HomeMy WebLinkAbout2002-06-12 e-packetAGENDA
REDEVELOPMENT AGENCY
CITY OF SOUTH SAN FRANCISCO
REGULAR MEETING
MUNICIPAL SERVICE BUILDING
COMMUNITY ROOM
JUNE 12, 2002
7:00 P.M.
PEOPLE OF SOUTH SAN FRANCISCO
You are invited to offer your suggestions. In order that you may know our method of conducting Agency
business, we proceed as follows:
The regular meetings of the Redevelopment Agency are held on the second and fourth Wednesday of
each month at 7:00 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South
San Francisco, California.
Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item, please
complete a Speaker Card located at the entrance to the Community Room and submit it to the Clerk.
Please be sure to indicate the Agenda Item # you wish to address or the topic of your public comment.
California law prevents Redevelopment Agency from taking action on any item not on the Agenda
(except in emergency circumstances). Your question or problem may be referred to staff for investigation
and/or action where appropriate or the matter may be placed on a future Agenda for more comprehensive
action or a report. When your name is called, please come to the podium, state your name and address for
the Minutes. COMMENTS ARE GENERALLY LIMITED TO FIVE (5) MINUTES PER SPEAKER. In
the event that there are more than six persons desiring to speak, the Chair may reduce the amount of time
per speaker to three (3) minutes. Thank you for your cooperation.
The Clerk will read successively the items of business appearing on the Agenda. As she completes
reading an item, it will be ready for Board action.
EUGENE R. MULLIN
Chairman
PEDRO GONZALEZ
Vice Chair
RAYMOND L. GREEN
B oardmember
BEVERLY BONALANZA FORD
Investment Officer
MICHAEL A. WILSON
Executive Director
JOSEPH A. FERNEKES
Boardmember
KARYL MATSUMOTO
Boardmember
SYLVIA M. PAYNE
Clerk
STEVEN T. MATTAS
Counsel
PLEASE TURN OFF CELL PHONES AND PAGERS
HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR USE BY THE HEARING-IMPAIRED AT REDEVELOPMENT AGENCY MEETINGS
CALL TO ORDER
ROLL CALL
AGENDA REVIEW
PUBLIC COMMENTS
CONSENT CALENDAR
1. Motion to approve the minutes of the May 22, 2002 regular meeting
2. Motion to confirm expense claims of June 12, 2002
3. Resolution authorizing architectural services contract with Starkweather/Bondy for the
Gateway Childcare Facility in an amount not to exceed $297,000
CLOSED SESSION
4. Pursuant to Government Code Section 54956.8, real property negotiations related to 178
Airport Boulevard, negotiating party: Redevelopment Agency Assistant Director Van
Duyn
ADJOURNMENT
REGULAR REDEVELOPMENT AGENCY MEETING JUNE 12, 2002
AGENDA
PAGE 2
Redevelopment Agency
Staff Report
DATE:
TO:
June 12, 2002
Redevelopment Agency Members
FROM:
Director of Economic and Community Development
SUBJECT:
Gateway Childcare Center Design - Authorization of contract for architectural
services with Starkweather Bondy Architecture to design the Gateway Childcare Center.
RECOMMENDATION:
It is recommended that the Redevelopment Agency adopt the attached resolution authorizing the
City Manager to execute a contract with Starkweather Bondy in the amount of $297,000.00 for
architectural services related to the Gateway Childcare Center.
BACKGROUND:
In 1999, the City issued Tax Allocation Bonds in the amount of $28 million dollars for Gateway
refinancing and related projects. Four million dollars of these funds were set aside for relocation of the
CalTrain Station and construction of a childcare facility.
In June 2000, the Redevelopment Agency approved a Precise Plan for Boston Properties to construct
two office buildings, and a parking garage at 611-681 Gateway Boulevard. As part of that approval,
Boston Properties agreed to provide to the City an approximately 0.6 acre site located along Gateway
Boulevard, just south of 601 Gateway Boulevard, for a childcare facility.
Using the existing bond funding, the City proposes to construct a childcare facility on the site of a size
suitable to accommodate approximately 100 children under the age of 5, with 50% of those spaces
targeted to infants (under 18 mos.) The facility would be owned by the City and operated by the
YMCA.
DISCUSSION:
In January 2002, staff sent out a Request for Proposals (RFP) to a select group of qualified architectural
consultants to design the subject childcare facility. Three architectural teams submitted proposals:
Indigo/Hammond & Playle Architects, KK Architects, and Starkweather Bondy Architecture.
Interviews were conducted in March, Panelists included Planning staff, YMCA executive staff and
Planning Commissioner Eugene Sim, a licensed architect.
Staff Report
To: Redevelopment Agency
RE: Gateway Childcare Facility - Consultant Contract
Date: June 14, 2002
Page 2
Based on the substance of the proposals, the quality of the graphic presentations, the experience of the
firms in this specialized area, knowledge of the project and ability to work closely with staffs of both the
City and the YMCA, as well as understanding of budgetary constraints and scheduling concerns, the
interview panel recommended the selection of Starkweather Bondy Architects.
Proposal - The proposal includes basic architectural services for development of an approximately
9,000 square foot building. Services will include schematic design, design development, contract
documents, and bid and construction administration phases of architectural work.
· Schematic Design - Work with YMCA, City staff, Gateway Business Association, etc., to establish
conceptual design including conceptual site plan, preliminary building plans and elevations.
· Design Development - Further develop design plans for submittal to Design Review Board and
approval by Redevelopment Agency.
· Contract Documents - Prepare construction documents
· Bid Phase - Assist the City in the bidding process
· Construction Administration - Review contractor's submittals, change orders, etc. Review work
progress for substantial completion and review final construction phase for completion.
Cost - The fee proposal is for this work is $297,000.00, which represents 12% of the rough construction
estimate of the 9,000 square foot facility at $250 per square foot ($2.25m).
Schedule - Staff has requested that the architects adhere to an extremely tight timeframe, attached,
which calls for design work to commence immediately and anticipates a project completion date of
December 22, 2002. The YMCA indicates this timeframe would work nicely for them since January is
a popular time for new enrollments.
CONCLUSION:
It is recommended that the Redevelopment Agency adopt the attached resolution authorizing the City
Manager to execute a contract with Starkweather Bondy Architecture for architectural services related
to the Gateway Childcare Center.
BYh~ of Economic
and Community D veky.~lopment
MAW:MVD:sk
ATTACHMENTS:
Draft Resolution
Scope of Work
Draft Project Schedule
Approved: ]~' ~ ~ l~ ~'~ ~
Michael A. Wilson
City Manager
SusyKalldn
City of South San Francisco Planning Division
315 Maple Avenue
P.O. Box 711
South San Francisco, CA 94083
STARI<WEATHERBONDY .
1250 ADDISON STREET [ SUITE 202
BERKELEY, CA 94702
P:: 510.540.6594 F:: 510.486.0769
www.starkweatherbondy,com
May 8, 2002
RE: Architectural Services for the Gateway Childcare Cemer for City of South San Francisco
Dear Susy Kalkin,
Starkweather Bondy Architecture 1 l.p (SBA) is pleased to submit this proposal for Architectural Services for
the Gateway Childcare Center on Gateway Boulevard, South San Francisco, California. The general scope of
the project includes Basic Architectural Services for the development of a new 9,000 square foot building on
an approximately 0.6 acre site. These services will include Schematic Design, Design Development, Contract
Documents, Bid and Construction Administration Phases of Architectural Work. Please find details of this
proposal following:
Assumptions
Assumptions for developing the Scope of Work include the following:
1. The client will provide the building program used for developing the architectural design.
2. The project duration shall be as described in the attached project schedule.
3. Owner will provide cost estimating services.
4. Owner will provide digital drawing files of surrounding Gateway Development as necessary for
Redevelopment and Design Review Submittals.
5. No parking lot work is part of this scope of services.
Basic Services
The Scope of Work will be per the Owner/Architect Agreement (1997 AIA Document B141). The
Architect's design services shall include normal civil, structural, mechanical, electrical, plumbing, landscape
lighting, and acoustical engineering services.
Schematic Design
The Schematic Design for the Gateway Childcare Center is based on an Owner provided building program
The Architect will perform the following services:
1. Meet with the Owner and User to reviewthe mumallyagreed upon building program, project
budgets for Cost of the Work, and project schedule.
2. Conduct meetings with the Gatewayleadership to refine the program for the Project.
Page 1 of 5
3. We shall provide Schematic Design Documents based on the mutually agreed-upon program,
schedule, and budget for the Cost of Work. The documents shall establish the conceptual design of
the Project illustrating the scale and relationship of the Project components. The Schematic Design
Documents shall include a conceptual site plan, preliminary building plans, sections and elevations.
At the Architect's option, the Schematic Design Documents may include study models, perspective
sketches, electronic modeling or combinatiom of theses media.
4. Preliminary selections of major building systems and construction materials shall be noted on the
drawings or described in writing.
5. Attend meetings with the Gateway Leadership to develop the design and obtain approval of design
concepts.
6. Assist Gatewayleadership in obtaining preliminary cost estimates from the Owner's Cost Estimator.
7. Obtain approval of final schematic design and project budget and obtain authorization to proceed
with the Design Development Phase of work.
Design Development Phase
Based on the approved Schematic Design Documents, the Architect will provide Design Development Phase
Services. The Architect will perform the following services.:
1. The Architect will provide submittal of the approved schematic design phase work to the
Redevelopment Agency for project review. Additional submittals, which involve significant redesign
of the approved schematics, will be considered an additional service, and will only be provided upon
authorization by the Owner.
2. Attend (1) Design Review Hearing for the Redevelopment Review.
3. Attend (1) Redevelopmem Hearing for the Project.
4. The Architect shall provide Design Development Documents based on the approved Schematic
Design Documents and updated budget for the Cost of the Work.
5. Conduct a kick-off meeting with the design team and other Design Team Consultants.
6. Participate in presentations of the work to the Gateway leadership.
7. The Design Development Documents shall illustrate and describe the refinemem of the design of the
Project, establishing the scope, relationship, forms, size and appearance of the Project by means of
plans, sections and elevations, typical construction details, and equipment hyouts.
8. The Design Developmem Documents shall idem[fy major materials, finishes and systems and
establish in general their quality levels, based on estimated costs furnished by the Owner's Cost
Estimator.
9. Assist Gateway leadership in obtaining Design Development cost estimates from the Owner's Cost
Estimator.
10. Obtain approval of final Design Development Documents and project budget and obtain
authorization to proceed with the Contract Documents Phase of work.
Contract Documents Phase
Based on the approved Design Development Documents, the Architect will provide Contract Documents
Phase Services. The Architect will perform the following services:
Page 2 of 5
1. Prepare drawings and specifications for submittal to the South San Francisco Building Department
bythe Owner's Permit Expeditor to obtain a Building Permit.
2. Respond to South San Francisco Building Department Plan Check comments and make corrections
for Owner's Plan Expeditor to resubmit to obtain Building Permits.
3. Provide necessary coordination of drawings and specifications of Design Team Consultants.
4. Participate in presentations of the work to the Gateway leadership to present project progress,
details, materials, finishes and colors for approval.
5. Provide Contract Documents based on the approved Design Development Documents and the
updated budget for the Cost of the Work based on estimated costs furnished by the Owner's Cost
Estimator. The Construction Documents shall include Drawings and Specifications that set forth in
detail the requirements of construction of the Project. The Contract Documents shall include
Drawings and Specificatiom that establish in detail the q~mllty levels of material and systems required
for the Project.
6. Provide the Owner's Cost Estimator with sufficiem information to refine the Project Cost Estimate.
7. Obtain approval of Contract Documents and project budget and obtain authorization to proceed
with the Bid Phase of work
Bid Phase
Based on the approved Contract Documents, the Architect will provide Bid Phase Services. The Architect
will perform the following services:
1. Assist the Owner in the development and preparation of: (1) bidding and procurement information
which describes the time, place, and conditions of bidding: bidding or proposal forms; and the form
of agreemem between the Owner and the Comractor, and (2) the Conditions of the Contract for
Construction (General, Supplementary and other Conditions).
2. Provide assistance during the bidding process to answer questiom and clarffythe comtruction
documents for subcontract bids as necessary.
Construction Administration Phase
Based on the approved Bid Phase, the Architect will provide Construction Administration Phase Services.
The Architect will perform the following services:
1. Provide Construction Contract Administration services including review of submittals, shop
drawings, change omen, and applications for paymem.
2. Attend weekly job meetings during the construction.
3. Review the work for substantial completion and provide a punch list.
4. Review punch list kerns for completion.
Exclusiom
The following services are not included in this proposal, but may be added if agreed to in writing by both
parties and the Architect's schedule and compensation are adjusted accordingly
Page 3 of 5
1. Services in connection with procuremem and studyof Geotechnical Reports;
2. Services in connection with surveying the site. Owner shall provide the Architect a topographic and
utilities survey of the proposed site;
3. Physical investigation and testing of materials;
4. Work having to do with hazardous materials survey, analysis or removal including asbestos,
comaminated soils, fuel tanks, lead paint, etc.;
5. Erosion and Storm Water control plans;
6. Invemory of existing furnishings for reuse or the selection of new furnishings.
7. Work occurring beyond the periods of time shown in the attached Project Schedule;
8. Work having to do with approvals from governmental agencies not detailed in the Basic Services
Scope of Work including, including govemmemal agencies for Environmemal Review, Re-zoning or
Conditional Use Application Process;
9. Preparation of presentation models, renderings and presemation drawings other than sketch models
and drawings described in Schematic Design Phase work;
10. Cost estimating services;
11. Design of security systems, CL--TV or any telecommunications systems. Data Telecommunications
System work will be limited to providing power outlets and empty raceway based on Owner provided
Data and Telecommunications system requirements;
12. Evaluation of the prevailing environmental noise by means of a Noise Field Survey;
13. Commercial Kitchen design and Commercial Kitchen equipment specifications.
14. Direct expenses such as photography and reproduction services. These will be billed at our cost plus
ten percent;
Additional Services
Upon written request and approval, Starkweather Bondy Architecture l .l P will provide services in addition to
those described in Basic Services above. These services will be performed at the hourly rates described in the
attached Rate Schedule or can be negotiated as a lump surrz
Basic Services Fees
We propose to perform the Basic Services described in this proposal within the time frames shown on the
attached schedule for a lump sum fee. Work cominuing beyond time frames shown in the attached schedule,
through no fault of the Architect, shall be performed as an Additional Services at currem billing rates or can
be negotiated as a lump sum. Billings shall be based upon the percentage of work completed for each phase
of work at the time of invoicing. Invoicing shall occur every four weeks. Basic Services Fees are distributed
as follows:
Schematic Design Phase Fees
Design Development Phase Fees
Contract Documents Phase Fees
Bid Phase Fees
Contract Administration Phase Fees
Reimbursable Expense Allowance
$40,500
$54,000
$108,000
$13,500
$54,000
$27,000
Total Basic Services Fee + Reimbursable Expense Allowance
$297,000
Page 4 of 5
Additional Services and Fees:
1. Environmental Noise Survey: $4,670
This noise survey will provide information for the effective
and economical development of building shell elemems in
order to achieve acceptable interior noise environments.
The information provided by the survey is a particularly
important parameter in the selection of exterior glazing
and on the design of the roof areas above noise sensitive
spaces. Given the proximity of the ske to flight patterns
originating at SFO and to the fact that Gateway Blvd. has a
significant volume of fast-moving traffic.
We are very excited with the prospect of collaborating with you on this project. Should this proposal meet
with your approval, please sign below and return one copyto me. Upon your signature, we will submit a
Standard Form of Agreement Between Owner and Architect 0997 AIA Document BI41) for your approval.
Very truly yours,
Phxed Starkweather, AIA
Partner
Signature Date
Attachments:
Cc.
Page 5 of 5
May 15, 2002
Gateway Childcare Center
Draft Project Schedule
ID TaskName Duration Stad Finish May Jun Ju, IAug Sep Oct Nov Dec Jan FeblMarlApr IMaYlJun J Jul Aug SaPlOct INovl~ec
1 SCHEMATIC DESIGN 52 days Wed 5115102 Thu 7125/02 i i
2 Begin Schematic Design 1day Wed 5/15/02 Wed 5/15/02 ~i i i i i i i i i i
3 Kick Off Programming Meeting with Redevelopment and YMCA 1 day Wed 5115102 Wed 5/15102 ~ ~115 i
4 Prepare Prelim site planning sketches and massing models 9days Thu5/16102Tue5128/02 ~Sl!S
5 Present Preliminary site planning and massing models 1day WedSI29102WedSI29102
6 Refine site planning and massing models 14 days Thu 5/30/02 Tue 6/18/02 ll~ si30 i i
? Present refinements 1 da~, Wed 6112/02 Wed 6/12/02 i i i~s/12
s Prepare preliminary building elevations 14daysThu6/20/O2Tue7/9102 i II~l' ~il2o
s Present preliminary building elevations I day Wed 6126102 Wed 6/26/02I ~' !s/2
10 Refine building elevations 11 days Thu 7/11/02 Thu 7/25/02 i i I~ ?11i i
11 Present refinements I day Wed 7/10/02 Wed 7/10/02 , i i i~?/10 i i
12 Present 100% Schematic Design for approval sign off 1 day Wed 7124/02 Wed 7/24102 i i i 1~1'7/2'~ i
13 Issue schematic design documents for cost estimating 1 day Thu 7/25/02 Thu 7/25/02 i i i 1~7/2~ i
14 DESIGN DEVELOPMENT 56 days Thu 7~25~02 Thu 10110102. i i i ~
15 Begin Design Development 1 day Thu 7/25/02 Thu 7/25/02 i i i * 712~ i
IS Submit Schematic Design for Redevelopment Design Review I day Fri 8/2/02 Fri 8/2/02 · BI~
17 Prepare Design Development Backgrounds 5 days Mort 8/5/02 Fri 8/9/02 ~ Bis
18 Issue DD Backgrounds to Consultants I day Fri 8/9/02 Fri 8/9/02, ~8~s~ ~ ~ ~ ~ ~
19 Design Team Consultants kick off meeting 1 day Mon 8/12/02 Mon 8/12/02
20 Design Development Client kick off meeting 1 day Wed 8/14/02 Wed 8114/02i -i ! i i ~114 i
21 Redevelopment Design Review Hearing I day Tue 8/20/02 Tue 8/20/02 i ~. 8120
22 Prepare 70% DD Check Set 26 days Mon 8/12/02 Mon 9/16/02
23 Prepare preliminary materials and finishes selections 26 days Mon 8/12/02 Mon 9/16/02 I i i i ~ 8/12i
24 Issue 700/0 DD check set and revised backgrounds 1 day Fri 9/20/02 Fri 9/20/02 i i i i i ~'i "120i,
25 Present preliminary materials finishes and Interior elevations 1 day Wed 9/18102 Wed 9/18/02 i i i i i ~l~,lS
26 Refine materials and finishes 15 days Thu 9/19/02 Wed 10/9/02 i i i i i IB~
27 Present 100% DD documents and materials and finishes I day Wed 10/9102 Wed 1019/02 ~ li~019 i i i i :
2s 100% Design Development sign off 1day Wed 10/9/02 Wed 10/9/02 i i i i i~1019
29 Issue 100°/o DD work to Owner's Cost Estimator I day Thu 10/10/02 Thu 10/10/02 i i i i i ~N~
30 CONTRACT DOCUMENTS 116 days Mon 10114/02 Mort 3124/03 i ! i i i i
31 Begin Contract Documents 1 day Mon 10/14/02 Mort 10/14/02 ~1o11~
32 Prepare Design Development Backgrounds 5 days Mon 10/14/02 Fd 10/18/02 ~ i ~ ~ i i
33 Issue CD Backgrounds I day Mon 10/21/02 Uon 10/21/02 i [ { i i i I~10'~
34 Design Team Consultants kick off meeting I day Mon 10/21/02 Mon 10/21/02 i i i
StarkweatherBondy architecture LLP Gateway Project Schedule Draft 2.rnpp
1
AGENDA
CITY COUNCIL
CITY OF SOUTH SAN FRANCISCO
REGULAR MEETING
MUNICIPAL SERVICE BUILDING
COMMUNITY ROOM
JUNE 12, 2002
7:30 P.M.
PEOPLE OF SOUTH SAN FRANCISCO
You are invited to offer your suggestions. In order that you may know our method of conducting
Council business, we proceed as follows:
The regular meetings of the City Council are held on the second and fourth Wednesday of each month at
7:30 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South San
Francisco, California.
Public Comment: For those wishing to address the City Council on any Agenda or non-Agendized item,
please complete a Speaker Card located at the entrance to the Council Chamber's and submit it to the
City Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your public
comment. California law prevents the City Council from taking action on any item no__!t on the Agenda
(except in emergency circumstances). Your question or problem may be referred to staff for
investigation and/or action where appropriate or the matter may be placed on a future Agenda for more
comprehensive action or a report. When your name is called, please come to the podium, state your
name and address for the Minutes. COMMENTS ARE GENERALLY LIMITED TO FIVE (5)
MINUTES PER SPEAKER. In the event that there are more than six persons desiring to speak, the
Mayor may reduce the amount of time per speaker to three (3) minutes. Thank you for your cooperation.
The City Clerk will read successively the items of business appearing on the Agenda. As she completes
reading an item, it will be ready for Council action.
PEDRO GONZALEZ
Mayor Pro Tem
EUGENE R. MULLIN
Mayor
JOSEPH A. FERNEKES
Councilman
RAYMOND L. GREEN
Councilman
KARYL MATSUMOTO
Councilwoman
BEVERLY BONALANZA FORD
City Treasurer
SYLVIA M. PAYNE
City Clerk
MICHAEL A. WILSON
City Manager
STEVEN T. MATTAS
City Attorney
PLEASE TURN OFF CELL PHONES AND PAGERS
HEARING ASSISTANCE EQUIPMENT AVAILABLE FOR USE BY THE HEARING IMPAIRED AT CITY COUNCIL MEETINGS
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
INVOCATION
PRESENTATIONS
· Certificate of Recognition to Meghan McNab, Library volunteer and recipient of the 2002
College Student Youth Service Leader Award
· Report from Ms. Jayme Maltbie, Caltrain Public Information Officer
AGENDA REVIEW
PUBLIC COMMENTS
ITEMS FROM COUNCIL
· Community Forum
· Subcommittee Reports
CONSENT CALENDAR
Motion to approve the minutes of the May 22 regular meeting and May 22 and May 29
special meetings
2. Motion to confirm expense claims of June 12, 2002
o
Resolution authorizing consulting services agreement with Van Meter Williams Pollack
for land use and traffic study of the Lindenville/San Bruno BART Station area in the
amount of $88,200
°
Resolution authorizing the City to apply and accept the 50% grant up to $75,000 from
the Water Recycling Facilities Planning Grant Program
o
Resolution awarding construction contract to D.L. Falk Construction Inc. for alterations
to Fire Station No. 62 in an amount not to exceed $649,499
o
Resolution awarding the construction contract to Interstate Grading and Paving, Inc. for
the 2001-2002 Street Resurfacing Project in an amount not to exceed $574,927
7. Acknowledgement of proclamation issued: Paul Hamann, June 6, 2002
PUBLIC HEARINGS
o
Water Quality Control Plant Wet Weather Program Update, consideration of stormwater
and sewer fees for Fiscal Year 2002-2003 and discussion of East of 101 sewer fee
a) Resolution establishing Stormwater Management Program Fees for Fiscal Year
2002-2003 pursuant to SSFMC Chapter 14.04 (Public Hearing)
REGULAR CITY COUNCIL MEETING JUNE 12, 2002
AGENDA PAGE 2
b) Resolution requesting San Mateo County Board of Supervisors use the San Mateo
County Flood Control District as the funding mechanism to support the County-wide
National Pollution Discharge Elimination System (NPDES) Stormwater
Management Plan
c) Resolution establishing the annual sewer service charges for FY 2002-2003 pursuant
to SSFMC Chapter 14.12 (Public Hearing)
d) Resolution declaring intention to reimburse sewer capital expenditures from the
proceeds of obligations to be issued by the City
ADMINISTRATIVE BUSINESS
9. Resolution authorizing policies and procedures for First Time Home Buyer Program
10. Resolution consenting to the proposed change of control of AT&T Broadband
11. McLellan Drive Extension Joint Venture Project:
a) Resolution authorizing the City Manager to enter into an agreement with the Town
of Colma and the County of San Mateo for construction project
b) Resolution awarding construction contract to Bauman Landscape in an amount not
to exceed $1,854,989
CLOSED SESSION
12.
Pursuant to Government Code Section 54957.6, conference with Labor Negotiator
Bower on AFSCME Local 1569 and Public Safety Management negotiations
ADJOURNMENT
REGULAR CITY COUNCIL MEETING JUNE 12, 2002
AGENDA PAGE 3
Staff Report
DATE:
TO:
FROM:
June 12, 2002
Honorable Mayor and City Council
Director of Economic and Community Development
SUBJECT:
Lindenville Subarea Land Use and Urban Design Plan - Authorization of contract
for planning services with Van Meter Williams Pollack for a study of the
Lindenville/San Bruno BART Station area.
RECOMMENDATION:
It is recommended that the City Council adopt the attached resolution authorizing the City
Manager to execute a contract with Van Meter Williams Pollack in the amount of $88,200.00 for
planning services related to the Lindenville Subarea Land Use and Urban Design Plan.
BACKGROUND:
In recognition of the potential for dramatic changes in the land use intensity in the southern portion of
the Lindenville Area due to the close proximity of the new San Bruno BART Station, the 1999 General
Plan update includes policies to redirect development patterns in this area to take advantage of the
transit station, including intensification of uses to create a high intensity business commercial district
and development of an improved circulation system.
The General Plan designates this area "Office", and allows for high intensity office and mixed-use
"transit-oriented" development, with a floor area ratio FAR of not less than 1.25. It also calls for a
focused land assembly and parcelization program, and assumes several additional roadway connections
to facilitate this development pattern and to access the BART station.
In November 2001, a letter was submitted to the City Council from the Lindenville Property Owners
Association, attached, noting optimism over the proposed land use changes, but concern over the details
involved in implementation. Association representatives also met with several Department heads and
the City Manager to discuss these concerns. Specifically, the primary concern is with the current
vehicular access through the area and the lack of a direct connection with the BART station.
DISCUSSION:
The General Plan directs that additional focused study of the Lindenville Subarea around the BART
Station be undertaken. Consequently, staff solicited a proposal from Van Meter Williams Pollack to
develop a land use and urban design plan for the area.
Staff Report
To: Honorable Mayor and City Council
RE: Lindenville SubArea Planning Study - Consultant Contract
Date: June 14, 2002
Page 2
Proposal - As with the other City studies recently undertaken by this firm, the consultant will work
closely with a stakeholder committee and City staff to ensure input from the major interests in the area.
The stakeholder committee would likely include affected property owners, developers, and other
interested parties including staff from the City of San Bruno. The proposed project is to include
development of a draft circulation, land use and urban design plan illustrating an overall land use
strategy and development structure, and recommended public improvement projects.
Consultant Selection - Staff recommends selection of the consultant team of Van Meter Williams
Pollack based on the following:: 1) The Consultant prepared the South San Francisco BART Transit
Village Plan and has an advanced understanding of the issues important to South San Francisco and the
areas adjacent to BART Stations and the future linear park; 2) The team has extensive experience
preparing urban design plans; and 3) Van Meter Williams Pollack has the ability to prepare detailed
color graphics. Additionally, the Consultant's proposal is within the budget target.
Budget and Schedule - The cost of preparing the Land Use and Urban Design Plan, including site plans
and graphics, is eighty-eight thousand two hundred dollars ($88,200.00). It is anticipated that Van Meter
Williams Pollack will take approximately five months to produce the draft Land Use Plan for City
Council review. Funding to prepare the study has been allocated from the Economic and Community
Development Department Consultant Services budget.
CONCLUSION:
It is recommended that the City Council adopt the attached resolution authorizing the City Manager to
execute a contract with Van Meter Williams Pollack for preparation of the Lindenville Subarea Land
Use and Urban Design Plan.
By~-[? ---
Marry Van Duyn,/DirecJtor of Economic
and Community ~pment
Approved: ~.~~5~, Michael A. Wilson
City Manager
MAW:MVD:sk
ATTACHMENTS:
Draft Resolution
Scope of Work
Letter from Lindenville Property Owners Association
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO,
STATE OF CALIFORNIA
A RESOLUTION AUTHORIZING A CONTRACT WITH VAN
METER WILLIAMS POLLACK IN AN AMOUNT NOT TO
EXCEED $88,200 FOR PLANNING SERVICES RELATED TO
THE LINDENVILLE SUB AREA LAND USE AND URBAN
DESIGN PLAN
WHEREAS, staff recommends that the City Council enter into an agreement with
Van Meter Williams Pollack for architectural services related to the Lindenville Sub Area
Land Use and Urban Design Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
South San Francisco the City Council hereby approves a contract with Van Meter
Williams Pollack in an amount not to exceed $88,200 for Planning Services Related To
The Lindenville Sub Area Land Use And Urban Design Plan.
I hereby certify that the foregoing Resolution was regularly introduced and
adopted by the City Council of the City of South San Francisco at a regular meeting held
on the day of ,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
Clerk
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
Attachment A
Scope of Work
5/24/02
PROJECT START-UP
A Project Initiation, Work Pro.qram and Schedule Refinement
A. 1 Scoping Meeting
Initial scoping meetings will be held with VMWP and South San Francisco staff, Planning
and Public Works Departments to identify concerns and issues, gather information, and
to discuss the overall project schedule, and expectations. Desired revisions to the work
program and scope of services will be made based upon these discussions.
1.0 Existincl Conditions & Project Kick-off
1.1 Assemble Base Information
We will focus on gathering, compiling and evaluating maps and data from the project
area. Data will be obtained from the General Plan and other technical reports and
maps provided by Staff, as well as through contact with other public agencies and City
departments and the City of San Bruno reports as required.
! .2 Base Map Development:
With the collection of City maps and data, the team will develop an existing conditions
base map to use throughout the project. It should show streets, building footprints
where appropriate, parking areas, truck routes, bike paths, pedestrian connections,
natural resources and other physical features.
1.3 Existing Conditions Evaluation
The Existing Conditions Evaluation will provide an overview analysis of the project area,
highlighting it's important features, weaknesses and opportunities. These will be
presented to the area Stakeholders and Community for further input and to ensure that
the City and community have a clear understanding of the opportunities and
constraints.
The inventory of existing conditions and relevant policies will identify factors which may
act as constraints to physical development, as well as opportunities for shaping land
use patterns and circulation systems within the area. The land use evaluation for the
Lindenville area includes, but is not limited to:
Existing and Planned Circulation (Transit, Roadways, Bicycles,
Pedestrians);
Existing and Planned Land Uses and Planned Developments;
Van Meter Williams Pollack
Architecture * Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
Vacant and underutilized Parcels;
Massing and scale of surrounding development and other
structures;
Physical and Environmental Constraints of the Site; (including CNEL
noise contour and over-flight zones)
Parcelization and Property Ownership Patterns;
Public Facilities and Infrastructure conditions;
Urban Design Features (views, gateways, linkages, significant
structures, etc.);
Important Elements noted by the City staff, Stakeholder Committee
and community; and
Potential for Change.
Infrastructure evaluation for capacity threshold.
1.3a Optional Existing Economic ! Market Evaluation (Not in Contract)
VMWP could also work with an economics consultant to evaluate market conditions in
the project area and discuss development prototypes with a focus on developing a
strategy to identify the highest and best land use pattern in the project area.
VMWP will work with the city to determine the appropriate market / economic
evaluation scope when appropriate and will subcontract with consultant acceptable
to the City for this effort. This scope will be an addendum to the contract and will not
proceed without appropriate authorization by the City of South San Francisco.
1.4 Stakeholder Committee
To ensure input from the major interests in the area, VMWP recommends creating a
Stakeholder Committee made up of City staff, a Planning Commissioner, if appropriate,
property and business owners/developers, and surrounding community leaders. A
representative from San Bruno may also be appropriate for certain meetings. This
Stakeholder Committee will meet to discuss the issues and help to develop concept
plans at various stages throughout the project.
1.4a Stakeholder Committee Tour
As a part of the Existing Conditions Evaluation and to familiarize ourselves with
the issues facing development in the Lindenville area and its relationship to
surrounding areas, we suggest that VMWP, city staff representatives, and
representatives of the Stakeholder Committee, meet to tour the project area to
openly discuss a wide variety of issues, real and perceived problems, and
potential solutions. The staff's and Stakeholder Committee's knowledge of the
project area will be invaluable in preparing the Existing Conditions presentation.
2.0 Land Use and Urban Design Plan
Van Meter Williams Pollack
Architecture * Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
2.1 Land Use and Urban Design Draft Plan
With input from the Stakeholder Committee, Staff, and based on their analysis, VMWP
will develop a draft Circulation, Land Use and Urban Design Plan illustrating an overall
land use strategy and development structure, recommended public improvement
projects, and highlighting infill and other private development opportunities.
