furnish the Contractor with written instructions designating priority of effort or change in methods, whereupon the Contractor shall immediately comply with such direction. In such event, the Contractor shall be entitled to an extension of the Contract Time only for unavoidable delays verified by the Architect/Engineer; no increase in the Contract Sum, however, shall be due to the Contractor. (d) The Contractor shall promptly remedy damage wrongfully caused by the Contractor to completed or partially completed construction or to property of the Owner or separate contractors as provided in Subparagraph 10.2(e). (e) Should the Contractor cause damage to the work or property of any separate contractor on the Project, the Contractor shall, upon due notice, settle with the separate contractor by agreement, if the separate contractor will so settle. If the separate contractor sues the Owner or submits a claim on account of any damage alleged to have been so sustained, the Owner shall notify the Contractor who shall defend such proceedings, at the Contractor's expense, and if any judgment or award against the Owner arises from the separate contractor's claim, the Contractor shall pay or satisfy it and shall reimburse the Owner for all attorney's fees and costs which the Owner has incurred. Contract 5963 EXHIBIT 4 (f) The Owner and each separate contractor shall have the same responsibilities for cutting and patching as are described for the Contractor in Paragraph 3.14. 6.3 OWNER'S RIGHT TO CLEAN UP If a dispute arises among the Contractor, separate contractors and the Owner as to the responsibility under their respective contracts for maintaining the Project site and surrounding area free from waste materials and rubbish as described in Paragraph 3.15, the Owner may clean up and allocate the cost among those responsible as the Architect/Engineer recommends to be just. ! 61 1 (a) A Change Order is a written order to the Contractor, signed by the Owner and the Architect/Engineer, issued after execution of the Contract, authorizing a change in the Work, an adjustment in the Contract Sum, or an adjustment to the Contract Time, consistent with other applicable provisions of this Contract. The Owner, without invalidating the Contract and without requiring notice of any kind to the sureties, may order changes to the scope of Work under the Contract by additions, deletions, or other revisions, the Contract Sum and Contract Time to be adjusted consistent with other applicable provisions of this Contract. All Change Orders shall be executed on a Change Order form approved by the Owner and the Owner's City Attorney. (b) In addition to the Owner and the Architect/Engineer, the Contractor shall sign all Change Orders to verify and confirm the terms and conditions established by Change Order; however, should the Contractor refuse to sign a Change Order, this shall not relieve him of his obligation to perform the change directed by the Owner and the Architect/Engineer to the best of his ability in accordance with the provisions of this Article 7. A Change Order signed by the Contractor indicates his agreement with all of the changes approved, including the adjustment in the Contract Sum or the Contract Time. EACH CHANGE ORDER SHALL BE SPECIFIC AND FINAL AS TO PRICES AND EXTENSIONS OF TIME, WITH NO RESERVATIONS OR OTHER PROVISIONS ALLOWING FOR FUTURE ADDITIONAL MONEY OR TIME AS A RESULT OF THE PARTICULAR CHANGES IDENTIFIED AND FULLY COMPENSATED IN THE CHANGE ORDER. The execution of a Change Order by the Contractor shall constitute conclusive evidence of the Contractor's agreement to the ordered changes in the Work. The Contractor forever releases any claim against the Owner for additional time or compensation for matters relating to or arising out of or resulting from the Work included within or affected by the executed Change Order. This release applies to claims related to the cumulative impact of all Change Orders and to any claim related to the effect of a change on other Work. (c) No extra work (except under emergency conditions) or changes shall be made nor shall any substitutions, changes or additions to or omissions or deviations from the requirements of the Drawings and Specifications be made unless pursuant to a written Change Order signed by the Owner and the Architect/Engineer, it being expressly understood that the Owner shall not be liable for the cost of extra work or any substitution, change, addition, omission or deviation from the requirements of the Drawings or Specifications unless the same shall have been authorized in writing by the Contract 5963 EXHIBIT 4 Owner and the Architect/Engineer in a written change order or other Amendment. The provisions of this Paragraph 7.1 shall control in the event of any inconsistency between such provisions and the other provisions of this Article 7. See Subparagraph 10.3(x) of the General Conditions for Change Orders under emergency conditions. (d) The method of determining the cost or credit to the Owner for any change in the Work shall be one of the following: (1) mutual acceptance of a riot -to -exceed lump sum amount properly itemized and supported by sufficient substantiating data to permit evaluation; (2) unit prices stated in the Contract Documents or subsequently agreed upon; (3) cost to be determined in a manner agreed upon by the parties and a mutually acceptable fixed or percentage fee; or (4) the force account method provided in Subparagraph 7.1(e) (e) If the parties cannot agree to one of the methods of calculating cost provided in Clauses (d) (1), (d) (2), or (d) (3), or if the parties agree to a method but cannot agree to a final dollar figure, or if the Contractor for whatever reason refuses to sign the Change Order in question, the Contractor, provided he receives a written order signed by the Owner, shall promptly proceed with the Work involved. The cost of the Work involved shall then be calculated on the basis of the reasonable jobsite expenditures and savings of those performing the Work attributable to the changes, including a reasonable allowance for overhead and profit, such allowance in any case never to exceed 15%. In such case, the Contractor shall keep an itemized accounting of the Work involved, on a daily basis, in such form and with the appropriate supporting data as the Architect/Engineer and Owner may prescribe. Sworn copies of the itemized accounting shall be delivered to the Architect/Engineer each day during the performance of force account work, with copies to the Owner. FAILURE OF THE CONTRACTOR TO SUBMIT THE SWORN -TO ITEMIZED ACCOUNTING DAILY AS REQUIRED HEREIN SHALL CONSTITUTE A WAIVER BY THE CONTRACTOR OF ANY RIGHT TO DISPUTE THE OWNER'S DETERMINATION OF THE AMOUNT DUE THE CONTRACTOR FOR FORCE ACCOUNT WORK. Costs to be charged under this Subparagraph for force account work are limited to the following: (1) costs of labor, including social security, old age and unemployment insurance, fringe benefits required by agreement or custom, and workers compensation insurance; (2) costs of materials, supplies and equipment (but not to include off-site storage unless approved in writing by the Owner), whether incorporated or consumed; (3) rental costs of machinery and equipment, exclusive of hand tools, whether rented from the Contractor or others; (4) costs of premiums for all bonds and insurance related to the Work; and Contract 5963 EXHIBIT 4 (5) additional costs of supervision and field office personnel directly attributable to the changed Work. Pending final determination of cost to the Owner, payment of undisputed amounts on force account shall be included on the Architect/Engineer's Certificate of Payment as work is completed. (f) The amount of credit to be allowed to the Owner for any deletion of Work or any other change which results in a net decrease of the Contract Sum shall be the amount of actual net cost confirmed by the Architect/Engineer plus the stated percentage for overhead" and profit. When both additions and deletions or credits covering related Work or substitutions are involved in any one change, the allowance for overhead and profit shall be figured on the basis of the net increase or decrease with respect to that change. 7.2 SUPPLEMENTAL AGREEMENTS A written Supplemental Agreement can also be used to implement changes in the Work instead of a Change Order form, including but not limited to situations involving partial occupancy of the Work under Paragraph 9.8, a change made to the Drawings or the Specifications without an increase in the Contract Sum, or special circumstances where it is necessary or more appropriate for the Owner to use a Supplemental Agreement. Written Supplemental Agreements shall have a status equal to that of Change Orders for purposes of priority of Contract Documents interpretation, except that to the extent of a conflict, later Supplemental Agreements in time control over earlier Supplemental Agreements, and the latest Change Order or Supplemental Agreement in time controls over earlier dated Change Orders and Supplemental Agreements. The rules of Subparagraphs 7.1(b) through (f) shall also apply to the negotiation and execution of Supplemental Agreements. 7.3 MINOR CHANGES IN THE WORK The Architect/Engineer, after notifying the Owner, shall be authorized to order minor changes in the Work not involving an adjustment in the Contract Sum or an extension of the Contract Time and not inconsistent with the intent of the Contract Documents. Minor changes shall be effected by written order, and shall be binding on the Owner and the Contractor. The Contractor shall carry out such written orders promptly. These written orders shall not be deemed to change or impact the Contract Sum or the Contract Time. Contractor shall have no Claim for any minor change ordered to the Work under this Paragraph 7.3 unless the Contractor submits its change proposal, prior to complying with the minor change ordered and in no event later than ten (10) working days from the date the minor change was ordered, to the Owner for approval. 7.4 TIME REQUIRED TO PROCESS AMENDMENTS (a) All' of the Contractor's responses to proposal requests shall be accompanied by a complete, itemized breakdown of costs. Responses to proposal requests shall be submitted sufficiently in advance of the required work to allow the Owner and the Architect/Engineer a minimum of thirty (30) calendar days after receipt by the Architect/Engineer to review the itemized breakdown and to prepare or distribute additional documents as may be necessary. All of the Contractor's responses to proposal requests shall include a statement that the cost described in the response represents the complete, total and final cost and additional Contract Time associated with the extra work, change, addition to, omission, deviation, substitution, or other grounds for seeking Contract 5963 EXHIBIT 4 extra compensation under the Contract Documents, without reservation or further recourse. (b) All Amendments require approval by either the City Council or, where authorized by the state law and City ordinance, by the City Manager pursuant to Administrative Action. The approval process requires a minimum of forty-five (45) calendar days after submission to the Owner in final form with all supporting data. Receipt of a submission by Owner does not constitute acceptance or approval of a proposal, nor does it constitute a warranty that the proposal will be authorized by City Council Resolution or Administrative Action. THE TIME REQUIRED FOR THE APPROVAL PROCESS SHALL NOT BE CONSIDERED A DELAY AND NO EXTENSIONS TO THE CONTRACT TIME OR INCREASE IN THE CONTRACT SUM WILL BE CONSIDERED OR GRANTED AS A RESULT OF THIS PROCESS. Pending the approval described above, the Contractor will proceed with the work under a pending Amendment only if directed in writing by the Owner. ON&W-1390 9 tAM61 W NFLA (a) Unless otherwise provided, the Contract Time is the period of time, including authorized adjustments, allotted in the Contract Documents for Substantial Completion of the Work. (b) The date of commencement of the Work is the date established in the notice to proceed from the Owner. The date of commencement shall not be postponed by the failure of the Contractor, or ' of persons or entities for whom the Contractor is responsible to act promptly to commence the Work. If the Owner unreasonably delays the issuance of the notice to proceed through no fault of the Contractor, the Contractor shall be entitled only to an equitable extension of the Contract Time; the Contract Sum shall remain unchanged. (c) The date of Substantial Completion is the date certified by the Architect/Engineer in accordance with Paragraph 9.7. (d) The term "day" as used in the Contract Documents shall mean a calendar day, beginning and ending at 12:00 midnight, unless otherwise specifically defined by special provision. .IRA9 Z�7li: D.Y��►i1Z�7� a s � (a) Time limits stated in the Contract Documents are of the essence of the Contract. By executing the Building Construction Services Agreement, the Contractor confirms that the Contract Time is a reasonable period for performing the Work. (b) The Contractor shall not knowingly, except by agreement with or instruction of the Owner in writing, prematurely commence operations on the Project site or elsewhere prior to the effective date of insurance to be furnished by the Contractor as required by Article 11. The date of commencement of the Work shall not be changed by the effective date of insurance required by Article 11. Contract 5963 EXHIBIT 4 (c) Liquidated Damages. The Contractor shall proceed expeditiously with adequate forces, materials, and equipment, and shall achieve Substantial Completion within the Contract Time. If the Contractor fails or refuses to complete the Work within the Contract Time as specified in the Bid Proposal form, the Building Construction Services Agreement, or in any proper extension of the Contract Time granted by the Owner, then the Contractor agrees, as a part of the consideration for the awarding of the Contract, to pay to the Owner the amount of liquidated damages (hereinafter called the "Stipulated Amount") as stipulated in the Bid Proposal form and the Building Construction Services Agreement for each calendar day that the Contractor has not Substantially Completed the Work after the expiration of the Contract Time provided. The Stipulated Amount is not to be considered as a penalty, but shall be deemed, taken, or treated as reasonable liquidated damages, fixed and agreed upon by and between the Contractor and the Owner because of the impracticality and extreme difficulty of fixing and ascertaining the actual damages the Owner would sustain in the event of the Contractor's late completion of the Project, and the stipulated amount is agreed to be the daily amount of damages that the Owner would sustain. The Stipulated Amount, as it accrues, will be retained from any portion of the Contract Sum due or that may become due to the Contractor. In the event the portion of the Contract Sum retained by the Owner is insufficient to recover the Stipulated Amount, then the Contractor or the Contractor's Surety shall pay to the Owner any additional liquidated damages due that are in excess of the funds remaining unpaid in the Contract Sum. The Owner shall be the sole judge as to whether or not the Work has been Substantially Completed within the calendar days allotted, which shall include the original Contract Time and any proper extension of the Contract Time granted in writing by the Owner. Should the Contractor dispute the Owner's determination of liquidated damages due, however, or should the Contractor, or the Contractor's agents or assigns, institute any legal action against the Owner to enforce rights under the Contract Documents, then this Subparagraph 8.2(c) shall not be construed to prevent the Owner from seeking full recovery for any and all actual damages suffered by the Owner and attributable to the Contractor, as an alternative to all liquidated damages due. 8.3 DELAYS AND EXTENSIONS OF TIME (a) If the Contractor is delayed at any time in the progress of the Work by an act or neglect of the Owner or Architect/Engineer, or of an employee of either, or of a separate contractor employed by the Owner, or by changes ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor's control, or by delay authorized by the Owner pending a claim, or by other causes which the Architect/Engineer determines may justify delay, then the Contract Time shall be extended by Change Order for such reasonable time as the Architect/Engineer and Owner may determine. (b) Claims relating to Contract Time and time extensions shall be'made in accordance with the applicable provisions of Paragraph 4.3. (c) No Damages for Delay. NOTWITHSTANDING ANY OTHER PROVISIONS OF THE CONTRACT DOCUMENTS, INCLUDING THE GENERAL CONDITIONS, NO ADJUSTMENT SHALL BE MADE TO THE CONTRACT SUM AND THE CONTRACTOR SHALL NOT BE ENTITLED TO CLAIM OR RECEIVE ANY ADDITIONAL COMPENSATION AS A RESULT OF OR ARISING OUT OF ANY DELAY, HINDRANCE, DISRUPTION, FORCE MAJEURE, IMPACT, OR Contract 5963 EXHIBIT 4 INTERFERENCE, INTENTIONAL OR UNINTENTIONAL, FORESEEN OR UNFORESEEN, WHICH INCREASES THE TIME TO COMPLETE THE WORK, INCLUDING BUT NOT LIMITED TO ANY DELAYS CAUSED IN WHOLE OR IN PART BY THE ACTS, OMISSIONS, FAILURES, NEGLIGENCE, OR FAULT OF THE OWNER, THE ARCHITECT/ENGINEER, OR THE OWNER'S REPRESENTATIVE, AN EXTENSION OF THE CONTRACT TIME UNDER SUBPARAGRAPH 8.3(a) BEING THE CONTRACTOR'S SOLE REMEDY. (d) The Owner shall have the right to occupy, without prejudice to the right of either party, any completed or largely completed portions of the structure or Work, notwithstanding the fact that the Contract Time for completing all or a portion of the Work may not have expired. Partial occupancy and use shall not be deemed as an acceptance of the Work taken or used. (e) The Contractor shall promptly suspend the Work when either the Contractor or the Owner is ordered to do so by a court order from a court having lawful jurisdiction, and the Contractor will not be entitled to additional compensation by virtue of any delays resulting from the court order. The Contractor will also not be liable to the Owner for a delay caused in fact by the Work being suspended by a court order. (f) The Architect/Engineer, with the consent of the Owner, shall have the authority to suspend the Work, in whole or in part, for such period or periods as the Architect/Engineer deems necessary due to unusual or severe weather conditions as are considered unfavorable for the suitable prosecution of the Work, or due to failure on the part of the Contractor to correct conditions considered unsafe for workmen or the general public. If it should become necessary to stop the Work for an indefinite period, the Contractor shall store all materials in such a manner that they will not obstruct or impede the public unnecessarily or become damaged in any way, and shall take every precaution to prevent damage or deterioration of the Work performed. In cases of suspension of the Work under this Subparagraph, the Contractor shall also provide suitable drainage about the Work and erect temporary structures where necessary. The Contractor shall not suspend the Work in whole or in part without written authority from the Architect/Engineer or the Owner, and shall resume the Work promptly when notified by the Architect/Engineer or the Owner to resume operations. (g) In the event of a delay that is the responsibility of the Contractor or any of the Subcontractors, for which the Contractor is not entitled to a time extension under the provisions of this Contract, the Owner may direct that the Work be accelerated by means of overtime, additional crews or additional shifts, or resequencing. This acceleration shall be at no cost to the Owner and will continue until the Contract Time is restored. In the event of a delay for which the Contract6r is entitled to a time extension, as determined by the Architect/Engineer, Owner may similarly direct acceleration and the Contractor agrees to perform same on the basis that the Contractor will be reimbursed only to the extent described in Subparagraph 4.3(i). THE CONTRACTOR EXPRESSLY WAIVES ANY OTHER COMPENSATION RESULTING FROM ACCELERATION, SUCH AS LOSS OF LABOR PRODUCTIVITY OR EFFICIENCY. Contract 5963 EXHIBIT 4 9.1 CONTRACT SUM The Contract Sum is stated in the Building Construction Services Agreement and, including authorized adjustments, is the total amount of compensation payable by the Owner to the Contractor for the performance of the Work under the Contract Documents. 