2.1a Stakeholder Committee Meeting
This plan will be evaluated with Staff and the Stakeholder Committee for input and
recommendations.
2.2 Land Use and Urban Design Plans
The Draft Land Use and Urban Design Plan will be drawn at the schematic level. Using
the feedback from Task 2.1, VMWP will develop and refine the Plan until consensus is
reached on the major land use strategy. After the Land Use strategy is finalized, VMWP
will prepare a final Land Use and Urban Design Plan to include: land use, density, urban
design features and character, circulation and streetscapes, and open space where
appropriate. Opportunity Sites will be identified through this process, and VMWP will
prepare similar plans to illustrate major concepts. An illustrative Plan will represent the
project area's anticipated development pattern.
The Land Use and Urban Design Plans will include/identify:
Land Use Plan; showing recommended zoning district changes
Circulation and Streetscapes:
Open Space;
Urban Design Structure;
Opportunity Sites; and
Illustrative Plan.
2.2a Stakeholder Committee Meeting #2
The Land Use and Urban Design Plan will be presented and issues regarding the Plan will
be addressed in a second Stakeholder Committee Meeting.
2.3 Zoning and Design Guidelines
New land uses identified for the project area may require a General Plan Amendment.
Also if appropriate, a new Zoning Overlay may be prepared as a part of the project.
Design Guidelines could be developed for the project area as well, to provide direction
to the development community and Staff as they undertake projects in the Lindenville
sub area. (The extent of this Task should be determined during the Project time frame
VMWP will assist the City to determine the appropriate scope and provide a budget for
this task if it extends beyond the current anticipated scope and timeframe.)
2.4 Circulation / Traffic Evaluation
Van Meter Williams Pollack
Architecture * Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
A major issue in the development of the urban design plan is anticipated to be access
and traffic. VMWP with Crane Transportation will consider traffic and circulation options
within the planning effort and recommends allocating between fifteen and twenty
thousand ($15,000 - $20,000) for this task for budget purposes. Until the overall strategy
has been developed the scope of traffic circulation evaluations cannot be effectively
anticipated.
VMWP will work with the city to determine the appropriate traffic / circulation
evaluation scope when appropriate. This scope will be an addendum to the contract
and will not proceed without appropriate authorization by the City of South San
Francisco.
2.5 Utilities and Infrastructure Evaluation
An additional anticipated issue with regards to redevelopment of the Lindenville area is
the capacity of the utilities in the area and its potential impact on the City utility system.
Existing water, sewer and storm drain systems and general utilities will be evaluated for
capacity and potential expansion requirements based on the preferred land use
scenario developed. A preliminary evaluation will be made during the existing
conditions review to determine any major holding capacity threshold which may
prohibit major land use modifications in the area. Similar to the traffic evaluation VMWP
will work with Cyrus Kianpour of CSG Consultants, Inc. to evaluate the infrastructure
capacity based on the preferred scenarios and define an overall implementation
strategy relative to development requirements. It is estimated that the fee for the
infrastructure evaluation will range from $7,000 to $12,000. This scope will be an
addendum to the contract and will not proceed without appropriate authorization by
the City of South San Francisco.
3.0 Study Sessions and Community Open House
3.1 Planning Commission / City Council Study Session:
As a kickoff to the approval process we encourage the City to hold a joint study session
or separate study sessions with Planning Commission and City Council to present the
draft Plan.
3.2
Community Open House:
Overview of Lindenville Area Land Use and Urban Design Plan
The "open house" style meeting will provide a project overview and an opportunity for
Community members and Stakeholders to evaluate the Plan developed by VMWP.
Discussion will focus on stakeholder and community priorities, answer general questions,
and allow for one on one discussion between community members, Stakeholders, staff
and VMWP. We encourage Planning Commissioners and City Council members to
informally attend this meeting.
Van Meter Williams Pollack
Architecture * Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
Note: The community meeting advertising and arrangements for meeting places etc.
are the responsibility of the City and Client Team. The project team will provide
presentation materials and handouts as deemed appropriate and will organize and
facilitate the presentations.
4.0 The Final Lindenville Area Land Use and Urban Desi.qn Plan
Following the Community Open House, VMWP will synopsize the process and products
into a document that explains the process, provides an overview of the Land Use and
Urban Design strategies, including recommendations for Zoning modifications and
Design Guidelines as appropriate. This document will be appropriately illustrated with
photos and drawings to present the strong vision.
The Final Plan Document will include:
Key Goals, Objectives and Policies relative to the Lindenville Area;
Illustrative Plan;
Design Guidelines as appropriate;
Recommended Public Improvement Opportunities;
Opportunity Site Plans and Recommendations.
Land Use Plan;
Zoning modifications and maps as appropriate; and
implementation Strategies: The team will outline the key elements
and provide a step by step implementation strategy including
some potential funding sources as a working document towards
implementing the plan. It provides a framework or a series of tasks
for the City to undertake to realize the Plan.
5.0 Jurisdiction Review and Adoption of the Concept Plan
5.1 Planning Commission and City Council Presentations (2)
VMWP will assist the Client and City to have the Plan adopted by the Planning
Commission and City Council. This will include presentations to both entities providing
an overview of the process, the details of the plan itself, and the implementation
Strategy for the Plan. As noted previously we recommend Study Sessions (Task 4.1) to
familiarize them with the Plan and process and allow for their initial discussion and input
to be included in the final Plan.
VMWP has planned for two joint study sessions, one Planning Commission Hearing and
One City Council Hearing as part of the adoption of the Plan,
Van Meter Williams Pollack
Architecture · Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
BUDGET AND SCHEDULE
Proiect Bud.qet
The following is a synopsis of the project budget for the proposed scope of service. We believe
that we have provided a project approach which will result in a thorough evaluation of the
existing opportunities and constraints as well as provide the City with a dynamic plan with which
to guide development in a meaningful way. We would gladly work with the City staff to modify
the scope of services or clarify individual tasks as desired to create a strong fit with the Client's
goals and objectives. The budget and schedule may be finalized in Task A.
Task VMWP Budget I Task
Description I Total
A. Proiect Initiation
A.1 Project Initiation Meeting (Scoping & Budget)
1.0 Existinq Conditions & Project Kick-off
1.1 Assemble Base Information
1.2 Base Map Development
1.3 Existing Conditions Evaluation
1.4 Stakeholder Committee Meeting / Tour # 1
1.5 Stakeholder Meeting #2
2.0 Land Use and Urban Desiqn Plan
2.1 Land Use & Urban Design Draft Plan
2.1a Stakeholder Committee Meeting # 3
2.2 Land Use and Urban Design Plans
2.2a Stakeholder Committee Meeting #4
2.3 Zoning and Design Guideline Recommendations
Sub Total: of Authorized Tasks
$1,000 $1,000
$1,000
$2,000
$8,000
$1,500
$1,500
$6,000
$2,000
$6,000
$2,ooo
$3,50o
$14,000
$19,500
Future Tasks
2.4 Traffic and Circulation Evaluation
(not prior to separate authorization)
2.5 Infrastructure Evaluation
(not prior to separate authorization)
Subtotal of optional future tasks (to be separately authorized)
3.0 Study Sessions and Community Open House
3.1 Planning Commission and City Council Study Sessions (2)
3.2 Community Open House
4.0 Final Lindenville Area Land Use & Urban Desiqn Plan
4.1 Final Plan
5.0 Jurisdictional Review & Adoption of the Plan
5.1 Planning Commission and City Council Presentations (2)
Tasks Subtotal
$15,000-$20,000
$10,000-$15,000
$1,500
$2,000
$8,500
$3,500
$25,000to
$35,000
$3,500
$8,500
$3,500
$50,000
Van Meter Williams Pollack
Architecture · Urban Design
Proposal for South San Francisco
Lindenville Sub Area Land Use and Urban Design Plan
Reimbursable (Estimated @ 6.%)
Proposed Total Budget
$3,200
$53,200
Optional Tasks 2.4 & 2.5 (to be separately authorized)
Total Budget
$25,000-
$35,000
$88,200
Reimbursables: (Reproduction*, Travel, Postage etc.)
* All reproductions will be provided in black and white. If color is desired for any of the maps or illustrations
these will be provided for the camera-ready copy and can be provided for additional copies at additional
expense.
Administrative Draft E/C Memorandums: 5 copies and 1 camera ready orig.
Presentation Materials for Meetings and Workshops
Draft Plan: 15 copies and one camera-ready copy.
Final Plan: 15 copies and 1 camera-ready copy.
Project Travel, Postage, Telephone, Materials and Misc. Repro.
Reimbursables (Estimated @ 6 %)
$100
$100
$4OO
$400
$2,200
~ 3,200
Hourly Rates
The following hourly rates correspond to the development of the budget on a task by task basis.
If required VMWP will provide an hourly breakdown for each task as part of the final contract.
Van Meter Williams Pollack
Principal $115/hour
Project Manager $ 95/hour
Urban Designer $ 95/hour
Designer $ 75/hour
Schedule
The team will develop a detailed task by task schedule as part of the initial scoping phase to
integrate any additional or revised tasks and determine advisory and community meetings. The
VMWP team believes an expedited process has the best potential to influence the areas
development prior to private developments bringing in development proposals. We would
work with the team to maintain this expedited schedule.
Task A: Project Start-up Meeting ( Scoping and Budget)
Phase 1: Existin,q Conditions
Month 1
2-4 weeks
Phase 2: Land use Urban Design Plan
Phase 3: Opportunity Site Proiect Concepts and Des ,qns
Phase 4: Study Sessions and Community Open House
Planning Commission and City Council Review and Approval
Month 1 &2
Month 3
Month 3& 4
Month 4-5
Van Meter Williams Pollack
Architecture · Urban Design
Lindenville Property Owners Association
c/o South Maple Business Park, 325 South Maple Ave unit 8-A, South San Francisco CA 94080
Phone' 650 588 5927 or 415 822 8255 ~..,..,~ .~
City Council, South San Francisco
Mike Wilson, City Manager, South San Francisco
400 Grand Ave.
PO Box 711
South San Francisco CA 94083
DEC,
November 10, 2001
I'm writing on behalf of the undersigned, all of us South San Francisco property owners in the
Lindenville area near the San Bruno Bart Station now under construction.
We are optimistic that this new transit facility will improve our neighborhood, and believe that as
the years progress the majority of employees based in the area as well as many of its visitors will
arrive by BART. The problem is, that not everyone, or everythingcan come by BART.
The October 1999 South San Francisco General Plan implies an extensive economic
revitalization in our neighborhood. As a group, we are united in our belief that unless vehicle
access is improved, the forecasted economic benefits will not be fully realized. Traveling to this
area by car is just 'too inconvenient. Though they may be impractical exactly as shown in the
plan, connector road/roads to San Bruno and El Camino Real must be completed for this area to
progress.
We realize that because multiple jurisdictions, SSF, BART, San Bruno, are involved, that this
matter may take some time to resolve. We want to get started.
We ask that you direct the city staff to begin the process by which at least I major artery between
Lindenville and El Camino Real, in the vicinity of the San Bruno Bart Station is established.
A portion of our group would like to meet with you on this matter, and will be in contact with you to
see if we can arrange a time and place.
Thank you for your consideration,
Charles Krenz, {./ Bob Legall ,
Owners Parcel 014 232 050, 325 South Maple Ave
Property is operated as The South Maple Business Park, and is subdivided and leased to 14
small businesses.
~)~l~ePr ~re~'01~50 050, 54 Tanforan
Leased to SFO Airporter and Compass Transportation.
Owner parcel 014 250 090, 30 q'anforan ,~e
Managing General Partner, All West Park Association
Edward Palmer,
Owner parcel 014 250 080, 40 Tanforan Ave
Leased to Target Logistics
Owner, J~arcel/014 232 050/306 South Mj3rfle Ave
Oper or~L.~r East Restaurant Equip~trg Inc
Bert Steinebel,
Owner Parcel 014 231 090318 So Maple Ave
Operator. B Metal Fabrication Inc
.... (J
Henri L~uyade,
Owner Parcel 014 231 050'415 Browning Way
Operator: Marcel and Henri
(,..~ik Doyle, Loyola V~nture~' LLC~/
Owner Parcel 014 241 040 16(YSo. Linden
/
Hend Lapuyade
Burr Steinebel
Johnny Fong
vid Lai
per
0
C
Z
0
I11
Nov 01
StaffReport
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
The Director of Public Works
State Water Resources Control Board Grant for Facilities Planning Study of
Usage Implementation of Reclaimed Water from the Water Quality Control Plant
and Appointment of the City Manager to Apply and Accept the grant.
RECOMMENDATION:
It is recommended that the City Council adopt a resolution authorizing the City Manager to apply
and accept the 50% grant up to $75,000 from Water Recycling Facilities Planning Grant Program.
BACKGROUND/DISCUSSION:
This study will determine the benefits of using the reclaimed water for the City of South
San Francisco, the cost and how this program can be implemented.
John G
Direct{
~bs
of Public Works
Michael A. Wilson
City Manager
ATTACHMENT: Resolution
RB/JG/ed
RESOLUTION NO.
CiTY COUNCIL, CiTY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION AUTHORIZING THE CITY TO APPLY AND ACCEPT
THE 50% GRANT UP TO $75,000 FROM THE WATER RECYCLING
FACILITIES PLANNING GRANT PROGRAM
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby authorizes the City to apply and accept the 50% grant up to
$75,000 from the Water Recycling Facilities Planning Grant Program.
BE IT, FURTHER RESOLVED that the City Manager is appointed to apply and accept the
grant on behalf of the City of South San Francisco.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the ~ day of
,2002 by the following vote.
AYES:
NOES:
ABSTAIN:
ABSENT:
F:\file cabinefiCurrent Reso's\6-12state.water.resources.res.doc
ATTEST:
City Clerk
StaffReport
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
Director of Public Works
Alterations to Fire Station 62
Project No. 51-13232-0222 (PB-01-7), Bid No. 2317
RECOMMENDATION:
It is recommended that the City Council adopt a resolution authorizing the following:
Award of the construction contract for Alterations to Fire Station 62 to D.L. Falk Construction, Inc.,
South San Francisco in an amount not to exceed $649,499 for the base bid plus alternates No. #1
and #2.
BACKGROUND:
This project will seismically upgrade Fire Station 62. The base bid will seismically upgrade the
building, remodel the kitchen and day room, provide separate living and bathroom facilities for men
and women, and provide a new bio-hazard cleanup room. Bid Alternate No. gl will remodel the
large dormitory room into three separate rooms. Bid Alternate No. #2 will provide a new Heating
Ventilating and Air Conditioning unit and new ducting.
Following is a tabulation of the bids received on May 23, 2002:
Bidder Base Bid Bid Alt. No. 1 Bid Alt. No. 2 Base Bid + Alt 1 & 2
D.L. Falk Construction, Inc. $544,499 $66,000 $39,000 $649,499
South San Francisco, CA
Carlin Company, Inc. $551,791 $74,400 $54,200 $680,391
South San Francisco, CA
Romkon, Inc. $677,030 $65,000 $41,000 $783,030
San Francisco, CA
Kin Woo Construction, Inc. $690,495 $49,395 $43,447 $783,337
San Francisco, CA
Staff Report
ro~
Re:
Date:
Page:
The Honorable Mayor and City Council
Alterations to Fire Station 62
June 12, 2002
2 of 2
GSC Inc. $691,076 $48,530 $46,977 $786,583
Milpitas, CA
LC General Engineering $709,660 $74,500 $54,020 $838,180
San Francisco, CA
MH Construction Mgmt. $824,000 $46,800 $48,600 $919,400
San Francisco, CA
Engineer's Estimate $545,985 $79,506 $70,796 $696,287
Specifications indicate that award will be made to the contractor with the lowest base bid. Because
the bids are lower than the engineer's estimate, there are sufficient funds available to pick up
alternates #1 and alternate #2.
The following is a summary of the project cost:
Design and Administration $110,000
Construction $649,499
Contingencies $ 40,000
Construction Management/Inspection $ 30,501
TOTAL $830,000
Construction is expected to start in the month of July 2002 and be completed by January 2003.
FUNDING:
Project was budgeted for $830,000 in the 2001-2002 Capital Improvement Program (CIP).
Therefore, sufficient funds are available to award the base bid plus alternates #1 and #2.
~bhn Gi'
Directo:
,gs :l '
of Publi&orks
Michael A. Wilson
City Manager
ATTACHMENT: Resolution
FK/JG/ed
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION AWARDING THE CONSTRUCTION CONTRACT
FOR THE ALTERATIONS TO FIRE STATION 62 TO D.L. FALK
CONSTRUCTION, INC., IN AN AMOUNT NOT TO EXCEED $649,499
FOR THE BASE BID PLUS ALTERNATES NO. #1 AND #2
WHEREAS, the City desires to award the construction contract to the lowest responsible
bidder, D.L. FALK Construction, Inc., in an amount not to exceed $649,499 for the Alterations to
Fire Station 62; and
WHEREAS, the project was budgeted for $830,000 in the 2001-2002 Capital Improvement
Program budget; and
WHEREAS, sufficient funds are available to award the base bid plus alternates #1 and #2.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby awards the construction contract for the Alterations to Fire
Station 62 to D.L. Falk Construction, Inc. in an amount not to exceed $649,499 for the base bid plus
Alternates No. #1 and #2.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the __day of
,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATI'EST:
City Clerk
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
Director of Public Works
2001 - 2002 Street Resurfacing Project, Federal Project No. STPL-5177(013)
Engineering File No. 51-13231-0202, Project No. ST-02-2, BID NO. 2311
RECOMMENDATION:
It is recommended that the City Council adopt a resolution awarding the construction contract for the
2001- 2002 Street Resurfacing Project, Federal Project No. STPL-5177(013) to Interstate Grading &
Paving Inc. of South San Francisco in the amount of $574,927.00.
BACKGROUND:
The City of South San Francisco applied for the Transportation Equity Act (TEA-21) and the
Congestion Mitigation and Air Quality Improvement Program (CMAQ) from the State to fund the
resurfacing of South Airport Boulevard (Northbound 101 off-ramp to Beacon Street South).
The project's major items of work involve: the installation of handicap ramps at Utah Avenue
intersection, the installation of new traffic loop detection system, the replacement of severely
damaged sections of sidewalk, curb, and gutter, asphalt concrete deeplift patching, AC surface
milling & wedge cutting, the resurfacing of the roadway pavement, and the reinstallation of signing,
striping, pavement markings as well as curb markings.
The Engineering Division advertised the project and opened bids on May 28, 2002. The following
are the bid results:
CONTRACTOR
BID AMOUNT
Interstate Grading & Paving, Inc.
South San Francisco, CA.
$ 574,927.00
Staff Report
To~
Re:
Date:
The Honorable Mayor and City Council
2001 - 2002 Street Resurfacing Project
Project No. ST-0202, Bid No. 2311
June 12, 2002
Page: 2 of 3
CONTRACTOR
G. Bortolotto Co., Inc.
San Carlos, CA
Ghillotti Bros., Inc
San Rafael, CA
Granite ROck/Pavex Construction, Company
Redwood City, CA.
Desilva Gates Construction
Dublin, CA
C. F. Archibald Paving, Inc.
San Francisco, CA.
Esquivel Grading & Paving
San Francisco, CA
O'Grady Paving, Inc.
Mountain View, CA.
BID AMOUNT
$ 598,964.59
$ 618,685.40
$ 629,478.00
$ 639,639.00
$ 651,841.00
$ 674,115.50
$ 682,159.00
Interstate Grading & Paving Inc. has worked with the City on previous projects. Staff has reviewed
their qualifications and references and found them to be satisfactory. The time allotted for this
project is 30 working days. Staff recommends that the contract be awarded to Interstate Grading &
Paving Inc. in the amount of $574,927.00. The following is a cost breakdown for the project budget:
Construction
10% Contingency
Administration/Inspection
$ 574,927.00
$ 57,492.00
$ 30,240.00
Total $ 662,659.00
Staff Report
To:
Re:
Date:
The Honorable Mayor and City Council
2001 - 2002 Street Resurfacing Project
Project No. ST-0202, Bid No. 2311
June 12, 2002
Page: 3 of 3
FUNDING:
Funding for this project is included in the City of South San Francisco's
Improvement Program. The following are the funds available:
2000-2001 Capital
STIP TEA-21 Grant Fund:
Gas Tax Fund
Total Available
$ 243,000.00
$ 419,659.00
$ 662,659.00
Director o~Public Works
Michael A. Wilson
City Manager
ATTACHMENTS: Resolution
Location Map
RD/JG/ed
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION AWARDING THE CONSTRUCTION CONTRACT
FOR THE 2001-2002 STREET RESURFACING PROJECT TO
INTERSTATE GRADING & PAVING INC. IN AN AMOUNT NOT TO
EXCEED $$74,927
WHEREAS, the City desires to award the construction contract to the lowest responsible
bidder, Interstate Grading & Paving Inc. in an amount not to exceed $574,927 for the 2001-2002
Street Resurfacing Project to Interstate Grading & Paving Inc.; and
WHEREAS, funding for this project is included in the 2000-2001 Capital Improvement
Program budget.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby awards the construction contract for the 2001-2002 Street
Resurfacing Project, Federal Project No. STPL-5177 (013) to Interstate Grading & Paving Inc. in an
amount not to exceed $574,927.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the day of
,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
F:Xfile cabinet\Current Reso's\6-12Rstreet.resurfacing.pro.res.doc
LOCATION MAP
ort
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
Director of Public Works
NATIONAL POLLUTION DISCHARGE ELIMINATION SYSTEM (NPDES)
STORMWATER MANAGEMENT PLAN GENERAL PROGRAM AND FEE
RECOMMENDATION:
It is recommended that the City Council adopt a resolution requesting that the San Mateo County
Board of Supervisors use the San Mateo County Flood Control District as the funding mechanism to
support the Countywide National Pollution Discharge Elimination System (NPDES) General
Program.
BACKGROUND/DISCUSSION:
The Environmental Protection Agency, under amendments to the 1987 Clean Water Act, imposed
regulations that mandate local government to control and reduce the amount of stormwater pollution
runoff into receiving waters of the United States.
The initial Stormwater Management Plan included tasks, schedules, and parties responsible for
implementation during the initial five-year NPDES permit period (i.e., 1993-1998). The Regional
Board adopted Order 93-106 and the STOPPP's Municipal Stormwater NPDES Permit No.
CA0029921 in September 1993.
On March 18, 1999, the San Mateo Countywide Stormwater Pollution Prevention Program's
Technical Advisory Committee submitted a new San Mateo Countywide Stormwater Management
Plan for the period between July 1998 through June 2003, and compiled other information needed to
reapply for NPDES permit reissuance.
On July 21, 1999, the Regional Board, after Public hearing, approved the Renewed NPDES permit
effective July 21, 1999 and which expires July 20, 2004.
Staff Report
To:
Re:
Date:
The Honorable Mayor and City Council
NATIONAL POLLUTION DISCHARGE ELIMINATION SYSTEM (NPDES)
STORMWATER MANAGEMENT PLAN GENERAL PROGRAM AND FEE
June 12, 2002
Page: 2 of 2
The General Program encompasses those efforts undertaken for the benefit of all twenty-one agency
co-permittees involved with the implementation of the Stormwater Management Plan, and adherence
to the conditions set forth under the Countywide NPDES Discharge Permit. The 2002-2003 NPDES
General Program Budget is $1,295,348 as outlined in the attached NPDES Budget.
FUNDING:
Funding will be provided from the San Mateo Countywide General Program Budget Year 10, which
is approximately $1,295,348 financed by a Countywide parcel fee levied against residential land
users, commercial/retail/manufacturing/industrial land users, and miscellaneous land users. For Year
10 activities, single-family residential land users are charged $5.9242 per parcel, which establishes
the base rate. Miscellaneous, Condominium, Agriculture and Vacant parcels are charged
$2.9621/APN; all other land uses a base rate of $5.9242/APN for the first 11,000 square feet plus
$0.5367 per 1,000 additional square feet of parcel area. The use of parcel size provides for a more
equitable distribution of the fee throughout the various land uses within the County.
~ib~s U' '
John
1
Director of Public Works
Appr°ved: Mic/hae~l A~. ~~
City Manager
ATTACHMENTS: Resolution
(NPDES) City/County Association of Govts. 2002-2003 Program Budget
RH/JG/ed
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION RECOMMENDING THAT THE SAN MATEO
COUNTY FLOOD CONTROL DISTRICT IMPOSE CHARGES
FOR FUNDING THE 2002-2003 COUNTYWIDE NATIONAL
POIJ.UTION DISCHARGE ELIMINATION SYSTEM (NPDES)
GENERAL PROGRAM
WHEREAS, The Environmental Protection Agency, under amendments to the
1987 Federal Clean Water Act, imposed regulations that mandate local governments to
control and reduce the amount of stormwater pollutant runoff into receiving waters; and
WHEREAS, under the authority of California Porter-Cologne Water Quality Act,
the State Water Resources Control Board has delegated authority to its regional boards to
invoke permitting requirements upon counties and cities; and
WHEREAS, in July 1991, the San Francisco Bay Regional Water Quality Control
Board notified San Mateo County of the requirement to submit an NPDES Permit
Application by November 30, 1992; and
WHEREAS, in furtherance of the NPDES Permit Process, San Mateo County in
conjunction with all incorporated cities in San Mateo County has prepared a San Mateo
Countywide Stormwater Management Plan, which has a General Program as a
fundamental component of the Management Plan; and
WHEREAS, the San Mateo Countywide Stormwater Management Plan has been
submitted to the San Francisco Bay Regional Water Quality Control Board and the
Management Plan has been approved by the Board and made part of the NPDES Waste
Discharge Permit CA 0029921, issued September 13, 1993 and remaining in effect
through June 30, 1998; and
WHEREAS, the San Mateo Countywide Stormwater Management Plan and
NPDES Waste Discharge Permit CA 0029921, required that San Mateo County submit a
renewal application by March 31, 1998 which, shall include a Stormwater Management
Plan for 1998 through 2003; and
WHEREAS, the San Mateo County NPDES Technical Advisory Committee has
prepared the San Mateo Countywide Stormwater Management Plan for 1998-2003; and
WHEREAS, the City of South San Francisco has accepted, adopted and
committed to implement the San Mateo Countywide Stormwater Management Plan for
1998-2003 and the renewal application and Plan was submitted to the San Francisco
Regional Water Quality Control Board on March 18, 1998; and
WHEREAS, the San Francisco Bay Regional Water Quality Control Board, after
Public Hearing, approved the Renewed NPDES Permit effective July 21, 1999 and which
expires July 20, 2004; and
WHEREAS, the San Mateo County Flood Control District Act, as amended by
the State legislature in 1992 (Assembly Bill 2635), authorized the San Mateo County
Flood Control District to impose charges to fund storm drainage programs such as the
NPDES Program;' Countywide General Program charges for fiscal year 2002-2003 to
fund a $1,295,348 Budget are; Single Family Resident: $5.9242/APN; Miscellaneous,
Agriculture, Vacant and Condominium: $2.9621/APN; all other land uses a base rate of
$5.9242/APN for the first 11,000 square feet plus $0.5367 per 1,000 additional square
feet of parcel area; and
WHEREAS, the City of South San Francisco has held a hearing upon the proposal
to fund the Countywide NPDES General Program through the San Mateo County flood
Control District; The City Council makes the below resolve following that heating.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
South San Francisco that:
The City of South San Francisco respectfully requests the San Mateo County
Board of Supervisors, acting as the governing board of the San Mateo County
Flood Control District, to impose those charges necessary to fund the
Countywide NPDES General Program; and
The City of South San Francisco respectfully requests that all properties
within the territorial limits of said city be charged (exempted from) the annual
charges in accordance with said charges stated above; and
o
The City Clerk is hereby directed to forward a copy of this Resolution to the
San Mateo County Board of supervisors and to the NPDES Coordinator of
C/CAG.
I certify that the foregoing Resolution was regulmly introduced and, adopted by
the City Council of the City of South San Francisco at a regular meeting held on the __
day ~ 2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
F:~flle cabinet\Current Reso's\6-12countyreso2002.doc
CITY/COUNTY ASSOCIATION OF GOVERNMENTS
2002-03 PROGRAM BUDGET
JULY 01, 2002-JUNE 30, 2003
(by fund)
NPDES STORMWATER MANAGEMENT PLAN PROGRAM FUND
PROGRAM DESCRIPTION: The National Pollutant Discharge System (NPDES) program is a response to the
mandate imposed by federal and state legislation and the San Francisco Bay Regional Water Quality Control Board
(RWQCB) directing San Mateo County to obtain a stormwater discharge permit. C/CAG has been designated by its
members as the administrator of the program for all of the jurisdictions that have joined together as co-permittee
agencies for the Stormwater Pollution Prevention Program (STOPP). This year's program will continue to carry out
the mandate of the Stormwater Management Plan and its main objective of implementing a comprehensive storm water
quality management program to protect the water quality of San Francisco Bay, the pacific Ocean and San Mateo
County tributary streams form the adverse effects of stormwater caused pollution. The budget includes the supplement
fee of $550,000 and the addition s'cope of work approved by the C/CAG Board.
ESTIMATED BEGINNING BALANCE
RESERVE BALANCE
$282,038
PROJECTED REVENUES
Interest Earnings $ I0,000
NPDES Feel $1,340,821
TOTAL PROJECTED REVENUES
$1,350,821
TOTALSOURCESOFFUNDS
PROPOSED EXPENDITURES
$1,638,859
Administrative Services $143,180
Professional Services $202,814
Consulting Services 2 $744,104
Supplies $750
Professional Dues & Membership 3 $59,000
Conferences & Meetings $500
Publications $45,000
NPDES Distributions $0
Miscellaneous (Fee Notification) $100,000
TOTAL EXPENDITURES
$1,295,348
NET CHANGE $55,743
TRANSFER TO RESERVES
$0
TOTAL USE OF FUNDS
ENDING FIYNDBALANCE
RESERVE FUNDBALANCE
$1,295,348
$337,511
1. NPDES Fee- Assumed the same contribution rate as 2001-02 plus a supplemental fee of $550,000.
2. Consulting Services are provide by EOA.
3. Consists of Permits and regional Assessment fees.
$100,903
$100,903
Staff Report
DATE:
TO:
FROM:
June 12, 2002
The Honorable Mayor and City Council
Director of Public Works
SUBJECT: Proposed Sewer Rate Increase and "Report of Annual Sewer Rentals and
Charges" for FY 2002-2003.
RECOMMENDATION:
It is recommended that the City Council conduct a public hearing, adopt a resolution
establishing sewer service rates for FY 2002-2003, amending the master fee schedule to
include the rates, and adopting the "Report of Annual Sewer Rental and Charges" for FY
2002-2003.
BACKGROUND/DISCUSSION:
In June 2000, in accordance with the requirements of Proposition 218, the City notified by
mail the owners of property in South San Francisco of proposed rate increases of up to 5%
each year for FY 2001 through FY 2005. It was explained in the notice that the rate increases
were needed to finance capital improvements for the City' s Water Quality Control Plant and
sanitary sewer system. A presentation of the improvements and financial requirements was
given to the public at E1 Camino High School in July 2000. The improvements allow the
City to comply with state and federal clean water requirements intended to protect the San
Francisco Bay and public health.
On August 1, 2000, at its public hearing, the City Council approved a resolution containing a
five-year schedule of charges that called for a 5% rate increase for FY 2000-01 and FY 2001-
02 and increases up to 5% for FY 2002-03, FY 2003-2004, and for FY 2004-2005. The
revenue generated by the sewer service charges fund the following cost categories:
Treatment Plant Operating Costs
Sewer Maintenance Costs
Sewage Pump Stations Costs
Industrial Waste Control Costs
Debt Service Costs associated with the Capital
Improvements
Staff Report
To: The Honorable Mayor and City Council
Re: Proposed Sewer rate Increase and "Report of Annual Sewer Rentals and Charges for
FY 2002-2003
Date: June 12, 2002
Page: 2 of 3
The capital improvements at the treatment plant are essentially complete. The improvements
now allow the plant to reliably treat up to 13 million gallons per day as needed to meet state
requirements contained in the City's National Pollution Discharge Elimination System
(NPDES) permit.
In addition to the improvements at the treatment plant several other facilities are in the early
stages of design or construction:
An effluent storage basin to prevent wastewater overflow to
Colma Creek
Major pump station improvements to prevent sanitary
sewage overflows
Two major force mains to convey wet-weather flows to the
treatment plant
General sanitary sewer rehabilitation to reduce storm water
inflow and infiltration
Nature-viewing trail with a bridge over Colma Creek,
required by the Bay Conservation & Development
Commission (BCDC)
Except for the latter, these projects are required by the State Regional Water Quality Control Board
in its Cease and Desist Order issued to the City in 1997 and are needed to prevent raw sewage
overflows from sanitary sewers that have occurred during severe rain storms in the past. Such
overflows are a violation of the City's NPDES permit, which allows only treated wastewater to be
discharged to the San Francisco Bay.
CONCLUSIONS:
Bartle Wells Associates, an independent financial advisory firm, recently updated the
financial forecast for the City that they prepared in May 2000. Based on this evaluation,
which includes updated estimates of revenue and expenses for the wet-weather program,
bridge construction, and Colma Creek bank restoration, the staff recommends that the
maximum 5% rate increase be adopted for FY 2002-03.
The proposed sewer service rates were determined in accordance with State guidelines. Staff
believes that they are a fair and equitable allocation of costs to the various classes of users
and are in proportion to the amount of sewage discharged into the sewer system. The current
annual rate for a residence is $197. The proposed rate is $207, which amounts to about 83
cents per month more.
Staff Report
To: The Honorable Mayor and City Council
Re: Proposed Sewer rate Increase and "Report of Annual Sewer Rentals and Charges for
FY 2002-2003
Date: June 12, 2002
Page: 3 of 3
A comparison of the existing rates and the proposed rates for all classes of users and a
comparison of the residential rates for other cities in San Mateo County are attached.
A notice of water usage and estimated sewer service charges was sent on May 1, 2002 to all
commercial property owners in the South San Francisco service area for a 30-day protest
period as required by the Municipal Code. The City Clerk has had a notice of the proposed
rates published in a local newspaper as required by the Municipal Code.
Director~f Public Works
City Manager
ATTACHMENTS:
Resolution establishing Sewer Service Rates for FY 2002-03 and adopting
"Report of Annual Sewer Rentals and Charges for FY 2002-2003."
Exhibit "A" to Resolution, Sewer Rates for Fiscal Year 2002-2003.
Proposed Sewer Rate Increase sent to parcel owners in June 2000.
Survey of Residential Sewer Service Charges in San Mateo County.
DC/JG/ed
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALI:FORNIA
A RESOLUTION APPROVING SEWER RATES EFFECTIVE
FISCAL YEAR 2002-2003, AMENDING THE MASTER FEE
TO INCLUDE THE RATES AND ADOPTING A REPORT OF
ANNUAL SEWER RENTAL AND CHARGES FOR 2002-2003
PURSUANT TO CHAPTER 14.12 OF THE SOUTH SAN
FRANCISCO MUNICIPAL CODE
WHEREAS, by Chapter 14.12 of the South San Francisco Municipal Code the City Council
is authorized to establish sewer rates by resolution; and
WHEREAS, in May 2000, the City Council reviewed the implementation of the 5-year rate
increases of 5% for 2000-2001, and 5% for 2001-2002, and up to 5% annually through 2004-2005 to
finance costs associated with the Water Quality Control Plant, including expansion thereof; and
WHEREAS, notice of the proposed increase and the public heating was published in the San
Mateo Times; and
WHEREAS, the City Council has given notice and on June 12, 2002, held a public heating as
required by law on the subject sewer rates; and
WHEREAS, the rates reflected in the report of Annual Sewer Rentals and charges are
consistent with the five-year financing plan.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby approves the schedule of rates set forth in the attached Exhibit
"A" which implements the previously approved financing plan, and hereby amends the City's Master
Fee Schedule to include the rates.
BE IT FURTHER RESOLVED that the City Council hereby adopts the Report of Annual
Sewer Rentals and Charges for Fiscal Year 2002-2003, and directs that the rates so established shall
be collected on the official tax assessment roll, together with real property taxes, and that the amount
shall constitute liens upon the properties which shall be effective at the same time and to the same
extent as is provided for by law in the case of real property taxes, with like penalties for
delinquencies.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the __day of
,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
F:\file cabinetXCurrent Reso's\6-12ResolutionFY2003.doc
REPORT OF SEWER RENTAL CHARGES FOR 2002-2003
IN ACCORDANCE WITH CHAPTER 14.12 OF THE
SOUTH SAN FRANCISCO MUNICIPAL CODE
In accordance with Chapter 14.12 of the South San Francisco Municipal Code, the following report
prepared as of May 22, 2002 is submitted. The report describes the procedure of charging those
parcels of real property, which directly receive the benefits of municipal sanitary sewer services and
the amount of the annual charge or rental, which will be imposed against each parcel for Fiscal Year
2002-2003.
Summary of Rentals or Charges. The following is a summary of the annual rental or charges
for 2002-2003.
All commercial and industrial properties
Ail residential properties, except those serviced
by Westborough County Water District
Billed by Statement
Total
$4,407,000
$3,288,564
$ 221,357
$7,916,921
Sewer Rental Account File. This report refers to and incorporates by reference the report
entitled "Rate Determination and Revenue Program Summary," prepared by and on file at the
City of South San Francisco Water Quality Control Plant. The report summarizes the 2002-
2003 sewer rental charge that will be proposed to the City Council on June 12, 2002. Upon
adoption of the proposed charges, or amendments thereto, a report entitled 3.City of South
San Francisco Sanitary Sewer Charges, prepared by Engineering Data Services, Los Altos,
California, will be completed. The report will describe by Assessor's Parcel Number each
parcel of real property receiving directly the benefits of muni6ipal sanitary sewer service and
the amount of annual charge or rental imposed against each parcel for fiscal year 2002-2003.
All of these documents, including this report shall be filed with the County Tax Collector or
Auditor. Accompanying the filing of this report shall be the Clerk's endorsement that the
report has been adopted by the City Council.
Dated: May 22, 2002
J. Steele
Director of Finance
CI JERK'S STATEMENT
I, Sylvia M. Payne, City Clerk of the City of South San Francisco, a municipal corporation,
do hereby certify that the foregoing report was adopted by the City Council on the __ day of
~, 2002 by Resolution No. __
Dated:
Sylvia M. Payne
City Clerk
EXHIBIT "A" TO RESOLUTION NO.
SEWER RATES FISCAL YEAR 2002-2003
PARCELS BY USE CLASSIFICATION
Residential Class
Single-family dwelling
Multi-family dwelling (duplexes,
flats, apartments, and similar
class of users)
Trailer Court and similar class of
uses
ANNUAL RATE
$207.00 per dwelling
per year
$207.00 per dwelling
per unit per year
$186.00 per dwelling
per unit per year
Be
Institutional Class
Schools, colleges, rest homes,
hospitals, clubs, lodges, and
similar class of uses.
Minimum charge, or
Volume charge based on water
consumed (metered inflow), or
Volume charge based on water
consumed (metered effluent)
$207.00 per year
$ 2.215 per 100
cubic feet of water
consumed
$ 2.461 per 100
cubic feet of water
consumed
Ce
Commercial and Nonmonitored
Industrial Classes
1. Light Strength Uses:
Bars (without dining
facilities), car washes,
department and retail stores,
hotels, motels (without dining
facilities), laundromats,
professional and business
offices, banks, savings and
loan associations, warehouses,
auto rentals (without repair
shops), newspapers, commercial
printing shops, freight and
drayage services, barber shops,
shoe repair shops, camera
shops, plating shops, wood and
furniture fabricators, heating
and appliance stores, drug
stores, auto supply stores,
general contractors' offices,
public administration offices,
health services, legal
services, dry cleaners, metal
fabricators, lumber companies,
laundry services, sheet metal
shops, and similar classes of
uses with wast.water strengths
less than or approximated
equivalent to residential
strength
Minimum charge, or
Volume charge based on water
consumed (metered inflow), or
Volume charge based on water
consumed (metered effluent)
$207.00 per facility
per year
$ 2.745 per 100 cubic
feet of water consumed
$ 3.051 per 100 cubic
feet of water consumed
Moderate Strength Uses:
Auto/gas service stations,
auto steam cleaners, auto
rentals (with repair shops),
bakeries, beauty and hair
salons, commercial laundries,
mortuaries, lodges (with
dining facilities), radiator
repair shops, markets (with
garbage disposals), ice cream
parlors, candy manufacturers,
food preparation and caterers,
sandwich shops, drive-in
theaters, creameries, roofers,
chemical preparations, machine
shops, photo/film processors,
rug, carpet, upholstery
cleaners, foundries, ceramics
studios, oil services,
transmission services,
sanitation services,
furriers, drum and
barrel cleaners, and similar
classes of uses with
wastewater strengths
significantly greater than
residential strength.
The user will be reclassified
to the light strength use
classification if it adequately
demonstrates to the city
engineer it is discharging only
segregated or wastewater
equivalent in strength to
residential wastewater.
Minimum charge, or
Volume charge based on water
consumed (metered inflow), or
$207.00 per year
$ 4.296 per 100
cubic feet of water
consumed
Volume charge based on water
consumed (metered effluent)
e
Restaurants, Cafes and Other
Eating Places:
Minimum charge, or
Volume charge, based on water
consumed (metered inflow), or
Volume charge, based on water
consumed (metered effluent)
Monitored and Industrial Class:
1. Monitored and Industrial
Users:
Manufacturers, processors,
producers, laundries, photo
finishers, painting services,
packagers and similar classes
of uses whose wastewater are
monitored by the City
Minimum charge, or combination
of the following:
Volume charge, based on water
consumed (metered inflow), or
Volume charge, based on water
consumed (metered effluent)
$ 4.774 per 100
cubic feet of water
consumed
$207.00 per year
$ 6.278 per 100
cubic feet of water
consumed
$ 6.976 per 100
cubic feet of water
consumed
$207.00 per year
$1.645 per 100
cubic feet of water
consumed
$1.828 per 100
cubic feet of water
consumed
Surcharge for suspended solids
(ss)
Surcharge for chemical oxygen
demand (COD)
Septage Waste Haulers:
Commercial businesses which
haul to and dispose of septage
waste at the Water Quality
Control Plant.
Minimum charge
Volume charge based on waste
water discharge
$ 0.552 per pound of
suspended solids
discharged
$ 0.171 per pound of
COD discharged
$207.00 per year
$ 0.117 per gallon
discharged
City of South San Francisco
Proposed Sewer Rate Increase
(Rates are from the June 2000 Notice sent to all parcel owners)
How rates are calculated:
Residential Rates. Rates for residential properties are calculated by multiplying the number of dwelling units on the assessor's parcel by the annual rate.
The dwelling unit rate for Single Residential and Multiple Residential assume an "average" annual effluent flow of 84 hundred cubic feet.
The trailer unit rate assumes an "average" effluent flow of 75.6 hundred cubic feet.
Commercial and :[nstitutional Rates. Restaurant, Institutional and Commercial rates are calculated
a. by measuring the annual water use at the assessor's parcel and multiplying this usage by the inflow rate, or
b. by measuring the annual sewer flow from the assessor's parcel and. multiplying by the effluent rate.
Tndustrial Rates. Industrial Rates are calculated based on the annual amount of flow, chemical oxygen demand and solids from the Assessor's parcel.
Separate sewer rates are calculated for each component and then added for the total sewer fee per assessor's parcel.
Annual measurement and testing are performed at each assessor's parcel to confirm the flow and loading.
Septage Rates, Septage rates are calculated by multiplying the gallons of flow discharged from the septic pumper by the septage rate.
;ed S Rate Increases over the next 3 years
Proposed Proposed Proposed
Basis of Rate Rate Rate Existing Rate Maximum Rate Maximum Rate Maximum Rate
User Group Calculation 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005
(Units) S/Unit/Year S/Unit/Year S/Unit/Year S/Unit/Year S/Unit/Year S/Unit/Year
Single & Multiple Residence Dwelling Unit 179 188 197 207 218 228
Trailer Units Trailer Unit 161 169 177 186 195 205
Restaurants Hundred Cubic Feet effluent 6,027 6.327 6.643 6.976 7.324 7.691
Or inflow 5.424 5.694 5.979 6.278 6.592 6.921
Institutional Hundred Cubic Feet effluent 2.124 2.232 2.344 2.461 2.584 2.713
or inflow 1.912 2,009 2.109 2.215 2.326 2.442
Light Strength Commercial Hundred Cubic Feet effluent 2.631 2.767 2.905 3.051 3.203 3.363
or inflow 2.368 2.490 2.615 2.745 2.882 3.027
Moderate Strength Commercial Hundred Cubic Feet effluent 4.121 4.330 4.547 4.774 5.013 5.263
or inflow 3.709 3.897 4.092 4.296 4,511 4.737
Industrial Flow Hundred Cubic Feet effluent 1.408 1.658 1.741 1.828 1.919 2.015
or inflow 1.267 1.492 1.567 1.645 1.727 1.81 4
Chemical Oxygen Demand Pounds 0.155 0.155 0.163 0,171 0.179 0,188
Solids Pounds 0.499 0.501 0.526 0.552 0.580 0.609
Gallons 0,108 0.106 0.111 0.117 0,123 0.129
Septage Haulers ~
RESIDENTIAL
SEWER SERVICE CHARGES
SAN MATEO COUNTY
(Source of lnformation: State Water Resources Control Board Survey for 2002)
AGENCY
ANNUAL SEWER CHARGE
HILLSBOROUGH
MONTARA SANITARY DIST.
HALF MOON BAY
PACIFICA
SAN BRUNO
FOSTER CITY
BRISBANE
Mil ,LBRAE
DALY CITY
SAN MATEO
SAN CARLOS
EL GRANADA SANITARY
BELMONT
MENLO PARK
REDWOOD CITY
SOUTH SAN FRANCISCO
BURLINGAME
AVERAGE RESIDENTIAL CHARGE
$842 *
$579
$405
$359
$341
$332*
$321
$300
$294
$280
$276*
$273
$269*
$242*
$228*
$197'
$190'**
$304
$207**
The rates are calculated using an average of 84 hundred cubic feet of wastewater discharged
annually, except for those agency with a flat charge.
Flat Charge
Proposed Charge
A 20% rate increase is being considered by the City of Burlingame for the coming fiscal
year.
Staff Report
Date: June 12, 2002
To:
Honorable Mayor and City Council
From: Director of Finance
Subject: Resolution of Intent to Issue Debt for Wet Weather Program Improvements
RECOMMENDATION:
It is recommended that the City Council approve the attached resolution, which states the City
Council's intent to issue debt obligations in the future to finance Wet Weather Program
improvements. Approving this resolution merely allows the City to reimburse itself out of
debt proceeds for any Wet Weather expenses incurred prior to the issuance of that debt, in
conformance with U.S. Income Tax provisions. Passage of this resolution does not obligate
the City in any way to issue debt.
BACKGROUND/DISCUSSION:
As has been reported to the City Council in previous reports from the Public Works
Department, the City is operating under a cease and desist order from the State Water Quality
Control Board to take action to prevent storm water inflow and/or groundwater infiltration
entering the sewer collection system from leaky pipes and direct cross-connection between
storm drains and the sewer system. In order to mitigate this situation, and to comply with the
cease and desist order, Public Works staff has contracted with Carollo Engineers to design a
series of capital improvements. Those improvements are known as the Wet Weather
Program, and are the topic of a presentation by the Public Works Director on tonight's
agenda. The Wet Weather Program is being budgeted in the 2002-03 Capital Improvement
Program Budget, which was presented to the City Council at the study session of May 29,
2002.
For cash flow purposes, debt financing will be required to finance the Wet Weather Program.
Staff has applied for a State Revolving Fund (SRF) loan to finance much of the Wet Weather
Program. However, additional bonds may be required over and above the SRF for a variety
of reasons:
Some of the costs may not be eligible for the State loan, the largest being Phase
IV, the East of 101 improvements.
Staff Report
To: The Honorable Mayor and City Council
Re: Resolution of Intent to Issue Debt for Wet Weather Program Improvements
Date: June 12, 2002
Page 2
Staff is proposing charging a new East of 101 Sewer Impact Fee to charge
developers for their share of the capacity improvements to the sewer system east
of 101. However, the timing of the receipt of those developer fees may not
coincide with the construction of the improvements. Therefore, the City will
likely want to bond finance the East of 101 improvements, and then pay for debt
service on those improvements out of developer fees collected in the East of 101
area.
o
The SRF loan, which staff anticipates the State will approve, will likely not be
approved in time to fund the beginning of Phases I - III of the Wet Weather
Program.
For all of these reasons, the City may very well need to issue sewer debt in the next 6-12
months, although some of it may only be in the form of a bridge loan until the State loan
comes in. Prior to the issuance of debt obligations, the City will be making initial capital
expenses associated with the Wet Weather Program.
United States Income Tax Regulations in Section 1.150-2 provides that proceeds of tax-
exempt debt may not be used for reimbursement of expenditures made prior to the date of
issuance of that debt unless certain procedures are followed, one of which is that the issuer
declares an intention to reimburse itself for such expenditures. Therefore, staff has prepared
a reimbursement resolution, which will allow the City to reimburse itself for Wet Weather
project expenditures made prior to the issuance of debt by the City.
Approval of this resolution does not obligate the City to issue debt, nor does it require that
when debt is eventually sold, that it must sell debt matching the maximum amount listed in
the Resolution ($55 million). Rather, this resolution merely preserves the City's flexibility in
using debt financing, up to the maximum amount listed in the resolution, to reimburse itself
for prior expenditures.
FISCAL IMPACT:
Approval of this resolution will have no fiscal impact on the City, as it does not obligate the
City in any way. If and when the City needs to issue debt to finance Wet Weather
improvements, staff will return to the City Council for approval.
Prepared by: ~
Finance Director
Approved b y' ~:chl a~l A/~~~
City Manager
Attachment: Resolution
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION DECLARING INTENTION TO REIMBURSE
SE'vVER CAPITAL EXPENDITURES FROM THE PROCEEDS
OF OBLIGATIONS TO BE ISSUED BY THE CFI~'
WHEREAS, the City of South San Francisco ("the City") proposes to undertake
the construction and acquisition of the sewer facilities described below (collectively "the
Project"), to issue debt for such project, and to use a portion of the proceeds of such debt
to reimburse expenditures made for the project prior to the issuance of debt; and
WHEREAS, United States Income Tax Regulations section 1.150-2 provides
generally that proceeds of tax-exempt debt are not deemed to be expended when such
proceeds are used for reimbursement of expenditures made prior to the date of issuance
of such debt unless certain procedures are followed, one of which is a requirement that
(with certain exceptions) prior to the payment of any such expenditure, the issuer declares
an intention to reimburse such expenditure; and
WHEREAS, it is in the public interest and for the public benefit that the City
declares its official intent to reimburse the expenditures referenced herein.
NOW, THEREFORE BE IT RESOLVED, the City of South San Francisco hereby
resolves as follows:
1. The City intends to issue debt obligations (the "Obligations") for the purpose of
paying the costs of the Wet Weather Program (the "Project"), described in more detail in
Attachment A, which is hereby incorporated by reference herein.
2. The City hereby declares that it reasonably expects to pay certain costs of the
Project prior to the date of issuance of the Obligations and to use a portion of the
proceeds of the Obligations for reimbursement of expenditures for the Projects that are
paid before the date of issuance of the Obligations.
3. The maximum principal amount of Obligations to be issued for the Project is
$55,000,000.
I hereby certify that the foregoing Resolution was regularly
adopted by the City Council of the City of South San Francisco at a
held on the ~ day of ., 2002 by the following vote.
introduced and
meeting
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
\XMULDER\VGATI'RELL\file cabinet\Current Reso's\6-12RESOLUTION of intent to issue debt.doc
Exhibit A: Description of the Project
Wet Weather Program
Phases I-IV of the project are described in "City of South San Francisco, Wet Weather
Program" Final Report by Carollo Engineers, dated May 2002. Phase IV is further
described in "City of South San Francisco, East of Highway 101 Sewer Master Plan", by
Carollo Engineers, Draft dated April 2002.
This project is required to comply with the Cease and Desist Order (CDO) issued by the
Regional Water Quality Control Board on July 16, 1997. The CDO requires controlling
overflows from the sewer system for up to a 5-year storm event. It consists of four
phases:
Phase I
Pump Station improvements, parallel force main improvements, and an
effluent storage pond
Phase
Sewer Rehabilitation and relief sewers
Phase m Colma Creek Bank Restoration
Phase IV East of 101 Sewer System Improvements.
DATE:
September 11, 2002
TO:
The Honorable Mayor and City Council
FROM:
Director of Public Works
SUBJECT:
Program for the Repair/Maintenance of Streets Utilized by Transit Vehicles:
Program Agreement with the City/County Association of Governments
(C/CAG) and the City of South San Francisco
RECOMMENDATION:
It is recommended that the City Council adopt a resolution authorizing the City Manager to execute
the attached program agreement with the City/County Association of Governments (C/CAG) and the
City of South San Francisco to participate in the Revenue Aligned Budget Authority (RABA)
BACKGROUND:
The City of South San Francisco applied for the Revenue Aligned Budget Authority (RABA) funds
for the resuffacing of the following streets utilized by transit vehicles (Samtrans):
Miller Avenue (from Evergreen Drive - Gardenside Avenue)
Gardenside Avenue (from Crestwood Drive - Miller Avenue)
Crestwood Drive (from Evergreen Drive - Gardenside Avenue)
Shannon Drive (from Oakmont Drive - Gellert Boulevard)
Oakmont Drive (from Westborough Boulevard - San Bruno City Limits)
The City received a notification from the County of San Mateo Public Works Department that funds
are now obligated for the project and will need a resolution from the City of South San Francisco to
finalize the agreement.
FUNDING:
Funding~ ~or this project will be included in the Capital Improvement Program for FY 2003 - 2004.
John
Directbr of Public Works
libbs
Michael A. Wilson
City Manager
ATTACHMENTS:
RD/JG/ed
Resolution
Exhibit "B" - Agreement
Attachment "A"
I hereby certify that the foregoing Resolution was regularly introduced and
adopted by the City Council of the City of South San Francisco at a
meeting held on the day of ,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
F:\f'de cabinet\Current Reso's\txansit. vehilces.res.doc
EXHIBIT "B"
AGREEMENT BETWEEN THE CITY/COUNTY ASSOCIATION OF GOVERNMENTS
AND THE CITY OF SOUTH SAN FRANCISCO
BUS ROUTE REPAIR/MAINTENANCE PROGRAM
THIS AGREEMENT, entered into this day of ,20__, by and
between the CITY/COUNTY ASSOCIATION OF GOVERNMENTS, a political organization
within the County of San Mateo, hereinafter called "C/CAG", and the CITY OF SOUTH SAN
FRANCISCO, a city within the County of San Mateo, State of California, hereinafter called
"City";
WlTNESSETH:
WHEREAS, as provided in the document entitled "Program for Repair/Maintenance of
Streets Utilized by Transit Vehicles", Revenue Aligned Budget Authority (RABA) funds have
been made available for the repair or maintenance of streets or roads used by transit vehicles;
and
WHEREAS, city will repair or maintain certain bus routes within its jurisdiction; and
WHEREAS, City desires program reimbursement for said work;
NOW, THEREFORE, IT IS HEREBY AGREED by parties hereto, as follows:
1. C/CAG agrees to allocate $ 200,000.00 to City from monies reimbursed
under ISTEA.
C/CAG agrees to make payment hereinabove provided upon receipt of
certified contractor invoice for said amount from City and proper reimbursement
from RABA.
3. City agrees to submit to the State Controller of the State of California all
notices and reports required for the legal expenditure of Program funds.
4. City agrees that said funds as herein provided shall be used only as permitted
by this Program and by law.
5. City agrees to furnish such reports and accounts of the expenditure of
Program funds as C/CAG deems necessary and convenient.
6. Attachment "A" incorporated by reference lists the eligible City streets and
eligible project costs.
City shall furnish those documents necessary to verify quantity calculations
prior to City's seeking reimbursement for such costs under Paragraph 2 of this
Agreement.
o
City will comply with all rules, regulations and laws of the State and Federal
governments, including but not limited to Section 7260 et seq. Of the
Government Code and Public Law 91-646, and C/CAG shall not be responsible
for City's failure to so comply. Further, City shall hold C/CAG harmless from
any failure by City to comply with all rules, regulations and laws of the State and
federal governments.
The City shall indemnify and hold harmless C/CAG, its officers, agents and
employees from all claims, suits or action of every name, kind and description
brought for, or on account of, injuries to, or death of any person or damage to
property resulting from the negligent acts or omissions of the City, its officers,
employees or agents in the performance of this Agreement or work funded by the
"Program for Repair/Maintenance of Streets Utilized by Transit Vehicles".
IN WITNESS WHE~OF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers on the day and year first above written.
CITY/COUNTY ASSOCIATION OF GOVERNMENTS
By:
Chairman
Attest:
Clerk of Said Board
CITY OF SOUTH SAN FRANCISCO
By:.
Michael Wilson, City Manager
Attest:
Sylvia Payne, City Clerk
ATTACHMENT "A"
Page 1
MILLER AVENUE EVERGREEN DRIVE - GARDENSIDE AVEI~
ITEM DESCRIPTION QUANTITY UNIT UNIT COST
PRICE
AC Deeplift Patch 72 Tons $85.00 $6,120.00
AC Overlay 220 Tons $45.00 $9,900.00
Pavement Fabric 1765 Sq. Yd. $1.15 $2,029.75
Wedge Grinds 1010 LF $1.50 $1,515.00
Striping 1 LS $1,000.00 $1,000.00
JE)
[ Total I
GARDENSlDE AVENUE (MILLER AVENUE - CRESTWOOD DRIVE)
ITEM DESCRIPTION QUANTITY UNIT UNIT COST
PRICE
AC Deeplift Patch 65 Tons $85.00 $5,525.00
AC Overlay 400 Tons $45.00 $18,000.00
Pavement Fabric 3545 ScI. Yd. $1.15 $4,076.75
Wedge Grinds 2140 LF $1.50 $3,210.00
Striping 1 LS $1,200.00 $1,200.00
I Total I I $32,oaa.Ts I
CRESTWOOD DRIVE (EVERGREEN DRIVE - GARDENSIDE AVENUE)
ITEM DESCRIPTION QU~,NTITY UNIT UNIT COST
PRICE
AC Deeplift Patch 35 Tons $85.00 $2,975.00
AC Overlay 105 Tons $45.00 $4,725.00
Pavement Fabric 875 Sq. Yd. $1.15 $1,006.25
Wedge Grinds 800 LF $1.50 $1,200.00
Striping 1 LS $1,000.00 $1,000.00
[ Total J1,10,906.251
ATTACHMENT "A"
Page 2
SHANNON DRIVE OAKMONT DRIVE - GELLERT BOULEVARD)
ITEM DESCRIPTION 'QUANTITY UNIT UNIT COST
PRICE
AC Deeplift Patch 385 Tons $85.00 $32,725.00
AC Overlay 2545 Tons $45.00 $114,525.00
Pavement Fabric 22410 Sq. Yd. $1.15 $25,771.50
Wedge Grinds 10280 LF $1.50 $15,420.00
Striping 1 LS $5,000.00 $5,000.00
I Total I I $193'441'50 I
OAKMONT DRIVE 'WESTBOROUGH BOULEVARD - CITY LIMITS)
ITEM DESCRIPTION 'QUANTITY UNIT UNIT COST
PRICE
AC Deeplift Patch 150 Tons $85.00 $12,750.00
AC Overlay 485 Tons $45.00 $21,825.00
Pavement Fabric 3885 Sq. Yd. $1.15 $4,467.75
Wedge Grinds 2250 LF $1.50 $3,375.00
Crack Seal 1 LS $1,000.00 $1,000.00
Striping 1 LS $2,000.00 $2,000.00
Total I I $45,417'75 I
StaffReport
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
Director of Economic and Community Development
First Time Homebuyer Program
RECOMMENDATION:
It is recommended that the City Council
1. Provide direction on program parameters for a first time homebuyer program in South San
Francisco and approve by motion a program description
2. Approve by motion loan documents for a first time homebuyer program, and
3. Agree in concept to the use of $250,000 in Redevelopment Agency funds for the first time
homebuyer program.
BACKGROUND:
With the cost of housing increasing beyond levels of affordability, many residents are turning to
cities for assistance in renting or buying homes. In South San Francisco, the Office of Economic
and Community Development Department (ECD) receives five to ten calls per week asking
whether the City has a first time homebuyer program. Presently, staff refers these callers to the
County of San Mateo and other cities on the Peninsula who have first time homebuyer programs.
Through their loan programs, the County and other cities have been helping people buy homes for
several years now.
The proposed first time homebuyer program would start a similar loan program for people who live
and/or work in the City of South San Francisco, and it be would modeled on the programs offered
by the County and other cities on the Peninsula. It is important to note that this is a new loan
program separate from the City's inclusionary housing requirement that results in the creation of
Below Market Rate (BMR) units. Recommendations noted in this report only affect how the new
loan program will be structured and not how the City handles units created under the City's
Inclusionary Housing Ordinance. The loan program, however, will facilitate the sale of BMR units
by making them more affordable to a wider range of city_ residents. A
O0 1
STAFF REPORT
TO:
SUBJECT:
DATE:
HonoraOle Mayor and City Council
First Time Homebuyer Program
June 12, 2002
Page 2
The proposed City of South San Francisco First Time Homebuyer Program is designed to achieve
the following key objectives:
· To establish and maintain a program that creates and maximizes affordable home ownership
opportunities for low- and moderate-income households
· To create a program that provides for long term affordability for homeowners
· To maximize the number of households that receive assistance
· To leverage City funds by participating in the San Mateo Countywide Housing Investment
Partnership (CHIP) and other lending programs
In addition, staff is requesting that the City Council also provide direction on three other potential
program objectives. First, should the City's First Time Homebuyer Program give priority for loans
to City employees to promote employee recruitment and retention. Second, should the Program
give similar priority to other public service employees such as schoolteachers to promote similar
employee recruitment and retention in their organizations. Third, if the program gives loan priority
to City and/or other public service employees, as indicated in the first two options, should the City
encourage employee retention through financial incentives built into the program (these incentives
are described later in this report) If the r-;.., ,-.
· ^... ,*-~.,~ program ...... r
City's F:'g' 'r;m~ u~r.
The City Council Housing Sub-Committee considered these questions at a meeting on June 5, and
recommends the following options to the City Council:
That first priority be given to City employees if the loan program can be structured such that
the City loan is due and payable when the employee ends his or her employment with the
City
That second priority be given South San Francisco School District employees if the loan
program can be structured such that the City loan is due and payable when the employee
ends his or her employment with the School District, and if the School District provides a
matching loan to its employees
The Housing Sub-Committee believes the City and/or School district should receive greater
guarantees that employees will continue to work in South San Francisco in return for receiving
priority for City assistance. Therefore, City staff will contact banks and other lending institutions
to see if they are willing to provide loans with the provision that the City can call in its loan when a
borrower ends his or her employment. If it is not possible to find lenders to make loans under
these conditions, no priority will be given to City or school district employees.
The City Council should note that staff has learned from other cities that banks are generally not
willing to allow let secondary lenders call in their loans. Such a clause would make the loans non-
conforming and banks would not be able to sell them Jn the secondary market. Banks also believe
00 2
STAFF REPORT
TO:
SUBJECT:
DATE:
Page 3
Honorable Mayor and City Council
First Time Homebuyer Program
June 12, 2002
this provision would place their loans at risk because borrowers would have to find new, more
expensive financing that would require higher monthly payments. Higher monthly payments
would increase the likelihood that a borrower would default on all loans. Nevertheless, staff will
make every effort to locate a bank or lender willing to make portfolio loans to support the City's
program.
In it's discussion, the Housing Sub-Committee also recommended the following priority:
· To provide assistance to long-time South San Francisco residents, the City's First-Time
Homebuyer Program should give loan priority to residents who have lived or worked in
South San Francisco for five or more years.
DISCUSSION:
Staff developed the City's First Time Homebuyer program description by working with the County
of San Mateo, lending institutions, various school districts, and other cities on the Peninsula.
Working together the cites and County created the Countywide Housing Investment Partnership
(CHIP). CHIPS's purpose is to create a uniform first time homebuyer program for all of San
Mateo County. The uniform program will enable CHIP to obtain bank, secondary market, and
other institutional approval for the program instead of each City having to undergo a lengthy loan
program approval process.
Another purpose for creating CHIP is to leverage public funds with private investment funds. By
tapping into a variety of funding sources, including those of the state, the federal government,
pension funds and other private investors, the program will be able to leverage the City's dollars to
further maximize assistance for first time homebuyers. Once the CHIP program is fully
established, staff will present membership options to the City Council for review and approval.
Following is a discussion of the facets of the proposed First Time Homebuyer Program including
the funding structure, program participant requirements, and loan parameters. A summary is
attached as Exhibit A
Program Funding Structure
The City's First Time Homebuyer program provides low-interest "silent second" loans to qualified
first time homebuyers. By deferring loan payments for a period of ten (10) years the City is
creating a grant-like mechanism that makes it easier for borrowers to qualify for conventional first
loans from lenders. The Housing Sub-Committee recommends that City loans be for up to
$100,000 with a maximum loan amount of $50,000 from Redevelopment Agency (RDA) funds
and a maximum of $50,000 from Community Development Block Grant (CDBG) funds. The
rationale for this is that a $50,000 loan would be available for moderate-income borrowers who can
afford higher payments, and an additional $50,000 CDBG loan would be available for lower-
00 3
STAFF REPORT
TO:
SUBJECT:
DATE:
Page 4
Honorat)le Mayor and City Council
First Time Homebuyer Program
June 12, 2002
income borrowers who need more assistance.., ~' is ,,~.,,,,,,,,~,,,~,~u'~a ,~,,,,., r,;,,,~,,., ~,v.,,., .... ~'~,~ far up te
In addition, it is highly recommended that the City Council authorize the City to use CHIP's lender
approved loan documents. Using CHIP's loan documents will make it possible in the future for
some borrowers to obtain an additional $50,000 from CHIP investors. CHIP will revise the loan
documents from time to time to ensure compliance with State and federal loan programs as well as
any new laws. The City will use the most current version of CHIP loan documents as long as it
continues to be a CHIP member. The City Council should note, however, that City staff is still
working with other CHIP members to formalize CHIP's organizational structure. Once this is
done, one of CHIP's roles will be to find private investors to make matching loans to first time
homebuyers. Among the investors targeted are pension funds such as CaI-PERS and large
corporations on the Peninsula.