9.2 SCHEDULE OF VALUES Before the first Application for Payment, the Contractor shall submit to the Architect/Engineer a schedule of values allocated to various portions of the Work, prepared in such form and supported by such data to substantiate 'its accuracy as the Architect/Engineer may require. This schedule, when approved by the Architect/Engineer and the Owner, shall be used as a basis for the Contractor's Application for Payment. The schedule of values shall follow the trade division of the Specifications. Contractor's Application for Payment shall be filed on the current version of AIA Form G702 (Application and Certificate for Payment), as approved by the Owner. (a) At least ten (10) days before the date established for each progress payment, the Contractor shall submit to the Architect/Engineer an itemized Application for Payment for Work completed in accordance with the schedule of values. The Application shall be notarized, if required, and supported by data substantiating the Contractor's right to payment as the Owner or Architect/Engineer may require, including but not limited to copies of requisitions from Subcontractors and material suppliers, and reflecting the applicable retainage as required in the Contract Documents. Contractor's Application for Payment shall also provide other supporting documentation as the Owner or the other applicable provisions of the Contract Documents may require. (b) Applications for Payment may not include requests for payment of amounts the Contractor does not intend to pay to a Subcontractor because of a good faith dispute, unless the Contractor complies with Clause 5.3(b) (2) of these General Conditions and the Contractor's Payment Bond Surety consents in writing to payment to the Contractor of the funds deemed to be in dispute. (c) Unless otherwise provided in the Contract Documents, progress payments shall include payment for materials and equipment delivered and suitably stored at the Project site for subsequent incorporation into the Work within thirty (30) days after delivery to the Project site. If approved in advance by the Owner, payment may similarly be made for materials and equipment suitably stored away from the Project site at a location agreed upon in writing. Payment for costs incurred in storage of materials or equipment away from the Project site will NOT be made by Owner unless: (1) the Owner has given prior approval of such off-site storage in writing; (2) the materials or equipment are stored in a bonded warehouse located in Denton County and identified with the Project for which they are stored, as evidenced by warehouse receipts and appropriate documents of title; and (3) the materials or equipment stored off-site will be incorporated into the Work within thirty (30) days after delivery. STORAGE IN FACILITIES OF THE MANUFACTURER OR THE CONTRACTOR WILL NOT BE PERMITTED OR Contract 5963 EXHIBIT 4 PAID FOR, UNLESS THE OWNER HAS EXPRESSLY GIVEN PRIOR APPROVAL OF SUCH STORAGE IN WRITING. (d) The Contractor warrants that title'to all Work covered by an Application for Payment will pass to the Owner no later than the time of payment. The Contractor further warrants that upon submittal of an Application for Payment all Work for which Certificates for Payment have been previously issued and payments received from the Owner shall be free and clear of liens, claims, security interests or encumbrances in favor of the Contractor, Subcontractors, material suppliers, or other persons or entities making a claim by reason of having provided labor, materials, and equipment relating to the Work. (e) All materials or equipment delivered to the Project site earlier than thirty (30) days prior to an approved schedule for delivery to the Project site shall be classified as an "early delivery." All early delivery materials or equipment must have the express written permission of the Owner to be stored on the Project site. If any unauthorized early delivery occurs, Contractor shall, at Contractor's expense or at the expense of the responsible Subcontractor or Supplier, cause such early delivery to be removed from the Project site and stored off-site until required at the Project site. All costs of labor, transportation and storage will be included as part of the expense. If the Contractor fails or refuses to remove unauthorized early delivery materials, the Owner may cause such materials to be removed at the Contractor's sole expense, and amounts may be withheld from the Contractor's Application for Payment to reimburse the Owner for any costs incurred in removing unauthorized early delivery materials. OWNER WILL NOT BE RESPONSIBLE FOR THE PROTECTION OF OR RISK OF LOSS ON ANY EARLY DELIVERY MATERIALS OR EQUIPMENT, NOR WILL OWNER BE LIABLE FOR ANY PAYMENT FOR THE EARLY DELIVERY MATERIALS OR EQUIPMENT. Any materials or equipment classified as early delivery will not be approved for payment as stored materials prior to thirty (30) days before the incorporation of the materials or equipment into the Work, unless storage and payment at an earlier date is expressly approved in writing by the Owner. (f) If the Contract Sum is equal to or less than $25,000.00 and performance and payment bonds are not furnished by the Contractor, no payment applied for will be payable under the Contract until the Work has been Finally Completed and accepted. 9.4 CERTIFICATES FOR PAYMENT (a) The Architect/Engineer will, within ten (10) days after receipt of the Contractor's Application for Payment, either issue to the Owner a Certificate for Payment, with a copy to the Contractor, for such amount as the Arch itect/Engineer determines is properly due, or notify the Contractor and Owner in writing of the Architect/Engineer's reasons for withholding certification in whole or in part as'provided in (a) City of Denton General Conditions for Building Construction. (b) Subparagraph 9.5(a). The Certificate for Payment shall be issued on the current version of AIA Form G702 (Application and Certificate for Payment) as approved by the Owner. (c) The issuance of a Certificate for Payment will constitute a representation by the Architect/Engineer to the Owner, based on the Arch itect/Engineer's observations at the site and the data comprising the Application for Payment, that the Work has progressed to the point indicated and that, to the best of the Architect/Engineer's knowledge, information and belief, quality of the Work is in accordance with the Contract Contract 5963 EXHIBIT 4 Documents. The foregoing representations are subject to an evaluation of the Work for conformance with the Contract Documents upon Substantial and Final Completion, to results of subsequent tests and inspections, to minor deviations from the Contract Documents correctable prior to Final Completion and to specific qualifications expressed by the Architect/Engineer. The issuance of a Certificate for Payment will further constitute a representation that the Contractor is entitled to payment in the amount certified, subject to the Owner's approval. The issuance of a Certificate for Payment is not a representation that the Architect/Engineer has: (1) made exhaustive or continuous on-site inspections to check the quality or quantity of the Work; (2) reviewed construction means, methods, techniques, sequences or procedures; (3) reviewed copies of requisitions received from Subcontractors and material suppliers and other data requested by the Owner to substantiate the Contractor's right to payment; or (4) made examination to ascertain how or for what purpose the Contractor has used money previously paid on account of the Contract Sum. (d) Whenever the Application for Payment for Work done since the last previous Application for Payment exceeds one hundred dollars ($100.00) in amount, Owner will pay a percentage of the Application, less applicable retainage, to the Contractor within thirty (30) days following Owner's receipt and approval of the Certificate for Payment certified by the Architect/Engineer. The Application may include acceptable nonperishable materials delivered to the Work or stored as provided for in Paragraph 9.3(c) and the payment will be allowed on the net invoice value, less taxes and applicable retainage. (e) The City is required to withhold retainage for public works contracts in which the total contract price estimate at the time of execution is more than $400,000; however, this requirement is applied by the City for all public works contracts in excess of $50,000. The City may require varying percentage withholding amounts; however, the City requires five percent. The retainage will be withheld by the Owner from each progress payment until final completion of the Work by the Contractor, approval of final completion by the Architect/Engineer, and final acceptance of the Work by the Owner. Unless otherwise required by state law, the retainage percentage as specified above is based upon the original Contract Sum, and will not be affected in the event the original Contract Sum is subsequently increased or decreased by Change Order. (f) No progress payments'shall be made on contracts where performance and payment bonds are not required or furnished. In such instances, payment for the Work performed will be made upon final completion and acceptance by the Owner of all Work. (a) The Architect/Engineer or the Owner may decide not to certify payment and may withhold a Certificate for Payment in whole or in part, to the extent reasonably necessary to protect the Owner's interest, if in the Architect/Engineer's or Owner's opinion the Contract 5963 EXHIBIT 4 representations to the Owner required by Subparagraph 9.4(b) cannot be made. If the Arch itect/Engineer or the Owner is unable to certify payment in the amount of the Application, the Architect/Engineer or the Owner will notify the Contractor as provided in Subparagraph 9.4(a). If the Contractor and Architect/Engineer or the Owner cannot agree on a revised amount, the Architect/Engineer will promptly issue a Certificate for Payment for the amount for which the Architect/Engineer is able to make the required representations to the Owner. The Architect/Engineer or the Owner may also decide not to certify payment or, because of subsequently discovered evidence or subsequent observations, may nullify the whole or a part of a Certificate for Payment previously issued to such extent as may be necessary, in the Architect/Engineer's or Owner's opinion, to protect the Owner from loss because of: (1) defective or nonconforming Work not remedied; (2) third party claims filed or reasonable evidence indicating probable filing of such claims; (3) failure of the Contractor to make payments properly to Subcontractors or for labor, materials, or equipment; (4) reasonable evidence that the Work cannot be completed for the unpaid balance of the Contract Sum; (5) damage to the Owner or another contractor; (6) reasonable evidence that the Work will not be completed within the Contract Time, and that the unpaid balance would not be adequate to cover actual or liquidated damages for the anticipated delay; (7) persistent failure to carry out the Work in accordance with the Contract Documents; or (8) mathematical or other errors that are discovered in the Application for Payment. (b) When each of the above reasons that existed for withholding certification are removed or remedied, certification will be made for amounts previously withheld. (c) The Owner may, at its option, offset any progress payment or final payment under the Contract Documents against any debt (including taxes) lawfully due to the Owner from the Contractor, regardless of whether the amount due arises pursuant to the terms of the Contract Documents or otherwise and regardless of whether or not the debt due to the Owner has been reduced to judgment by a court. M111 U kill" .11 AM LVA I (a) After the Architect/Engineer has issued a Certificate for Payment, the Owner shall make payment in the manner and within the time provided in the Contract Documents, and shall so notify the Architect/Engineer. The Owner shall not be liable for interest on any late or delayed progress payment or final payment caused by any claim or dispute, any Contract 5963 EXHIBIT 4 discrepancy in quantities, any failure to provide supporting documentation or other information required with the Application for Payment or as a precondition to payment under the Contract Documents, or due to any payment the Owner or the Architect/Engineer has a right to withhold or not certify under the Contract Documents. Notwithstanding the foregoing, the Owner may refuse to make payment on any Certificate for Payment (including, without limitation, the final Certificate for Payment) for any default under the Contract Documents, including but not limited to those defaults set forth in Subparagraph 9.5(a), Clauses (1) through (7). The Owner shall not be deemed in default by reason of withholding payment while any Contractor default remains uncured. (b) The Contractor shall promptly pay each Subcontractor, upon receipt of payment from the Owner, out of the amount paid to the Contractor on account of each Subcontractor's portion of the Work, the amount to which said Subcontractor is entitled, reflecting percentages actually retained from payments to the Contractor on account of such Subcontractors portion of the Work. The Contractor shall, by appropriate agreement with each Subcontractor, require each Subcontractor to make payments to Sub -subcontractors in similar manner. (c) The Architect/Engineer will, on request, furnish to a Subcontractor, if practicable, information regarding percentages of completion or amounts applied for by the Contractor and action taken thereon by the Architect/Engineer and the Owner on account of portions of the Work done by such Subcontractor. (d) Neither the Owner nor the Architect/Engineer shall have an obligation to pay or to see to the payment of money to a Subcontractor except as may otherwise be required by law. That obligation belongs to the Contractor or, in the event of the Contractor's failure to pay a Subcontractor, to the Surety on the Payment Bond as required under Paragraph 11.3. (e) Payment to material suppliers shall be treated in a manner similar to that provided in Subparagraphs 9.6(b), (c), and (d). (f) A Certificate for Payment, a progress payment, or partial or entire use or occupancy of the Project by the Owner shall not constitute acceptance of Work not performed in accordance with the Contract Documents. 9.7 SUBSTANTIAL COMPLETION (a) The Date of Substantial Completion of the Work, or designated portion of the Work, is the date certified by the Architect/Engineer when construction is sufficiently completed in accordance with the City Of Denton' General Conditions For Building Construction. (a) the Contract Documents such that the Owner may beneficially occupy and use the Work, or designated portions of the Work, for the purposes for which it is intended and only trivial and insignificant items remain which do not affect the Work as a whole. (b) When the Contractor considers that the Work, or the portion of the Work which the Owner agrees to accept separately, is Substantially Complete, the Contractor shall prepare and submit to the Architect/Engineer a comprehensive list of remaining items to Contract 5963 EXHIBIT 4 be completed or corrected. The Contractor shall proceed promptly to complete and correct items on the list (hereinafter called the "punch list"). Failure to include an item on the punch list does not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents. Upon receipt of the punch list, the Architect/Engineer will make an inspection to determine whether the Work, or designated portion of the Work, is Substantially Complete. If the Architect/Engineer's inspection discloses any item, whether or not included on the punch list, which is not in accordance with the requirements of the Contract Documents and which renders the Work inspected not Substantially Complete the Contractor shall, before issuance of the Certificate of Substantial Completion, complete or correct the item upon notification by the Architect/Engineer. The Contractor shall then submit a request for another inspection by the Architect/Engineer to determine Substantial Completion. When the Work or designated portion of the Work is Substantially Complete, the Architect/Engineer will prepare a Certificate of Substantial Completion which shall establish the date of Substantial Completion, shall establish responsibilities of the Owner and the Contractor for security, maintenance, heat, utilities, damage to the Work and insurance, and shall fix the time within which the Contractor shall finish all items on the punch list accompanying the Certificate. (c) The Certificate of Substantial Completion shall be submitted to the Owner and the Contractor for their written acceptance of responsibilities assigned to them in the Certificate. (d) Upon Substantial Completion of the Work or designated portion thereof and upon application by the Contractor and certification by the Architect/Engineer, the Owner shall make payment, reflecting adjustment in retainage, if any, for the Work, or portion of the Work, as provided in the Contract Documents. 9.8 PARTIAL OCCUPANCY OR USE (a) The Owner may occupy or use any completed or partially completed portion of the Work at any stage when such portion is designated by separate Supplemental Agreement with the Contractor, provided such occupancy or use is consented to by the insurer as required under Subparagraph 11.2(e) and authorized by public authorities having jurisdiction over the Work. Such partial occupancy or use may commence whether or not the portion is Substantially Complete, provided the Owner and Contractor have accepted in writing the responsibilities assigned to each of them for payments, retainage if any, security, maintenance, heat, utilities, damage to the Work and insurance, and have agreed in writing concerning the period for correction of the Work and commencement of warranties required by the Contract Documents. When the Contractor considers a portion Substantially Complete, the Contractor shall prepare and submit a list to the Architect/Engineer as provided'under Subparagraph 9.7(b). Consent of the Contractor to partial occupancy or use shall not be unreasonably withheld. The stage of the (a) progress of the Work shall be determined by written agreement between the Owner and Contractor or, if no agreement is reached, by decision of the Architect/Engineer. (b) Immediately prior to such partial occupancy or use, the Owner, Contractor, and Architect/Engineer shall jointly inspect the area to be occupied or portion of the Work to be used in order to determine and record the condition of the Work. Contract 5963 EXHIBIT 4 (c) Unless otherwise agreed upon, partial occupancy or use of a portion or portions of the Work shall not constitute acceptance of Work not complying with the requirements of the Contract Documents. (a) Upon receipt of written notice that the Work is ready for final inspection and acceptance and upon receipt of a final Application for Payment, the Architect/Engineer, accompanied by the Owner's representative, will promptly make final inspection and, when the Architect/Engineer finds the Work acceptable under the Contract Documents and the Contract Documents fully performed, the Architect/Engineer will promptly issue a final Certificate for Payment stating that to the best of the Architect/Engineer's knowledge, information and belief, and on the basis of the Architect/Engineer's observations and inspections, the Work has been completed in accordance with terms and conditions of the Contract Documents and that the entire balance found to be due the Contractor and noted in said final Certificate is due and payable. The Architect/Engineer's final Certificate for Payment will constitute a further representation that conditions listed in Subparagraph 9.9(b) as a condition precedent to the Contractor's being entitled to final payment have been fulfilled. Owner will normally make final payment within thirty (30) days after Owner's receipt and approval of the final Certificate for Payment. Warranties required by the Contract Documents shall commence on the date of Substantial Completion of the Work, unless otherwise provided by separate agreement between the Owner and the Contractor. (b) Neither final payment nor any remaining retained percentage shall become due until the Contractor submits to the Architect/Engineer: (1) an affidavit that payrolls, bills for materials and equipment, and other indebtedness connected with the Work for which the Owner or the Owner's property might be responsible or encumbered (less amounts withheld by Owner) have been paid or otherwise satisfied; (2) a certificate evidencing that insurance required by the Contract Documents to remain in force after final payment is currently in effect and will not be cancelled or allowed to expire until at least thirty (30) days prior written notice has been given to the Owner; (3) a written statement that the Contractor knows of no substantial reason that the insurance will not be renewable to cover the period required by the Contract Documents; (4) a consent of surety to final payment; and (5) if required by the Owner, other data establishing payment or satisfaction of obligations, such as receipts, releases and waivers of liens, claims, security interests or encumbrances arising out of the Contract, to the extent and in such form as may be designated by the Owner. (c) As a precondition to final payment by the Owner under this Contract, the Contractor's affidavit under Clause (b)(1) shall state that the Contractor has paid each of his subcontractors, laborers or materialmen in full for all labor and materials provided to him for the Work under this Contract. In the event the Contractor has not paid each of his subcontractors, laborers or materialmen in full, the Contractor shall state in the affidavit Contract 5963 EXHIBIT 4 the amount owed and the name of each subcontractor, laborer or materialmen to whom such payment is owed. IN ANY EVENT, THE CONTRACTOR SHALL BE REQUIRED TO EXECUTE THE OWNER'S STANDARD AFFIDAVIT OF FINAL PAYMENT AND RELEASE AS A PRECONDITION TO RECEIPT OF FINAL PAYMENT. (d) If, after Substantial Completion of the Work, final completion of the Work is materially delayed through no fault of the Contractor or by issuance of Change Orders affecting final completion and the Architect/Engineer confirms the delay, the Owner shall, upon application by the Contractor and certification by the Architect/Engineer, and without terminating the Contract, make payment of the balance due for that portion of the Work fully completed and accepted. If the remaining balance for Work not fully completed or corrected is less than retainage stipulated in the Contract Documents, and if bonds have been furnished, the written consent of surety to payment of the balance due for that portion of the Work fully completed and accepted shall be submitted by the Contractor to the Architect/Engineer prior to certification of payment. Payment shall be made under terms and conditions governing final payment, except that it shall not constitute a waiver of claims. (e) The acceptance by the Contractor of the final payment shall operate as and shall be a complete release of the Owner from all claims or liabilities under the Contract, for anything done or furnished or relating to the Work or the Project, or for any act or neglect of the Owner relating to or connected with the Work or the Project. ARTICLE 10 SAFETY, SECURITY AND UTILITY PROVISIONS; COMPLIANCE The Contractor shall be responsible for initiating, maintaining and supervising all safety precautions and programs in connection with the performance of the Contract, and will comply with all applicable City, County, State and Federal health and safety regulations. ��7►(."7 ► 1 ' Z�]'3:a MA (a) The Contractor shall take reasonable precautions for safety of, and shall provide reasonable protection to prevent damage, injury or loss to: (1) employees on the Work and other persons who may be affected thereby; (2) the Work and materials and equipment to be incorporated therein, whether in storage on or off the site, under care, custody or control of the Contractor or the Contractor's Subcontractors or Sub -subcontractors; and (3) other property at the site or adjacent thereto, such as trees, shrubs, lawns, walks, pavements, roadways; structures and utilities not designated for removal, relocation or replacement in the course of construction. Contract 5963 EXHIBIT 4 (b) The Contractor shall give notices and comply with applicable laws, ordinances, rules, regulations and lawful orders of public authorities bearing on safety of persons or property or their protection from damage, injury or loss. (c) The Contractor shall erect and maintain, as required by existing conditions and performance of the Contract, reasonable safeguards for safety and protection, including posting danger signs and other warnings against hazards, promulgating safety regulations and notifying owners and users of adjacent sites and utilities. (d) When use or storage of explosives or other hazardous materials or equipment or unusual methods are necessary for execution of the Work, the Contractor shall exercise utmost care and carry on such activities under supervision of properly qualified personnel. (e) USE OF EXPLOSIVES - CLAIMS AND TOTAL INDEMNIFICATION. The Owner shall have the right to pre -approve the use of any explosives on the Project; the Contractor shall not assume in its bid that permission to use explosives will be granted. The Owner shall NOT be liable for any claim for additional time or compensation as a result of the Owner's denial of permission to use explosives. Where use of explosives is permitted by the Owner, the Contractor EXPRESSLY AGREES TO BE SOLELY RESPONSIBLE for the determination as to whether explosives shall actually be used, and for any result from the use, handling or storage of explosives, and shall INDEMNIFY, DEFEND AND HOLD COMPLETELY HARMLESS the Owner, its officers, agents and employees, and the Architect/Engineer against any and all claims, lawsuits, judgments, costs or expenses for personal injury (including death), property damage or other harm for which recovery of damages is sought, suffered by any person or persons, as the result of the use, handling or storage of the explosives by the Contractor or any Subcontractor, REGARDLESS OF WHETHER SAID USE, HANDLING OR STORAGE WAS NEGLIGENT OR NOT, AND REGARDLESS OF WHETHER THE DAMAGE OR INJURY WAS CONTRIBUTED TO IN ANY WAY BY THE NEGLIGENCE OR FAULT OF THE OWNER, ITS OFFICERS, AGENTS, EMPLOYEES, OR REPRESENTATIVES, OR THE ARCHITECT/ENGINEER AND ITS OFFICERS, AGENTS, EMPLOYEES, OR REPRESENTATIVES. In the event of conflict with any other indemnity paragraph in this Contract, this paragraph controls. This indemnity paragraph is intended solely for the benefit of the parties to this Contract and is not intended to create or grant any rights, contractual or otherwise, to or for any other person or entity. The Contractor shall furnish the Owner and the Architect/Engineer with evidence of insurance sufficient to cover possible damage or injury, which insurance shall either include the Owner and the Architect/Engineer as additional insureds or be sufficiently broad in coverage as to fully protect the Owner and the Architect/Engineer. All explosives shall be stored in a safe and secure manner, under the care of a competent watchman at all times, and all storage places shall be marked clearly "DANGEROUS - EXPLOSIVES." The method of storing and handling explosives and highly flammable materials shall conform to Federal and State laws, City of Denton ordinances, and the City of Denton Fire Department regulations. The Contractor shall notify any telecommunications and public utility company and any private property owners having structures in the proximity of the Project Site of the Contractor's intention to use explosives, and such notice shall be given sufficiently in advance to enable the telecommunications and public utility companies and private property owners to take such steps as they may deem necessary to protect their property from injury. The notice Contract 5963 I EXHIBIT 4 shall not relieve the Contractor of any responsibility for damage resulting from any blasting operations. (f) The Contractor shall promptly remedy damage and loss (other than damage or loss insured under property insurance required by the Contract Documents) to property referred to in Clauses 10.2(a)(2) and 10.2(x)(3) caused in whole or in part by the Contractor, a Subcontractor, or anyone directly or indirectly employed by any of them, or by anyone for whose acts they may be liable and for which the Contractor is responsible under Clauses 10.2(x)(2) and 10.2(x)(3), except damage or loss attributable to acts or omissions of the Owner or Architect/Engineer or anyone directly or indirectly employed by either of them, or by anyone for whose acts either of them may be liable, and not attributable to the fault or negligence of the Contractor or any of its Subcontractors. The foregoing obligations of the Contractor are in addition to the Contractor's obligations under Paragraph 3.19. To the extent that any such damage or loss may be covered by property insurance or other insurance required by the Contract Documents, the Owner and the Contractor shall exercise their best efforts to make a claim and obtain recovery from the insurers to provide for the cost, in whole or in part, of the repair work or to provide for reimbursement for such damage or loss. (g) The Contractor shall designate a responsible member of the Contractor's organization at the site whose duty shall be the prevention of accidents. This person shall be the Contractor's superintendent unless otherwise designated by the Contractor in writing to the Owner and Architect/Engineer. (h) The Contractor shall not load or permit any part of the Work or the Project site to be loaded so as to endanger its safety. In an emergency affecting safety, health, or security of persons or property, the Contractor shall act, at the Contractor's discretion, to prevent threatened damage, injury, or loss. Additional compensation or extension of time claimed by the Contractor on account of an emergency shall be determined as provided in Paragraph 4.3 and Article 7. (a) The Contractor shall place materials stored about the Work and shall conduct the Work at all times in a manner that causes no greater obstruction to the public than is considered necessary by the Owner. Sidewalks or streets shall not be obstructed, except by special permission of the Owner. The materials excavated and the construction materials or plant used in the performance of the Work shall be placed in a manner that does not endanger the Work or prevent free access to all fire hydrants, water mains and appurtenances, water valves, gas valves, manholes for the telephone, telegraph signal or electric conduits, wastewater mains and appurtenances, and fire alarm or police call boxes in the vicinity. (b) The Owner reserves the right to remedy any neglect on the part of the Contractor in regard to public convenience and safety which may come to the Owner's attention, after twenty-four (24) hours notice in writing to the Contractor. In case of an emergency, the Contract 5963 EXHIBIT 4 Owner shall have the right to immediately remedy any neglect without notice. In either case, the cost of any work done by the Owner to remedy the Contractor's neglect shall be deducted from the Contract Sum. The Contractor shall notify the City Traffic Control Department when any street is to be closed or obstructed. The notice shall, in the case of major thoroughfares or street upon which transit lines operate, be forty-eight (48) hours in advance. The Owner reserves the right to postpone or prohibit any closure or obstruction of any streets or thoroughfares to the extent necessary for the safety and benefit of the traveling public. The Contractor shall, when directed by the Architect/Engineer or the Owner, keep any street or streets in' condition for unobstructed use by City departments. When the Contractor is required to construct temporary bridges or make other arrangements for crossing over ditches or around structures, the Contractor's responsibility for accidents shall include the roadway approaches as well as the crossing structures. If the Work is carried on or adjacent to any street, alley or public place, the Contractor shall, at the Contractor's own cost and expense, furnish, erect and maintain sufficient barricades, fences, lights and danger signals, shall provide sufficient watchmen, and shall take such other precautionary measures as are necessary for the protection of persons or property and of the Work. All barricades shall be painted in a color that will be visible at night, shall indicate in bold letters thereon the Contractor's name and shall be illuminated by lights from sunset to sunrise. The term "lights," as used in this Paragraph, shall mean flares, flashers, or other illuminated devices. A sufficient number of barricades with adequate markings and directional devices shall also be erected to keep vehicles from being driven on or into any Work under construction. The Contractor will be held responsible for all damage to the Work due to failure of barricades, signs, lights and watchmen to protect the Work. Whenever evidence is found of such damage, the Architect/Engineer may order the damaged portion immediately removed and replaced by the Contractor at Contractor's cost and expense. The Contractor's responsibility for maintenance of barricades, signs, and lights, and for providing watchmen, shall not cease until the Project has been finally accepted by the Owner. In case it is necessary to change or move the property of the Owner or of any telecommunications or public utility, such property shall not be removed or interfered with until ordered to do so by the Architect/Engineer. The right is reserved to the owner of any public or private utilities to enter upon the Project site for the purpose of making such changes or repairs of their property that may become necessary during the performance of the Work. The Owner reserves the right of entry upon the Project site f6r any purpose, including repairing or relaying sewer and water lines and appurtenances, repairing structures, and for making other repairs, changes, or extensions to any of the Owner's property. The Owner's actions shall conform to the Contractor's current and approved schedule for the performance of the Work, provided that proper notification of schedule requirements has been given to the Owner by the Contractor. Contract 5963 EXHIBIT 4 When existing storm sewers or drains have to be taken up or removed, the Contractor shall at his own expense provide and maintain temporary outlets and connections for all public and private storm sewers and drains. The Contractor shall also take care of all storm sewage and drainage which will be received from these storm drains and sewers; for this purpose, the Contractor shall provide and maintain, at the Contractor's own expense, adequate pumping facilities and temporary outlets or diversions. The Contractor shall, at the Contractor's own expense, construct such troughs, pipes, or other structures necessary and shall be prepared at all times to dispose of storm drainage and sewage received from these temporary connections until such time as the permanent connections are built and in service. The existing storm sewers and connections shall be kept in service and maintained under the Contract, except where specified or ordered to be abandoned by the Architect/Engineer. All storm water and sewage shall be disposed of in a satisfactory manner so that no nuisance is created and that the Work under construction will be adequately protected. 