Program Participant Requirements
First Time Homebuyer
Program participants must be first time homebuyers. A first time homebuyer is defined as a
borrower who has not owned a residential property in the past three years. Exceptions can be made
for displaced homemakers such as divorced and widowed single parents.
Live and/or Work Requirements
Staff is recommending that participants in the City's first time homebuyer program live and/or
work in the City of South San Francisco. The City Council may elect to have more or less
restrictive live/work requirement. For example, the City Council may want to require participants
to live in South San Francisco, not just work in the City. On the other hand, CHIP is encouraging
its members to broaden their loan eligibility criteria where possible. Some of these options will be
presented to the City Council for program revisions at a later date when CHIP is fully functional.
The Housing Sub-Committee agrees with the live/work requirement but has recommended a
priority for long-time City residents as described in the introduction.
Program Education and Counseling
The City's First Time Homebuyer Program should require interested prospective buyers to attend a
first time homebuyer seminar. This provision will help safeguard City funds by helping educate
borrowers about their responsibilities as borrowers and homeowners. To help applicants meet this
requirement, the City will have to contract with organizations such as Consumer Credit Counseling
Services and First Home, Inc. to provide the seminars. It costs an average of $1,000 per seminar
and the City should plan to have two to four seminars per year. The seminars will help first time
homebuyer program applicants as well as many other City residents needing education on how to
purchase a home. Once the City launches its first time homebuyer program, staff will request
proposals from organizations qualified to conduct seminars and bring a contract for approval to the
City Council.
00 4
STAFF REPORT
TO:
SUBJECT:
DATE:
Honorat~le Mayor and City Council
First Time Homebuyer Program
June 12, 2002
Page 5
Target Buyers (if objectives approved by City Council)
The City has determined there is a need to attract and retain certain types of public service
employees, such as teachers, librarians, and police officers that serve the South San Francisco
community. Therefore, the Housing Sub-Committee recommends the program give priority to City
and School District employees if the loan program can be structured such that City loans are due
and payable when borrowers end their employment with the City or School District. Priority for
School District employees would also require a matching loan from the School Distrcit.upcn
COUBC 0 ...... ~j ...... , ....... j ..... ~"~ y ...... ~ ....................... j ..........
t~l;,~az t ...... 1 ..... 4" 1..-.,,,.-,~1 ..... ,-,,',e;,t .... ,",; .... ..4
To further leverage City funds, it is also recommended that the City on a case-by-case basis
consider giving priority to employees of organizations or corporations participating in the CHIP
Program. This priority would occur only if the applicants meet the City's other program
requirements.
Income Eligibility
Income eligibility is contingent on the funding source used to make loans and on the number of
persons in a household. Loans funded with Redevelopment Agency Housing Set-Aside will be
available for buyers whose income does not exceed 120 percent of area median income. Loans
funded with federal Community Development Block Grants (CDBG) will be restricted to persons
earning up to 80 percent of median income. Loans funded using federal HOME program funds
will be restricted to persons earning up to 60 percent of median income. If the City uses more than
one source of money to fund a loan the more restrictive eligibility criteria will take precedence.
For the 2002-2003 fiscal year income eligibility is as follows:
% Area IncomeI Person 2 People 3 People 4 People
i0% MFI $36,150 or less $41,340 or less $46,500 or less $51,660 or less
30% MFI $36,151- $57,00(:; $41,341- $65,150 $46,501- $73,30(:: $51,661- $81,45C
20% MFI $57,001- $72,30£ $65,151- $82,650 $73,301- $92,95C $81,451- $103,30(;
% Area Income5 People 6 People 7 People 8 People
B0% MFI $55,800 or less $59,940 or less $64,050 or less $68,190 or less
80%MFI $55,801- $87,950 $59,941- $94,45(:: $64,051- $101,000 $68,191- $107,500
120%MFI $87,951- $111,550 $94,451- $119,85£ $101,001- $128,100 $107,501- $136,350
Geographic Restrictions
Funds from the City's First Time Homebuyer Program can only be used to purchase homes within
South San Francisco city limits. For loans made with certain types of federal funding, such as
HOME or CBDG, the City may impose additional geographic restrictions in the future such as
limiting home purchases to established CDBG target neighborhoods. (2 0
5
STAFF REPORT
TO: Honoraole Mayor and City Council
SUBJECT: First Time Homebuyer Program
DATE: June 12, 2002
Page 6
Property Restrictions
Property types eligible for purchase is limited to detached single-family residences, condominiums,
or town homes. All other types of properties are excluded from the program.
Ownership in Fixed Assets
It is recommended that applicants who own fixed assets such as land or a percentage of investment
property be eligible for the first time homebuyer program, however, the City should consider the
earnings equivalent value of the assets to determining income eligibility. To determine the
earnings equivalent, the City will multiply the value of the fixed asset by a factor assigned by the
Department of Housing and Urban Development (HUD). Currently the earnings equivalent is set
at six percent (6%). For example, for a fixed asset valued at $100,000 the City will add $6,000
($100,000 x .06) to that person's income for the purpose of calculating income eligibility.
Loan Approval by First Lender
Program participants must be credit approved by a first lender in order to be eligible for a loan
from the City. This will require the borrower to have excellent credit and a savings history. In
addition, the first lender will establish a maximum debt ratio for housing costs and personal debt
for the borrower. The allowable housing cost ratio will also depend on the source of funds for the
second loan. Both CDBG and RDA Housing Set-Aside have a 30 percent ratio requirement.
Mortgage Credit Certificates
Program participants will be able to participate in the County's Mortgage Credit Certificate Program
(MCC), provided that the borrower meets MCC income guidelines, that the purchase price of the
property does not exceed $381,000, and that funds are available under the MCC Program.
Loan Parameters
The City will provide its first time homebuyer loans in the form of a silent second mortgage loan.
Repayment of loan will occur through two components-- amortization and shared appreciation, tt,
Amortized Repayment
The City will defer payments and provide its loan interest free for a period of ten (10) years. The
loan will then amortize over a period of 25 years with an interest rate of four percent (4%).
Borrowers will be encouraged to make voluntary principal reduction payments during the deferral
period. By making interest-free payments on a scheduled incremental basis borrowers will prepare
themselves for the mandatory payments that will begin on the eleventh year of the loan.
Standard Shared Appreciation
Shared appreciation will require that borrowers pay the City a portion of the profit they make upon
sale of the property. The City's appreciation share will also be due at the time the borrower takes
STAFF REPORT
TO: Honorable Mayor and City Council
SUBJECT: First Time Homebuyer Program
DATE: June 12, 2002
Page 7
out cash through a property refinance, or upon transfer of the property. The City can make an
exception to the cash out option for borrowers making property repairs or having certain
emergencies, as determined by the City's Housing Manager, provided that the City's loan is not
placed at risk. By risk, staff means that under no circumstance would the City allow borrowers to
take cash out without requiring repayment if the total loan(s) to value ration exceeds 80 percent
(80%) of home value or the value of the City's loan principle, interest due, and appreciation share.
The City's appreciation share will be equal to the City's percentage contribution of the purchase
price. For example, if the City contributes $50,000 towards the purchase of a $400,000 home, the
City's will have contributed 12.5 percent (12.5%) of the purchase price. Therefore, the City will
receive 12.5% of the property's appreciation upon sale. In this example, if the contract price is
$500,000 at the time of sale (an appreciation of $100,000), the City will receive $12,500 of the
$100,000 profit, plus any remaining loan principle and interest. The owner will receive $87,500 of
the $100,000 profit plus any equity accrued though principle reduction.
Also, the City, at its discretion may adjust the appreciation share for individuals so that the City's
First Time Homebuyer Program is in compliance with other loan programs that can leverage City
funds. For example, the City may adjust the appreciation share for some buyers so that buyers can
qualify for a loan from the California Housing Finance Agency (CHFA) who has established loan
appreciation caps.
Public Service Employee Shared Appreciation (if approved by City Council)
[Note to City Council: If the City gives priority to City and school district employees as
recommended by the Housing Sub-Committee, that is calling in loans when borrowers end their
employment, it will not be necessary to create additional employee retention incentives. Therefore,
this section can be eliminate.To
O0
7
STAFF REPORT
TO: Honorame Mayor and City Council
SUBJECT: First Time Homebuyer Program
DATE: June 12, 2002
Page 8
CO ........... 1-' ......'" ..................... I-'F ........................
Program Funding
Initial funding for the first time homebuyer program will come from two sources. First, the City
Council has already set aside $191,043 in CDBG funds that can be applied to the first-time
homebuyer program or for housing acquisition and rehabilitation. These funds, however, will only
be available to families at or below 80 percent of median income. Second, staff is requesting that
the City Council agree in concept to the use of $250,000 in Redevelopment Agency Housing Set-
Aside (RDA) funds to be used for families that earn up to 120 percent of median income.
CONCLUSION:
It is recommended that the City Council review and approve the attached First Time Homebuyer
Program for South San Francisco description outlined in this report, approve the use of CHIP loan
documents, and approve in concept the use of $250,000 in Redevelopment Agency funds for the
program. Making a first time homebuyer program, including homebuyer seminars, available to
South San Francisco City residents will help address the housing needs of working residents. In
addition, the program may be able to will help the City and the school district othe. r public ~er;'icc
organizaticns attract and retain quality employees by helping them acquire housing in South San
Francisco.
Finally, active participation in the CHIP program will help the City leverage its funds and reduce
the cost of operating a first time homebuyer program by spreading many administrative costs
among CHIP members.
Economic and Community Development
MAW:MVD:NF:AFS
Attachments: Attachment A:
Attachment B:
Attachment C:
Approved: Michael A. Wilson City Manager
Program Summary Table
First Time Homebuyer Program Description
CHIP Loan Documents
(20 $
Exhibit A
City of South San Francisco
First Time Homebuyer Program
Program Criteria Standards
Eligible Borrowers · Live or work in City of South San Francisco
· First Time Homebuyers (not having owned principal residence for past
3 years).
Target Borrowers · Priority to applicants who have lived and/or worked in the City for five
years
· City employees (if approved by City Council and loans can be called in
when borrowers end their employment)
· School District n,~ ..... ~'~:~ ~cr;'ice employees (if approved by City
Council, loans can be called in when borrowers end employment, and
the School District can match the City's loan)
Maximum Income · 120% of area median income (AMI) adjusted for family size
Eligible Properties .Available citywide for single family homes, condos, and townhouses
Resale Price · None. (Note: BMR units would still be subiect to re-sale restrictions)
Restrictions
Loan Maximum: · $50,090 $100,000, with a maximum Redevelopment Agency loan of
$50,000 and a maximum CDBG loan of $50,000
Interest Rate · 4%
Repayment · Loan balance and appreciation share due upon sale or transfer, or
refinance. (Under very limited circumstance allow for refinancing)
· If City and School District priority is available, loan is also due upon
ending employment with the City or school district,
· Generally, payments amortized in equal monthly installments after the
initial deferral period.
Appreciation Share · 1 to 1 for public loans (City receives an appreciation share
Ratio commensurate to its purchase price contribution)
.....j rccc:;'cs an apprec:at:on ~'~-~ equal to 150 percent cf its ..... ~.~r~
Payment Deferral · 10 years
Amortization Term · 25 years after deferral period
Down Payment · Typically 3-5%.
Voluntary Payments · No standard.
Loan Security · Secured by a second Deed of Trust. If there is a partner loan, City will
be in 3rd position.
Homebuyer · Required
Education
Administration · To be determined
Loan Fees · To be determined
O0 9
Exhibit B
City of South San Francisco
First Time Homebuyer Program
General Program Objectives
The proposed City of South San Francisco First Time Homebuyer Program is designed to
achieve the following key objectives:
· To establish and maintain a program that creates and maximizes affordable home
ownership opportunities for low- and moderate-income households
· To create.a program that provides for long term affordability for homeowners
· To maximize the number of households that receive assistance
· To leverage City funds by participating in the San Mateo County CHIP program
and other lending programs
· To assist City employees purchase a home by giving them first priority for loans
(if the loan program can be structured such that City loans are due and payable
when the employee ends his or her employment with the City)To ~r~:o,
e~,,,~, c~ c .... ;~^ (if approved by City Council)
· That assist South San Francisco School District employees purchase a home by
giving them second priority for loans (if the loan program can be structured such
that the City loan is due and payable when the employee ends his or her
employment with the School District, and if the School District provides a
matching loan to its employees) (if approved by City Council)
· To provide assistance to long-time South San Francisco residents and workers by
giving loan priority to people who have lived or worked in South San Francisco
for five or more years (if approved by City Council)
b~
Program Funding Structure
The City's First Time Homebuyer program provides low-interest "silent second" loans to
qualified first time homebuyers. By deferring loan payments for a period of ten years the
City is creating a grant-like mechanism that makes it easier for borrowers to qualify for
conventional first loans from a lenders.
City loans can be for up to $100,000 with a maximum loan amount of $50,000 from
Redevelopment Agency (RDA) funds and a maximum loan amount of $50,000 from
Community Development Block Grant (CDBG)
p.~. ..... : ..... ~-;~h ..... :~ ] ...... In addition, the City's loan is compatible with the
San Mateo County CHIP Program. Compatibility with CHIP will make it possible for
O0 10
CHIP eligible first time homebuyer programs to borrow up to $100,000 by leveraging the
City's funds with CHIP Investor funds.
Program Participant Requirements
First Time Homebuyer
Program participants must be first time homebuyers. A first time homebuyer is defined
as a borrower who has not owned a residential property in the past three years. The city
will verify non-ownership status by reviewing the participant's credit reports and the last
three years' tax returns. Exceptions can be made for displaced homemakers such as
divorced and widowed single parents.
Live and/or Work Requirements
Participants in the City's first time homebuyer program must live and/or work in the City
of South San Francisco. Priority is also given to people who have lived or worked in
South San Francisco for five or more gears.
Program Education and Counseling
The City program requires interested prospective buyers to attend a first time homebuyer
seminar. The City contracts with organizations such as Consumer Credit Counseling
Services and First Home to provide homebuyer educational seminars.
Target Buyers (If Approved by City Council)
In addition to live and work priorities, the City will give priority to certain targeted
borrowers. The City has determined there is a need to attract and retain certain types of
public service employees, such as teachers, librarians, and police officers that serve the
South San Francisco community. Therefore, the City will give priority to City and
School District employees (if the loan program can be structured such that City loans are
due and payable when borrowers end their employment with the City or School District).
Priority for School District employees also requires a matching loan from the School
Distrcit ~'~; .... t,~; ...... ; .....~ ...... e .... ~, e~., To further
c ....... v ................ v,..~,.,.o worldng in ...... ~:ran":°~o
leverage City funds, the City may also decide to give priority to employees of
organizations participating in the CHIP Program.
Income Eligibility
Income eligibility is contingent on the funding source used to make loans and on the
number of persons in a household. Loans funded with Redevelopment Agency Housing
Set-Aside are available for buyers whose income does not exceed 120 percent of area
median income. Loans funded with federal Community Development Block Grants
(CDBG) are restricted to persons earning up to 80 percent of median income. Loans
funded using federal HOME program funds will be restricted to persons earning up to 60
percent of median income. If the City uses more than one source of money to fund a loan
the more restrictive eligibility criteria will take precedence.
00 11
For the 2002-2003 fiscal year income eligibility is as follows:
% Area Income I Person 2 People 3 People 4 People
60% MFI $36,150or less $41,340or less $46,500or less $51,660or less
80% MFI $36,151- $57,000 $41,341- $65,150 $46,501- $73,300 $51,661- $81,450
120% MFt $57,001- $72,300 $65,151- $82,65(3 $73,301- $92,950 $81,451- $103,30(;
% Area Income 5 People 6 People 7 People 8 People
30% MFI $55,800or less $59,940or less $64,050or less $68,190or less
50%MFI $55,801- $87,95¢ $59,941- $94,45(; $64,051- $101,000 $68,191- $107,50(;
120%MFI $87,951- $111,55¢ $94,451- $119,85(; $101,001- $128,10C $107,501- $136,350
Geographic Restrictions
Funds from the City's First Time Homebuyer Program can only be used to purchase
homes within South San Francisco city limits. For loans made with certain types of
federal funding, such as HOME or CBDG, the City may impose additional geographic
restrictions such as limiting home purchases to established CDBG target neighborhoods.
Property Restrictions
Property types eligible for purchase is limited to detached single-family residences,
condominiums, or town homes. All other types of properties are excluded from the
program.
Ownership in Fixed Assets
Applicants who own fixed assets such as land or a percentage of investment property are
eligible for the first time homebuyer program, however, the City will consider the
earnings equivalent value of the assets to determining income eligibility. To determine
the earnings equivalent, the City will multiply the value of the fixed asset by a factor
assigned by the Department of Housing and Urban Development (HUD). Currently the
earnings equivalent is set at six percent (6%). For example, for a fixed asset valued at
$100,000 the City will add $6,000 ($100,000 x .06) to that person's income for the
purpose of calculating income eligibility.
Loan Approval by First Lender
Program participants must be credit approved by a first lender prior to obtaining a loan
reservation from the City's First Time Homebuyer Program. The approval must meet the
following guidelines:
· The first lender's credit approval must be for an "A" or better grade loan. This
requires that the borrower maintain good to excellent credit and have a savings
history that will allow the lender to provide the borrower with an "A" grade
mortgage loan. The City, or its program administrator, will require the program
participant to provide a copy of the first lender's approval prior to submitting a
reservation request to the City.
3
O0 12
· The first lender will establish a maximum debt ratio for housing costs and
personal debt for the borrower. The allowable housing cost ratio will also depend
on the source of funds for the second loan. Both CDBG and RDA Housing Set-
Aside have a 30 percent ratio requirement.
Mortgage Credit Certificates
Program participants will be able to participate in the County's Mortgage Credit
Certificate Program (MCC), provided that the borrower meets MCC income guidelines,
that the purchase price of the property does not exceed $381,000, and that funds are
available under the MCC Program.
Loan Parameters
The City provides its first time homebuyer loans in the form of a silent second mortgage
loan. Repayment of loan will occur through two components-- amortization and shared
appreciation, argete
Amortized Repayment
The City will defer payments and provide its loan interest free for a period of ten (10)
years. The loan will then amortize over a period of 25 years with an interest rate of four
percent (4%). Voluntary principal reduction is available for borrowers who want to
reduce the balance of their notes during the deferral period. By making interest-free
payments on a scheduled incremental basis borrowers will prepare themselves for the
mandatory payments that will begin on the eleventh year of the loan.
Standard Shared Appreciation
Shared appreciation requires that the borrower pay the City a portion of the profit they
make upon sale of the property. The City's appreciation share is also due at the time the
borrower takes out cash through a properly refinance, or upon transfer of the property.
The City can make an exception to the cash out option for borrowers making property
repairs or having certain emergencies, as determined by the City's Housing Manager,
provided that the City's loan is not placed at risk. By risk, staff means that under no
circumstance would the City allow borrowers to take cash out without requiring
repayment if the total loan(s) to value ration exceeds 80 percent (80%) of home value o.~r
the value of the City's loan principle, interest due, and appreciation share.
The City's appreciation share is equal to the City's percentage contribution of the
purchase price. For example, if the City contributes $50,000 towards the purchase of a
$400,000 home, the City's will have contributed 12.5 percent (12.5%) of the purchase
price. Therefore, the City will receive 12.5% of the property's appreciation upon sale. In
this example, if the contract price is $500,000 at the time of sale (an appreciation of
$100,000), the City will receive $12,500 of the $100,000 profit, plus any remaining loan
principle and interest. The owner will receive $87,500 of the $100,000 profit plus any
equity accrued though principle reduction.
4 (~0 13
The City, at its discretion may adjust the appreciation sham for individuals so that the
City's First Time Homebuyer Program is in compliance with other loan programs that
can leverage City funds. For example, the City may adjust the appreciation sham for
some buyers so that buyers can qualify for a loan from the California Housing Finance
Agency (CHFA) who has established loan appreciation caps.
Public Service Employee Shared Appreciation (If Approved by City Council)
[Note to City Council: If the City gives priority to City and school district employees as
recommended by the Housing Sub-Committee, that is calling in loans when borrowers
end their employment, it will not be necessary to create additional employee retention
incentives. Therefore, this section can be eliminated]. "'^
O0 14
Exhibit C (Sample Loan Documents)
COUNTYWIDE HOME INVESTMENT PARTNERSHIP (CHIP)
City of
SILENT LOAN PROGRAM
PROMISSORY NOTE
Date
The undersigned, ("Borrowers") promises to pay to The Redevelopment Agency of Some City
("Lender/Agency"), or order, at Some City, California, the principal sum of Dollars ($__.).
Except as hereinafter provided, no interest shall accrue upon the principal until the eleventh (11 th) anniversary of
the date of this Note. Thereafter, interest shall accrue at the rate of four percent (4%) per annum upon the unpaid principal,
and interest and principal shall be payable in three hundred (300) equal monthly installments of $ commencing one
hundred twenty (120) months from the date of this Note. In addition, it is anticipated that the Lender / Agency will contract
an outside service to service the payments on the Note. The projected cost of the service will be approximately six dollars
and fifty cents ($6.50) per a month. The cost of this service will be borne by the Borrower and may be changed with no
further notice prior to and/or after the principal and interest repayment on the loan commences.
Commencing the anniversary date of the fifth year, in the event that any installment of interest or principal is not
made when due, and such default continues for a period of fifteen (15) days thereafter, Borrower promises to pay a late
charge equal to 5% of the delinquent payment.
If default shall be made in the payment of any installment when due and said default shall continue for a period of
fifteen (15) days thereafter, at the option of the holder of this Note, the entire remaining balance of the principal and accrued
interest shall become immediately due and payable.
In the event that default shall be made in the payment of this Note when due, and proceedings shall be commenced
to foreclose under the terms of the deed of trust securing this Note, Borrower promises to pay to the holder of this Note a
reasonable attorney's fee incurred in such foreclosure proceedings.
This Note may be prepaid at any time without penalty.
This Note is made pursuant to a Shared Appreciation Loan Agreement between Borrower and Lender/Agency of
even date. The Loan Agreement provides, among other things, that the following shall constitute Disqualifying Events:
(a) Lease of the Dwelling for a period of more than two months in any one calendar year.
(b) Sale, conveyance, or other alienation of the Dwelling (including a sale under a deed of trust in the event of
foreclosure), if the remaining ownership interest of Borrower in the Dwelling is less than fifty percent (50%).
(c) Borrower ceases to reside in the Dwelling as his or her Principal Residence.
(d) A default shall occur under the terms of the Senior Deed of Trust and said default shall not be cured within
sixty (60) days following the recordation of notice of default by the trustee under the Senior Deed of Trust.
(e) Borrower incurs additional indebtedness, either through a senior or junior loan, on the property in excess of
the principal balance of the existing loans secured against the property at the original purchase of the property.
Upon the first day of the calendar month following a Disqualifying Event, notwithstanding anything to the contrary
contained in this Note or the Junior Deed of Trust, the following shall occur.
(i) Interest on this Note shall accrue at a rate equal to the Federal Reserve Boards Eleventh District Cost of
Hicapdoc-CHIP final (March 2002)
i O0 15
Funds plus 2.5% per annum, and the principal balance of this Note shall be amortized in equal monthly installments
including interest and principal over a period of thirty (30) years commencing upon the first day of the second
month following the Disqualifying Event.
(ii) At the option of the holder of this Note, the entire remaining balance of the principal and accrued interest
shall become immediately due and payable.
The Loan Agreement also provides that Borrower shall pay Lender/Agency a portion of the appreciation in the
value of the Dwelling securing this Note, and Borrower agrees to pay said sum, if any, to Lender/Agency in accordance with
the terms and conditions of the Shared Appreciation agreement incorporated with this Loan Agreement.
This Note is secured by a deed of trust upon real property situation in Some City, County of San Mateo, State of
California commonly known and described as _.
Borrower Co-borrower
Dated Dated
Hicapdoc~CHIP final
(March 2002)
COMPLIMENTARY RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383
When Recorded Mail To:
The Redevelopment Agency of Some City
PO Box 391
Some City, CA 94064
Attn: Silent Loan Program Coordinator
Loan Number:
DEED OF TRUST
AND SECURITY AGREEMENT
SUBORDINATE DEED OF TRUST
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made this ~ day of
,20.._, among the trustor, __ ("Borrower"), whose address is , and ("Trustee"), and the Redevelopment
Agency of Some City (the "Agency") as Beneficiary, whose principal address is , Some City, California 94064.
The Borrower, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers,
conveys and assigns to Trustee, in trust with power of sale, the property located in Some City, State of California, described
in the attached Exhibit "A" and more commonly known as: Some City, California (the "Property").
TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances,
and all fixtures now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be
deemed to be and remain a part of the property covered by this Deed of Trust; and
TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building
or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use
and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other
goods and chattels and personal property as are ever used or fumished in operating a building, or the activities conducted
therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in
substitution therefore, whether or not the same are or shall be attached to said building or buildings in any manner; and all of
the foregoing, together with the Property, is herein referred to as the "Security";
To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever;
TO SECURE to the Agency the repayment of the sums evidenced by a Promissory Note executed by Borrower and
the Agency dated 20_, in the amount of Dollars ($ ) ("Note"); and
TO SECURE the payment of all other sums, with interest thereon, said Note providing for full payment, due and
payable upon sale or transfer of the Property or failure of Borrower to occupy the Property as Borrower's principal place of
residence
BORROWER AND AGENCY COVENANT AND AGREE AS FOLLOWS:
1. Title. That Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey
the Property, and that Borrower will warrant and defend generally the title of the Property against all claims and demands
subject to any declarations, easements, or restrictions listed in the schedule of exemptions to coverage in any title insurance
policy insuring Agency's interest in the Property, and that other than this Deed of Trust, the Security is encumbered only by
the following priority lien senior to this deed: (1) that deed of trust (the "First Lender Deed of Trust") executed by Borrower
in connection with a loan made to Borrower by (the "First Lender"), securing a promissory note executed by
Hicapdoc-CHIP final (March 2002)
3 O0 17
Borrower in favor of the First Lender ("First Lender Note") and (2) the Note, (3) and the following allowed encumbrances
2. Repayment of Loan. Borrower will promptly repay, when due, the principal, interest (if any), and any late
charges due and required by the Note and such other amounts as are provided under this Deed of Trust or under the Note.
3. Preservation and Maintenance of Property.
(A) Borrower covenants to keep the Property in good condition and repair, not to remove or demolish any
building thereon; to complete or restore promptly and in good and workmanlike manner any building which may be
constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and material furnished
therefor; to comply with all laws affecting the Property or requiring any alterations or improvements to be made thereon; not
to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law; to cultivate,
irrigate, fertilize, fumigate, prune, and do all other acts which form the character of the Property may be reasonably
necessary, the specific enumeration herein not excluding the general.
(B) If this Deed of Trust is on a unit in a condominium, stock cooperative, or a planned unit development,
Borrower shall perform all of Borrower's obligations under the declaration or covenants creating or governing the
condominium, stock cooperative, or planned unit development, and constituent documents. If a condominium, stock
cooperative, or planned unit development rider is executed by Borrower and recorded together with this Deed of Trust, the
covenants and agreements of such rider shall be incorporated into and shall amend and supplement the covenants and
agreements of this Deed of Trust as if the rider were a part hereof.
4. Appear and Defend. Borrower shall appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of the Agency or Trustee; and to pay all costs and expenses, including cost of
evidence of title and attorney's fees in a reasonable sum, in any such action or proceeding in which the Agency or Trustee
may appear, and in any suit brought by the Agency to foreclose this deed.
5. Prior Deeds of Trust; Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines and
impositions attributable to the Property which may attain priority over this Deed of Trust, and leasehold payments or ground
rents, if any. Borrower shall make payment on time directly to the person owed payment. Borrower shall make such
payments when due, directly to the payee.
Except for the lien of the First Deed of Trust, Borrower shall promptly discharge any other lien which shall have
attained priority over this Security Instrument unless Borrower: (a) agrees in writing to the payment of the obligation
secured by the lien in a manner acceptable to the Agency; (b) contests in good faith the lien by, or defends against
enforcement of the lien in, legal proceedings which in the Agency's opinion operate to prevent the enforcement of the lien;
or (c) secures from the holder of the lien an agreement satisfactory to Agency subordinating the lien to this Security
Instrument. Except for the lien of the First Deed of Trust, if Agency determines that any part of the Property is subject to a
lien which may attain priority over this Security Instrument, Agency may give Borrower a notice identifying the lien.
Borrower shall satisfy such lien or take one or more of the actions set forth above within ten (10) days of the giving of
notice.
6. Subordination. Agency and Borrower acknowledge and agree that this Deed of Trust is subject and
subordinate in all respects to the liens, terms, covenants and conditions of the First Lender Deed of Trust and to all advances
heretofore made or which may hereafter be made pursuant to the First Lender Deed of Trust including all sums advanced for
the purpose of (a) protecting or further securing the lien of the First Lender Deed of Trust, or for any other purpose expressly
permitted by the First Lender Deed of Trust or (b) constructing, renovating, repairing, furnishing, fixturing or equipping the
Property. The terms and provisions of the First Lender Deed of Trust are paramount and controlling, and they supersede any
other terms and provisions hereof in conflict therewith. In the event of a foreclosure or deed in lieu of foreclosure of the
First Lender Deed of Trust, any provisions herein or any provisions in any other co]lateral agreement restricting the use of
the Property to low income households or otherwise restricting the Borrower's ability to sell the Property shall have no
further force or effect on subsequent owners or purchasers of the Property. Any person, including his successors or assigns
(other than the Borrower or a related entity of the Borrower), receiving title to the Property through a foreclosure or deed in
lieu of foreclosure of the First Deed of Trust shall receive title to the Property free and clear from such restrictions.
Hicapdoc-CHIP final (March 2002)
4 t30
18
Further, if the First Lender acquires title to the Property pursuant to a deed in lieu of foreclosure, the lien of the
Deed of Trust shall automatically terminate upon the First Lender's acquisition of title, provided that the Agency shall not
have cured the default under the First Deed of Trust or diligently pursued curing the default as determined by the First
Lender within the sixty (60) day period provided in such notice sent to the Agency.
7. Hazard Insurance. Borrower will keep the Security insured by a standard fire and extended coverage
insurance policy in at least such amounts and for such periods as the Agency may require, which amounts shall be the lesser
of (1) the sum of the loan amount under the Note and the First and Second Lenders Note, or (2) the replacement cost of the
Security, but in no event less than (3) the amount necessary to prevent Borrower from becoming a co-insurer under the terms
of the policy.
The insurance carrier providing this insurance shall be licensed to do business in the State of California and be
chosen by Borrower subject to approval by the Agency. All insurance policies and renewals thereof will be in a form
acceptable to the Agency and will include a standard mortgagee clause with standard lender's endorsement in favor of the
holder of the Second Lender Note as its interests may appear and in a form acceptable to the Agency. The Agency shall
have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Borrower shall promptly
furnish to the Agency, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices
and all receipts of paid premiums. In the event of loss, Borrower will give prompt notice to the insurance carrier and the
Agency or its designated agent. The Agency, or its designated agent, may make proof of loss if not made promptly by
Borrower. The Agency shall receive thirty (30) days advance notice of cancellation of any insurance policies required under
this section.
Unless the Agency and Borrower otherwise agree in writing, insurance proceeds, subject to the rights of the First
Lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically
feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically
feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used to repay the grant
under this Deed of Trust, with the excess, if any, paid to Borrower. If the Security is abandoned by Borrower, or if
Borrower fails to respond to the Agency, or its designated agent, within thirty (30) days from the date notice is mailed by
either of them to borrower that the insurance carrier offers to settle a claim for insurance benefits, the Agency, or its
designated agent, is authorized to collect and apply the insurance proceeds at the Agency's option either to restoration or
repair of the Security or to repay the loan.
If the Security is acquired by the Agency, all right, title and interest of Borrower in and to any insurance policy and
in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Agency
to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of
the First Lender.
8. Occupancy of Property; Borrower's Loan Application. Borrower shall occupy, establish, and maintain the
use of the Property as Borrower's principal residence within sixty (60) days after the execution of this Security Instrument.