10.8 ARRANGEMENT AND CHARGE FOR WATER FURNISHED BY THE OWNER: ELECTRICITY O. THE PROJECT (a) When the Contractor desires to use the Owner's water in connection with the Work, the Contractor shall make complete and satisfactory arrangements with the Denton Water Utilities Department and shall be responsible for the cost of the water the Contractor uses. Where meters are used, the charge will be at the regular established rate; where no meters are used, the charge will be as prescribed by City ordinance, or where no ordinance applies, payment shall be based on estimates made by the Denton Water Utilities Department. (b) The Contractor shall make complete and satisfactory arrangements for electricity and metered electrical connections with the Owner or with Denton Municipal Electric in the event that separately metered electrical connections are required for the Project. The Contractor shall pay for all electricity used in the performance of the Work through separate metered electrical connections obtained by the Contractor through the City of Denton. The Contractor, Subcontractors, and any other person working on the Project shall not open, turn off, interfere with, attach any pipe or hose to, or connect anything with any fire hydrant, stop valve, or stop cock, or tap any water main belonging to the Owner, unless duly authorized to do so by the Denton Water Utilities Department in accordance with the Denton City Code. Ili 019LTA'IAV 19121 (a) The Contractor and its Subcontractors are deemed to have made themselves familiar with and at all times shall comply with all applicable federal, state or local laws, rules, regulations, ordinances, and rules of common law now in effect (including any amendments now in effect), relating to the environment, Hazardous Substances or exposure to Hazardous Substances, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. §§ Contract 5963 EXHIBIT 4 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.A. §§ 1801, et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C.A. §§ 6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C.A §§ 1201, et seq.; the Toxic Substances Control Act, 15 U.S.C.A. §§ 2601, et seq.; the Clean Air Act, 42 U.S.C.A. §§ 7401, et seq.; the Safe Drinking Water Act, 42 U.S.C.A. §§ 3808, et seq., and any current judicial or administrative interpretation of these laws, rules, regulations, ordinances, or rules of common law, including but not limited to any judicial or administrative order, consent decree, or judgment affecting the Project. (b) In the event the Contractor encounters on the site materials reasonably believed to be a Hazardous Substance that have not been rendered harmless, and removal of such materials is not a part of the scope of Work required under the Contract Documents, the Contractor shall immediately stop Work in the affected area and report in writing the facts of such encounter to the Architect/Engineer and the Owner. Work in the affected area shall not thereafter be resumed except by written order of the Owner unless and until the material is determined not to be a Hazardous Substance or the Hazardous Substance is remediated. The Owner may choose to remediate the Hazardous Substance with a separate contractor or through a Change Order with the Contractor. If the Owner determines that the Hazardous Substance exists in the affected area due to the fault or negligence of the Contractor or any of its Subcontractors, the Contractor shall be responsible for remediating the condition at the sole expense of the Contractor in accordance with the Contractor's APPROVED Spill Remediation Plan. An extension of the Contract Time for any Jdelay in the progress schedule caused as a result of the discovery and remediation of a Hazardous Substance may be granted by the Owner only if all remaining Work on the Project must be suspended and the delay cannot be made up elsewhere in the progress schedule. Any request for an extension of the Contract Time related to the discovery and remediation of a Hazardous Substance is subject to the provisions of Paragraph 4.3 and Article 8. (c) The Contractor shall be responsible for identification, abatement, cleanup, control, removal, remediation, and disposal of any Hazardous Substance brought into or upon the site by the Contractor or any Subcontractor or Supplier. The Contractor shall obtain any and all permits necessary for the legal and proper handling, transportation, and disposal of the Hazardous Substance and shall, prior to undertaking any abatement, cleanup, control, removal, remediation, and disposal, notify the Owner and the Architect/Engineer so that they may observe the activities; provided, however, that it shall be the Contractor's sole responsibility to comply with all applicable laws, rules, regulations, or ordinances governing the activities. (d) Spill Prevention Plan. At least seventy-two '(72) hours prior to commencing performance of any of the Work at the Project site, the Contractor shall submit to the Owner for review and approval a Spill Prevention and Response Plan (SPRP) meeting the requirements of federal and state law, rules, and regulations. The SPRP shall be specially designed for the Contractor's planned work methods and procedures. The SPRP shall be designed to complement all applicable safety standards, fire prevention regulations, and pollution prevention policies and procedures. The SPRP shall include estimates of the quantity and rate of flow should equipment fail, and detail containment or diversionary structures to prevent spills from leaving the site or Contract 5963 EXHIBIT 4 migrating into adjacent properties or navigable waters. The SPRP shall include methods of recovery of spilled materials and all applicable twenty-four (24) hour emergency phone numbers, including without limitation that of the Owner's Project Manager or other designated representative. The Contractor shall not commence any field work prior to approval of such plan by the Owner. The following additional rules shall apply with respect to spills caused by the Contractor or a Subcontractor: (1) The Contractor shall immediately report any spill or release at the Project site, whether or not it is associated with this Contract, to the Owner's Project Manager or other designated representative. Thereafter, within two (2) working days after the occurrence of such event, the Contractor shall submit a written report describing such event in a degree of detail reasonably acceptable to the Owner. (2) The Contractor shall immediately respond in accordance with the SPRP in the event of a spill. (3) The Contractor shall dispose of spilled materials in accordance with EPA and Texas Commission on Environmental Quality (TCEQ) regulations and any other applicable federal, state, or local laws, rules, or regulations. In connection with such disposals, the Contractor shall use only those transporters and disposal facilities that are approved in advance in writing by the Owner. A copy of all transport manifests for the spilled materials shall be obtained and retained in the Contractor's records for reference purposes, to be provided upon request of the Architect/Engineer, the Owner, or any governmental regulatory agency with jurisdiction over the matter. ALL COSTS OF COLLECTION, CONTAINMENT, AND DISPOSAL OF SPILLED MATERIALS SHALL BE THE SOLE RESPONSIBILITY OF THE CONTRACTOR. (4) For purposes of this Subparagraph (e), the term "spill" includes any kind of environmental discharge or release. (e) Clean Air Management Plan. The Contractor shall comply with the Clean Air Management Plan submitted to and approved by the Owner during the contractor selection process. The Owner reserves the right, at the Contractor's sole expense, to require the removal or retrofitting of any equipment used in the course of construction that does not comply with the Plan submitted to and approved by the Owner. (f) The Contractor shall deposit surplus or waste excavation or other materials removed as part of the Work at a legal disposal site in accordance with all applicable state, federal, and local laws, rules, regulations, and ordinances. The Contractor shall submit to the Owner for 'review and approval all planned disposal sites or proposed uses for the surplus or waste excavation or other materials prior to removal of any excavation or other material from the Project site. A copy of all transport manifests for surplus or waste excavation or other materials shall be obtained and retained in the Contractor's records for reference purposes, to be provided upon request to the Architect/Engineer, the Owner, or any governmental regulatory agency with jurisdiction over the matter. Contract 5963 EXHIBIT 4 (g) The Contractor is responsible for obtaining all TXPDES Storm Water Permits from TCEQ for construction of the Project under regulations contained in 40 CFR Part 122, as amended, pursuant to the Clean Water Act, 33 U.S.C.A. §§1251 et seq. These regulations require the filing of a notice of intent to obtain and abide by the general storm water permit for construction activities promulgated by EPA, including but not limited to cleaning, grading, and excavation that disturb the applicable amount of total land area. In addition, the Contractor shall comply with all regulations of the Owner relating to storm water and storm water runoff management at the Project site pursuant to Chapter 19, Article IX, Denton City Code, as amended. (h) The Contractor shall not install any materials in the performance of the Work that contain asbestos or asbestos-related material such as hydrated mineral silicate, including chrysolite, amosite, crocidolite, tremolite, anthophylite or actinolite, whether friable or non -friable. (i) The Owner reserves the right in its sole option to exercise the following remedies (without waiving the right to pursue the imposition of any civil or criminal fines or penalties that may be imposed under state, federal, or local laws or ordinances), at no additional cost to the Owner and without an extension of the Contract Time, in the event the Contractor fails or refuses after seven (7) days advance written notice from the Owner to comply with the provisions of this Paragraph 10.10, the terms of the SPRP, the terms of the Clean Air Management Plan, any storm water permit or other environmental permit issued in connection with the Work, or any applicable environmental law, rule, regulation, or ordinance: (1) suspend all or any portion of the Work until the noncompliance is corrected, or until a detailed plan to achieve compliance within a reasonably prompt period of time is prepared by the Contractor and approved by the Owner; (2) if the Contractor fails to properly address the noncompliance within the time stipulated by the Owner, perform the necessary remediation or correction work and backcharge the Contractor for the cost of the remediation or correction; or (3) terminate the Contract for cause as provided in Article 13. 1 \ NVIAM61 ILI)Oak's Contractors shall refer to the requirements listed within the solicitation document and resulting contract for all City of Denton insurance requirements. Should a conflict arise between the solicitation document and the resulting contract, the requirements set forth in the actual contract shall prevail. It" ll901ta11`8UR 118.100111 Contractors shall refer to the requirements listed within the solicitation document and resulting contract for all City of Denton insurance requirements. Should a conflict arise between the solicitation document and the resulting contract, the requirements set forth in Contract 5963 EXHIBIT 4 the actual contract shall prevail. Contractors shall refer to the requirements listed within the solicitation document and resulting contract for all City of Denton insurance requirements. Should a conflict arise between the solicitation document and the resulting contract, the requirements set forth in the actual contract shall prevail. Contractors shall refer to the requirements listed within the solicitation document and resulting contract for all City of Denton insurance requirements. Should a conflict arise between the solicitation document and the resulting contract, the requirements set forth in the actual contract shall prevail. (a) Subject to the provisions of Subparagraph 11.3(b), the Contractor shall, with the execution and delivery of the Construction Services Agreement, furnish and file with the Owner in the amounts required in this Paragraph, the surety bonds described in Clauses (a)(1) and (a)(2) below, which surety bonds shall be in accordance with the Charter of the City of Denton and the provisions of Chapter 2253, Texas Government Code, as amended; each bond shall be signed by the Contractor, as Principal, and by an established bonding company, as surety, meeting the requirements of Subparagraph 11.3(c) and approved by the Owner. The surety bonds shall be accompanied by an appropriate Power -of -Attorney clearly establishing the extent and limitations of the authority of each signer to so sign: (1) Performance Bond. A good and sufficient bond in an amount equal to 100% of the total Contract Sum, guaranteeing the full and faithful execution of the Work and performance of the Contract in accordance with Plans, Specifications and all other Contract Documents, including any Amendments thereof, for the protection of the Owner. This bond shall also provide for the repair and maintenance of all defects due to faulty materials and workmanship that appear within a period of two (2) year from the date of final completion and acceptance of the improvements by the Owner or lesser or longer periods as may be otherwise designated in the Contract Documents. (2) Payment Bond. A good and sufficient bond in an amount equal to 100% of the total Contract Sum, guaranteeing the full and prompt payment of all claimants supplying labor or materials in the prosecution of the Work provided for in the Contract Documents and any Amendments thereto, and for the use and protection of each claimant. (b) If the Contract Sum, including Owner -accepted alternates and allowances, if any, is greater than $100,000, Performance in 100% of the Contract Sum are mandatory and shall be provided by the Contractor. If the Contract Sum is greater than $50,000 but less than or equal to $100,000, only a Payment Bond in 100% of the Contract amount is mandatory; provided, however, that the Contractor may elect to furnish a Performance Contract 5963 EXHIBIT 4 Bond in the same amount if the Contractor so chooses. If the Contract Sum is less than or equal to $25,000, the Contractor may elect not to provide Performance and Payment Bonds; provided that in such event, no money will be paid to the Contractor until final completion and acceptance of all work by Owner. If the Contractor elects to provide Performance and Payment Bonds 100% of the total Contract Sum, progress payments in accordance with these General Conditions shall be disbursed. (c) No surety will be accepted by the Owner who is now in default or delinquent on any bonds or who is a party to any litigation against the Owner. All bonds shall be made and executed on the Owner's standard forms, shall be approved by the Owner, and shall be executed by not less than one corporate surety that is authorized and admitted to do business in the State of Texas, is licensed by the State of Texas to issue surety bonds, is listed in the most current United States Department of the Treasury List of Acceptable Sureties, and is otherwise acceptable to the Owner. Each bond shall be executed by the Contractor and the surety, and shall specify that legal venue for enforcement of each bond shall lie exclusively in Denton County, Texas. Each surety shall designate an agent resident