Borrower's principal residence shall mean the Property is occupied by the Borrower for at least ten (10) months out of each
year. The Borrower shall not lease the Property for more than two (2) months without the written consent of the Agency
during any twelve (12) month period and shall not lease the Property without providing the Agency with a copy of the lease.
Borrower shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that
in Lender's good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by
this Deed of Trust or Agency's security interest. Borrower may cure such a default and reinstate, as provided in paragraph
19, by causing the action or proceeding to be dismissed with a ruling that, in Agency's good faith determination, precludes
forfeiture of the Borrower's interest in the Property or other material impairment of the lien created by this Deed of Trust or
Agency's security interest. Borrower shall also be in default if Borrower, during the loan application process, gave
materially false or inaccurate information or statements to Agency (or failed to provide Agency with any material
information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning (i)
Borrower's occupancy of the Property as a principal residence and (ii) Borrower's income.
9. Protection of the Agency's Security. If Borrower fails to perform the covenants and agreements contained
Hicapdoc-CHIP final (March 2002)
in this Deed of Trust or if any action or proceeding is commenced which materially affects the Agency's interest in the
Security, including, but not limited to, default under the Deed of Trust securing the First Lender Note, eminent domain,
insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Agency, at the
Agency's option, upon notice to Borrower, may make such appearances, disburse such sums and take such action as it
determines necessary to protect the Agency's interest, including but not limited to, disbursement of reasonable attorney's fees
and entry upon the Security to make repairs.
Any amounts disbursed by the Agency pursuant to this paragraph, with interest thereon, will become an
indebtedness of Borrower secured by this Deed of Trust. Unless Borrower and Agency agree to other terms of payment,
such amount will be payable upon notice from the Agency to Borrower requesting payment thereof, and will bear interest
from the date of disbursement at the rate payable from time to time on outstanding principal under the Note unless payment
of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate
permissible under applicable law. Nothing contained in this paragraph will require the Agency to insure any expense or take
any action hereunder.
10. Inspection. The Agency may make or cause to be made reasonable entries upon and inspections of the
Security; provided that the Agency will give Borrower reasonable notice of inspection.
11. Application of Payments. Unless applicable law provides otherwise, any payments received by the Agency
under the Note shall be applied by the Agency first to interest, if any, and then to the principal due on the Note.
12. Condemnation.
(A) The proceeds of any award or claim for damages, direct or consequential, in connection with any
condemnation, exercise or eminent domain, or other taking of the Property, or part thereof, or for conveyance in lieu of
condemnation, are hereby assigned and shall be paid to the Agency subject to the terms and rights of the First Deed of Trust.
(B) In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this
Security Instrument, whether or not then due, with any excess paid to Borrower. In the event of a partial taking of the
Property, unless Borrower and the Agency otherwise agree in writing, the sums secured by this Security Instrument shall be
reduced by the amount of the proceeds multiplied by the following fraction: (1) the total amount of the sums secured
immediately before the taking, divided by (2) the fair market value of the Property immediately before the taking. Any
balance shall be paid to the Borrower.
(C) If the Property is abandoned by Borrower, or if, after notice by the Agency to Borrower that the
condemnor offers to make an award or settle a claim for damages, Borrower fails to respond to the Agency within thirty (30)
days after the date such notice is mailed, the Agency is authorized to collect and apply the proceeds of any award to the
sums secured by this Deed of Trust.
(D) Unless the Agency and Borrower otherwise agree in writing, any such application of proceeds to
principal shall not extend or postpone the due date of payment or payments specified in the Note or change the amount of
such payment or payments.
13. Forbearance by the Agency Not a Waiver. Any forbearance by the Agency in exercising any right or
remedy will not be a waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of
taxes or other liens or charges by the Agency will not be a waiver of the Agency's right to accelerate the maturity of the
indebtedness secured by this Deed of Trust.
14. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other
right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised
concurrently, independently or successively.
15. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the respective successors and assigns of the Agency and Borrower subject to the provisions of this
Deed of Trust.
Hicapdoc-CHIP final (March 2002)
6
16. Joint and Several Liability. The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the respective successors and assigns of the Agency and Borrower, subject to the provisions of
paragraph 29 hereof. All covenants and agreements of Borrower shall be joint and several.
17. Notice. Except for any notice required under applicable law to be given in another manner, (a) any notice to
Borrower provided for in this Deed of Trust will be given by certified mail, addressed to Borrower at the address shown in
the first paragraph of this Deed of Trust or such other address as Borrower may designate by notice to the Agency as
provided herein, and (b) any notice to the Agency will be given by express delivery, return receipt requested, to the Agency
at the address shown in the first paragraph or to such other address as the Agency may designate by notice to Borrower as
provided above. Notice shall be effective as of the date received by Agency as shown on the return receipt.
18. Governin~ Law. This Deed of Trust shall be governed by federal law and the law of the State of California.
19. Severability. In the event that any provision or clause of this Deed of Trust or the Note conflicts with
applicable law, such conflict will not affect other provisions of this Deed of Trust or the Note which can be given effect
without the conflicting provision, and to this end the provisions of the Deed of Trust and the Note are declared to be
severable.
20. Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to
interpret or define the provisions hereof.
21. Hazardous Substances. Borrower shall not cause or permit the presence, use, disposal, storage, or release of
any Hazardous Substances on or in the Property. Borrower shall not do, nor allow anyone else to do, anything affecting the
Property that is in violation of any Environmental Law. The preceding two sentences shall not apply to the presence, use, or
storage on the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to
normal residential uses and to maintenance of the Property.
22.
Acceleration: Remedies. Upon Borrower's breach of any covenant or agreement of Borrower in this Deed of
Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust,
the Agency, prior to acceleration, will mail by express delivery, return receipt requested notice to Borrower
specifying; (1) the breach; (2) the action required to cure such breach; (3) a date, not less than thirty (30) days
from the date the notice is received by Borrower as shown on the return receipt, by which such breach is to be
cured; and (4) that failure to cure such breach on or before the date specified in the notice may result in
acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also inform
Borrower of Borrower's right to reinstate after acceleration and the right to bring a court action to assert the
nonexistence of default or any other defense of Borrower to acceleration and sale. If the breach is not cured on
or before the date specified in the notice, the Agency, at the Agency's option, may: (a) declare all of the sums
secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the
power of sale and any other remedies permitted by California law; (b) either in person or. by agent, with or
without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the
adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of
the Security, in its own name or in the name of Trustee, and do any acts which it deems necessary or desirable
to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income
therefrom or protect the security thereof, and the entering upon and taking possession of the Security shall not
cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding
the continuance in possession of the Security, the Agency shall be entitled to exercise every right provided for
in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the
power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to Trustee a written declaration of default and
demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924,
eta., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the
instruments by which the Borrower acquires title to any Security, or in any other document or agreement now
or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided
by law.
(March 2002)
Hicapdoc-CHIP final
The remedies specified herein are not intended to substitute for those provided in the Promissory Note and Shared
Appreciation Agreement, all of which shall remain in full force and effect.
The Agency shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided
in this paragraph, including, but not limited to, reasonable attorney's fees.
23. Borrower's Right to Reinstate. Notwithstanding the Agency's acceleration of the sums secured by this Deed of
Trust, Borrower will have the right to have any proceedings begun by the Agency to enforce this Deed of Trust discontinued
at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or
at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) Borrower pays Agency all sums which would be
then due under this Deed of Trust and no acceleration under the Note has occurred; (b) Borrower cures all breaches of any
other covenants or agreements of Borrower contained in this Deed of Trust; (c) Borrower pays all reasonable expenses
incurred by Agency and Trustee in enforcing the covenants and agreements of Borrower contained in this Deed of Trust, and
in enforcing the Agency's and Trustee's remedies, including, but not limited to, reasonable attorney's fees; and (d) Borrower
takes such action as Agency may reasonably require to assure that the lien of this Deed of Trust, Agency's interest in the
Security and Borrower's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such
payment and cure by Borrower, this Deed of Trust and the obligations secured hereby will remain in full force and effect as
if no acceleration had occurred.
24. Assignment of Rents; Appointment of Receiver; the Agency in Possession. Upon acceleration under Paragraph
22 hereof or abandonment of the Property, the Agency (in person, by ageni or by judicially appointed receiver) shall be
entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property (if any) including
those past due. All rents collected by the Agency or the receiver shall be applied first to payment of the costs of
management of the Property and collection of rents including, but not limited to, receiver's fees, premiums on receiver's
bonds, and reasonable attorney's fees, and then to the sums secured by this Security Instrument. The Agency and the
receiver shall be liable to account only for those rents actually received. The provisions of this paragraph and Paragraph 22
shall operate subject to the claims of prior lien holders.
25. Reconvevance. Upon payment of all sums secured by this Deed of Trust, the Agency will request Trustee to
reconvey the Security and will surrender this Deed of Trust and the Note to Trustee. Trustee will reconvey the Security
without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all
costs of recordation, if any.
26. Substitute Trustee. The Agency, at the Agency's option and upon providing written notice to the First Lender,
may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The
successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law.
27. Superiority of First and Second Lenders Documents. Notwithstanding any provision herein, this Deed of Trust
shall not diminish or affect the rights of the First Lender under the First Lender Deed of Trust or any subsequent First
Lender Deed of Trust hereafter recorded against the Deed of Trust.
28. Use of Property. Borrower shall not permit or suffer the use of any of the Property for any purpose other than
as a single family residential dwelling.
29. Transfer of the Property; Assumption. If all or any part of the Property or an interest therein is sold or
transferred by Borrower without the Agency's prior written consent, the Agency may, at the Agency's option, declare all the
sums secured by this Security Instrument to be immediately due and payable.
If the Agency exercises such option to accelerate, the Agency shall mail Borrower notice of acceleration in
accordance with Paragraph 22 hereof. Such notice shall provide a period of not less than 30 days from the date the notice is
mailed within which Borrower may pay the sums declared due. If Borrower fails to pay such sums prior to the expiration of
such period, the Agency may without further notice demand on Borrower, invoke any remedies permitted by Paragraph 22
above hereof.
Hicapdoc-CHIP final
(March 2002)
30. Borrower's Copy. Borrower shall be given a conformed copy of the Note and this Security Instrument.
IN WITNESS WHEREOF, Borrower has executed this Deed of Trust as of the date first written above and by so
doing, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument.
Borrower
Co-borrower
Hicapdoc-CHIP final
(March 2002)
9 O0 "')
~3
STATE OF CALIFORNIA
COUNTY OF
OB
, before me,
, personally appeared
personally known to me - OR -
proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(les) and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
STATE OF CALIFORNIA
COUNTY OF
On
, before me,
, personally appeared
personally known to me - OR -
proved to me on
the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(is) and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Hicapdoc-CHIP final
(March 2002)
00 24
Legal description
EXHIBIT A
Property Description
Hicapdoc-CHIP final
11
(March 2002)
O0 25
COMPLIMENTARY RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383
When Recorded Mail To:
The Redevelopment Agency of Some City
PO Box 391
Some City, CA 94064
Attn: Silent Loan Program Coordinator
COUNTYWIDE HOME INVESTMENT PARTNERSHIP (CHIP)
CITY OF
SHARED APPRECIATION LOAN AGREEMENT
This LoanAgreement made this __
Agency of Some City ("Lender/Agency")
day of
,20__, by and between The Redevelopment
. ("Borrower")
RECITALS:
A. Lender/Agency has established a First Time Home Buyer Program ("Program") for the benefit of
households who are either employed within the geographic region or currently reside within the geographic region of Some
City
B. Borrower will receive a loan from Lender/Agency under the Program.
C. The parties wish to enter into this Loan Agreement to define the rights and obligations of the Borrower
with respect to the Loan.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
Unless otherwise defined in this Agreement, all capitalized words, terms and phrases used in this Agreement shall
have the following meanings
a. "Appraiser" shall mean a real estate appraiser who is certified and licensed in California.
c. "Borrower" shall mean a borrower or co-borrower or co-borrower(s) who execute this Agreement
and all relevant loan program documents related hereto.
d. "First Time Homebuyer" shall mean a Borrower who has not owned a primary residential
property within the past three years. Exception to this rule will be applied for a Borrower who has had only nominal, non-
controlling interest in a residence consistent with the goals of the Program Guidelines. In such cases, an interest yield which
is established and published by the United States Housing and Urban Development (HUD) division, will be applied towards
the value of the percentage ownership that the Borrower maintains. This yield will then be applied towards the Borrower's
income in determining the Borrower's eligibility as based on the Program Guidelines. For example, if a Borrower has a 50%
interest in an exempt property that is worth $250,000 the Lender/Agency will apply an interest yield of 6% (for this
example) to 50% of the ownership, or 6% towards $125,000. This would equate to an additional $7,500 of income added to
the Borrower's income for program eligibility purposes.
Program
Hicapdoc-CHIP final
"Program" shall mean to the "Some City" Countywide Home Investment Partnership (CHIP)
(March 2002)
12 00
f. "Program Guidelines" shall mean the Program Guidelines dated
the Agency, as may be amended from time to time by the Agency.
, and approved by
g. "Dwelling" shall mean the real property commonly known and described in the attached Exhibit
"A" and more commonly known as · California, which will be the Principal Residence of the Borrower.
h. "Principal Residence" shall mean the place where the Borrower resides on a substantially full-
time basis, for not less than ten (10) months in each calendar year.
i. "Note" shall mean the Promissory Note made by the Borrower payable to Lender/Agency secured
by the Junior Deed of Trust upon the Dwelling.
j. "Senior Deed of Trust" shall mean the Deed of Trust made by the Borrower to a lender which is
a prior lien upon the Dwelling senior to the Junior Deed of Trust, commonly referred to as the first lender.
ho
Disqualifying Events shall include but not be limited to:
(I) Lease of the Dwelling for a period of more than two months in any one calendar year.
(ii) Sale, conveyance, or other alienation of the Dwelling (including a sale under a deed of
trust in the event of foreclosure), if the remaining ownership interest of the Borrower in the Dwelling is less than fifty
percent (50%).
(iii) Borrower ceases to reside in the Dwelling as his or her or their Principal Residence.
(iv) A default shall occur under the terms of the Senior Deed of Trust and said default shall not
be cured within sixty (60) days following the recordation of notice of default by the trustee under the Senior Deed of Trust.
(v) Borrower incurs additional indebtedness, either through a senior or junior loan, on the
property in excess of the principal balance of the existing loans secured against the property at the original purchase of the
property.
($
2. Loan. Lender/Agency agrees to lend and the Borrower agrees to borrow the sum of Dollars
). The loan will be evidenced by the Note and will be secured by the Junior Deed of Trust upon the Dwelling.
3. Disqualifying Event. Upon the first day of the calendar month following a Disqualifying Event,
notwithstanding anything to the contrary contained in the Note or the Junior Deed of Trust, the following shall occur.
a. Interest on the Note shall accrue at a rate equal to the Eleventh District Cost of Funds plus 2.5%
per annum, and the principal balance of the Note shall be amortized in equal monthly installments including interest and
principal over a period of thirty (30) years commencing upon the first day of the second month following the Disqualifying
Event.
b. At the option of the holder of the Note, the entire remaining balance of the principal and accrued
interest shall become immediately due and payable.
4.. Refinancing. Lender/Agency shall not be required to subordinate to the lien of a new Senior Deed of Trust
in the event that the loan initially obtained by the Borrower is to be refinanced. Provided, however, Lender/Agency will
consent to such refinancing if all of the following conditions are met: (a) the proceeds of such loan do not exceed the amount
of the remaining principal secured by the Senior Deed of Trust, plus the reasonable cost of refinancing, (b) the interest rate
payable under the note given in connection with the refinancing is less than the interest rate payable under the note secured
by the Senior Deed of Trust prior to refinancing, and (c) the Borrower does not obtain an additional junior loan which will
create an indebtedness over the current balance of the existing loans on the property, and c) no Disqualifying Event has
occurred.
5. Shared Appreciation. In addition to the repayment of the principal and payment of interest as provided in
the Note and this Agreement, Borrower agrees to pay Lender/Agency a share of any appreciation in the value of the
Dwelling between the date of its purchase by the Borrower and the date of its sale, repayment of the Note prior to sale of the
Hicapdoc-CHIP final (March 2002)
13 O0
27
Dwelling, or upon the happening of any Disqualifying Event. The amount of shared appreciation payment required shall be
based upon the Value of the Dwelling less the Cost of the Dwelling and any Additional Costs and Closing Costs as those
terms are defined herein below and the formula as defined herein below.
The share appreciation calculation applied towards the loan is outlined in the Shared Appreciation
Disclosure Statement as part of the Truth in Lending Disclosure Statement.
"Cost of the Dwelling" shall mean the purchase price paid by the Borrower plus any escrow fees and the
cost of title insurance paid by them at the time the Dwelling is purchased. The parties agree that the Cost of the Dwelling is
$
"Additional Costs" shall mean the verified cost of any capital improvement made to the Dwelling by the
Borrower which is in excess of $2,000, and the cost of which may be added to the basis of the Dwelling for federal income
tax purposes under the Internal Revenue Code ("Code"). It shall be the responsibility of Borrower to retain all records and
to substantiate any Additional Costs.
"Closing Costs" shall mean the verified cost which the Borrower is responsible for as related to the sale of
the property, including the real estate sales commissions, and sellers allocation of transfer tax, if any. Closing costs shall not
include credits provided by the seller to pay for the new buyers closing costs, commonly referred to as a seller's credit and
shall not include costs associated with refinance.
"Value" shall mean: a) if the Dwelling is sold at fair market value in a bona fide sale transaction to a third
party, the gross sales price less a reasonable real estate commission and costs of sale which would be deductible in
determining the gain under the Code, or b) if the Dwelling is not sold, the fair market value (without the deduction of any
anticipated costs of sale) as determined by the appraiser selected by Borrower in accordance with this agreement.
If the Dwelling is not sold or not sold at fair market value in a bona fide sales transaction to a third party,
"Value" shall mean and be determined as follows:
Borrower and Agency shall mutually select a licensed and certified Appraiser and said Appraiser shall
make the appraisal. The appraisal shall be binding upon both parties. In the event that the Borrower and Lender cannot
agree on an appraiser within twenty (20) days after the request by the Agency, then Agency may select a licensed and
certified appraiser who shall make the appraisal. Both parties shall cooperate with the appraiser in the making of such
appraisal. The cost of the appraisal shall be shared between the parties in the proportion in which they are entitled to share
in the Shared Appreciation.
Lender/Agency's share of the Shared Appreciation shall be payable in cash upon the sale of the Dwelling,
or within twenty (20) days following delivery of the appraisal to the parties by the appraiser selected.
6. Shared Appreciation Formula. Shared Appreciation shall be calculated by multiplying a share of any
appreciation in the value of the Dwelling times a proportion represented by one half of the Agency's loan to Cost of the
Dwelling. For example, if the Cost of the Dwelling is $ 400,000 and the Lender/Agency's loan is $ 80,000, this proportion
would be 10% ($40,000/$400,000). Therefore, to calculate the Shared Appreciation payment owed to the Agency, one
would multiply 10% times any appreciation in the value of the Dwelling (based on original Cost of Dwelling plus Additional
Costs as defined above). In this example, if the Dwelling sold for $600,000, (that is an appreciation of $200,000) the
Borrower would repay the Lender/Agency 10% times the Appreciation of $200,000 which is $ $20,000 The Borrower's
Cost of the Dwelling is $ and the Lender/Agency's loan is in the amount of $ , thus the proportion represented
by the Agency's loan to the Cost of the Dwelling is % ($ /$ ). The Borrowers Shared Appreciation
payment, until such time that the shared appreciation is paid for in full, is calculated by multiplying ~% times any
appreciation in the value of the Dwelling. Repayment will be required irrespective if the loan has been paid off to a zero
dollar ($0) balance during or before the term of the loan.
Hicapdoc-CHIP final
(March 2002)
00 28
IN WITNESS WHEREOF, the parties have executed this Shared Appreciation Agreement upon the date above written.
THE REDEVELOPMENT AGENCY OF Some City
By:
Borrower Dated
Co-Borrower Dated
Hicapdoc-CHIP final
(March 2002)
StaffReport
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
Honorable Mayor and City Council
Director of Finance
Resolution Consenting to the Proposed Change of Control of AT&T Broadband
RECOMMEN~DATION
Staff recommends that the City Council approve the attached resolution consenting to the proposed
change of control of AT&T Broadband, subject to AT&T's activation of a second government affairs
and educational (PEG) channel and the provision of $.30 per subscriber per month in grant funds to
the City.
B A C KGROUND/DIS CUSSION
In 1995, the City of South San Francisco entered into a Cable Television Franchise Agreement with
Western Cable. That franchise was transferred in 1998 to TCI Cable, and then transferred to AT&T
Broadband in 2000. On December 19, 2001, the Board of Directors of AT&T and Comcast
Corporation agreed to a merger of the two companies. As a result of the merger, the City's Franchise
Agreement will be transferred from AT&T Broadband to the new company name, AT&T Comcast
Corporation.
DISCUSSION:
As described in further detail in Section 4 of the Moss and Barnett Report (attached), AT&T,
Comcast Corporation, and related subsidiaries entered into an Agreement and Plan of Merger
pursuant to which AT&T Comcast will become the new parent corporation of Comcast and AT&T's
newly created cable television subsidiary. AT&T will contribute its cable television assets to a new
subsidiary in a tax-free transaction prior to the Merger. AT&T Comcast has entered into an
Exchange Agreement with Microsoft Corporation that will provide for a conversion of $5 billion of
indebtedness to 115 million shares of AT&T Comcast common stock. AT&T Comcast will be the
largest cable operator with $19 billion in annual revenues and in excess of 22 million subscribers.
Staff Report ~.
To: Honorable Mayor and Council
Subject: Resolution Consenting to the Proposed Change of Control of AT&T Broadband
June 12, 2002
Page 2
The City received the official franchise transfer request from AT&T and Comcast Corporation on
February 28, 2002. This was accomplished through the submission of a transfer application on
Federal Communications Commission (FCC) Form .>94, along with supporting documentation.
Under FCC rules, the City had 30 days to contact AT&T concerning any questions related to the
transfer application and supporting documentation, including questions regarding the accuracy and
completeness of the information provided. A letter was sent to AT&T on March 27 requesting
compliance with several outstanding items from the current franchise, and the results are
summarized in the next section. After the City determines that the transfer application is complete, it
has 120 days to approve or deny the transfer request. Under federal la~v, if no action is taken, and no
extension granted, the transfer request is deemed approved 120 days after receipt. That 120-day
window expires June 28, 2002.
Outstandin~ Franchise Issues Addressed:
Staff sent a letter to AT&T on March 27, 2002 (attached) outlining several concerns and outstanding
items of the current franchise. As a result of staff's efforts and with the assistance of the law firm
Moss and Barnett, which was selected by the San Mateo County Telecommunications Authority
(SamCat) Board to negotiate on franchise renewal items, those items have now been addressed, and
are summarized below. Of particular importance are the first three items. It is because these items
have been addressed to the City's satisfaction that staff believes AT&T is in compliance with the
terms of its current franchise, which leads staff to recommend, along with the conclusions of the
attached Moss and Barnett report, that the City Council approve the transfer request.
Interconnection Issues: As was reported to the City Council on May 30, 2002, the San Mateo
County Telecommunications Authority (SamCat), of which the City is a member, has approved
Memorandums of Understanding with AT&T Broadband and with RCN that will facilitate the
two way interconnection of those cable systems, as well as with San Bruno Cable. Those
interconnections will allow RCN subscribers to view Peninsula TV. The interconnection
should be completed in approximately 90 days.
AT&T has agreed to provide the City with grant funds in the amount of $.30 per subscriber
per month to pay for the City's expenses related to capital equipment for government access
programming. Those grant funds will pay for the City's contributions to Peninsula TV.
Those funds will generate approximately $60,000 annually to the City, and will commence
within 90 days of the adoption of the attached resolution by the City Council. AT&T may
pass along this $.30 per subscriber per month grant fee to customers on their cable bill. It is
important to note that South San Francisco's franchise fees, also paid by customers, are the
lowest in San Mateo County. South San Francisco's franchise (originally negotiated with
Western Cable in 1995) specifies a 2.5% franchise fee on gross revenues earned by AT&T,
while the other cities in the County have franchise agreements that allow for 5% fees.
3. AT&T will provide a second Educational/Governmental (PEG) channel. This new channel
will allow AT&T to broadcast Peninsula TV at all times, including the times when City
Staff Report -..
To: Honorable Mayor and Council
Subject: Resolution Consenting to the Proposed Change of Control of AT&T Broadband
June 12, 2002
Page 3
Council and Planning Commission meetings are broadcasted, Currently, ~vhen City Council
and Planning Commission meetings are broadcasted, Peninsula TV programming is pre-
empted.
AT&T has completed or is in the process of completing cable connections to several public
facilities.
o
Worker's Compensation and General Liability insurance have been renewed to required
levels.
AT&T has confirmed that AT&T cable allows the City to "transmit an emergency alert signal
to all participating subscribers, in the form of an audio override capability to permit Grantor
{South San Francisco} to interrupt and cablecast an audio message on all channels
simultaneously in the event of disaster or public emergency." Use of that signal will require
City staff to receive training in the use of the equipment necessary to activate the override.
AT&T has confirmed that its cable system is served by standby power capacity.
AT&T has confirmed that its upgrade is complete, which includes "hybrid fiber optic/coaxial
system design or better, with nodes covering no more than 2,000 homes on the average."
AT&T has confirmed that all public schools in South San Francisco have been provided with
a cable connection.
Review of Proposed Transfer Request
As was mentioned previously, the SamCat Board commissioned Moss and Barnett, a law firm
specializing in cable franchise issues, to review the proposed transfer documents submitted by
AT&T. Their report is attached. Denial of a franchise transfer may be denied only upon
unsatisfactory financial, legal, and technical qualifications, which would render the new cable
company unable to provide the required cable services.
Moss and Bamett's conclusions are summarized belo:v and are found in more detail in the attached
report:
"Based specifically on the information and evaluations contained within this report, we believe
AT&T Comcast possesses the necessary legal and technical qualifications based on the standards of
review identified in applicable local, state, and federal laws and subject to the conditions referenced
in Section 7 of this report with respect to AT&T Comcast's financial qualifications. We recommend
that the Agencies review this entire report, listen to any additional public comment or information,
and assuming the Agencies determines AT&T Comcast to be financially qualified, undertake all
necessary action to pass and adopt a Resolution with the recommendation that the Agencies will
follow-up to ensure that AT&T Comcast submits the required documents...
Staff Report -._
To: Honorable Mayor and Council
Subject: Resolution Consenting to the Proposed Change of Control of AT&T Broadband
June 12, 2002
Page 4
"Neither federal law nor FCC regulations provide franchising authorities with any guidance
concerning the evaluation of the financial qualifications of a transfer applicant for a cable franchise.
However...based on the foregoing and limited strictly to the Financial Statements reviewed by Moss
& Barnett in conducting this review, we do not believe that AT&T Corp.'s request for assignment of
the franchisees to operate the Systems serving the Agencies can reasonably be denied based on the
financial qualifications of AT&T Comcast Corporation."
Other Issues that Could Potentially be Used to Justify the City Council Not Approving the Transfer:
There are no outstanding rates, cable system buildout, or significant: customer service issues that
would cause AT&T to be in violation of its current City franchise. Staff therefore believes that the
City would not have legal grounds to deny the transfer request based on these issues.
Rates:
Based on reviews by telecommunication firms specializing in cable franchises, AT&T is in
compliance with FCC requirements governing its basic rate structure. Note that under
federal law, AT&T's rates are unregulated for other than the basic tier of service
Customer Service:
Staff is not aware of any significant or on-going customer service issues related to AT&T.
Buildout:
There are no explicit cable buildout requirements (for example, specifying geographic areas
of town) in the City's Franchise Agreement with AT&T. Therefore, staff believes no claim
can be made that AT&T has failed to live up to any buildout requirements in South San
Francisco.
City Council Actions on the Transfer Request
The City Council has three options for dealing with the transfer request by AT&T Broadband. They
are:
Uncot~ditional Approval of the Transfer: With this approach, approval of the transfer as
presented would be granted without any conditions.
Approve the Transfer with Conditions: This is staff's recommended approach, and is
reflected in the attached resolution. It recommends approval of the transfer subject to the
following conditions.
Successful completion of the transfer transaction described in information provided
to the City by AT&T, and, within 30 days of the date of closing, notifying the City in
writing of the completion of the transaction.
Staff Report
To: Honorable Mayor and Council
Subject: Resolution Consenting to the Proposed Change of Control of AT&T Broadband
June 12, 2002
Page _5
b. That AT&T implement and activate a second PEG access channel (described in more
detail below).
That AT&T, within 90 days of the date of adoption of this resolution, commence
payment to the City of PEG access grant funds in the amount of $.30 per subscriber
per month.
Denial of the transfer request: The final option would be to recommend rejection of the
transfer request. A transfer can only be denied under certain d'rcumstances. Applicable law
provides a basis for denial of transfer requests. A franchising authority may deny a transfer
request based upon unsatisfactory financial, legal, and technical qualifications, which would
render the new cable company unable to provide the required cable services.
FISCAL IMPACT:
The City ,,viii gain approximately $60,000 annually under the $.30 per subscriber per month grant
provision.
CONCLUSION:
Staff has concluded that there are no legal grounds by which the City could deny the transfer request
by AT&T Broadband. Staff therefore recommends that the City Council approve the attached
resolution which consents to the proposed change of control of AT&T Broadband, subject to
AT&T's activation of a second government affairs and educational (PEG) channel and the provision
of $.30 per subscriber per month in grant funds to the City.
Prepared by: Ji~
Finance Director
Approved by~~
Michael A Wilson
City Manager
CC:
Kathi Noe, AT&T
Brian Moura, SamCat
Attachments:
Resolution
Moss and Barnett Report on the Proposed Transfer
March 27 Letter to Kent Leacock, AT&T
EXHIBIT A
RESOLUTION NO.
CITY COU'NC[L, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION APPROVING TI-'IE PROPOSED CHANGES
OF CONTROL OF AT&T BROADBAND
WI-IEREAS, on or about February 10, 1996, the City of South San Francisco, California
("City") granted a Cable Television Franchise Ordinance ("Franchise") to TCI Cablevision of
California, Inc. ("TCI") which Franchise is now held by AT&T Broadband (Grantee"); and
WI-iEREAS, grantee is an indirect subsidiary of AT&T Corp. ("AT&T"); and
WI-[EREAS, pursuant to an Agreement and Plan of Merger dated as of December 19,
2001 by an among AT&T, AT&T Broadband Corp., Comcast Corporation ("Comcast"), AT&T
Broadband Acquisition Corp., Comcast Acquisition Corp. and AT&T Comcast Corporation and
a Separation and Distribution Agreement dated December 19, 2001 by and between AT&T and
AT&T Broadband Corp. (collectively, the "Merger Agreement") AT&T and Comcast intend to
create a new company to be known as AT&T Comcast Corporation ("AT&T Comcast"); and
WHEREAS, as a result of the Merger Agreement, Grantee and AT&T Comcast has
requested consent by City to change of control of Grantee. In addition, Grantee may elect, as
permitted by law, to convert or reorganize its legal form to a limited liability company ("LLC
Conversion"); and
WHEREAS, tinder the Franchise and applicable law, the proposed change of control
requires consent from the City; and
WHEREAS, the City has reviewed the proposed change of control and the legal,
technical, and financial qualifications of AT&T Comcast to be the new parent company of
Grantee following the proposed change of control; and
WHEREAS, based on information obtained and on the reports and information received
by City, including the report prepared by Moss & Barnett, a Professional Association, which is
hereby incorporated by reference, City has elected to approve the proposed change of control.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby resolves as follows:
The Franchise is in full force and effect, and Grantee is the lawful holder of the
Franchise.
Grantee ~vill remain the la~vful holder of the Franchise after consummation of the
transaction contemplated tinder the Merger Agreement.
The City hereby consents and approves of the proposed change of control of
Grantee as contemplated under the Merger Agreement, as well as the LLC
Conversion, subject to:
Closing of the transaction described in information provided to the City by
Grantee, AT&T and AT&T Comcast.
AT&T Comcast, within thirty (30) days of the date of closing, notifying
the City in ~vriting of the completion of the transaction.
Pursuant to and as provided in the May 28, 2002 letter from Kathi Noe,
Director, Government Affairs for AT&T, to..Brian A Moura, Chariman,
San Mateo County Telecommunications Authority (SamCat), with that
letter on file at 600 Elm Street, San Carlos, CA 940'70, City and Grantee
agree that Grantee will commence implementation to activate and provide
City with a second PEG access channel on the schedule set forth in the
Franchise.
Grantee hereby confirms that, as of May 28, 2002, the City has met all
requirements necessary to trigger Grantee's obligation under Section $ and
Exhibit C(2) of the Franchise and therefore Grantee shall, within ninety
(90) days of the date of adoption of this Resolution, commence provision
to the City of EG access grant funds in the amount of thirty (30) cents per
South San Francisco subscriber per month as capital to be used solely for
EG access equipment and facilities pursuant to and in accordance with
Section 5 and Exhibit C(2) of the Franchise.