in Denton County, Texas to whom any requisite statutory notices may be delivered and on whom service of process may be had in matters arising out of the suretyship. (d) The person or persons, partnership, company, firm, Limited Liability Company, association, corporation, or other business entity to whom the Contract is awarded shall, within ten (10) days after such award, sign the required Contract with the Owner and provide the necessary surety bonds and evidence of insurance as required under the Contract Documents. No Contract shall be binding on the Owner until it has been approved as to form by the City Attorney, executed for the Owner by the City Manager, the performance and payment bonds and evidence of insurance have been furnished as required by the Contract Documents, and the fully executed contract has been delivered to the Contractor. (e) The failure of the Contractor to execute the Contract or deliver the required statutory bonds and evidence of insurance within ten (10) days after the Contract is awarded or as soon thereafter as the Owner can assemble and deliver the Contract shall constitute a material breach of the Contractor's bid proposal and the Owner may rescind the Contract award and collect or retain the proceeds of the bid security. By reason of the uncertainty of the market prices or materials and labor, and it being impracticable and difficult to determine accurately the amount of damages occurring to the Owner by reason of the Contractor's failure to execute and furnish the statutory bonds and to sign the Contract within ten (10) days, the filing of a bid proposal with the accompanying bid security will be considered as an acceptance of this Subparagraph 11.3(e). In the event the Owner should re -advertise for bids, the defaulting Contractor shall not be eligible to bid, and the lowest responsible bid obtained in the re -advertisement shall be the bid referred to in this Paragraph. lip's ' 1 19 Contract 5963 EXHIBIT 4 (a) If a portion of the Work is covered contrary to the Architect/Engineer's request or to requirements specifically expressed in the Contract Documents, the Work must, if required in writing by the Architect/Engineer, be uncovered for the Architect/Engineer's observation and be replaced at the Contractor's expense without change in the Contract Time. (b) If a portion of the Work has been covered which the Architect/Engineer has not specifically requested to observe prior to it being covered, the Architect/Engineer may request to see such Work and it shall be uncovered by the Contractor. If such Work is in accordance with the Contract Documents, costs of uncovering and replacement shall, by appropriate Change Order, be charged to the Owner. If any Work is not in accordance with the Contract Documents, the Contractor shall pay the costs of uncovering, repair, replacement unless the condition was caused by the Owner or a separate contractor in which event the Owner shall be responsible for payment of such costs. 1 03 IM ti Kai N [110911' (a) The Contractor shall promptly correct Work rejected by the Architect/Engineer as failing to conform to the requirements of the Contract Documents, whether observed before or after Substantial Completion and whether or not fabricated, installed or completed. The Contractor shall bear costs of correcting such rejected Work, including additional testing and inspections and compensation for the Architect/Engineer's services and expenses made necessary thereby. (b) If any of the Work is found to be defective or nonconforming with the requirements of the Contract Documents, the Contractor shall correct it promptly after receipt of written notice from the Architect/Engineer or the Owner to do so unless the Owner has previously given the Contractor a written acceptance or waiver of the defect or nonconformity. The Contractor's obligation to correct defective or nonconforming Work remains in effect for: (1) two years after the date of Substantial Completion of the Work or designated portion of the Work; (2) two years after the date for commencement of warranties established by agreement in connection with partial occupancy under Subparagraph 9.8(a); or (3) the stipulated duration of any applicable special warranty required by the Contract Documents. (c) The one-year period described in Clauses (b)(1) and (b)(2) shall be extended with respect to portions of the Work performed, repaired, or corrected after Substantial Completion by the period of time between Substantial Completion and the actual completion of the Work. (d) The obligations of the Contractor under this Paragraph 12.2 shall survive final acceptance of the Work and termination of this Contract. The Owner shall give notice to the Contractor promptly after discovery of a defective or nonconforming condition in Contract 5963 EXHIBIT 4 the Work. The one-year period stated in Clauses (b)(1) and (b)(2) does not limit the ability of the Owner to require the Contractor to correct latent defects or nonconformities in the Work, which defects or nonconformities could not have been discovered through reasonable diligence by the Owner or the Architect/Engineer at the time the Work was performed or at the time of inspection for certification of Substantial Completion or Final Completion. The two year period also does not relieve the Contractor from liability for any defects or deficiencies in the Work that may be discovered after the expiration of the two year correction period. (e) The Contractor shall remove from the Project site portions of the Work which are not in accordance with the requirements of the Contract Documents and are neither corrected by the Contractor nor accepted by the Owner. (f) If the Contractor fails to correct defective or nonconforming Work within a reasonable time after notice from the Owner or the Architect/Engineer, the Owner may correct it in accordance with Paragraph 2.4. If the Contractor does not proceed with correction of defective or nonconforming Work within a reasonable time fixed by written notice from the Architect/Engineer, the Owner may remove or replace the defective or nonconforming Work and store the salvageable materials or equipment at the Contractor's expense. If the Contractor does not pay costs of removal and storage within ten days after written notice, the Owner may, upon ten (10) additional days written notice, sell the materials and equipment at auction or at private sale and shall account for the proceeds after deducting costs and damages that should have been borne by the Contractor, including compensation for the Architect/Engineer's services and expenses made necessary as a result of the sale. If the proceeds of sale do not cover costs which the Contractor should have borne, the Contract Sum shall be reduced by the deficiency. If payments due to the Contractor then or thereafter are not sufficient to cover the deficiency, the Contractor shall pay the difference to the Owner. (g) The Contractor shall bear the cost of correcting destroyed or damaged construction of the Owner or separate contractors, whether the construction is completed or partially completed, that is caused by the Contractor's correction or removal of Work which is not in accordance with the requirements of the Contract Documents. (h) Nothing contained in this Paragraph 12.2 shall be construed to establish a period of limitation with respect to other obligations which the Contractor might have under the Contract Documents. Establishment of the one-year time period as described in Subparagraph 12.2(b) relates only to the specific obligation of the Contractor to correct the Work, and has no relationship to the time within which the obligation to comply with the Contract Documents may be sought to be enforced, nor to the time within which proceedings may be commenced 'to establish the Contractor's liability with respect to the Contractor's obligations other than specifically to correct the Work. (i) Any Work repaired or replaced pursuant to this Article 12 shall be subject to the provisions of Article 12 to the same extent as Work originally performed or installed. The Owner may, in the Owner's sole discretion, accept Work which is not in accordance Contract 5963 EXHIBIT 4 with the requirements of the Contract Documents instead of requiring its removal and correction, in which case the Contract Sum will be reduced as appropriate and equitable. The adjustment will be accomplished whether or not final payment has been made. ARTICLE 13 COMPLETIONtTEMPORARY SUSPENSION 13.1 FINAL COMPLETION OF CONTRACT The Contract will be considered completed, except as provided in any warranty or maintenance stipulations, bond, or by law, when all the Work has been finally completed, the final inspection is made by the Architect/Engineer, and final acceptance and final payment is made by the Owner. Prior to the expiration of the specified warranty period provided for in the Contract Documents, the Architect/Engineer will make a detailed inspection of the Work and will advise the Contractor and the Contractor's Surety of the items that require correction. The Architect/Engineer will make a subsequent inspection and if the corrections have been properly performed, the Architect/Engineer will issue a letter of release on the maintenance stipulations to the Contractor and the Surety. If for any reason the Contractor has not made the required corrections before the expiration of the warranty period, the warranty provisions as provided for in the Contract Documents shall remain in effect until the corrections have been properly performed and a letter of release issued. L9300 : (a) Notwithstanding any other provision of these General Conditions, the Work or any portion of the Work may be terminated immediately by the Owner for any good cause after giving seven (7) days advance written notice and opportunity to cure to the Contractor, including but not limited to the following causes: (1) Failure or refusal of the Contractor to start the Work within ten (10) days after the date of written notice by the Owner to commence the Work. (2) A reasonable belief that the progress of the Work being made by the Contractor is insufficient to complete the Work within the specified time. (3) Failure or refusal of the Contractor to provide sufficient and proper equipment or construction forces to properly execute the Work in a timely manner. (4) A reasonable belief that the Contractor has abandoned the Work. (5) A reasonable belief that the Contractor has become insolvent, bankrupt, or otherwise financially unable to carry on the Work. (6) Failure or refusal on the part of the Contractor to observe any requirements of the Contract Documents or to comply with any written orders given by the Architect/Engineer or the Owner as provided for in the Contract Documents. Contract 5963 EXHIBIT 4 (7) Failure or refusal of the Contractor to promptly make good any defects in materials or workmanship, or any defects of any nature, the correction of which has been directed in writing by the Architect/Engineer. (8) A reasonable belief by the Owner that collusion exists or has occurred for the purpose of illegally procuring the Contract or a Subcontractor, or that a fraud is being perpetrated on the Owner in connection with the construction of Work under the Contract. (9) Repeated and flagrant violation of safe working procedures. (10) The filing by the Contractor of litigation against the Owner prior to completion of the Work. (b) When the Work or any portion of the Work is terminated for any of the causes itemized above or for any other cause except termination for convenience pursuant to Subparagraph 13.3(e), the Contractor shall, as of the date specified by the Owner, discontinue the Work or portion of the Work as the Owner shall designate, whereupon the surety shall, within fifteen (15) days after the written notice of termination for cause has been served upon the Contractor and the surety or its authorized agents, assume the obligations of the Contractor for the Work or that portion of the Work which the Owner has ordered the Contractor to discontinue and may: (1) perform the Work with forces employed by the surety; (2) with the written consent of the Owner., tender a replacement contractor to take over and perform the Work, in which event the surety shall be responsible for and pay the amount of any costs required to be incurred for the completion of the Work that are in excess of the amount of funds remaining under the Contract as of the time of the termination; or (3) with the written consent of the Owner, tender and pay to the Owner in settlement the amount of money necessary to finish the balance of uncompleted Work under the Contract, correct existing defective or nonconforming Work, and compensate the Owner for any other loss sustained as a result of Contractor's default. In the event of termination for cause involving Clause (b)(1) or (b)(2), the Surety shall assume the Contractor's place in all respects, and the amount of funds remaining unpaid under the Contract shall be paid by the Owner for all Work performed by the 'surety or the replacement contractor in accordance with the terms of the Contract Documents, subject to any rights of the Owner to deduct any costs, damages, or liquidated or actual damages that the Owner may have incurred, including but not limited to additional fees and expenses of the Architect/Engineer and attorneys fees, as a result of such termination. (c) The balance of the Contract Sum remaining at the time of the Contractor's default and of the termination shall become due and payable to the surety as the Work progresses, subject to all of the terms, covenants, and conditions of the Contract Documents. If the Contract 5963 EXHIBIT 4 surety does not, within the time specified in Subparagraph 13.3(b), exercise its obligation to assume the obligations of the Contract, or that portion of the Contract which the Owner has ordered the Contractor to discontinue, then the Owner shall have the power to complete the Work by contract or otherwise, as it may deem necessary. The Contractor agrees that the Owner shall have the right to take possession of or use any or all of the materials, plant, tools, equipment, supplies, and property of every kind provided by the Contractor for the purpose of the Work, and to procure other tools, equipment, labor, and materials for the completion of the Work, and to charge to the account of the Contractor the expenses of completion" -and labor, materials, tools, equipment, and incidental expenses. The expenses incurred by the Owner to complete the Work shall be deducted by the Owner out of the balance of the Contract Sum remaining unpaid to or unearned by the Contractor. The Contractor and the surety shall be liable to the Owner for any costs incurred in excess of the balance of the Contract Sum for the completion and correction of the Work, and for any other costs, damages, expenses (including but not limited to additional fees of the Architect/Engineer and attorney's fees), and liquidated or actual damages incurred as a result of the termination. (d) The Owner shall not be required to obtain the lowest bid for the Work of completing the Contract as described in Subparagraph 13.3(c), but the expenses to be deducted from the Contract Sum shall be the actual cost of such Work. In case the Owner's expense is less than the sum which would have been payable under the Contract, if the same had been completed by the Contractor, then the Owner may pay to the Contractor (or the Surety, in the event of a complete termination for cause) the difference in the cost, provided that the Contractor (or the Surety) shall not be entitled to any claim for damages or for loss of anticipated profits. In case such expenses for completion shall exceed the amount which would have been payable under the Contract if the same had been completed by the Contractor, then the Contractor and his Sureties shall pay the amount of the excess to the Owner on notice from the Owner for excess due. When only a particular part of the Work is being carried on by the Owner by contract or otherwise under the provisions of this Subparagraph, the Contractor shall continue the remainder of the Work in conformity with the terms of the Contract, and in such manner as not to hinder or interfere with the performance of workmen employed and provided by the Owner. (e) The right to terminate this Contract for the convenience of the Owner (including but not limited to nonappropriation of funding) is expressly retained by the Owner. In the event of termination for convenience, the Owner shall deliver at least ten (10) days advance written notice of termination for convenience to the Contractor. Upon the Contractor's receipt of such written notice, the Contractor shall cease the performance of the Work and shall take reasonable and appropriate action to secure and protect the Work in place. The Contractor shall then be reimbursed by the Owner in accordance with the terms and provisions of the Contract Documents, not to exceed actual labor costs incurred, materials stored at the Project site or away from the Project site as approved by the Owner but not yet paid for, plus actual, reasonable, and documented termination charges, if any, paid by the Contractor in connection with the Work in place which is completed and in conformance with the Contract Documents to the date of termination for convenience. No amount shall ever be due to the Contractor for lost or anticipated profits. Contract 5963 EXHIBIT 4 (a) The Work or any portion of the Work may be temporarily suspended by the Owner immediately upon written notice to the Contractor for any reason, including but not limited to: (1) the causes described in Clauses 13.1(a)(1) through.