In the event the change of control of Grantee to AT&T Comcast contemplated by
the foregoing resolution is not completed, for any reason, the City's consent shall
not be effective.
This Resolution shall take effect and continue and remain in effect from and after
the date of its passage, approval, and adoption.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by
the City Council of the City of South San Francisco at a meeting held on the
day of ., 2002 by the following vote.
AYES:
NOES:
ABSTAhN:
ABSENT:
ATTEST:
City Clerk
ACCEPTANCE AND AGREEMENT
TCI Cablevision of California, Inc., providing services as AT&T Broadband, as
controlled by AT&T Comcast Corporation, hereby accepts this Resolution No. __
("Resolution") and agrees to be bound by the terms and conditions of this Resolution
and the la~vful terms and conditions of the Franchise referenced ~vithin the Resolution.
Dated this clay of ,2002
TCI CABLEVISION OF CALIFORNIA,
INC. PROVEDING SERVICES AS AT&T
BROADBAND
By:
Its:
STATE OF )
).SS.
COUNTY OF )
The foregoing instrument was subscribed and sworn to before me this
2002, by , the
TCI Cablevision of California, Inc., providing services as AT&T Broadband.
day of
of
SEAL
Notary Public
EXHIBIT B
RESPONSE TO TRANSFER QUESTIONNAIRE
50835~'2 B- 1
REPORT TO THE
SAN MATEO COUNTY TELECOMMUNICATIONS AUTHORITY
REGARDING THE PROPOSED TRANSFER OF CONTROL OF
AT&T CORPORATION
To
AT&T COMCAST CORPoRATIoN
MAY 23, 2002
Prepared by:
Brian T. Grogan, Esq.
Michael R. Nixt, Esq.
Yuri B. Berndt, Esq.
Moss & Barnett
A Professional Association
4800 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-4129
(612) 347-0340 (phone)
(612) 339-6686 (facsimile)
REPORT TO THE
SAN MATEO COUNTY TELECOMMUNICATIONS AUTHORITY
REGARDING THE PROPOSED TRANSFER OF CONTROL OF
AT&T CORPORATION
TO
AT&T COMCAST CORPORATION
MAY 23, 2002
Table of Contents
Section 1.
Section 2.
Section 3.
Section 4.
Section 5.
Section 6.
Section 7.
Section 8.
Section 8.
Section 9.
Exhibit A
Exhibit B
Exhibit C
1
Executive Summary ...................................................................................
Introduction ..........................................................................
Applicable Law ............................................................................... 5
Description of the Transaction ................................................................... 7
Legal Qualifications ................................... 19
Technical Qualifications .................................... 31
Financial Qualifications ........................
................... 45
Interviews With City Officials ................................................
.................. 56
Additional Franchise Issues ...................................................
Recommendations ..........................
Transfer Questionnaire ........................................................................... A-1
.......... B-1
Response to Transfer Questionnaire ............................................
Resolution Approving Transfer ............................................................... C°1
508352/2 i
REPORT TO THE
SAN MATEO COUNTY TELECOMMUNICATIONS AUTHORITY
REGARDING THE PROPOSED TRANSFER OF CONTROL OF
AT&T CORPORATION
To
AT&T COMCAST CORPORATION
MAY 23, 2002
SECTION 1. EXECUTIVE SUMMARY
This report has been provided by Moss & Barnett, a Professional Association, for
the express purpose of evaluating a request from AT&T Broadband, ("Grantee") the
current holder of the cable television franchises ("Franchise") in the cities of Belmont,
Brisbane, Burlingame, Daly City, Foster City, Hillsborough, Millbrae, Portola Valley,
Redwood City, San Carlos, San Mateo, South San Francisco, Woodside and County of
San Mateo, California, (collectively referred to as "Agencies") to approve a proposed
transfer of control of Grantee to AT&T Comcast Corporation ("AT&T Comcast").
Pursuant to the Franchise, this proposed transfer of control to AT&T Comcast is
prohibited without the written consent of the Agencies. Federal law provides the
Agencies with a period of 120 days to examine the legal, technical and financial
qualifications of the proposed transferee.
Description of the Transaction. As described in further detail in Section 4 of
this report, AT&T, Comcast Corporation, ("Comcast"), and related subsidiaries entered
into an Agreement and Plan of Merger dated December 19, 2001, ("Merger
Agreement") pursuant to which AT&T Comcast will become the new parent corporation
of Comcast and AT&T's newly created cable television subsidiary. AT&T will contribute
its cable television assets to a new subsidiary in a tax-free transaction prior to the
Merger. AT&T Comcast will also enter into a Support Agreement with Sural LLC, an
entity controlled by Mr. Brian L. Roberts which holds approximately 88.7% of the voting
power of Comcast, to provide various management services. AT&T Comcast has
entered into an Exchange Agreement with Microsoft Corporation that will provide for a
conversion of $5 billion of indebtedness to 115 million shares of AT&T Comcast
common stock. AT&T Comcast will be the largest cable operator with $19 billion in
annual revenues and in excess of 22 million subscribers.
Legal Qualifications. As discussed in Section 5 of this report, the legal
qualifications standard relates primarily to an analysis of whether entities within this
508352/2 1
transaction are authorized to proceed with the transactions contemplated by the Merger
Agreement and are authorized to control the cable television franchises.
AT&T and Comcast, according the to Merger Agreement, have the corporate
power to execute, deliver and perform the Merger transaction, which is a valid and
binding agreement on its terms. All of the entities involved with the merger transaction
are in good standing with their State of incorporation.~
Certain AT&T shareholders have expressed concerns regarding AT&T
Comcast's atypical governance rights. Some of these atypical rights include Board of
Director's terms that will not expire until 2005; no annual shareholder meetings until
2005; the shareholders will not have the right to call special meetings or acquire more
than 10% of the voting power without the approval of the AT&T Comcast board; removal
of the AT&T Comcast Chairman and CEO prior to April 2010 only with the approval of
75% of the AT&T Comcast board; and the creation of a dual class of stock whereby
Sural LLC will hold a non-dilutable 33.3% combined voting power of AT&T Comcast
stock despite holding less than 1.5% of the economic interest in AT&T Comcast. In
addition, Sural LLC will have a substantial amount of control of AT&T Comcast due to
the fact that it will hold a 33.3% nondilutable voting interest in AT&T Comcast. The
effect of the atypical governance arrangement on the overall business operations of
AT&T Comcast is uncertain, but it is appropriate for the Agencies to consider the
adverse impact of the governance structure affecting AT&T Comcast on its ability to
fulfill its respective legal obligations under the franchise.
Technical Qualifications. As discussed in Section 6 of this report, AT&T
Comcast will provide cable services in 41 states with approximately 22 million
subscribers passing 38 million homes. AT&T Comcast will become the indirect parent
company of AT&T Corp. which is the ultimate parent of the Grantee.
The transfer of control does not present any immediate impact on the Grantee's
ability to continue to operate and fulfill its Franchise obligations. However, as with any
transfer of control at the highest level, it is possible that the management philosophy
and overall management approach of the company may be altered with the creation of
AT&T Comcast. It is impossible to predict, given the information presently before the
Agencies, the ultimate impact of this transaction.
Financial Qualifications. As discussed in Section 7 of this report, we reviewed
the historical financial information of AT&T and Comcast as provided in AT&T
Comcast's securities registration statement. AT&T Comcast will require significant cash
flow to continue to operate in the competitive cable television environment, service its
current outstanding debt and continue to provide the necessary capital expenditures.
~ AT&T Broadband Corp., a Delaware corporation formed on December 14, 2001, as of April 30, 2002
was not in good standing although upon notification of this issue by Moss & Barnett, AT&T has since
brought the company in good standing.
2
508352/2
AT&T Comcast is projected to have in excess of $30 billion of debt at the date of
the merger and its management is in the process of securing approximately $12.85
billion of financing to replace some of its current debt and to provide cash for operations
and capital expenditures. Comcast currently has $6.5 billion of cash and lines of credit
available to fund operations. Based upon proforma 2001 data, AT&T Comcast's
EBITDA or Cash Flow Percentage would be below industry averages. However, AT&T
Comcast hopes to improve the cash flow percentage by increasing AT&T's gross
margins that are currently at 23% to Comcast's 42% by incorporating 1) Comcast's
management and the merger synergies; and 2) cost savings and efficiencies in i)
programming, ii) general operating, iii) advertising, iv) new products, and v) telephony
areas. AT&T Comcast believes these steps will result in.an estimated $1.25 to $1.95
billion of annual cash savings and should improve AT&T Comcast's cash flow
percentage.
Recommendation. Based specifically on the information and evaluations
contained within this report, we believe AT&T Comcast possesses the necessary legal
and technical qualifications based on the standards of review identified in applicable
local, state, and federal laws and subject to the conditions referenced in Section 7 of
this report with respect to AT&T Comcast's financial qualifications. We recommend that
the Agencies review this entire report, listen to any additional public comment or
information, and assuming the Agencies determines AT&T Comcast to be financially
qualified, undertake all necessary action to pass and adopt a Resolution with the
recommendation that the Agencies will follow-up to ensure that AT&T Comcast submits
the required documents.
3
508352/2
SECTION 2. INTRODUCTION
The cities of Belmont, Brisbane, Burlingame, Daly City, Foster City, Hillsborough,
Millbrae, Portola Valley, Redwood City, San Carlos, San Mateo, South Francisco,
Woodside and County of San Mateo, California (collectively referred to as "Agencies")
have before them a request from AT&T Broadband ("AT&T" or "Grantee"), the current
Grantee of the cable television franchise serving the Agencies, to approve a proposed
transfer of control of AT&T to AT&T Comcast Corporation ("AT&T Comcast"). Pursuant
to the cable television franchises ("Franchise") held in the Agencies, this proposed
transfer of control of AT&T to AT&T Comcast is prohibited without the written consent of
the Agencies.
In light of the request by AT&T and AT&T Comcast an~l the procedural
requirements outlined in the Franchise, Moss & Barnett, A Professional Association, has
been retained by the San Mateo Telecommunications Authority ("SAMCAT") and was
asked to provide this report.
In preparing this report, Moss & Barnett has relied upon information submitted by
AT&T, including:
1. FCC Form 394--Application for Franchise Authority Consent to
Assignment or Transfer of Control of Cable Television Franchise received
by each Agency on or about February 25, 2002.
2. Transfer Questionnaire/Application dated March 22, 2002 and Response
of AT&T dated April 1,2002.
3. Agreement and Plan of Merger dated as of December 19, 2001 by and
among AT&T Corp., AT&T Broadband Corp., Comcast Corporation, AT&T
Broadband Acquisition Corp., and Comcast Acquisition Corp. and a
Separation and Distribution Agreement dated December 19, 2001 by and
between AT&T Corp. and AT&T Broadband Corp.
4. Selected financial information as described in the "Financial Qualifications"
section of this report.
The report has been prepared with Brian T. Grogan, Esq. serving as project
manager, Terri L. Hammer assisting with due diligence and document preparation,
Michael R. Nixt, Esq. performing the legal review of AT&T Comcast Corporation, Yuri B.
Berndt, Esq. and a former CPA, performing the financial review of AT&T Comcast
Corporation and Jonathan L. Kramer of Kramer. Firm, Incorporated of Los Angeles,
California performing the technical review of AT&T Comcast.
508352/2 4
SECTION 3. APPLICABLE LAW
The following provisions of federal law and the Franchise govern the action of
the Agencies in acting on the request of AT&T for approval of the transfer of control of
the Franchise to AT&T Comcast.
FEDERAL LAW
The Cable Communications Policy Act of 1984, as amended by the Cable
Consumer Protection and Competition Act of 1992 and the Telecommunications Act of
1996 ("Cable Act"), provides at Section 617 (47 U.S.C. §.537):
Sales of Cable Systems
A franchising authority shall, if the franchise requires franchising authority
approval of a sale or transfer, have 120 days to act upon any request for approval of
such sale or transfer that contains or is accompanied by such information as is
required in accordance with City regulations and by the franchising authority. If the
franchising authority fails to render a final decision on the request within 120 days,
such request shaft be deemed granted unless the requesting party and the franchising
authority agree to an extension of time.
The Cable Act also provides at Section 613(d) (47 U.S.C. § 533(d)) as follows:
(d) Regulation of ownership by States or franchisinq authorities
Any State or franchising authority may not prohibit the ownership or control of a
cable system by any person because of such person's ownership or control of any
other media of mass communications or other media interests. Nothing in this section
shall be construed to prevent any State or franchising authority from prohibiting the
ownership or control of a cable system in a jurisdiction by any person (1) because of
such person's ownership or control of any other cable system in such jurisdiction, or
(2) in circumstances in which the State or franchising authority determines that the
acquisition of such a cable system may eliminate or reduce competition in the delivery
of cable service in such jurisdiction.
Further, the Federal Communications Commission ("FCC") has promulgated
regulations governing the sale of cable systems. Section 76.502 of the FCC's
regulations (47 C.F.R. § 76.502) provides:
47 C.F.R. § 76.502 Time Limits Applicable to Franchise Authority
Consideration of Transfer Applications
A franchise authority shall have 120 days from the date of submission of
a completed FCC Form 394, together with all exhibits, and any additional
information required by the terms of the franchise agreement or
508352/2 5
applicable state or local law to act upon 'an application to sell, assign, or
otherwise transfer controfling ownership of a cable system.
A franchise authority that questions the accuracy of the information
provided under paragraph (a) must notify the cable operator within 30
days of the filing of such information, or such information shall be
deemed accepted, unless the cable operator has failed to provide any
additional information reasonably requested by the franchise authority
within 10 days of such request.
If the franchise authority fails to act upon such transfer request ~vithin
120 days, such request shall be deemed granted unless the franchise
authority and the requesting party otherwise agree to an extension of
time.
LOCAL LAW
City of Belmont
City of Brisbane
City of Burlingame
City of Daly City
City of Foster City
City of Hillsborough
City of Millbrae
City of Portola Valley
City of Redwood City
City of San Carlos
City of San Mateo
City of South San Francisco
City of Woodside
County of San Mateo
Refer to the City's Franchise at Section 3.2
Refer to the City's Franchise at Section 3.2
Refer to the City's Franchise at Section 6.48.100
Refer to the City's Franchise at Section 5.40.150
Refer to the City's Franchise at Section 24
Refer to the City's Franchise at Section 4.04.040J
Refer to the City's Franchise at Section 5.4
Refer to the City's Franchise at Section 1.08
Refer to the City's Franchise at Section 3.2
Refer to the City's Franchise at Section 3.2
Refer to the City's Franchise at Section 3.2
Refer to the City's Franchise at Section 6.76.080
Refer to the City's Franchise at Section 113.06
Refer to the County's Franchise at Section 2.10
508352/2 6
SECTION 4. DESCRIPTION OF THE TRANSACTION
AT&T Corp., a New York corporation ("AT&T"), AT&T Broadband Corp., a
Delaware corporation and wholly owned subsidiary of AT&T ("AT&T Broadband"),
Comcast Corporation, a Pennsylvania corporation ("Comcast"), AT&T Comcast
Corporation, a Pennsylvania corporation ("Transferee" or "AT&T Comcast"), AT&T
Broadband Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Transferee ("AT&T Broadband Merger Sub") and Comcast Acquisition Corp., a
Pennsylvania corporation and wholly owned subsidiary of Transferee ("Comcast Merger
Sub") entered into an Agreement and Plan of Merger dated December 19, 2001 (the
"Merger Agreement"), pursuant to which Transferee will become the new parent
company of AT&T Broadband? The transaction contemplate.d by the Merger
Agreement also is affected by the provisions of other material agreements, which
include the Separation and Distribution Agreement by and between AT&T and AT&T
Broadband dated December 19, 2001 (the "Separation and Distribution Agreement"), a
Support Agreement between, among other parties, Sural LLC and AT&T (the "Support
Agreement") and an Exchange Agreement between Microsoft Corporation and Comcast
(the "Exchange Agreement").
The assets of AT&T Broadband are valued for purposes of the Mergers at $72
billion3, subject to certain adjustments as prowded for ~n the Merger Agreement. The
Mergers will create the nation's largest cable operation with $19 billion in revenues for
the period ended December 31,20015 and in excess of 22 million subscribers and 38
2 Agreement and Plan of Merger between AT&T and Comcast and related entities dated December 19,
2001 as provided in Annex A of the AT&T Comcast Corp. Form S-4 filed with the Securities and
Exchange Commission ("SEC") on February 11,2002, as amended by Form S-4 Amendment 1 filed with
the SEC on April 10, 2002.
3 AT&T Comcast Corporation Investor Presentation dated December 20, 2001, at p.8.
'~ The Merger Agreement provides for two events upon which "Potential Additional Payments" of shares of
AT&T Comcast common stock would be required to be issued. These events require the issuance of
additional shares of AT&T Comcast common stock to the AT&T Broadband shareholders if (i) the AT&T
Comcast common stock issued as a result of the consummation of the AT&T Broadband Merger do not
have a value in excess of 50% of the total value of all AT&T Comcast shares issued in consummation of
the Mergers, then an additional number of shares of AT&T Comcast common stock will be issued to
ensure that the AT&T Broadband shareholders receive shares representing more than 50.0% of the value
of all shares issued by AT&T Comcast in consummation of the Mergers (referred to in the Merger
Agreement as the "Section 355(e) Top-up adjustment"); and (ii) additional shares of AT&T Comcast
common stock may be issued to the AT&T Broadband shareholders in the event that prior to the
completion of the Mergers, Standard & Poors has not committed to include the class of AT&T Comcast
common stock to be received by the AT&T Broadband shareholders upon consummation of the AT&T
Broadband Merger in the Standard & Poors 500 Index immediately after the consummation of the
Mergers (referred to in the Merger Agreement as the K/A Security or K/C Security based on whether the
Mergers are consummated under the Preferred or Alternate Methods; provided, however, the price
differential adjustment described in this section (ii) is capped at a maximum of 3% and is subject to
reduction by the number of shares issued as a result of the Section 355(e) Top-up Adjustment. The
parties to the Merger Agreement do not anticipate being required to issue the additional shares described
in this footnote.
5 AT&T Comcast Corporation, Form S-4 Amendment No. 1 filed April 10, 2002 with the Securities and
Exchange Commission ("AT&T Comcast S-4 Amendment 1"), at p. 111-7.
508352/2 7
million homes passed.8 The transaction contemplated by the Merger Agreement is
scheduled to close by the end of 2002.7 The closing is subject to satisfaction of several
contingencies including approval by the shareholders of Comcast and AT&T, various
state and federal regulatory agencies, note holders,8 and all other conditions as
described in the Merger Agreement, all of which contingencies are in all material
respects customary for a transaction of this magnitude.~
MERGER AGREEMENT
Pursuant to the Merger Agreement, AT&T Broadband Merger Sub will merge
with and into AT&T Broadband, with AT&T Broadband continuing as the surviving
corporation in the merger and, as a result of such merger,'becoming a wholly owned
subsidiary of AT&T Comcast (the "AT&T Broadband Merger").~° On the same effective
date as the AT&T Broadband Merger, Comcast Acquisition Corp. will merge with and
into Comcast, with Comcast continuing as the surviving corporation in the merger and,
as a result of such merger, becoming a wholly owned subsidiary of AT&T Comcast (the
"Comcast Merger"). The AT&T Broadband Merger and the Comcast Merger are
referred to herein collectively as the "Mergers").
AT&T
Broadband
MERGER
AT&T Comcast
AT&T Broadband
Holdings, LLC
AT&T Broadband
Merger Sub
Comcast
Acquisition Group
merge
Comcast
Corporation
RESULTING STRUCTURE
AT&T Comcast I
Holdings, LLC
AT&T Broadband
Comcast
Corporation
AT&T Comcast Investor Presentation dated December 20, 2001.
AT&T Comcast S-4 Amendment 1, at page I-4.
AT&T Comcast S-4 Amendment 1, at p. 1-33.
Merger Agreement, Article 10, at pp. 109-112.
~0 AT&T Comcast S-4 Amendment 1, at page V-1.
508352/2 8
The closing date for the Mergers will occur as soon as practicable following the
satisfaction or waiver of conditions to the Mergers set forth in the Merger Agreement.
The Mergers will be effective on the same effective date, but after the completion of the
separation and distribution by AT&T of certain assets and the corresponding
assumption of certain liabilities of AT&T's Broadband business operations by AT&T
Broadband, in a transaction described as an internal restructuring and "spin-off" of the
Broadband operations. For a description of the internal restructuring and spin-off, see
description of the Separation and Distribution Agreement infra.
The consideration to be issued in the Mergers will be shares of various classes of AT&T
Comcast common stock. The rights of the classes of AT&T Comcast common stock to
be issued in the Mergers is dependent upon whether the holders of Comcast Class A
common stock and Class B common stock approve what is referred to in the Merger
Agreement as the "Preferred Structure". If the Preferred Structure is not approved by
the holders of Comcast Class A common stock and Class B common stock, the
Mergers, if approved by the AT&T and Comcast shareholders, generally, will be
completed under what is described as the "Alternative Structure".
Under either the Preferred Structure or Alternative Structure, the Comcast Class B
shareholders, who own approximately 86.6% of the Comcast's voting power, will own
33-1/3% of AT&T Comcast voting power upon completion of the AT&T Comcast
transaction~. A description of the securities to be exchanged in the Preferred Structure
and Alternative Structure follows:
Preferred Structure. If the Preferred Structure is approved by the applicable
holders of Comcast Class A common stock and Class B common stock, the AT&T
Broadband shareholders and the holders of Comcast Class A common stock will
receive shares of AT&T Comcast Class A common stock based on applicable exchange
ratios set forth in the Merger Agreement; the holders of Comcast Class B common stock
will receive shares of AT&T Comcast Class B common stock; and the holders of
Comcast Class A special common stock will receive shares of AT&T Comcast Class A
special common stock.12
Alternative Structure. In the event the Mergers are consummated under
circumstances where the Alternative Structure is implemented, the holders of Comcast
Class B common stock will receive AT&T Comcast Class B common stock; the holders
of AT&T Broadband common stock will receive shares of AT&T Comcast Class C
common stock; the holders of Comcast Class A common stock will receive shares of
AT&T Comcast Class A common stock; and the holders of Comcast Class A special
common stock will receive shares of AT&T Comcast Class A special common stock.
The applicable exchange ratios for the shares of common stock are set forth in the
Merger Agreement and will be determined based on the number of outstanding shares
of common stock as of the closing date of the Mergers. If the Mergers were
consummated as of April 10, 2002, and without giving effect to the issuance of any
~I AT&T Comcast S-4 Amendment 1, at page I-2.
~2 AT&T Comcast S-4 Amendment 1, at p. I-9.
508352/2 9
additional shares of common stock that may be required to be issued under the Merger
Agreement, the tables below describe the relative economic and voting interest of the
AT&T Broadband and Comcast shareholders upon the consummation of the Mergers
under the Preferred Structure and Alternative Structure, including the effect of the
Microsoft Quips transfer described in the section entitled "Exchange Agreement" infra.
TABLE OF ECONOMIC INTEREST PERCENTAGES
SHAREHOLDERS OF AT&T BROADBAND AND COMCAST CORPORATION
(giving effect to the Mergers using assumptions set forth in the AT&T Comcast S-4A)
Based on AT&T Comcast S-4 Amendment No. I filed with Securities and Exchange Commission on April 10,
2002 (see pages I-1 and I-2) , .
'~ ~:' ",:*~ ~'~.'; ~:J~':';:' ~;': : :~'~:~'"~ .':~;~ ~,*~ . ':~-~:~,'." ~:-;~: ~:'.:~:zi~;~!~.':,~:.; ~,,';t'~'?,~:~E ~-~:~":~:~:E:~'~ ....... *' '" 1 ~:;,;' ~','i,.'~ .~:. ,.~L" , ,
AT&T Broadband Shareholders
Comcast - Class A Shareholders
Comcast - Class B Shareholders
Comcast - Class A Special
Shareholders
Microsoft
TOTALS
54.80% 57.70%
1.00% 1.00%
0.40% 0.40%
38.60%~3 40.60%
5.30% 0%
99.30%'4 99.70%~
TABLE OF VOTING POWER
SHAREHOLDERS OF AT&T BROADBAND AND COMCAST CORPORATION
(giving effect to the Mergers using assumptions set forth in the AT&T Comcast So4A)
AT&T Broadband 60.60% 65.55% 56.60% 61.55%
Shareholders~z
Comcast - Class A 1.10% 1.10% 5.14% 5.14%
Shareholders
Comcast - Class B 33.33% 33.33% 33.33% 33.33%
Shareholders
Comcast - Class A 0.00% 0.00% 0.00% 0.00%
Special Shareholders
Microsoft 4.95% 4.95% 0.00%
TOTALS 99.98%TM 99.98%1~ 100.02~/% 100.02~ r%
~3 Assumes that AT&T Comcast is not required to make any of the potential additional payments described in the Merger
Agreement.
'~ Difference of .70% due to rounding and use ol estimates.
~ Difference of .30% due to rounding and use ol estimates.
Assumes that AT&T Comcast is not required to make any of the potential additional payments described in the Merger
~Acqreement.
~-lf the Preferred Structure is adopted, shares will be AT&T Comcast Class A voting common stock and, if the Alternate Structure is
adopted, shares will be AT&T Comcast Class C voting common stock.
Difference of +/- .02% attributable to rounding and use of estimates.
508352J2 1 0
Summary of Certain Provisions of A T& T Comcast Stock Issued in Mergers
- Voting Power.
Class A Special Common Stock. Under either the Preferred Structure or the
Alternative Structure, each share of AT&T Comcast Class A special common stock will
have n._9.o voting rights.
Class B Common Stock. Under either the Preferred Structure or the Alternative
Structure, each share of AT&T Comcast Class B common stock will have 15 votes and
all shares in the aggregate will have 33-1/3% of the combined voting power of all
classes of issued and outstanding shares of AT&T Comcast common stock, and, except
where the shares of AT&T Comcast Class B common stock are reduced following the
completion of the Mergers, for any reason (as described in the Merger Agreement), or
upon the occurrence of other events resulting in an increase or decrease in the number
of issued and outstanding shares of Class B common stock will be non-dilutable in
voting power as a result of the increase in the number of outstanding shares of any
other class of voting securities of AT&T Comcast.
Class A Common Stock. The terms of AT&T Comcast Class A common stock
will vary depending on which capital structure for the Mergers is approved.
I
Preferred Structure. AT&T Comcast Class A common stock issued in
the Preferred Structure will initially have approximately .2094 of one vote per
share and all shares in the aggregate will have 66 2/3's% of the voting power of
the AT&T Comcast stock~9. However, the AT&T Comcast Class A common
stock which is issued in the Preferred Structure is subject to voting power dilution
on a per share basis upon the issuance of other shares of Class A common
stock or on a per share and aggregate basis upon the issuance of another class
of AT&T Comcast voting stock.
Alternative Structure. AT&T Comcast Class A common stock issued in
the Alternative Structure will be issued to holders of Comcast Class A common
stock and will have one vote per share, with all shares in the aggregate having
5.14% of the combined voting power of AT&T Comcast stock. Except under
certain circumstances, a disproportionate adjustment in the shares of Class A or
Class B voting stock issued in consummation of the Mergers under the
Alternative Structure which occurs after the completion of the Mergers, will result
in an adjustment of the relative voting power of each such class, but the
combined voting percentage of those two classes of stock will remain constant at
approximately 38.47%, except where the number of shares are reduced below
the number of shares outstanding at the completion of the Mergers, in which
event a reduction in voting power of the applicable class of common stock (A or
B) will occur and an increase in the voting power of Class C common stock
(described below) will also occur (unless there is another class of voting
securities outstanding).
Id.
508352/2 1 1
Class C Common Stock. AT&T Comcast Class C common stock will only be
issued in the event the Mergers are consummated under the Alternative Structure. All
shares of Class C common stock will be issued in the Mergers to the AT&T Broadband
shareholders and will initially have approximately 61-53/100% of the combined voting
power of AT&T Comcast stock, with a per share voting power of approximately .1953 of
one vote.2° Under the Alternative Structure, the issuance of additional shares of voting
securities of AT&T Comcast, other than Class A or Class B common stock, will result in
a dilution of the voting power of the Class C common stock.
As a result of the capital structure of AT&T Comcast under either the
Preferred Structure or the Alternative Structure, the former Comcast shareholders
will have significant control over the control of AT&T Comcast.
Selected Material Provisions of Merger Agreement.
AT&T and Comcast are undertaking certain covenants in the Merger Agreement,
which include the following:
Interim Operations. Comcast and AT&T have agreed to conduct their
business consistent with past practices and to refrain from engaging in any
material transactions pending the completion of the Mergers, subject to consent
of the other party, which covenant restricts what actions AT&T may take with
respect to contracts with Time Warner Entertainment.
Re.qulatory Approvals. Comcast and AT&T have agreed to use their best
efforts to obtain applicable governmental approvals necessary to the Mergers.
No Solicitation of Other Offers. AT&T is prohibited from soliciting other
offers for the Broadband operations, subject to certain exceptions.
QUIPS Failure. In the event the QUIPS transaction does not occur on the
closing date of the Mergers (see description infra), the closing of the Mergers
may be extended by up to 180 days to facilitate the QUIPS transaction.
Comcast Exchanqe of AT&T Common Stock. Comcast has agreed to
exchange all of its shares of AT&T common stock for shares of a new class of
preferred stock prior to the completion of the spin off of the Broadband
operations, which preferred shares will be mandatorily exchangeable after
completion of the Mergers into shares of AT&T common stock, giving Comcast
an interest in AT&T's communications operations.
AT&T Redemption of Debt and Equity. AT&T has agreed to call for
redemption of certain AT&T Broadband debt which is then redeemable and will
redeem certain shares of preferred stock.
20 AT&T Comcast S-4 Amendment 1, at page 9.
508352/2 1 2
Sural LLC. Sural LLC, controlled by Brian L. Roberts, may be merged
with and into AT&T Comcast or a subsidiary immediately prior to the Mergers, in
which event, the members of Sural LLC would receive the consideration (Shares
of AT&T Comcast common stock) that Sural LLC would have received in the
Mergers, pro-rata based on their membership interest.
Conditions to Completion of the Mergers. The following conditions, among
others which are customary for transactions of this nature and magnitude, must be
satisfied or waived by the parties to the Merger Agreement:
1. Shareholders of AT&T and Comcast must approve the Mergers;
2. Receipt of all required regulatory approvals, inc'luding expiration or
termination of applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976;
3. Completion of the transaction contemplated by the Separation and
Distribution Agreement;
4. Receipt of rulings or tax counsel opinions to the effect that the separation
and AT&T Broadband spin-off will be tax-free and the Mergers and certain other
distributions to be made by AT&T to fail to qualify as tax-free transactions;
5. Receipt of separate options of tax counsel that the combination of AT&T
Broadband and Comcast will qualify as a tax-free transaction.
Termination of Merger Agreement/Consequences of Termination. The Merger
Agreement is subject to termination upon, among other events, the following:
1. By Comcast or AT&T if:
a. either party's shareholders do not approve the Mergers;
b. Mergers have not been completed by March 1, 2003 (as limited)
c. Material breach by other party not curable by March 1,2003
2. By AT&T upon certain circumstances if the QUIPS transaction is not
completed prior to the date set for completion
3. By Comcast if the AT&T Board withdraws or modifies adversely to
Comcast the Board's recommendations of the Mergers.
A termination fee of $1.5 billion in cash is payable by AT&T to Comcast if the
Merger Agreement is terminated because of (i) willful or material breach by AT&T of
certain material covenants; (ii) the AT&T board withdraws or adversely modifies its
recommendations of the Mergers; or (iii) with respect to the consummation of an
508352/2 1 3
acquisition proposal pending at the time of the AT&T shareholder meeting which is
subsequently consummated within one year of the meeting.
A termination fee of $1.5 billion in cash is payable by Comea:t to AT&T if (;) tt~e
Merger Agreement is terminated because the Comcast board withdraws or adversely
modifies its recommendations of the Mergers; or (ii) if the Comcast shareholders fail to
approve the Mergers.
See also the analysis of the "atypical" governance structure of AT&T
Comcast in the Section 4 entitled "Legal Qualifications".
SEPARATION AND DISTRIBUTION AGREEMENT
Pursuant to the Separation and Distribution Agreement, AT&T will assign and
transfer to AT&T Broadband all of AT&T's and its subsidiaries right, title and interest in
all of the assets of the AT&T's Broadband business which are not then held by AT&T
Broadband or an AT&T Broadband subsidiary, subject to the obligation on the part of
AT&T Broadband to assume all of the liabilities of AT&T's Broadband business that are
not already liabilities of AT&T Broadband or an AT&T Broadband subsidiary. The
foregoing process of the assignment of AT&T Broadband assets and the assumption
liabilities is referred to as the "separation". Following the separation, AT&T will "spin-off"
AT&T Broadband by distributing to the shareholders of record of AT&T common stock
meeting certain criteria who hold shares of AT&T common stock designated by NYSE
"T" on the record date for the AT&T Broadband spin-off, one share of AT&T Broadband
common stock for each share of AT&T common stock held. The record date for the
AT&T Broadband spin-off will be the close of business on the date of completion of the
Mergers, subject to the right of AT&T and Comcast to modify that date by mutual
agreement.