(a)(10) above; (2) where other provisions in the Contract Documents require or permit temporary suspension of the Work; (3) situations where the Work is threatened by, contributes to, or causes an immediate threat to public health, safety, or security; or (4) other unforeseen conditions or circumstances. (b) The Contractor shall immediately resume the temporarily suspended Work when ordered in writing by the Owner to do so. The Owner shall not under any circumstances be liable for any claim of the Contractor arising from a temporary suspension due to a cause described in Clause (a)(1) above; provided, however, that in the case of a temporary suspension for any of the reasons described under Clauses (a)(2) through (a)(4), where the Contractor is not a contributing cause of the suspension under one of those Clauses or where the provision of the Contract Documents in question specifically provides that the suspension is at no cost to the Owner, the Owner will make an equitable adjustment for the following items, provided that a claim is properly made by the Contractor under Subparagraph 4.3 of these General Conditions: (1) an equitable extension of the Contract Time, not to exceed the actual delay caused by the temporary suspension as determined by the Architect/Engineer and the Owner; (2) an equitable adjustment to the Contract Sum for the actual, necessary, and reasonable costs of properly protecting any Work that is finished or partially finished during the period of the temporary suspension (no profit and overhead shall be allowed on top of these costs); and (3) if it becomes necessary to move equipment from the Project site and then return it to the Project site when the Work is ordered to be resumed, an equitable adjustment to the Contract Sum for the actual, necessary, and reasonable cost of these moves; provided, however, that no adjustment shall be due if the equipment is moved to another Project site of the Owner. Contract 5963 EXHIBIT 4 (a) This Contract shall be governed by the laws and case decisions of the State of Texas, without regard to conflict of law or choice of law principles of Texas or of any other state. (b) This Contract is entered into subject to and controlled by the Charter and ordinances of the City of Denton and all applicable laws, rules, and regulations of the State of Texas and the Government of the United States of America. The Contractor shall, during the performance of the Work, comply with all applicable City codes and ordinances, as amended, and all applicable State and Federal laws, rules and regulations, as amended. The Owner and the Contractor respectively bind themselves, their partners, successors, assigns, and legal representatives to the promises, covenants, terms, conditions, and obligations contained in the Contract Documents. The Contractor shall not assign, transfer, or convey its interest or rights in the Contract, in part or as a whole, without written consent of the Owner. If the Contractor attempts to make an assignment, transfer, or conveyance without the Owner's written consent, the Contractor shall nevertheless remain legally responsible for all obligations under the Contract Documents. The Owner shall not assign any portion of the Contract Sum due or to become due under this Contract without the written consent of the Contractor, except where assignment is compelled or allowed by court order, the terms of the Contract Documents, or other operation of law. Except as otherwise provided in Article 16, any notice, payment, statement, or demand required or permitted to be given under this Contract by either party to the other may be effected by personal delivery in writing or by mail, postage prepaid to the Project Manager or Superintendent of either party, or to an officer, partner, or other designated representative of either party. Mailed notices shall be addressed to the parties at an address designated by each party, but each party may change its address by written notice in accordance with this section. Mailed notices shall be deemed communicated as of three (3) days after mailing. (a) The duties and obligations imposed on the Contractor by the Contract Documents and the rights and remedies available to the Owner under the Contract Documents shall be in addition to, and not a limitation of, any duties, obligations, rights, and remedies otherwise imposed or made available by law. (b) No action or failure to act by the Owner shall constitute a waiver of a right afforded the Owner under the Contract Documents, nor shall any action or failure to act by the Owner constitute approval of or acquiescence in a breach of the Contract by Contractor, except as may be specifically agreed in writing by Change Order or Supplemental Agreement. The Owner shall not be liable for interest on any progress or final payment to be made under the Contract Documents, except as may be provided by the applicable provisions of the Contract 5963 EXHIBIT 4 Prompt Payment Act, Chapter 2251, Texas Government Code, as amended, subject to Paragraph 9.6(a) of these General Conditions. 14.6 OFFICERS OR EMPLOYEES OF THE OWNER NOT TO HAVE FINANCIAL INTEREST IN ANY CONTRACT OF THE OWNER No officer or employee of the Owner shall have a financial interest, direct or indirect, in any Contract with the Owner, or be financially interested, directly or indirectly, in the sale to the Owner of any land, materials, supplies or services, except on behalf of the Owner as an officer or employee. Any violation of this article shall constitute malfeasance in office, and any officer or employee of Owner guilty thereof shall thereby forfeit his office or position. Any violation of this section, with the knowledge, express or implied, of the person, persons, partnership, company, firm, association or corporation contracting with the Owner shall render the Contract involved voidable by the Owner's City Manager or City Council. 14.7 VENUE This Contract is deemed to be performed in Denton County, Texas, and if legal action is necessary to enforce this Contract, exclusive venue shall lie in Denton County, Texas. In performing the Work under this Contract, the relationship between the Owner and the Contractor is that of an independent contractor. The Contractor shall exercise independent judgment in performing the Work and is solely responsible for setting working hours, scheduling or prioritizing the Work flow and determining the means and methods of performing the Work, subject only to the requirements of the Contract Documents. No term or provision of this Contract shall be construed as making the Contractor an agent, servant, or employee of the Owner, or making the Contractor or any of the Contractor's employees, agents, or servants eligible for the fringe benefits, such as retirement, insurance and worker's compensation, which the Owner provides to its employees. As a condition of this Contract, the Contractor covenants that he will take all necessary actions to insure that, in connection with any work under this Contract, the Contractor and its Subcontractors will not discriminate in the treatment or employment of any individual or groups of individuals on the grounds of race, color, religion, national origin, age, sex, or handicap unrelated to job performance, either directly, indirectly or through contractual or other arrangements. The Contractor shall also comply with all applicable requirements of the Americans with Disabilities Act, 42 U.S.C.A. §§12101-12213, as amended. In this regard, the Contractor shall keep, retain and safeguard all records relating to his Contract or Work performed thereunder for a minimum period of three (3) years from final Contract completion, with full access allowed to authorized representatives of the Owner, upon request, for purposes of evaluating compliance with this and other provisions of the Contract. f[! [IZl'17911If. IYTI /lZll,xnromOf:I'%n►Y11.'1 Contract 5963 EXHIBIT 4 (a) The Owner may terminate this Contract immediately if the Contractor has offered, conferred, or agreed to confer any benefit on a City of Denton employee or official that the City of Denton employee or official is prohibited by law from accepting. (b) For purposes of this Article, "benefit" means anything reasonably regarded as pecuniary gain or pecuniary advantage, including benefit to any other person in whose welfare the beneficiary has a direct or substantial interest, but does not include a contribution or expenditure made and reported in accordance with law. (c) Notwithstanding any other legal remedies, the Owner may require the Contractor to remove any employee of the Contractor from the Project who has violated the restrictions of this Article or any similar State or Federal law, and obtain reimbursement for any expenditures made to the Contractor as a result of the improper offer, agreement to confer, or conferring of a benefit to a City of Denton employee or official. By execution of the Building Construction Services Agreement, the Contractor grants the Owner the right to audit, at the Owner's election, all of the Contractor's records and billings relating to the performance of the Work under the Contract Documents. The Contractor agrees to retain its Project records for a minimum of five (5) years following completion of the Work. The Owner agrees that it will exercise the right to audit only at reasonable hours. City may review any and all of the services performed by Contractor under this Contract. Any payment, settlement, satisfaction, or release made or provided during the course of performance of this Contract shall be subject to City's rights as may be disclosed by an audit under this section. This Contract is subject to the provisions of the Denton City Code, as amended, relating to requirements for filing a notice of a breach of contract claim against City. Contractor shall comply with the requirements of this ordinance as a precondition of any litigation relating to this Contract, in addition to all other requirements in this Contract related to claims and notice of claims. Should a conflict arise between any of the contract documents, it shall be resolved with the following order of precedence (if applicable). In any event, the final negotiated contract shall take precedence over any and all contract documents to the extent of such conflict. 1. Final negotiated contract 2. RFP/Bid documents 3. City's standard terms and conditions 4. Purchase order 5. Supplier terms and conditions Contract 5963 EXHIBIT 4 REQUIREMENTSEXHIBIT E INSURANCE 1 WORKERS'COMPENSATION REQUIREMENTS Upon contract execution, all insurance requirements shall become contractual obligations, which the successful contractor shall have a duty to maintain throughout the course of this contract. Without limiting any of the other obligations or liabilities of the Contractor, the Contractor shall provide and maintain until the contracted work has been completed and accepted by the City of Denton, Owner, the minimum insurance coverage as indicated hereinafter. Contractor shall file with the Purchasing Department satisfactory certificates of insurance including any applicable addendum or endorsements, containing the contract number and title of the project. Contractor may, upon written request to the Purchasing Department, ask for clarification of any insurance requirements at any time, however, Contractor shall not commence any work or deliver any material until he or she receives notification that the contract has been accepted, approved, and signed by the City of Denton. All insurance policies proposed or obtained in satisfaction of these requirements shall comply with the following general specifications, and shall be maintained in compliance with these general specifications throughout the duration of the Contract, or longer, if so noted: • Each policy shall be issued by a company authorized to do business in the State of Texas with an A.M. Best Company rating of at least A or better. • Any deductibles or self-insured retentions shall be declared in the proposal. If requested by the City, the insurer shall reduce or eliminate such deductibles or self-insured retentions with respect to the City, its officials, agents, employees and volunteers; or, the contractor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. • Liability policies shall be endorsed to provide the following: Name as Additional Insured the City of Denton, its Officials, Agents, Employees and volunteers. • That such insurance is primary to any other insurance available to the Additional Insured with respect to claims covered under the policy and that this insurance applies separately to each insured against whom claim is made or suit is brought. The inclusion of more than one insured shall not operate to increase the insurer's limit of liability. • Cancellation: City requires 30 day written notice should any of the policies described on the certificate be cancelled or materially changed before the expiration date. Contract 5963 EXHIBIT 4 Should any of the required insurance be provided under a claims made form, Contractor shall maintain such coverage continuously throughout the term of this contract and, without lapse, for a period of three years beyond the contract expiration, such that occurrences arising during the contract term which give rise to claims made after expiration of the contract shall be covered. • Should any of the required insurance be provided under a form of coverage that includes a general annual aggregate limit providing for claims investigation or legal defense costs to be included in the general annual aggregate limit, the Contractor shall either double the occurrence limits or obtain Owners and Contractors Protective Liability Insurance. Should any required insurance lapse during the contract term, requests for payments originating after such lapse shall not be processed until the City receives satisfactory evidence of reinstated coverage as required by this contract, effective as of the lapse date. If insurance is not reinstated, City may, at its sole option, terminate this agreement effective on the date of the lapse. All insurance policies proposed or obtained in satisfaction of this Contract shall additionally comply with the following marked specifications, and shall be maintained in compliance with these additional specifications throughout the duration of the Contract, or longer, if so noted: [X] A. General Liability Insurance: General Liability insurance with combined single limits of not less than $1,000,000.00 shall be provided and maintained by the Contractor. The policy shall be written on an occurrence basis either in a single policy or in a combination of underlying and umbrella or excess policies. If the Commercial General Liability form (ISO Form CG 0001 current edition) is used: Coverage A shall include premises, operations, products, and completed operations, independent contractors, contractual liability covering this contract and broad form property damage coverage. • Coverage B shall include personal injury. • Coverage C, medical payments, is not required. If the Comprehensive General Liability form (ISO Form GL 0002 Current Edition and ISO Form GL 0404) is used, it shall include at least: Bodily injury and Property Damage Liability for premises, operations, products and completed operations, independent contractors and property damage resulting from explosion, collapse or underground (XCU) exposures. Contract 5963 EXHIBIT 4 Broad form contractual liability (preferably by endorsement) covering this contract, personal injury liability and broad form property damage liability. [X] Automobile Liability Insurance: Contractor shall provide Commercial Automobile Liability insurance with Combined Single Limits (CSL) of not less than $500,000 either in a single policy or in a combination of basic and umbrella or excess policies. The policy will include bodily injury and property damage liability arising out of the operation, maintenance and use of all automobiles and mobile equipment used in conjunction with this contract. Satisfaction of the above requirement shall be in the form of a policy endorsement for: • any auto, or • all owned hired and non -owned autos. [X] Workers' Compensation Insurance Contractor shall purchase and maintain Workers' Compensation insurance which, in addition to meeting the minimum statutory requirements for issuance of such insurance, has Employer's Liability limits of at least $100,000 for each accident, $100,000 per each employee, and a $500,000 policy limit for occupational disease. The City need not be named as an "Additional Insured" but the insurer shall agree to waive all rights of subrogation against the City, its officials, agents, employees and volunteers for any work performed for the City by the Named Insured. For building or construction projects, the Contractor shall comply with the provisions of Attachment 1 in accordance with §406.096 of the Texas Labor Code and rule 28TAC 110.110 of the Texas Workers' Compensation Commission (TWCC). [ ] Owner's and Contractor's Protective Liability Insurance The Contractor shall obtain, pay for and maintain at all times during the prosecution of the work under this contract, an Owner's and Contractor's Protective Liability insurance policy naming the City as insured for property damage and bodily injury which may arise in the prosecution of the work or Contractor's operations under this contract. Coverage shall be on an "occurrence" basis and the policy shall be issued by the same insurance company that carries the Contractor's liability insurance. Policy limits will be at least $500,000.00 combined bodily injury and property damage per occurrence with a $1,000,000.00 aggregate. [ ] Fire Damage Legal Liability Insurance Coverage is required if Broad form General Liability is not provided or is unavailable to the contractor or if a contractor leases or rents a portion of a City building. Limits of not less than each occurrence are required. Contract 5963 EXHIBIT 4 [ ] Professional Liability Insurance Professional liability insurance with limits not less than $1,000,000.00 per claim with respect to negligent acts, errors or omissions in connection with professional services is required under this Agreement. [X] Builders' Risk Insurance Builders' Risk Insurance, on an All -Risk form for 100% of the completed value shall be provided. Such policy shall include as "Named Insured" the City of Denton and all subcontractors as their interests may appear. [ ] Environmental Liability Insurance Environmental liability insurance for $1,000,000 to cover all hazards contemplated by this contract. [ ] Riggers Insurance The Contractor shall provide coverage for Rigger's Liability. Said coverage may be provided by a Rigger's Liability endorsement on the existing CGL coverage; through and Installation Floater covering rigging contractors; or through ISO form IH 00 91 12 11, Rigger's Liability Coverage form. Said coverage shall mirror the limits provided by the CGL coverage [ ] Commercial Crime Provides coverage for the theft or disappearance of cash or checks, robbery inside/outside the premises, burglary of the premises, and employee fidelity. The employee fidelity portion of this coverage should be written on a "blanket" basis to cover all employees, including new hires. This type insurance should be required if the contractor has access to City funds. Limits of not less than $ each occurrence are required. [ ] Additional Insurance Other insurance may be required on an individual basis for extra hazardous contracts and specific service agreements. If such additional insurance is required for a specific contract, that requirement will be described in the "Specific Conditions" of the contract specifications. Contract 5963 EXHIBIT 4 ATTACHMENT 1 [X] Workers' Compensation Coverage for Building or Construction Projects for Governmental Entities A. Definitions: Certificate of coverage ("certificate ")-A copy of a certificate of insurance, a certificate of authority to self -insure issued by the commission, or a coverage agreement (TWCC-81, TWCC-82, TWCC-83, or TWCC-84), showing statutory workers' compensation insurance coverage for the person's or entity's employees providing services on a project, for the duration of the project. Duration of the project - includes the time from the beginning of the work on the project until the contractor's/person's work on the project has been completed and accepted by the governmental entity. Persons providing services on the project ("subcontractor" in §406.096) - includes all persons or entities performing all or part of the services the contractor has undertaken to perform on the project, regardless of whether that person contracted directly with the contractor and regardless of whether that person has employees. This includes, without limitation, independent contractors, subcontractors, leasing companies, motor carriers, owner -operators, employees of any such entity, or employees of any entity which furnishes, persons to provide services on the project. "Services" include, without limitation, providing, hauling, or delivering equipment or materials, or providing labor, transportation, or other service related to a project. "Services" does not include activities unrelated to the project, such as food/beverage vendors, office supply deliveries, and delivery of portable toilets. B. The contractor shall provide coverage, based on proper reporting of classification codes and payroll amounts and filing of any overage agreements, which meets the statutory requirements of Texas Labor Code, Section 401.011(44) for all employees of the Contractor providing services on the project, for the duration of the project. C. The Contractor must provide a certificate of coverage to the governmental entity prior to being awarded the contract. D. If the coverage period shown on the contractor's current certificate of coverage ends during the duration of the project, the contractor must, prior to the end of the coverage period, file a new certificate of coverage with the governmental .entity showing that coverage has been extended. E. The contractor shall obtain from each person providing services on a project, and provide to the governmental entity: 1. a certificate of coverage, prior to that person beginning work on the project, so the governmental entity will have on file certificates of coverage showing coverage for all persons providing services on the project; and Contract 5963 EXHIBIT 4 2. no later than seven days after receipt by the contractor, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project. F. The contractor shall retain all required certificates of coverage for the duration of the project and for one year thereafter. G. The contractor shall notify the governmental entity in writing by certified mail or personal delivery, within 10 days after the contractor knew or should have known, of any change that materially affects the provision of coverage of any person providing services on the project. H. The contractor shall post on each project site a notice, in the text, form and manner prescribed by the Texas Workers' Compensation Commission, informing all persons providing services on the project that they are required to be covered, and stating how a person may verify coverage and report lack of coverage. I. The contractor shall contractually require each person with whom it contracts to provide services on a project, to: 1. provide coverage, based on proper reporting of classification codes and payroll amounts and filing of any coverage agreements, which meets the statutory requirements of Texas Labor Code, Section 401.011(44) for all of its employees providing services on the project, for the duration of the project; 2. provide to the contractor, prior to that person beginning work on the project, a certificate of coverage showing that coverage is being provided for all employees of the person providing services on the project, for the duration of the project; 3. provide the contractor, prior to the end of the coverage period, a new certificate of coverage showing extension of coverage, if the coverage period shown on the current certificate of coverage ends during the duration of the project; 4. obtain from each other person with whom it contracts, and provide to the contractor: a. a certificate of coverage, prior to the other person beginning work on the project; and b. a new certificate of coverage showing extension of coverage, prior to the end of the coverage period, if the coverage period shown on the current certificate of coverage ends during the duration of the project; 5. retain all required certificates of coverage on file for the duration of the project and for one year thereafter; 6. notify the governmental entity in writing by certified mail or personal delivery, within 10 days after the person knew or should have known, of any change that materially affects the provision of coverage of any person providing services on Contract 5963 EXHIBIT 4 the project; and 7. Contractually require each person with whom it contracts, to perform as required by paragraphs (1) - (7), with the certificates of coverage to be provided to the person for whom they are providing services. J. By signing this contract or providing or causing to be provided a certificate of coverage, the contractor is representing to the governmental entity that all employees of the contractor who will provide services on the project will be covered by workers' compensation coverage for the duration of the project, that the coverage will be based on proper reporting of classification codes and payroll amounts, and that all coverage agreements will be filed with the appropriate insurance carrier or, in the case of a self-insured, with the commission's Division of Self -Insurance Regulation. Providing false or misleading information may subject the contractor to administrative penalties, criminal penalties, civil penalties, or other civil actions. K. The contractor's failure to comply with any of these provisions contract by the contractor which entitles the governmental entity contract void if the contractor does not remedy the breach within receipt of notice of breach from the governmental entity. Contract 5963 is a breach of to declare the ten days after EXHIBIT 4 EXHIBIT F Certificate of Interested Parties Electronic Filing In 2015, the Texas Legislature adopted House Bill 1295, which added section 2252.908 of the Government Code. The law states that the City may not enter into this contract unless the Contractor submits a disclosure of interested parties (Form 1295) to the City at the time the Contractor submits the signed contract. The Texas Ethics Commission has adopted rules requiring the business entity to file Form 1295 electronically with the Commission. Contractor will be required to furnish an original notarized Certificate of Interest Parties before the contract is awarded, in accordance with Government Code 2252.908. The contractor shall: 1. Log onto the State Ethics Commission Website at : httns://www.ethics.state.tx.tis/wiiatsnew/elf info form 1295.htm 2. Register utilizing the tutorial provided by the State 3. Print a copy of the completed Form 1295 4. Enter the Certificate Number on page 2 of this contract. 5. Sign and notarize the Form 1295 6. Email the notarized form to purchasing(cr�,cityofdenton.com with the contract number in the subject line. (EX: Contract 1234 — Form 1295) The City must acknowledge the receipt of the filed Form 1295 not later than the 30th day after Council award. Once a Form 1295 is acknowledged, it will be posted to the Texas Ethics Commission's website within seven business days. Contract 5963 Construction of Substation Precast Security Fences For the City of Denton From: Walsh's Hawk Construction Co. LLC 5002 Highway 380 Princeton, TX 75407 John Walsh 972-547-6652 office 972-542-0201 fax www.hawkprecast.com John@hawkrecast com EXHIBIT 4 Contract 5963 Exhibit G ll'X'FP #5963 PRICING SHEET FOR DME SUBSTATION PRE -CAST SECURITY FENCE CONSTRUCTION SERVICES Item Construction Unit Estimated Unit of Unit Price # Quantity Measure 10' Security/screening wal I material, pier design, and complete I construction including stockpiling, cleanup, regrading and 27,500 LF $ 199.50 compacting (assume 18"'x 14' pier) 2 Mow strip construction (includes drainage notches) 27,500 LF $ 12.00 Units that will apply as needed to adjust for geotechnical conditions and for drainage: 3 Increase 18" diameter pier depth 3,500 LF $ 10.00 4 Decrease 18" diameter pier depth 500 LF $ 10.00 5 Increase in price for 24" diameter pier I EA $ 375.00 6 Increase 24" diameter pier depth I LF $ 38.00 7 Decrease 24" diameter pier depth I LF $ 38.00 8 Rock drilling / excavation I CF $ 210.00 9 1 Payment and Performance Bonds for Project (per $100k) 59 EA $ 2,500.00 SECTION III - Delivery Timeframe 10 Estimated time between notice to proceed for a project until work begins (calendar days) 7 11 Normal time to complete a typical 2100 linear foot project (calendar days) 35 SECTION IV - Expedited Payment Discounts A dit! I Invoice Paid in 15 days 0% KW�,q ,,t4 Cont G City of Denton RFP for Construction of Substation Precast Security Fences �M§MAJMA-BUSINESS OVERVIEW QUESTIONNAIRE ANA FORMS 1. Contract Information (for formal contracting purposes): Thefollowing iqform-ation i-0/1 be used to write a contract, shouldyourfirm be selectedfor award. 0 Finn's Legral Name., Walsh's Hawk Construction Co. LIA11 •Address: 5002 Highway 380 Princeton, TX 7_5407 0 Agent's einail address: John,,, hawk- precast, corn Partnership Corporation Individual ' Associati(s M. r M SM Raw M r ff 11, u 1 FNgM-, 7. Does your company have an established physical presence mlie 'ffFe_6f-f'exas, or the city ot A toraft? Ve's s, Please provide a detailed listing of all products and/or services that your company provides. 1, Screen Walls 1 Sound Barrier Walls 3, Securitv Fences 4 Pre -Cast Concrete Retaining Wall Blocks 9. Has your company filed or been named in any litigation involving your company and the Owner on a contract within the last five years under your current company name or any other company name? If so provide details of the issues and resolution if available. Include lawsuits where Owner was involved, (Notice: Failure to disclose this information during proposal submission, and later discovered, may result in contract termination at the Owner's option.) Yes, Hawk Construction. filed suit In 2015 against a General Contractor for failure to pay, of work by I lawk Construction was completed, Ongoing negotiallons with partial payment received, RFP 5963 - Main Document Page 12 of 23 ContIMMMITA, City of Denton RFP for Construction of Substation Precast Security Fences any other company name? If so, where and why? Give name and telephone number of Owner. No defaulted contracts 0 111 'A"79 ,I telephone number (s) of Owner (s). No term 1 nated contracts 12.Has your company implemented an Employee Health and Safety Program compliant with 29 CFR 19 10 "General Industry Standards" and/or 29 CFR 1926 "General Construction Standards" as they apply to your Company's customary activities? http://www.osha.gov/pls/oshaweb/owasrch.search—form?pjoc_type--STANDARDS&P--�oe—level =I&peyvalue=1926 Yes 13.Resident/Non-Resident Bidder Determination: Texas Government Code Section 2252.002: Non-resident bidders. Texas law prohibits cities and other governmental units from awarding contracts to a non-resident firm unless the amount of such a bid is lower than the lowest bid by a Texas resident by the amount the Texas resident would be required to underbid in the non-resident bidders' state. In order to make this determination, please provide the name, address and phone number of'. a. Responding firms principle place of business - 5002 liwy 380 Princeton, TX 75407 b. Company's majority • principle • of business, 5002 llwy '180 Princeton, TX 75407 Ultimate Parent Company's principle place of business: 5002 f-iwv 380 Princeton,TX 75407 RFP 5963 - Main Document Page 13 of 23 ContrKNUIRIA City of Denton RFP for Construction of Substation Precast Security Fences 14. Provide detai Is to sit 1) port the, ev )r exIer ience and delivery. Rawk Construction has provided engineered pre -cost screen/sound wall materials and irlstallatioll services to Municipalities, t7wities, yx-i)o,r, Corporate and Private Developments for over 12 years. Hawk Construction has manufactured and installed over 60 miles of screen wall of V;Rriolls heights and patterns in North Texas, Oklahoma, Louisiana, Tennessee and New Nlexico. Rawk onstructioft has completed several projects for time City of Denton over the hast few vears with as track record of on-time completion and fiscal responsibiRty. I Hawk (,onstruetion currently has over 10,000 linear feet of screen wall In stock at our production facility irm Princeioll"IN. Itawk Construction maintains several installation Crews, allowing a quick response time for our clients, 15,provide details on how lir-In 111cets the Mini i 11 dais Main document I �tion13. a. The details must be completed on this form, and shall not point to another document in the respondent's proposal, b. Sign below and return form with final submission. 1; Over 12 years of experience 2- Municipal References, Landmark Services 817-230- 8811 Town of Flower Mound, Aimee 112nei, Gtv of Giiind Prairie, Ixe Harris, Special District M"Bagel' 972-237-8091 City of North Richland Hills, Joe Pock, Sr. Park Planner 817-427-6622 3: 11AW K CONSTRITC1.10N is registered with the City Of Denron 4: H..AWK, CONs'iRUCTION is an Authorized niaiitifa(,turer/(Iisti.-ibutt)r for Verti-Crete. I certify that our firm meets the minimum qualifications as stated in this Main document, Section 3, Sibynature 111bw. A'.14k 23-:30 Company Date RFP 5963 - Main Document Page 14 of 23 ConINUMIA, City of Denton RFP for Construction of Substation Precast Security Fences t MOM. -0-ti 'A M -C 0/ Anexceptions . ta ken to this solicitation (including terms and conditions in Exhibit 2, the General I Provisions and Terms and Conditions) must be itemized on 'tbe lines below, Additional pages may be added as needed, If there are no exceptions, please sip ji where indicated at -ie bottom oftl�e page, Theabove exceptions (and any additional pages identified) are the ONLY exceptions to the specifications, General Provisions and Terms and Conditions in Exhibit 2, and sample contract to this solicitation. I understand that the City may not accept additional exceptions produced after final submission of this proposal. kxr) .1k, ecllslr94441'0^ I I - - /,S" VSignature Company Date No Exceptions are taken to this solicitation or the General Provisions and Terins and Conditions in Exhibit 2. §ijn-a--ture---- Company Date RFP 5963 - Main Document Page 15 of 23 Conha�ict'5963ifiibit G City of Denton RFP for Construction of Substation Precast Security Fences The City of Denton desires to avail itself of the benefits of Section 252.0435 of the Local Government Code, and consider the safety records of potential contractors prior to award of City contracts. Pursuant to Section 252.0435 of the Local Government Code, the City of Denton has adopted the following written definition and criteria for accurately determining the safety record of a respondent prior to awarding City contracts. The definition and criteria for determining the safety record of a respondent for this consideration shall be: The City of Denton shall consider the safety record of the respondent in determining the responsibility thereof. The City may consider any incidence involving worker safety or safety of the citizens of the City of Denton, be it related or caused by environmental, mechanical, operational, supervision or any other cause or factor. Specifically, the City may consider, among other things: a. Complaints to, or final orders entered by, the Occupational Safety and Health Review Commission (OSHRC), against the respondent for violations of OSHA regulations within the past three (3) years. b. Citations (as defined below) from an Environmental Protection Agency (as defined below) for violations within the past five (5) years. Environmental Protection Agencies include, but are not necessarily limited to, the U.S. Army Corps of Engineers (USACOE), the U.S. Fish and Wildlife Service (USFWS), the Environmental Protection Agency (EPA), the Texas Commission on Environmental Quality (TCEQ), the Texas Natural Resource Conservation Commission (TNRCC) (predecessor to the TCEQ), the Texas Department of Health (TDH), the Texas Parks and Wildlife Department (TPWD), the Structural Pest Control Board (SPCB), agencies of local governments responsible for enforcing environmental protection or worker safety related laws or regulations, and similar regulatory agencies of other states of the United States. Citations include notices of violation, notices of enforcement, suspension/revocations of state or federal licenses or registrations, fines assessed, pending criminal complaints, indictments, or convictions, administrative orders, draft orders, final orders, and judicial final judgments. C. Convictions of a criminal offense within the past ten (10) years, which resulted in bodily harm or death. d. Any other safety related matter deemed by the City Council to be material in determining the responsibility of the respondent and his or her ability to perform the services or goods required by the solicitation documents in a safe environment, both for the workers and other employees of respondent and the citizens of the City of Denton. in order to obtain proper information from respondents so that City of Denton may consider the safety records of potential contractors prior to awarding bids on City contracts, City of Denton requires that respondents answer the following three (3) questions and submit them with their submissions: RFP 5963 - Main Document Page 16 of 23 ContaiciW3Pithibit G City of Denton RFP for Construction of Substation Precast Security Fences Has the respondent, or the firm, corporation, partnership, or institution represented by the respondent, or anyone acting for such firm, corporation, partnership or institution, received citations for violations of OSHA within the past three (3) years? YES NO If the respondent has indicated YES for question number one above, the respondent must provide to City of Denton, with its submission, the following information with respect to each such citation: Date of offense, location of establishment inspected, category of offense, final disposition of offense, if any, and penalty assessed. 