The separation and spin-off are each scheduled to occur on the closing date of
the Mergers, with the separation occurring before the spin-off and the spin-off prior to
the Mergers.
The shares of AT&T Broadband common stock issued in the spin-off will be
retained by the distribution agent pending delivery of certificates of various classes of
AT&T Comcast common stock described above under the description of the Merger
Agreement.
Repayment of Indebtedness. A T& T Broadband has agreed to repay at the
completion of the Mergers any debt that it or any of its subs/diaries owes to A T& T or
any of A T& T's subs/d/aries and A T& T has agreed to repay at the comp/et/on of the
Mergers any debt that it or any of its subs/d/aries owes to A T& T Broadband or any of
A T& T Broadband's subs/d/aries. Comcast has made arrangements for sufficient
financing to accomplish the oM/gat/on of A T& T Broadband to complete the foregoing.
The amount of the indebtedness owed by A T& T Broadband and its subsidiaries
to A T& T and its subsidiaries is expected to exceed $3.96 billion.
5O8352/2 14
Disposition of Time Warner Entertainment Interest. A T& T Broadband has
agreed to pay to AT&T50% of the proceeds or value in excess of a threshold amount
(net of tax effect) with respect to its interest in Time Warner Entertainment. The
threshold amount is a base amount of $10.2 billion, increased by 7% simple interest on
the balance until paid. If the Time Warner Entertainment interest has not been fully
disposed of within 54 months of the Mergers, then the value of the interest will be
determined by appraisal, and A T& T Broadband will pay 50% of the value in excess of
the threshold amount on a tax adjusted basis.
Material conditions to the Separation and Distribution. The fo/lowing conditions,
among others constitute conditions precedent to the separation and distribution:
1. Receipt of required regulatory approvals;
2. Satisfaction of conditions necessary to enable the spin-off to qua/fly as a
tax-free distribution to affected parties and shareholders;
3. Appro va/by the A T& T Shareholders; and
4. Satisfaction of the conditions to the Mergers.
Indemnification Obligations of AT&T Broadband. A T& T Broadband has agreed
to indemnify A T& T from certain liabilities and obligations, including:
1. Failure to perform liabilities or obligations of the A T& T Broadband
business;
2. If the QUIPS transaction is not consummated, A T& T's repayment
obligations to Microsoft, as reduced by increases in value of the QUIPS
from a specified date;
3. Some or all of the taxes and costs, ff any, incurred by A T& T resulting from
any disquafification of the A T& T Broadband spin-off (as weft as certain
other spin-off's) as tax-free, the percentage of which liability is to be
determined based on the cause for such disqualification;
Termination. The Separation and Distribution Agreement is subject to
termination by A T& T if the Merger Agreement has terminated.
SUPPORT AGREEMENT
Sural LLC, which is controlled by Brian L. Roberts, president of Comcast, and
holder of approximately 86.7% of the combined voting power of Comcast common
stock, has entered into a support agreement with, among other parties, AT&T, pursuant
to which Surral LLC has agreed to vote its shares of Comcast common stock in favor of
the AT&T Comcast transaction. Surral LLC's vote in favor of the AT&T Comcast
transaction will be sufficient to approve the AT&T Comcast transaction without the vote
of any other Comcast shareholder2~; however, the form of the transaction as being
consummated under the Preferred Structure or Alternative Structure requires the
21 AT&T Comcast S-4 Amendment 1, at p. 1-12.
508352/2 1 5
approval of the holders of Comcast Class A common stock in addition to Surral LLC,
which holds all of the Comcast Class B common stock.
Pursuant to the Support Agreement, Surral LLC has agreed as follows:
1. Prior to the completion of the Mergers it will not transfer ownership of
Comcast shares except to certain permitted transferees who agree to be bound
by the restrictions of the Support Agreement;
2. After completion of the Mergers, until the tenth anniversary of the effective
date of the Mergers, Surral LLC will not transfer ownership of any of its shares of
AT&T Comcast Class B common stock except to certain permitted transferees
who agree to be bound by the transfer restrictions except for transactions that
either permit AT&T Comcast other shareholders to dispose of their of AT&T
Comcast stock on an equivalent basis and for the highest amount of
consideration on a per share basis as Surral LLC receives for any of its shares of
AT&T Comcast common stock in a transaction which is approved by the
disinterested holders of AT&T Comcast's voting stock.
3. Brian L. Roberts has also agreed to a similar restriction in the preceding
paragraph with respect to his equity interest in Surral LLC, subject to similar
exceptions.
4. A general prohibition exists which prevents AT&T Comcast and its
subsidiaries from entering into any material transaction with Brian L. Roberts, any
associate or permitted transferee of Roberts unless the transaction is approved
by AT&T Comcast plus the its disinterested directors.
5. Compensation arrangements between Roberts and AT&T Comcast
including any of its subsidiaries require the approval of the disinterested directors
of the compensation committee of AT&T Comcast.
6. Until the 2005 annual meeting Surral LLC will vote its shares of AT&T
Comcast Class B common stock against any proposed amendment to the
governance arrangements set forth in the AT&T Comcast charter. (See
discussion in Legal Qualification section regarding "atypical governance
structure".)
7. In the event of Brian L. Roberts death or incapacity prior to the fifth
anniversary of the Mergers, unless Ralph J. Roberts has sole voting power with
respect to the election of directors with respect to all outstanding shares of AT&T
Comcast Class B common stock, then Surral LLC will vote such shares in the
same proportion as the holders of other voting common stock of AT&T Comcast
vote, which restriction applies until the fifth anniversary of the consummation of
the Mergers.
508352/2 16
8. The Support Agreement terminates one day following the tenth
anniversary of the consummation of the Mergers or upon termination of the
Merger Agreement.
EXCHANGE AGREEMENT
As part of the transactions contemplated by the Mergers, AT&T, Comcast, AT&T
Comcast Corporation and Microsoft Corporation, a Washington corporation, have
entered into an Exchange Agreement, which provides for the terms of the conversion of
$5 billion of AT&T debt currently in the form of 5% Convertible Quarter Income
Preferred Securities ("QUIPS") into 115 million shares of AT&T Comcast Common
Stock.22 The purpose and effect of the Exchange Agreement, if consummated, will
be to substantially reduce the outstanding debt held by AT&T Comcast
Corporation after the Mergers.
Microsoft Corporation currently holds the QUIPS, a security issued by the AT&T
Finance Trust I, a Delaware business trust. The QUIPS are convertible into 5 billion
aggregate face amount of 5% junior convertible subordinated debentures due 2029 of
AT&T, which debentures are in turn convertible into AT&T common stock. In
connection with the AT&T Broadband spin-off, Microsoft has agreed, subject to the
satisfaction of certain terms and conditions, to exchange the QUIPS for a number of
shares of AT&T Broadband common stock that will be converted in the AT&T
Broadband Merger into 115 million shares of AT&T Comcast Class A common stock
under the Preferred Structure or AT&T Comcast Class C common stock under the
Alternative Structure; provided, however, so that Microsoft and its affiliates will not hold
more than 4.95% of AT&T Comcast's voting power as a result of the Mergers, Microsoft
has agreed to accept shares of non-voting AT&T Comcast Class A special common
stock in lieu of shares of voting common stock (Class A or Class C, depending on the
structure of the Merger) to the extent of the surplus voting shares. In the event that
Microsoft's aggregate voting interest in AT&T Comcast is diluted below 4.95%,
Microsoft will have the right to cause AT&T Comcast to exchange shares of the non-
voting Class A special common stock received in the AT&T Broadband Merger for
shares of Class A or Class C voting AT&T Comcast stock (depending on the structure
of the Mergers) subject to the limitation that Microsoft's aggregate voting interest cannot
exceed 4.95% following the exchange. Certain limitations also apply to the ability of
Microsoft to complete the foregoing-described exchange of special common for voting
common shares.
As part of the QUIPS exchange transaction, AT&T Comcast agreed that, if
at any time prior to the fifth anniversary of the QUIPS exchange transaction
(assuming the transaction is consummated) AT&T Comcast offers a high speed
internet access agreement to any third party, then AT&T Comcast will also be
obligated to offer an agreement on non-discriminatory terms with respect to the
same cable systems for Microsoft's Internet service provider, The Microsoft
Network.
22 AT&T Comcast S-4 Amendment 1, at p. 1-15.
508352/2 1 7
Microsoft has agreed for a period of six months following completion of the
QUIPS exchange, with certain exceptions, that Microsoft or any of its wholly-owned
subsidiaries will not sell or enter into any agreement, arrangement or negotiations for
the sale of the AT&T Comcast common stock received by Microsoft in the QUIPS
exchange transaction.
Comcast has agreed to indemnify Microsoft against certain acts arising out of the
failure of the spin-off or the Mergers to qualify as tax-free, except where such failure
results from a breach of a covenant by Microsoft.
The consummation of the transactions contemplated by the Exchange
Agreement is conditioned upon consummation of the Mergers, but the Mergers are not
conditioned upon consummation of the transaction contemplated by the Exchange
Agreement.
508352/2 1 8
SECTION 5. LEGAL QUALIFICATIONS
STANDARD OF REVIEW
The legal qualifications standard relates primarily to an analysis of whether AT&T
Comcast, AT&T Broadband, AT&T Broadband Merger Sub, Comcast and Comcast
Merger Sub are (i) authorized to proceed with the transactions contemplated by the
Merger Agreement and, to the extent parties thereto, the Separation and Distribution
Agreement; and (ii) with respect to AT&T Comcast and AT&T Broadband, are
authorized to control the cable television system serving the Agencies (the "System").
The applicable standard of review is that the Agencies' consent shall not be
unreasonably withheld.
BRIEF SUMMARY OF TRANSACTION
As stated earlier in the Section 3 entitled "Description of the Transaction", the
transactions contemplated by the Merger Agreement will occur in several steps, all of
which are anticipated to occur on the same effective date. First, AT&T will transfer the
assets and liabilities of AT&T's Broadband business operations to AT&T Broadband to
the extent same are not already held as assets or constitute liabilities of AT&T
B 23 .
roadband . Following the ~nternal restructuring of the Broadband operations, AT&T
will spin-off AT&T Broadband to the AT&T shareholders24. Finally, AT&T Broadband
and Comcast will merge with AT&T Merger Sub and Comcast Merger Sub, respectively,
with AT&T Broadband and Comcast constituting the surviving corporations in their
respective Mergers2s. As a result, each of AT&T Broadband and Comcast will become
direct or indirect wholly-owned subsidiaries of AT&T Comcast28. The Merqer
Agreement provides for all of the above-described steps to occur on the closing date for
the Mergers.27
GOOD STANDING STATUS
With respect to the foregoing-described entities, we have concluded as follows:
1. AT&T Broadband Corp. is a Delaware corporation, formed on December
14, 2001, and, based on a verbal confirmation with the Delaware Secretary of
State on April 30, 2002, is active but was not in good standing due to its failure
23 See charts labeled "Step #1" attached hereto which illustrates the internal restructuring of certain
subsidiary legal entities and the contribution of entities that own or control cable franchisees to AT&T
Broadband. See also AT&T Comcast S-4 Amendment 1 at Page I-9.
2.~ See chad labeled "Step #2" attached hereto illustrating the post separation and distribution ownership
of AT&T Broadband by the AT&T shareholders.
2~ See chart labeled "Step #3" attached hereto illustrating the Mergers.
2~ See chart labeled "Final Structure" illustrating the structure of AT&T Comcast following the Mergers,
after giving effect to the separation and distribution of the AT&T Broadband operations contemplated by
the Separation Agreement.
27 AT&T Comcast S-4 Amendment 1 at Page I-9.
508352/2 1 9
to pay an unspecified amount of franchise taxes to the Delaware Secretary of
State .28
2. AT&T Comcast Corporation is a Pennsylvania corporation formed on
December 7, 2001 and, based on a verbal confirmation with the Pennsylvania
Secretary of State on April 30, 2002, is in good standing;
3. AT&T Broadband Merger Sub, is a Delaware corporation formed on
December 7, 2001, and, based on a verbal confirmation with the Delaware
Secretary of State on April 30, 2002, is in good standing;
4. Comcast Corporation, a Pennsylvania corporation, was formed on March
5, 1969, and based on a verbal confirmation with the Pennsylvania Secretary of
State on April 30, 2002, is in good standing; and
5. Comcast Merger Sub, a Pennsylvania corporation, was formed on
December 4, 2001, and based on a verbal confirmation with the Pennsylvania
Secretary of State on April 30, 2002, is in good standing.
Based solely upon the representations of the parties to the Merger Agreement:
1. With respect to Comcast: (A) the execution, delivery and performance by
Comcast of the Merger Agreement and the consummation of the transactions
contemplated by the Merger Agreement are within Comcast's corporate powers
and except for the approval of the Comcast shareholders, the Merger Agreement
has been duly authorized by all necessary corporate action on the part of
Comcast29; (B) the Merger Agreement constitutes the valid and binding obligation
of Comcast enforceable against Comcast in accordance with its terms, subject to
limitations imposed by laws limiting creditor's rights generally and general
equitable principles3°; and (C) Comcast has all corporate powers required to
carry on its business as conducted as of the date of the Merger Agreement and
is qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where qualification is necessary and material to the conduct of
Comcast's operations3~; and
2. With respect to the AT&T entities: (A) The execution, delivery and
performance by AT&T, AT&T Broadband and AT&T Merger Sub of the Merger
Agreement, Separation and Distribution Agreement and such other agreements
contemplated by the Merger Agreement to which they are a party are within the
respective AT&T entities corporate or other powers and, except for the
affirmative vote of a majority of the outstanding shares of AT&T common stock,
2~ Upon notification of this issue, AT&T representatives, on May 16, 2002, indicated that the franchise
taxes had been paid in full and a Certificate of Good Standing was provided to Moss & Barnett verifying
this fact.
2~ Merger Agreement at Section 5.02.
30 Id.
3~ Merger Agreement at Section 5.01, Note: An analysis of the jurisdictions in which Comcast is currently
required to be qualified is beyond the scope of this report.
508352/2 20
have been duly authorized by all necessary corporate action on the part of such
entity32; (B) the Merger Agreement, Separation and Distribution Agreement and
such other agreements contemplated by the Merger Agreement constitutes a
valid and binding agreement of AT&T and the AT&T subsidiary, party thereto,
enforceable in accordance with its terms, subject to limitations imposed by laws
limiting creditor's rights, generally, and general equitable principles33; and (C)
Each of AT&T and each AT&T subsidiary which is a party to the Merger
Agreement, Separation and Distribution Agreement and other agreements
contemplated by the Merger Agreement has all corporate or 'other powers
required to carry on its business as conducted as of the date of the Merger
Agreement and is qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where qualification is nece. ssary and material to the
conduct of its respective business3'~.
The foregoing representations and warranties are to be true and correct in all
material respects as of the closing date of the Merger Agreement and constitute
waivable conditions to the actual closing of the transactions contemplated by the Merger
Agreement3s.
DISMISSAL/DENIAL OF APPLICATION BY FRANCHISE AUTHORITIES
In response to the request as to whether the Transferee has had any interest in
or in connection with an application which has been dismissed or denied by any
franchise authority, AT&T Comcast, having not made any previous applications to any
franchise authorities, indicated that it has not had any dismissals or denials. However,
with respect to AT&T and Comcast, the following is a summary of various
denials/dismissals with respect to their respective business operations disclosed by the
Transferee:
1. The City of Portland, Oregon and Multnomah County, Oregon, denied
consent to the merger of TCI into AT&T Corp. in March, 1999 ("TCI Merger")
because AT&T and TCI would not accept the communities conditions requiring
non-discriminatory access to the cable modem platform. The Ninth Circuit Court
of Appeals subsequently held that the City and the County had no lawful
authority to impose such access obligations in the transfer process.
2. The Village of Rhinebeck, New York, Town of Rhinebeck, New York, and
Village of Red Hook, New York, denied consent to the TCI Merger; however,
these communities consented to the TCI Merger in connection with the June,
1999 exchange of certain cable systems owned by Time Warner, Inc.
32 Merger Agreement at Section 6.02.
33 Id.
34 Merger Agreement at Section 6.01. Note: An analysis of the jurisdictions in which Comcast is currently
required to be qualified is beyond the scope of this report.
3s See Sections 10.02(a) and 10.03(a) of the Merger Agreement.
508352/2 21
3. In connection with the May, 1999 merger of MediaOne Group into AT&T
("MediaOne Merger"), Cambridge, Massachusetts denied transfer of control
based on issues related to forced access alleging that AT&T did not possess
requisite managerial ability, and further alleging lack of benefit to the community
and further speculating that AT&T was unlikely to adhere to the terms and
conditions of the franchise. The Massachusetts Department of
Telecommunications and Energy subsequently ruled that the City's denial based
on forced access was outside the appropriate standard for review of a transfer of
control of a cable franchise and was therefore unlawful, further finding that the
City could not unilaterally alter the existing cable license by requiring AT&T to
provide open access to non-affiliated ISPs and further finding that no specific
benefit was required to be shown by the applicant. This dispute has
subsequently settled and consent to the transfer followed.
4. Mentor, Ohio, in connection with the MediaOne Merger, also denied
transfer of control based on allegations of MediaOne's non-compliance with the
franchise and AT&T's unwillingness to agree to additional terms and conditions.
The City's decision was subsequently appealed and consent was obtained as
part of the settlement process.
5. In connection with the Time Warner exchange, Township of Middletown,
PA denied consent based on a dispute over a cable right appeal. Following a
settlement of the dispute, the franchise transfer approval was granted.
6. Moreno Valley, California initially denied the request to transfer the
franchise to a partnership with affiliates of AT&T and Century Communications
Corporation, which dispute was subsequently settled, including approval of the
transfer as part of the settlement.
7. A transfer of the franchise for the Borough of Blawnox, Pennsylvania from
a subsidiary of Comcast to AT&T in December, 2000 remains pending.
8. The City of Hoover, Alabama denied the request to transfer the franchise
for the City of Hoover to Charter Communications Holding, LLC in June, 2001.
No reasons for the denial were included as part of the resolution supporting the
denial.
ADVERSE FINDINGS/ADMINISTRATIVE ACTIONS
AT&T Comcast has also stipulated that no adverse findings have been made and no
final actions have been taken with respect to AT&T Comcast with respect to actions
taken by any court or administrative body in a civil, criminal or administrative
proceeding, brought under the provisions of any law or regulation related to the
following: any felony; revocation, suspension, or involuntary transfer of any
authorization (including cable franchises) to provide video programming services, mass
media related anti-trust or unfair competition; fraudulent statements to another
508352/2 22
governmental unit; or employment discrimination. However, the following information
was provided with respect to AT&T:
1. In Rosemary Santos v. TCI Cablevision, Case No. 150982016, EEOC of
Florida, the Plaintiff, a former employee of the Plantation Call Center in Florida,
filed a charge against TCI Cablevision on April 14, 1998 alleging discrimination
under the ADA. The EEOC subsequently determined on July 21, 1 998 that TCI
Cablevision violated the statute.
2. In Fred Roberts v. AT&T Broadband, Case No. 01-CV-699, in the District
Court of Arapaho County, Colorado, Courtroom 5, Mr. Roberts, a former
employee, filed a disability discrimination retaliation suit on March 15, 2001, with
a default judgment being entered on September 20, 2001, including prejudgment
interest. Based on motions filed by AT&T Broadband, the execution has been
stayed and the motion to set aside is pending.
LEGAL CHALLENGES
In response to what is described by AT&T Comcast as an "Atypical governance
structure for a large publicly held corporation,''3e certain AT&T shareholders h*~ve
expressed their concerns to the Securities and Exchange Commission regarding what is
described by these shareholders as a "controversial proposal" under which AT&T will
spin-off AT&T's Broadband operations and subsequently merger with Comcast
Corporation to form a new Pennsylvania corporation, AT&T Comcast37. The Letters of
Opposition raise concerns regarding the nature and effect of the "atypical" governance
structure and also challenge the bundling of the separation and merger transaction with
the approval of significant corporate governance changes as constituting a potential
violation of the Securities and Exchange Commission's 1992 Amendment to Section
14(a) of the Securities Exchange Act of 1934, which has the effect of eliminating the
ability of companies to group related matters into a single proposal, requiring that the
form of the proxy provide for a separate vote on each matter presented. The position
taken in the Letters of Opposition is that the various material corporate governance
matters, most of which will appear in AT&T Comcast's Articles of Incorporation, require
a separate vote on each matter presented? The "atypical" governance provisions
referenced in the Letters of Opposition, include the following:
36 AT&T Comcast S-4 Amendment 1 at 1-30.
37 See February 21,2002 correspondence from Sarah A. B. Teslik, Executive Director of Counsel of
Institutional Investors to Alan L. Belier, Director, Division of Corporate Finance, Securities and Exchange
Commission; See also March 20, 2002 correspondence from Richard L. Trumka, Secretary-Treasurer of
the AFL-CIO to Alan L. Belier;; See also correspondence dated April 10, 2002 from William C. Thompson,
Jr., Comptroller of the City of New York to Mr. Harvey L Pitt, Chairman of the Securities and Exchange
Commission, (herein collectively the "Letters of Opposition").
38 As of the date of this report, it is unknown how the Securities and Exchange Commission will address
the concerns raised in the Letters of Opposition.
508352/2 23
1. The Board of Directors of AT&T Comcast will not expire until the 2005
annual meeting of shareholders and that no annual meeting will be held until
200539;
2. AT&T Comcast shareholders will not have the right to call special
meetings of shareholders or act by written consent;
3. AT&T Comcast will adopt a shareholder rights plan upon consummation of
the Mergers that will prevent any holder of AT&T Comcast stock from acquiring
more than 10% of the voting power without the approval of the AT&T Comcast
board4°;
4. AT&T Comcast Chairman and CEO can only be' removed from their
positions prior to April 2010 with the approval of 75% of the entire AT&T Comcast
board;
5. The AT&T Comcast charter is not subject to amendment except upon the
approval of 75% of the entire AT&T Comcast board until the earlier of the date on
which Brian L. Roberts is no longer serving as Chairman of the Board or CEO or
April 2010; and
6. The creation of dual class stock whereby the Roberts Family, as holders
of AT&T Comcast Class B common stock will hold a non-dilutable 33-1/3%
combined voting power of AT&T Comcast stock despite holding less than 1.5%
of the economic interest in AT&T Comcast.
Moreover, the Letters of Opposition further indicate that the governance changes
could adversely affect AT&T Comcast, including making it virtually impossible for:
1. Shareholders to hold AT&T Comcast Board members, either individually
or as a group, accountable to this Shareholder's interests and concerns (which
are not necessarily analogous to the interests and concerns of the Agencies in all
instances); and
2. The Board to replace executive management of AT&T Comcast for up to
eight years (which could have an effect on the operation of the System due to
policy decisions established at the executive management level of the
Transferee).
AT&T and Comcast also advised their respective shareholders to carefully
consider a variety of risk factors in deciding whether to vote for approval and adoption of
the Merger Agreement and the transactions contemplated by the Merger Agreement.4~
39 See Section regarding Description of the Transaction, supra, regarding apparent changes which will
now result in AT&T Comcast holding elections of the Board of Directors in April, 2004.
40 Sural LLC, which will hold the AT&T Comcast Class B common stock (or any of its affiliates which hold
such stock), is not subject to this restriction.
41 S4A at 1-27.
508352/2 24
Selected risk factors relate to the atypical governance structure outlined above and
include the following:
1. Voting power of AT&T Comcast's principal shareholder may discourage
third party acquisitions of AT&T Comcast at a premium. After completion of the
AT&T Comcast transaction, Brian L. Roberts will have significant control over the
operations of AT&T Comcast through his control of Sural LLC, which as a result
of its ownership of all outstanding shares of AT&T Comcast Class B common
stock will hold a non-dilutable 33~1/3% of the combined voting power of AT&T
Comcast stock will also have separate approval rights over certain material
transactions involving AT&T Comcast, which include right to approve any merger
of AT&T Comcast with another company or any othe'r, transaction that requires
AT&T Comcast shareholder approval under applicable' law or any other
transaction that would result in any person or group owning shares representing
in excess of 10% of the combined voting power of the resulting or surviving entity
or any issuance of securities requiring AT&T Comcast shareholder approval over
applicable rules and regulations of any stock exchange or quotation system;
2. Any issuance of AT&T Comcast Class B common stock or which are
convertible into Class B common stock; and
3. Charter amendments and other actions that limit the rights of holders of
AT&T Comcast Class B common stock to transfer, vote or otherwise exercise
rights with respect to AT&T Comcast Capital stock.
Atypical governance arrangements may make it more difficult for shareholders to
act. Since AT&T Comcast shareholders will not have the right to call special meetings
of shareholders or act by written consent and AT&T Comcast directors will be able to be
removed only for cause, AT&T Comcast shareholders will not be able to replace the
initial AT&T Comcast board members prior to the first annual meeting to be set in the
charter of AT&T Comcast (currently April 2005).42 Even after the expiration of the initial
term of the board of directors, it will be difficult for an AT&T Comcast shareholder, other
than Sural LLC or a successor entity controlled by Brian L. Roberts, to elect a slate of
directors of its own choosing to the AT&T Comcast board due to the fact that Brian L.
Roberts, through his control of Sural LLC or a successor entity, will hold all of the AT&T
Comcast Class B common stock with the aggregate nondilutable voting interest of 33
1/3%.43
In addition to the governance arrangements relating to the AT&T Comcast board,
Comcast and AT&T have agreed to a number of governance arrangements which make
it difficult to replace the senior management of AT&T Comcast which are summarized
above .44
~ Id. at 1-30.
43 Id.
44 Id. at 1-31.
508352/2 25
The effect of the above-referenced atypical governance arrangement on the
overall business operations of AT&T Comcast is uncertain, however, it is appropriate for
the Agencies to consider the adverse impact of the governance structure affecting
AT&T Comcast on its ability to fulfill, or cause the applicable subsidiary operating entity
to fulfill its respective legal obligations under the Franchise.
UPDATED S-4
On May 14, 2002, AT&T Comcast Corporation filed a revised S-4 registration
statement to the Securities and Exchange Commission which addressed the issues
raised by certain AT&T shareholders. In particular, the proposed merger to be put to
shareholders has been unbundled with one vote on the change of control and a
separate vote on the governance issues.
OTHER LEGAL CHALLENGE
In a separate matter, the New York State Supreme Court recently dismissed a
shareholder suit seeking to prevent the AT&T Broadband Merger. AT&T shareholders
have alleged that applicable provisions of the Pennsylvania Business Corporation Law,
which governs AT&T Comcast, requires an annual election of directors and, as a result,
AT&T Comcast's proposed governance plan, pursuant to which the Board of Directors
of AT&T Comcast would not be subject to re-election until the annual meeting in 200545
violated applicable provisions of Pennsylvania corporate law. The New York State
Supreme Court, finding in favor of AT&T (applying Pennsylvania law) found that the
provisions of Section 1306 of the Pennsylvania Business Corporation Law (which
permits terms of directors to be more than one year despite another legal provision
mandating one-year terms) was permitted and therefore AT&T Comcast's plan is
legal? An appeal of the ruling may be filed.
CONCLUSION
Based on our review of the legal qualifications of AT&T Broadband Corp. as
proposed to be controlled by AT&T Comcast Corporation upon consummation of the
separation, spin-off, and Mergers, we conclude it would be unreasonable for the
Agencies to find that upon closing of the transaction contemplated under the Merger
Agreement (including the Separation Agreement), the Transferee and AT&T Broadband
Corp. will not be legally qualified to own and operate the System.
~$ But see Note 16.
46
[ case site].
508352/2 26
STEP #1
Public Shareholders
AT&T Corp.
AT&T Broadband Corp.
AT&T Broadband
LLC
Media One Group,
Inc.
AT&T Broadband of
Southern Cal, Inc.
AT&T CSC, Inc.
District Cablevision, Inc.
Novato Cable Company
South Chicago Cable,
Inc.
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
508352/2 27
STEP #2
Public Shareholders
AT&T Corp.
AT&T Broadband Corp.
AT&T Broadband
LLC
Media One Group,
Inc.
AT&T Broadband of
Southern Cai, Inc.
AT&T CSC, Inc.
District Cablevision,
Inc.
Novato Cable
Company
I
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
5O8352/2 28
STEP #3
Public
Shareholders
AT&T Broadband
Corp.
AT&T
Broadband
Holdings,
AT&T
Comcast
Corporation
I
AT&T
Broadband
Merger Sub
Comcast
Acquisition
Company
Public
Shareholders
Comcast
Corporation
AT&T Broadband
LLC
Media One Group,
Inc.
AT&T Broadband of
Southern Cai, Inc.
AT&T CSC, Inc.
District Cablevision,
Inc.
Novato Cable
Company
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
Existing Cable
Franchise Holders
(direct and indirect)
508352/2 29
FINAL STRUCTURE
Public Shareholders
I
AT&T Comcast Corp..
I
AT&T Broadband
Holdinc]s, L.L.C.
I
. AT&T Broadband Corp.
AT&T Broadband
LLC
Comcast Corporation
Media One
Group, Inc.
AT&T Broadband
of Southern Cai,
Inc.
AT&T CSC, Inc.
District
Cablevision, Inc.
Existing Cable
Franchise
Holders (direct
and indirect)
Existing Cable
Franchise
Holders (direct
and indirect)
Existing Cable
Franchise
Holders (direct
and indirect)
508352/2 30
SECTION 6. TECHNICAL QUALIFICATIONS
The technical qualifications standard relates to AT&T Comcast's technical
expertise and experience in operating and maintaining cable television systems.
such a review, the standard is once again that the Agencies' consent shall not be
unreasonably withheld,
In
Jonathan L. Kramer of Kramer. Firm Incorporated provides the following analysis
in evaluating the AT&T and Comcast cable systems. Mr. Kramer has relied on
assertions made by AT&T and Comcast in the standardized FCC Form 394 filings
tendered to franchisors, including the Agencies.
Independently, AT&T and Comcast are before the proposed merger "Top 5"
cable television multiple system operators. Presuming the merger is completed, the
combined AT&T Comcast will be the largest U.S. cable operator.
While it is virtually impossible to suggest that the merged entity will lack the
technical qualifications to be a cable franchisee in the Agencies, there are legitimate
issues that should be addressed in connection with any transfer approval.
Specifically, the entity controlling the local franchisee will not be AT&T or
Comcast, but rather an entirely new entity which will control the assets of the present
AT&T systems and the present Comcast systems. Comcast has stated that its present
technical management team, supplemented by some of the existing AT&T technical
managers, will provide the technical oversight of the new entity. If there is an exodus of
technical management in or supervising the franchise area, the Agencies should be
concerned as Comcast does not presently have cable systems in or near the Agencies
(and, presumably, no local technical management team to step in to the recently
vacated shoes). The Agencies may wish to seek assurances from AT&T Comcast that
at the time of the transfer of control, if approved, it will have a full and competent
technical staff that will insure uninterrupted technical operations without reduction in
present service levels.
In summary, while the proposed new AT&T Comcast entity that is to control the
local franchisee will be presumptively qualified to conduct the technical operations in the
Agencies, adequate assurances satisfactory to the Agencies should be required of the
proposed new controlling entity.
Based on our review of the technical capabilities of AT&T Comcast, we conclude
it would be unreasonable for the Agencies to find that, upon closing of the transaction,
AT&T Comcast, will not be technically qualified to own and operate the System.
508352/2 31
SECTION 7. FINANCIAL QUALIFICATIONS
SCOPE OF REVIEW
We have reviewed selected financial information provided by AT&T Broadband, a
division of AT&T Corp., a New York corporation ("AT&T"), in conjunction with AT&T's
request for consent to the change in ownership of the cable television systems (the
"Systems") serving the Agencies.