1 � 1 Has the respondent, or the firm, corporation, partnership, or institution represented by the respondent, or anyone acting for such firm, corporation, partnership or institution, received citations for violations of environmental protection laws or regulations, of any kind or type, within the past five years? Citations include notice of violation, notice of enforcement, suspension/revocations of state or federal licenses, or registrations, fines assessed, pending criminal complaints, indictments, or convictions, administrative orders, draft orders, final orders, and judicial final judgments. YES NO—X If the respondent has indicated YES for question number two above, the respondent must provide to City of Denton, with its submission, the following information with respect to each such conviction: Date of offense or occurrence, location where offense occurred, type of offense, final disposition of offense, if any, and penalty assessed. QUESTION THREE Has the respondent, or the firm, corporation, partnership, or institution represented by respondent, or anyone acting for such firm, corporation, partnership, or institution, ever been convicted, within the past ten (10) years, of a criminal offense which resulted in serious bodily injury or death? YES NO—X' If the respondent has indicated YES for question number three above, the respondent must provide to City of Denton, with its submission, the following information with respect to each such conviction: Date of offense, location where offense occurred, type of offense, final disposition of offense, if any, and penalty assessed. RFP 5963 - Main Document Page 17 of 23 ContgmWai+� City of Denton RFP for Construction of Substation Precast Security Fences Please list three (3) Government references, other than the City of Denton, who can verify the quality of service your company provides. The City prefers customers of similar size and scope of work to this solicitation. REFERENCE ONE GOVERNMENT/COMPANY NAME:Two-n of Flower Vlound LOCATION: Flower Momid, I X CONTACT PERSON AND TITLE: Aimee, Hanei, Landmark Serw es TELL -PHONE NUMDER: 817-230-8811— SCOPE OF WORK: Screen Wall manufictore and CONTRACT PERIOD: multiple contracts since 2011 10 p) 3 M 9 W191 GOVERNMENT/COMPANY NAME: City of Grand Prairie LOCATION: Crand Prairie, CONTACT PERSON AND TITLE: Lee Harris, Special District N1 anager. TELEPHONE NC Elia 972-237-8091._. SCOPE OF WORK: Screen Wall manofiacture and installation CONTRACT PERIOD: rnultiple contracts since 2008 GOVERNMENT/CONlf'ANY NAME: City of North Richland Hills LOCATION: North Richland Hills, I \_—, CONTACT PERSON AND TITLE: Joe Pack, Senior Planner— TELEPHONE NUMBER: 8l7-42'7-wo22---- SCOPE, OF WORK: Sereeii Watt numufacture and installafioi CONT RACTPERIOD: multiple contracts since 2007 RFP 5963 - Main Document Page 18 of 23 &MW.tJ , t4 Cont G City of Denton RFP for Construction of Substation Precast Security Fences Please detail three (3) of the most recent projects your firm has completed: Project #1 Name of Project: Denton State School Preiect, Owner Name, Address and Phone Numbev- Tvxx� Mv'Oh 4i'mf 11'16"mum sf,rv�e'es Cloninkis'��mk 441")"' N,, Lmnm% Builifin,'g, Aoson- 'I X ""87:56 Original Contract Amount: 685,000.00 Final Contract Amount: S38-5,000.00 Contract Time Allotted (Calendar Days): 150 da ys Start Date for Project:' -1-2.0l ; Final Completion Date for Project: 12-18 2015 Number ofDays to complete (calendar days): 108 Please detail the project, including size, length, and materials used, Also describe any known contractual issues, successes, or potential problems and solutions encountered. Hawk Construction acted as the General Contractor on this project. 11"INVI" 4"'mMr1wfio",, vl",.Il; OW de'Uvt'r%' and ul" '' vru-( !'vc- n"it 'St-no'ej, M all ulb"Og A Serikon og' lhul' peril'U"-wr vi, Ow se n ) f Ir 'on b s l "';+'va n"r';SIMUS;hla '-'r "fie v"-"ora�mwwn n4ld 'up i; kif J "-;d"fi'44'o9aI , ik,aF'wlor'� aving, Ornamen"tal and 1"vacung" SM 3, On fllw� 1,iar6cul:lv�w dut' "o the J, 41Y vOUR"u"I'S N�v' n"Ai'mv 0, the 4, !"',.`4 n' sr ifl-' S du. 'o 'ufl�o �Fine cvnvn"' VrCP'flhvv' "I a"n?'Su'mr6on� 'W' ""fl, 'he i6b earl�' RFP 5963 - Main Document Page 19 of 23 City of Denton Project #2 Name of Project: Atmos Energy Corporation Service Center Pr*ct Owner Name, Address and Phone Numbcr. Minos Ener Service cewer I I W11Y 11 7 & Beel", N Larte *WnXalmehic, 214-620-3353 Please detail the proj%hi, including size, length, mid matefials uwd, Also describeany known exnitractual issues,successess, orjatential prc,rblerns and solutions encountered, 14 Hawk Coluaruclion Delivered. and 111sudled over 13(11)/If of 8' fail N erfi-( rote pr"'.Tast wreeiij res- all arouilf"I flic Perimeter orthe e's, esf Atmos sei-vire centerire W�IXMUICI'ieAX 2. llawk votcounten'%I arock% skdt-sofl which required the addifloual help cS a rock driffing fruch- Therc were no other issues etlemntelvd alhl Hllwk %'is able to watch tile Slone %i"orh m tile building 10 file customel's satisfactiom 3, Agaill Haslik' was abie to bring 40te lor(s:Icet ter coniplelion in under they contractec] pale fi-ame despke inclevnellf wcwher delays. nd a space coustrided site. RFP 5963 - Main Document Page 20 of 23 ContUMPRit3b City of Denton yl F• Project #3 Name of Project: Valley View Independent School District, Main Camptis Project Owner Name, Address and Phone Number: k"alley 'Y'iew ISD 209 Newton S�rcel- \`,-jJJe,y VfeN%, ']'X 7627,'.'E 81 -2 62-_,52 21) Pie -ase detail the prqject, includingsize, length, and materials ubed, Algo describe do y known contractLal issues, successes, or tmtenflal problems and solutions encountered, i, iiawk c(instruction T)elivercd. and hisliffled weer !,000/11'of 3' Verti-Crele Pre-( "AM sct cell welt along, the entrance to the Valley Vie" ISD main cami�nns site, 2, Despite sevr.,,rajl delays for inclement ivemheranality re -location, rated several change order, for adjustruents to sine locations alld add-ons, ail while %vorking on several other sites Construction AVAS able mobilize Tnultiple titnes said rinished the project on time, RFP 5963 - in Document Page 21 of 23 ContUMITIA. City of Denton RFP for Construction of Substation Precast Security Fences CONFLICT OF INTEREST QUESTIONNAIRE - FORM CIQ Uor vendor or other person doing business with local governmental entity This questionnaire reflects changes made to the law by H.B. 23, 84th Leg., Regular Session. This questionnaire is being filed in accordance with Chapter 176, Local Government Code, by a vendor who has a business relationship as defined by Section 176.001(1-a) with a local governmental entity and the vendor meets requirements under Section 176.006(a). By law this questionnaire must be filed with the records administrator of the local government entity not later than the 7th business day after the date the vendor becomes aware of facts that require the statement to be filed. See Section 176.006(a-1), Local Government Code. A vendor commits an offense if the vendor knowingly violates Section 176.006, Local Government Code, An offense under this section is a misdemeanor. Name of vendor who has a business relationship with local governmental entity. 10"A 1:1 Check this box if you are riling an update to a previously riled questionnaire. Mie law requires that you file an updated completed questionnaire with the appropriate filing authority not later than the 71 business day after the date on which vou became aware that lite Originally Mcd questionnaire was incomplete or inaccurate) Name of local government officer about whom the information in this section is being disclosed. N/A. Name of Officer This section, (item 3 including subparts & B, C & D), must be completed for each officer with whom the vendor has an employment or other business relationship as defined by Section 176,001(1-a), Local Governnient Code. Attach additional pages to this Form CIQ as necessary. A. Is the local government officer named in this section receiving or likely to receive taxable income, other than investment income, from the vendor? 0 Yes 0 No B, Is the vendor receiving or likely to receive taxable income, other than investment income, from or at the direction of the local government officer named in this section AND the taxable income is not received from the local governmental entity? 0 Yes F --]No C. Is the filer of this questionnaire employed by a corporation or other business entity with respect to which the local government officer serves as an officer or director, or holds an ownership of one percent or more? El Yes EINo D. Describe each employment or business and family relationship with the local government officer named in this section. I have no Conflict of Interest to disclose. -:70 of vendor doing business with the governmental entity Date RFP 5963 - Main Document Page 22 of 23 LW�,q , t4 Cont G City of Denton RFP for Construction of Substation Precast Security Fences VIC46NOAAWY11 AM W-11 i The undersigned agrees this submission becomes the property of the City of Denton after the official opening. The undersigned affirms he has familiarized himself with the specification, drawings, exhibits and other documents; the local conditions under which the work is to be performed; satisfied himself of the conditions of delivery, handling and storage of materials and equipment; and all other matters that will be required for the work before submitting a response. In submitting a response the undersigned further understands that the work required is to provide construction of the project that functions as described in the specification. The undersigned understands that all requirements of the construction may not be described in every detail and agrees to provide labor, tools, material and equipment necessary to complete all construction to make the project functional as described in the specification and drawings before submitting a response. The undersigned agrees, if this submission is accepted, to furnish any and all items/services upon which prices are offered, at the price(s) and upon the terms and conditions contained in the specification. The period for acceptance of this submission will be 120 calendar days unless a different period is noted. The undersigned affirms that they are duly authorized to execute this contract, that this submission has not been prepared in collusion with any other respondent, nor any employee of the City of Denton, and that the contents of this submission have not been communicated to any other respondent or to any employee of the City of Denton prior to the acceptance of this submission. Respondent hereby assigns to the City any and all claims for overcharges associated with this contract which arise under the antitrust laws of the United States, 15 USCA Section I et seg., and which arise under the antitrust laws of the State of Texas, Tex. Bus. & Com. Code, Section 15.01, 9 sp 4. The undersigned affirms that they have read and do understand the specifications, all exhibits and attachments contained in this solicitation package. The undersigned agrees that the solicitation package posted on the website are the official specifications and shall not alter the electronic copy of the specifications and/or pricing sheet (Exhibit 1), without clearly identifying changes. The undersigned understands they will be responsible for monitoring the City of Denton Purchasing Website at: bttp://www,cityofdenton.co,m/index,aspx?page=397 to ensure they have downloaded and signed all addendum(s) required for submission with their response. I certify that I have made no willful misrepresentations in this submission, nor have I withheld information in my statements and answers to questions. I am aware that the information given by me in this submission will be investigated, with my full permission, and that any misrepresentations or omissions may cause my submission to be rejected. Acknowledge receipt of following addenda to the solicitation: Addendum No I Dated December 16, 2015 Addendum No 2 Dated Addendum No 3 Dated NAME AND ADDRESS OF COMPANY-. Walsh's Hawk Construction LLC 5002 Hwy 380 Princeton, TX 75407 Tel. No. 972-547-6652 Enuail. estiiiiafingtr �liaivkl)recast.coni Received December 16, 2015 Received Received AUTHORIZED REPRUKNTATIVE: Signature Date 1')L-30 --QCl/S- Name- Jok-, Q,/S, Fax No. 972-542-0201 RFP 5963 - Main Document Page 23 of 23 EXHIBIT 4 Certificate Of Completion Envelope Id: 8707883E9C3347EC9AO494AB2D5AE287 Subject: City Council Docusign Item - 6963 - rev SoOrce Envelope: Document Pages: 92 Signatures: 2 Certificate Pages: 6 Initials: 0 AutoNav: Enabled Envelopeld Stamping: Disabled Time Zone: (UTC -06:00) Central Time (US & Canada) Record Tracking Status: Original Holder: Karen E. Smith 3/22/2016 12:33:43 PM karen.smith@cityofdenton.com Signer Events Signature Karen E. Smith Completed karen.smith@cityofdenton.com Assistant Purchasing Manager Using IP Address: 129.120.6.150 City of Denton Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Pat Walsh pat@hawkconst.com President Walsh's Hawk Construction Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: John Knight john.knight@cityofdenton.com Deputy City Attorney City of Denton Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Julia Winkley julia.winkley@cityofdenton.com Contracts Administration Supervisor City of Denton Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: George C. Campbell george.campbell@cltyofdenton.com Security Level: Email, Account Authentication (Optional) F(3-61ti-d by; ,a* 0&w, , 3C G-113ffl I S I �Y I. LM Using IP Address: 66.180.100.65 Using IP Address: 129.120.6.150 Dow> " Status: Sent Envelope Originator: Karen E. Smith karen.smith@cltyofdenton.com IP Address: 129.1120.6.150 Location: DocuSign Tinnestarnp Sent: 3/22/2016 12:36:18 PM Viewed: 3122/2016 12:36:31 PM Signed: 3/22/2016 12:36:57 PM Sent: 3/22/2016 12:37:00 PM Resent: 3/22/2016 12:38:13 PM Viewed: 3/22/2016 3:451:50 PM Signed: 3/2212016 4:02:03 PM Sent: 3/22/2016 4:02:09 PM Viewed: 3/23/2016 12:35:53 PM Signed: 3/23/2016 12:36:12 PM Sent: 3/23/2016 12:36:17 PM Viewed: 3/23/2016 2:28:30 PM EXHIBIT 4 Signer Events Signature Timestamp Electronic Record and Signature Disclosure: Not Offered via DocuSlgn ID: Jennifer Walters jennifer.walters@cltyofdenton.com (Optional) Not Offered via DocuSlgn ID: In Person Signer Events Signature Timestarnp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Julia Winkley Sent: 3/22/2016 4:02:07 PM julia.winkley@cltyofdenton.com COPIED Viewed: 3/23/2016 7:33:23 AM Contracts Administration Supervisor City of Denton Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSlgn ID: Sherri Thurman sherri.thurman@cltyofdenton.com Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSlgn ID: Robin Fox Robin.fox@cityofdenton.com Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Accepted: 10/912015 1:39:51 PM ID: 04463961-03db-4c4d-9228-d66Od6l46ed6 . I z " a . 0 * I jane.richardson@cltyofdenton.com ,Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Jennifer Bridges jennifer.bridges@cltyofdenton.com Security Level: Email, Account Authentication (Optional) Sent: 3/22/2016 4:02:07 PM EXHIBIT 4 Carbon Copy Events Status Ticnestamp Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Chris Lutrick chds.lutrick@cityofdenton.com Security Level: Email, Account Authentication (Optional) Electronic Record and Signature Disclosure: Accepted: 1/22/2016 8:21:32 AM ID: 08cec3f5-472a-45f2-9853-9bc38078799c Jane Richardson jane.richardson@cityofdonton.com (Optional) QP*bf4f Not Offered via DocuSlgn ID: Notary Events Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 3/23/2016 12:36:17 PM Electronic Record and Signature Disclosure Electronic Record and Signature Disclosure created on: 4/20/2015 2:25:,*MIIBIT 4 Parties agreed to: Robin Fox, Chris Lutrick ELECTRONIC RECORD AND SIGNATURE DISCLOSURE From time to time, City of Denton (we, us or Company) may be required by law to provide to you certain written notices or disclosures. 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