The selected financial information, which was provided or obtained and to which
our review has been limited, consists solely of the following 'fin. ancial information
(hereinafter referred to collectively as the "Financial Statements"):
1. Combined unaudited pro forma condensed balance sheet of AT&T
Comcast Corporation as of December 31,2001 and September 30, 2001, and
the related combined unaudited pro forma statements of operations for the years
ending December 31,2001 and 2000, together with the footnotes and additional
information, as published in AT&T Comcast Corporation's Form S-4 and Form S-
4 Amendment No. 1, and filed with the Securities and Exchange Commission on
February 11,2002 and April 10, 2002, respectively;
2. Consolidated balance sheet of AT&T and subsidiaries as of December 31,
2001,2000 and 1999, and a related consolidated statements of operations,
changes in shareholders' equity and cash flows for the years ended December
31,2001, 2000, and 1999, together with the footnotes and additional information,
as the same were published in AT&T Corp.'s Form 10-K for the year ending
December 31, 2001, and filed with the Securities and Exchange Commission on
April 1,2002;
3. Consolidated balance sheet of Comcast Corporation and subsidiaries
("Comcast") as of December 31, 2001 and 2000, and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for the
years ended December 31, 2001 and 2000, together with the footnotes and
additional information, as the same were published in Comcast's Form 10-K for
the year ending December 31, 2001, and filed with the Securities and Exchange
Commission on March 29, 2002;
4. Financial information provided in the AT&T Comcast Corporation Investor
Presentation dated December 20, 2001;
5. Financial information included as part of a presentation entitled "AT&T
Broadband and Comcast Merger Financial Issues" dated March 18, 2002
presented by Mr. Sumanta Ray of the Communications Workers of America; and
6. Financial information provided from AT&T with Form 394 and in response
to our questionnaire provided April 1,2002.
508352/2 32
AT&T, in response to our transfer questionnaire dated April 1,2002, failed to
provide us with requested information regarding certain financial forecasts, financial
projections, potential cost savings, and synergies. On April 15, 2002, we again
requested such information as was used as a basis by Credit Suisse First Boston
Corporation and Goldman Sachs & Co., in their opinions to the AT&T Board of Directors
dated December 19, 2001. AT&T provided us, in response to our second request, with
a declaration to the Federal Communications Commission dated February 27, 2002 of
Mr. Robert Pick, Senior Vice President of Corporate Development at Comcast. As
such, our review of the financial information with respect to AT&T Comcast Corporation
does not include any analysis with respect to the projected financial information, except
as provided in Mr. Pick's declaration or as otherwise noted within this report.
Our procedure was limited to providing a summary of dur analysis of the
Financial Statements and additional financial information to facilitate the Cities'
assessment of the financial capabilities of AT&T Comcast Corporation to become the
successor operator of the Systems serving the Cities currently operated by AT&T.
OVERVIEW OF TRANSACTION
AT&T, Comcast and their subsidiaries have entered into an Agreement and Plan
of Merger dated December 19, 2001 (the "Merger Agreement"), pursuant to which AT&T
Comcast Corporation will become the new parent company of AT&T Broadband Corp.,
and Comcast Corporation. AT&T Comcast Corporation will be a newly formed
corporation that will hold the Systems previously owned by AT&T or one of its
· · · 47
subsidiaries and Comcast and its subsld~anes. The value of the assets of AT&T'
Broadband and Comcast are valued for purposes of this transaction at $72 billion,
subject to adjustments, both increases and decreases, as provided for in the Merger
Agreement.48 The merger will create the nation's largest cable operations with $19
billion in revenues for the period ended December 31,200149, in excess of 22 million
subscribers and 38 million homes passed,so The transaction contemplated by the
Merger Agreement is scheduled to close by the end of 2002.54 The closing is subject to
satisfaction of several contingencies including approval by the shareholders of Comcast
and AT&T, various state and federal regulatory agencies, note holders,s2 and all other
conditions as described in the Merger Agreement, all of which contingencies are in all
material respects customary for a transaction of this magnitude,sa
4z Agreement and Plan of Merger between AT&T and Comcast and related entities dated December 19,
2001 as provided in Annex A of the AT&T Comcast Corp. Form S-4 for the year ending December 31,
2001, filed February 11, 2002 with the Securities and Exchange Commission ("2001 S-4").
4a AT&T Comcast Corporation Investor Presentation dated December 20, 2001, at p.8.
· ~9 AT&T Comcast Corporation, Form S-4 Amendment No. I filed April 10, 2002 with the Securities and
Exchange Commission ("2001 S-4A") at p. 111-7.
50 AT&T Comcast Investor Presentation dated December 20, 2001.
$1 2001 S-4 at p. I-4.
$2 2001 S-4 at p. 1-33.
53 Agreement and Plan of Merger between AT&T and Comcast dated December 19, 2001 Article 10, at
pp. 109-112.
508352/2 33
In the event AT&T or Comcast terminates the Merger Agreement on the account
of a breach by the other party, as defined in the Merger Agreement, Article 11 of the
Merger Agreement entitles the nonbreaching party to a termination fee in the amount of
$1.5 billion?
As part of the merger transaction, AT&T, Comcast, AT&T Comcast Corporation
and Microsoft Corporation, a Washington corporation, have entered into an Exchange
Agreement, which provides for the conversion of $5 billion of AT&T debt currently in the
form of Quarter Income Preferred Securities ("QUIPS") into 115 million shares of AT&T
Comcast Common Stock.5s The result of this Exchange Agreement will be to
substantially reduce the outstanding debt held by AT&T Comcast Corporation after the
Merger.
OVERVIEW OF AT&T CORP.
1. Summarv of AT&T. AT&T Corp., a New York Corporation, was
incorporated in 1885.56 AT&T provides voice, data and video communication
services to consumers worldwide, including international, regional and local
communication services, cable television and Internet services?
AT&T Broadband is a separating operating unit of AT&T, and is one of the
largest broadband communications companies by customer in the United States
as of December 31,2001.58 AT&T Broadband provides cable television, high-
speed cable Internet services and broadband telephone services.59 As of
December 31, 2001, AT&T Broadband served approximately 13.6 million basic
subscribers and passed in excess of 24 million homes.6° AT&T's geographical
market includes the cities of Chicago, San Francisco, and Boston.6~ Almost 80%
of AT&T Broadband's markets are located in larger metropolitan areas.62
A substantial portion of the assets of AT&T Broadband were acquired by
AT&T through the acquisitions of the assets of Tele-Communications, Inc. on
March 9, 1999, and MediaOne Group, Inc. on June 15, 2000. AT&T Broadband
also holds investments in Time Warner Entertainment Company L.P., Insight
Midwest, L.P., and Texas Cable Partners, L.P.63
2. Manaqement and Operations. AT&T Broadband is an integrated
operating unit of AT&T and has relied on AT&T for its management direction and
54 Id. al p. 1 1 6.
ss 2001 S-4A, at p. 1-15.
s6 AT&T Corp. Form 10-K for the year ended December 31,2001 filed with the Securities and Exchange
Commission on April 1,2002 ("AT&T 10-K"), at p. 1.
s7 Id.
5~ Id. at p. 16.
$9 Id.
6o Id.
6~ Id.
~? Id.
6~ Id.
508352/2 34
operations? AT&T Broadband's financial statements reviewed in this report are
based upon management's accounting assumption and allocations, which may
not accurately reflect the balance sheet and statement of operations of AT&T
Broadband as a stand alone company,es
3. Acquisition and Divestures. AT&T Broadband has increased its cable
capacity through a number of acquisitions in 1999, 2000 and 2001. The chad
below shows the significant acquisitions including the purchase prices, the basic
number of subscribers and cost per basic subscriber?
Predecessor Owner Acquisition Purchase Basic Approx. Per
Month Price Subscribers Subscriber Cost
Tele-Communications, March 1999 $52.0 billion 10.7'million $4,837
Inc.
MediaOne Group, Inc. June 2000 $45.0 billion 5 million I $9,028a
Cablevision Systems January 2001 $1.075 billion 228,000 (net) I $4,715
Corporation
~e ~rner Entertainment Company, LP.
AT&T Broadband has also completed in a number of divestures and joint
venture activities. The chart below shows the significant divestures including the
sales prices, the basic number of subscribers and the approximate cost per basic
subscriber?
Buyer Month of Sales Basic Approx. Per
.. Sale Price SUbscribers SUbSCriber Cost
Comcast Corporation April 2001 $1,423 million 590,000 $2,412
MediaOne Communications June 2001 $295 million 94,000 $3,138
Corp.
Charter Communications, Inc. June 2001 $1,719 million 554,000 (net) $3,103
Comcast Corporation June 2001 $510 million 115,000 $4,434
MediaCom Communications July 2001 $1,724 million 710,000 $2,428
Corp.
Adelphia Communications December $318 million 128,000 $2,484
Corp. 2001
4. Competitive Environment. The financial performance of cable television
operators is subject to many factors, including the competitive environment in
which they operate. Competition from multiple services, which provide and
distribute video programming and other sources of news, information,
entertainment, programming, telecommunication and Internet services. 68 The
growth and success of these competitors could have a material adverse impact
on AT&T Comcast Corporation's prospective financial results from operations.
s'~ 2001 S-4A at p. 1-30.
ss Id.
6~ AT&T 10-K at pp. 21- 22,
~7 Id.
sa 2001 S-4 at p. 1-36.
508352/2 35
The principal source of such alternative entertainment includes television
broadcast programming, direct broadcast satellite programming, newspapers,
movie theaters, live sporting events, overbuilds of exclusive franchise systems
and home video products? In addition, new technology advances and
regulatory promulgations also affect AT&T.TM Principal competition comes from
national high-powered DBS services, such as those that are currently being
provided by DirecTV, Inc. and EchoStar Communications Corp.TM
5. Financinq. The cable television business is inherently capital intensive
and requires substantial cash infusion for construction, maintenance,
improvements and expansion of cable, plant, and distribution equipment as well
as to fund acquisitions. AT&T Broadband has relied extensively on cash
infusions from AT&T to fund its operations and growth? At the current time,
AT&T Broadband is managed by AT&T on a centralized basis,z3 but for purposes
of AT&T Broadband's pro forma financial statements reviewed in this report, the
terms, conditions and interest rates of the AT&T Broadband debt are equal to an
independent third party lender's terms, conditions and interest rates. The failure
of AT&T Broadband to receive the substantial amounts of capital previously
supplied by AT&T would have a debilitating effect on AT&T Broadband. The
contemplated merger transaction would be the largest transaction in the cable
television systems operating business. At the current time, AT&T Broadband has
in excess of $22.3 billion of debt. TM Of this total amount of AT&T Broadband
debt, $5 billion would be reduced to capital in the Microsoft Exchange Agreement
discussed in this report.
AT&T Broadband, as part of its debt management activities, has liquidated
some of its operations (see Acquisition and Divestures above) and is in the
process of trying to liquidate its Time Warner Entertainment Company, L.P.
holdings?
OVERVIEW OF COMCAST CORPORATION
1. Summary of Comcast Corporation. Comcast Corporation, a Pennsylvania
corporation, was organized in 1969z~ and is in the business of development,
management and operation of broadband communication networks in the United
States?z Comcast, the third largest cable operator in the United States, provides
Id. at p. VI1-12.
Id. at p. 1-38.
AT&T 10-K at p. 37.
2001 S-4A at p. VII-24.
Id. at p. V11-33.
AT&T Comcast Corporation Investor Presentation dated December 20, 2001, at p. 34.
AT&T 10-K at pp 25-26.
Comcast 10-K at p. 1
Id. at p. 43.
508352/2 36
services to approximately 8.5 million subscribers in the United States as of
December 31, 2001.78
Comcast also provides, through its subsidiary~ QV0, Itl0, and its
subsidiaries, an electronic retail outlet for customers through its television
programming? Additionally, Comcast provides programming content, including
E! Entertainment Television Inc., the Golf Channel and other Comcast
networks.8°
Comcast currently employs approximately 38,000 individuals, with one-
half of the individuals working within the cable communications area.8~
2. Manaqement and Operations. Mr. Brian L. Roberts is the President of
Comcast and controls the corporation? Mr. Roberts, through a related entity,
Sural, LLC, owns approximately 87% of the voting power of Comcast? As part
of the merger transaction, Mr. Roberts will vote for and endorse the merger
transaction as well as be given atypical governance rights with respect to AT&T
Comcast Corporation?
3. Acquisitions. Comcast acquisitions have provided growth in its cable
operations unit. In 2001, Comcast exchanged approximately 440,000
subscribers with Adelphia Communications Corporation and had the following
acquisitions:85 (Number of basic subscribers and purchase price varies slightly
from amounts shown on AT&T Acquisitions and Divestures above)
Predecessor Owner 2001 Acquisition Purchase Basic APprOx¢ Per
Month Price Subscribers Subscriber Cost
AT&T April $1.423 billion 585,000 $2,432
AT&T April $518.7 million 112,000 $4,631
4. Competitive Environment. As stated in this report, the financial
performance of cable system operations are subject to a variety of factors
including competition from many different sources, including direct broadcast
satellite services, such as EchoStar and DirecTV, local television, program
distribution, satellite master antenna systems, online computer services,
newspapers, magazines, book stores, movie theatres, live events and home
78 Id. at p. 1.
7~ Id.
8o Id.
81 Id. at p. 17.
82 Id. at p. 19.
83 Id.
8.~ 2001 S-4A at p. 1-31-33.
8~ Comcast 10-K at pp. 2-3.
508352/2 37
video products? Additionally, regulatory agencies may limit Comcast's ability or
allow other operators to compete in Comcast's markets?
The competitive environment in the retail and programming content areas
also can have a substantial impact on the financial performance of Comcast.
Competition from all types of retail outlets effects Comcast's electronic retail
programming?
5. Financin.q. As is the case for AT&T Broadband, capital is vital for the
constant maintenance, system upgrades and operations of its cable system. As
a stand-alone entity, Comcast's management believes that it can meet its
liquidity and capital requirements through cash flow from operations, existing
cash and credit facilities,ss Historically, Comcast has maintained high profit
margins, which has resulted in positive working capital.9° The Comcast positive
working capital as of December 31, 2001, if maintained, could bridge the shod-
term cash needs of AT&T Comcast Corporation until its operations provide
positive cash flow.
FINDINGS
1. Analysis of AT&T Comcast Corporation's Financial Statements. Neither
federal law nor FCC regulations provide franchising authorities with any guidance
concerning the evaluation of the financial qualifications of a transfer applicant for
a cable franchise,gl In certain circumstances, it is appropriate to consider the
performance of an applicant based on the applicant's historical performance in
relation to the recognized industry standards. Given the fact that AT&T through
AT&T Broadband and Comcast and its subsidiaries have a history of cable
system operations, such combined statistical information and analysis is relevant
with respect to the transaction contemplated by the Merger Agreement. We have
based our analysis in pad on industry standards, which are generally recognized
in making such a determination. These industry standards are more precisely
described below?
Based on the selected financial information, which we reviewed, the
following is a summary of various financial factors as compared to applicable
industry standards for operations for the 12-month periods ending December 31,
2001 and 2000 and balance sheet dates of December 31 and September 30,
2001. AT&T Comcast Corporation management recognizes that the financial
8a Id. at p 6.
87 Id.
8a Id. at pp. 9-10.
89 Id. at p. 24.
9o AT&T Comcast Corporation Investor Presentation dated December 20, 2001, at p. 29.
9~ FCC Form 394 does reference whether the proposed transferee "has sufficient liquid assets on hand or
available from committed resources to consummate the transaction and operate the facilities for three
months." This reference, however, does not necessarily constitute the definitive standard for financial
~ualifications.
In this data based on information compiled by Paul Kagan & Associates.
508352J2 38
information in these pro forma statements may differ substantially from the
financial results if AT&T Broadband and Comcast were actually one corporation
throughout the pro forma period?
AT&T CORP. AND COMCAST CORP. COMBINED FINANCIAL DATA
INDUSTRY
DESCRIPTION STANDARD 2001 2000
1. EBITDA/revenue(1 )*
(Cash flow percentage) 39.09% to 54.83% 24.1% 22.9%
2. Operating Income Percentage*
(Operating Income/Revenue) +11% . . (15.6%) (37.3%)
3. Debt/Equity Ratio*
(long-term debt/total equity) 2.20:1 .51:1 .49:1 (2)
4. Current Ratio*
(current assets/current liabilities) 1.0:1 .58:1 .39:1 (2)
5. EBITDA (in Billions)
N/A 4.7 4.1
(1) Range based on a Domestic Suburban/Rural Wireline Cable Comparisons prepared by CtBC
Oppenheimer. Data has not been independently verified by the reviewer.
(2) Ratio determined as of September 30, 2001.
* Data based on Financial Information in 2001 S-4 and 2001 S-4A.
2. Specific Financial Statement Data and Analysis.
a. Assets. According to the combined AT&T Comcast Corporation
financial information, AT&T Comcast Corporation had (i) current assets of
$6,256 and $4,882 million; (ii) working capital of a negative $4,551 million
and a negative $7,756 million; and (iii) total assets of $140,775 million and
$141,201 million as of December 31,2001 and September 30, 2001,
respectively? Working capital, which is the excess of current assets over
current liabilities, is a short-term analytical tool used to assess the ability
of a particular entity to meet its current financial obligations in the ordinary
course of business. The negative working capital balance of $4,551
million as of December 31,2001, suggests that AT&T Comcast
Corporation may experience a short-term deficiency in available working
capital resources that will be needed to pay transaction costs and debt
service in the next year. This will need to be overcome by AT&T Comcast
Corporation drawing on other capital resources including additional
borrowings, liquidation of current investments regarding Time Warner
Entertainment Company, LP investment) and operating cash flows. AT&T
Comcast Corporation current ratio (current assets divided by current
liabilities) as of December 31, 2001, of .58:1 is below recognized industry
standards of 1.0:1, but this rate has improved over the September 30,
2001 ratio of 39:1.
93 2001 S-4A at p. 1-35.
9.~ Id. at pp. III 4-7 and Id. at pp. III 4-8.
508352.,/2 39
b. Liabilities. According to the combined AT&T Comcast Corporation
financial information, AT&T Comcast Corporation had (i) current liabilities
of $10,807 million and $12,638 million; (ii) long-term debt net of current
maturities of $31,528 million and $30,574 million; and (iii) equity of
$61,742 million and $62,098 million as of December 31,2001 and
September 30, 2001, respectively? As of December 31,2001, AT&T
Comcast Corporation's debt to equity ratio, which is a measure of the
amount of debt in relation to total equity, was approximately .51:1.
Generally, a low debt to equity ratio is considered favorable. AT&T
Comcast Corporation's debt to equity ratio is more favorable than the
industry standard. This is largely the result of AT&T's previous stock
equity acquisitions. The Tele-Communication~,'.lnc. stock acquisition in
1999 has contributed significantly to AT&T Comcast Corporation's
favorable debt to equity ratio?
c. Income and Expense. According to the combined AT&T Comcast
Corporation financial information, the combined entity would have: (i)
revenue of $19,697 million and $17,924 million; (ii) operating expenses of
$22,767 million and $24,604 million; and (iii) net loss of $3,070 million and
$6,680 million for the years ending December 31,200'1 and 2000,
respectively.9z AT&T Comcast Corporation, based on December 31,2001
proforma data, would have had an operating cash flow percentage for the
12 months ending December 31,2001 of 24.1%, which is lower than the
industry average of 40% to 55%. Cash flow and the cash flow percentage
provide a measure of the ability of a business entity to generate cash.
AT&T Comcast Corporation believes that as a result of the merger of the
two entities and cost savings and synergies, the cash flow percentage
should improve greatly as a result of improved margins?
3. AT&T and Comcast Manaqement Discussion and Analysis of Financial
Results. Both AT&T Broadband and Comcast may recognize potential benefits
and cost savings related to the merger of the AT&T Broadband operations and
Comcast. As noted previously, we requested additional information verifying
these projected revenue increases and cost savings, and AT&T provided us with
a declaration from Mr. Pick, a Comcast Senior Vice President of Corporate
Development, regarding the potential cost savings and benefits. The following
information is a summary of some of the pertinent projected financial benefits
and costs management believes will result from the merger transaction.
a. Revenue. The creation of a larger subscriber base through the
combination of AT&T Broadband and Comcast will allow for the
Id.
AT&T 10-K at p. 107.
2001 S-4A at pp. III 4-7 and 2001 S-4 at pp. III 4-8.
AT&T Comcast Corporation Investor Presentation dated December 20, 2001 at p. 29.
508352/2 40
deployment of a greater range of services and products, which should
have a positive impact on revenues.99
As a result of the merger transaction, AT&T and AT&T Comcast
Corporation may compete in the same market, including the cable and
digital subscriber line ("DSL), which may result in a decrease in potential
revenue for AT&T Comcast Corporation from the amounts shown in their
pro forma financial statements.1°° No estimated revenue loss was
provided by management with respect to this potential item.
b. Expenses. The AT&T Comcast Corporation management believes
the merger of the AT&T Broadband and Comcast will result in a
substantial reduction in overall operating costsl 'Mr. Pick, in his statement
to the Federal Communications Commission suggested numerous areas
where cost savings would result in a reduction in the AT&T Comcast
Corporation's overall costs. These projected cost savings and efficiencies
in the programming, general operating, advertising, new products and
telephony areas will result in cost savings of approximately $1,250 to
$1,950 million a year.1°1 The net present value of these projected savings
in $13,500 million.1°2 These projected savings and synergies do not
include additional transaction costs of the merger and issues with respect
to AT&T Broadband's utilization of AT&T's centralized management
services, which have not been fully described in management's
discussion.
c. Gross Margins. Management believes that the combination of the
two operations will increase AT&T Broadband's operating margins, to a
level that Comcast currently enjoys, which is approximately 42% through
three quarters of 2001 ?03 AT&T Broadband's gross margin through three
quarters of 2001 was approximately 23%.l°4 The potential increase in
AT&T Broadband's gross margin could result in up to $1.6 billion of annual
additional earnings from the AT&T Broadband's operations?°5
d. Capital Expenditures. In 2001, AT&T and Comcast anticipate
spending approximately $4.3 billion and $1.3 billion, respectively, on
capital expenditures.~°6 Management, according to its registration
statement, states that it has not determined the actual amount of capital
99 Id. at pp. 7, 12, 17 and 19.
10o 2001 S-4A at p. 1-33.
~ol Id. at p. II 8-9.
~02 AT&T Comcast Corporation Investor Presentation dated December 20, 2001 at p. 28.
103 Id. at p. 29 and 2001 S-4A p. 11-9.
~0.~ Id.
~o~ Id.
~06 2001 S-4A at p. 1-36.
508352/2 41
expenditures for the period after the merger, but expects that the capital
expenditures will be substantial,jo?
Notwithstanding the above paragraph, management believes the
transaction will result in an overall reduction in capital expenditures
through economies of scale of $200-$300 million annually.~°8 In 2000 and
2001, Comcast invested less in capital expenditures than AT&T
Broadband.~°9 A continued decrease in the amount of capital
expenditures may result in a reduction in the quality of products and
services provided by AT&T Comcast Corporation.
Additionally, capital expenditures for both AT&.T Broadband and Comcast
have outpaced net cash provided by operation"in the amount of $3.5
billion and $952 million for AT&T Broadband and Comcast in 2001,
respectively.~° Management believes this trend may continue in the
years to come after the merger transaction.TM As such, this substantial
use of cash could potentially have an adverse effect on AT&T Comcast
Corporation's continued operations.
e. Dividends. As part of the merger transaction, AT&T Comcast
Corporation does not intend to pay dividends in order to preserve cash for
operations.1~2
f. Lon.q Term Contracts/Investments. Both AT&T Broadband and
Comcast are subject to exclusive long-term contracts for video
programming, audio programming, electronic program guides, billing and
other services.~3 These contracts may limit the economies of scale and
cost savings projected to be realized as a result of the merger. Some of
these long-term contracts are with Starz Encore Group, TV Guide and
CSG Systems, Inc.TM for programming, interactive programming guides
and billing.~5 Due to the proprietary nature of the agreements, the terms
of these agreements are not disclosed, which may have a direct impact on
the potential cost savings from this merger transaction.~e
AT&T Broadband's substantial investments, including a noncontrolling
25% ownership interest in Time Warner Entertainment Company L.P., will
limit AT&T Comcast Corporation's ability to manage these investments
~o7 Id.
lO8 Id. at p. 11-8.
~o9 "AT&T Broadband and Comcast Merger Financial Issues" S. Ray March 18, 2002, at p. 7.
~1o 2001 S-4A at p. 1-36.
~1 Id.
~1~ Id. at p. 1-32.
~3 Id. at p. 1-37.
~'~ Id.
~s Id. at p. 1-35.
~e Id.
508352/2 42
and pass through its synergies and cost savings.~? In addition, AT&T's
controlling ownership in At Home Corporation, which filed bankruptcy in
September of 2001, may subject AT&T Comcast Corporation to suit from
the other shareholders or creditors of At Home Corporation.~8 The
financial impacts of this suit are not evaluated within the report.
g. Labor. The merger transaction may result in a substantial reduction
in the workforce of AT&T Broadband and Comcast. The loss of current
employees working with or providing services on the Cities' Systems may
result in a decline in the current level of system and customer service.
The cost of this workforce reduction has not been provided in
management's reports. Less than 10% of AT&T Broadband employees
are represented by unions affiliated with the AFL-CIO?~e
h. Financinq. Management realizes that AT&T Comcast Corporation
will have significant debt obligations in excess of $30 billion as of the date
of the merger.12° Management has secured approximately $12.85 billion
of financing, which will be used to replace obligations to AT&T ($9 - $10
billion), redeem certain AT&T shareholders ($1 - $2 billion) and to provide
cash for operating funds and capital expenditures ($1 - $2 billion)?2~
Comcast has obtained commitments for $12.85 billion from various
lenders as of May 13, 2002. Management realizes that the failure to
secure these additional funds will have a direct impact on the AT&T
Comcast Corporation's ability to fund its operation in the short-term, and
may require the sale of a portion of its assets.122 In addition, the cost of
obtaining the financing may be materially higher than the cost incurred by
AT&T Broadband on its debt previously held by AT&T.~23 Comcast has
cash, cash equivalents and short term investments of $3.0 billion and
available lines of credit from its subsidiaries of $3.5 billion as of December
31,2001.124 Thus, based on the financial information supplied by the
management of AT&T Broadband and Comcast, AT&T Comcast
Corporation should have sufficient liquid assets for short-term operations
and capital expenditures, and sufficient assets available to collateralize or
sell to obtain additional financing through the initial period after the
merger.
1~7 Id. at p. 1-38.
~8 Id.
118 Id. p. VI1-14.
~20 Id. p. 1-29.
~ Id.
~2~ Id. at pp. 29-30.
~23 Id. at p. 1-34.
~24 Comcast 10-K at p. 25.
508352/2 43
SUMMARY
Based on the foregoing and limited strictly to the Financial Statements reviewed
by Moss & Barnett in conducting this review, we do not believe that AT&T Corp.'s
request for assignment of the franchisees to operate the Systems serving the Agencies
can reasonably be denied based on the financial qualifications of AT&T Comcast
Corporation.
In the event the Agencies elect to proceed with approving the transaction
contemplated under the Merger Agreement (including the Separation Agreement), the
assessment of AT&T Comcast Corporation's financial qualification should not be
construed in any way to constitute an opinion as to the financial capability or stability of
AT&T Comcast Corporation to (i) operate its existing franchis~ operation; (ii) to operate
the Systems; or (iii) successfully consummate the transactions contemplated by the
Merger Agreement or future acquisitions upon which we express no opinion. The
efficiency of the procedures used in making an assessment of AT&T Comcast
Corporation's financial qualifications and the capability to become the successor
operator of the Systems is solely the responsibility of the Agencies. Consequently, we
make no representation regarding this efficiency of the procedures used either for the
purpose for which this analysis of financial capability and qualifications was requested
or for any other purpose.
508352/2 44
SECTION 8. INTERVIEWS WITH CITY OFFICIALS
We contacted a total of twelve (12) communities in April and May 2002 with cable
systems currently operated by Comcast entities in order to ascertain the following:
The nature and quality of the relationship between Comcast and the
community;
o
Whether Comcast worked well with the community in resolving cable
service problems;
Whether subscribers appear to be satisfied With .the services they received
from Comcast; and
The extent that Comcast supports public access programming and local
programming.
These twelve (12) communities were selected in order to obtain a response from
communities with different characteristics. We contacted communities in four (4) of the
states that Comcast now serves which includes, Alabama, Delaware, Mississippi and
Pennsylvania. The number of subscribers in these cities ranged from approximately 30
subscribers in Penn Township, Pennsylvania to 35,569 subscribers in Huntsville,
Alabama. (The subscriber numbers used in this report were provided by AT&T
Broadband and Comcast Corporation on April 1,2002.) A summary of the responses to
our questions follows, as does specific responses from each community.
Twelve (12) Communities Contacted in April and May 2002
1. How many years has Comcast been operating the cable system?
Comcast has operating systems for periods ranging from approximately one (1)
year to twenty (20) years.
Did Comcast build the cable system?
Comcast acquired all of the cable systems with the exception of two (2).
Is there a local office for Comcast? If not, how far away is the closest
office ?
Seven (7) of the communities interviewed had a local office in their community.
The distance of Comcast's local office to the other five (5) communities ranged
from ten (10) to sixty-seven (67) miles.
508352/2 45
Are most subscribers satisfied with the cable service?
Most communities felt the subscribers are generally happy with Comcast. One
(1) community indicated Internet problems with @home, but Comcast's support
was great with the switch to a new provider. One (1) community, where Comcast
has been operating the system for twenty (20) or more years, indicated that
subscribers have been unhappy with the rates for the last ten (10) years even
with though Comcast has added more services.
o
Has the City received many complaints?
Most of the communities receive very few complaints. Although, two (2)
communities have received complaints regarding rates, and one (1) community
received complaints regarding Comcast's new policy. This new policy requires a
certain number of calls regarding the same complaint before they will dispatch a
truck. Another community has received complaints that when dialing Comcast's
local number the calls are answered at a location in another state.
o
Does Comcast satisfactorily resolve subscriber complaints?
Nearly all communities interviewed responded that Comcast's satisfactorily
resolves subscriber's complaints.
How many basic cable channels are there?
The number of basic channels ranges from twelve (12) to seventy-eight (78).
°
What are the current subscriber rates?
The subscriber rates for the basic package range from approximately $13.48 to
$35.oo.
Has Comcast made any changes in subscriber rates ?
Eight (8) communities indicated that they have experienced increases in
subscriber rates. Many of these communities stated that they received an
increase in the number of channels at the same time. One (1) community
indicated that the increases have been well communicated by Comcast.
508352/2 46
10.
Does Comcast support public access programming? Is there public
access programming?
Eight (8) communities stated that Comcast provides public access programming.
Four (4) communities indicated that they do not have public access
programming.
11.
Does Comcast provide any local programming?
Eleven (11) communities indicated that Comcast does provide local
programming. ' · ..
12.
Do the schools use the cable system?
Eight (8) of the communities indicated that the schools use the cable system.
Four (4) communities were not sure if the schools used the system or had access
to it.
13.
What are your franchise fees? Are they paid on time?
Five (5) communities collect five percent (5%) of Comcast's gross revenues; one
(1) community collects four percent (4%); two (2) communities collect three
percent (3%); and four (4) communities were unsure of the amount. All
communities indicated that Comcast pays its franchise fees on time.
14.
Does Comcast provide any high-speed data services via the cable system
to cities or subscribers?
Eight (8) communities responded that they are receiving high-speed data
services and four (4) responded they were not yet receiving high-speed data
services.
15.
How would you describe the City's relationship with Comcast?
The responses to this question ranged from "Excellent" to "Good."
16.
What types of problems has the City experienced with Comcast?
Many communities indicted that they have had no problems with Comcast.
However, one (1) community discussed an issue regarding the local phone
508352/2 47
number listed for Comcast. When dialing this number subscribers are connected
to someone in another state. After stating their complaint the subscribers are
told that Comcast must receive a certain number of calls regarding the same
complaint before they will dispatch a truck. Another community responded that
they have the same problems with Comcast they would with any cable operator
regarding cost and selection. While another commented on problems with
service to residents where Comcast responds there are not enough people per
square mile to provide service.
17.
Would you grant a new franchise to Comcast? Why or why not?
All communities indicated that they felt they would grant a new franchise to
Comcast. Three (3) communities indicated that have recently renewed their
franchise with Comcast and three (3) communities indicated that they are
currently in the renewal process with Comcast.
Specific Responses for each of the Eleven (11) Communities
The following responses cannot completely reflect the attitudes that city officials
had toward Comcast. This is a very short synopsis of the information they conveyed.
ALABAMA
City: Florence
Contact Person: Steve Eason, Clerk
Phone No.: (256) 760-6679
Subscribers: 14,263
1. 20 or more.
2. Yes, possibly.
3. Yes.
4. Over the last 10 years subscribers have been dissatisfied with the rates even with
more services provided.
5. Very few.
6. Yes, Comcast provides the channels people want.
7. 60 basic channels.
8. Unknown.
9. Unknown.
10. Unsure.
11. Yes.
12. Yes.
13.5%; yes, monthly.
14. Not yet.
508352J2 48
15. Good.
16. None.
17. Yes, just renewed franchise with Comcast. It was a very amicable process.
City: Huntsville
Contact Person: Greg Gray, City Cable Administrator
Phone No.: (256) 427-6708
Subscribers: 35,569
1. 5 years.
2. Yes.
3. Yes.
4. Yes.
5. Few.
6. Yes, complaints cleared up quickly.
7. 78 channels.
8. $29.95 full basic.
9. Yes, February 2002
10. Yes.
11. Yes.
12. Unsure.
13. Unsure; yes.
14. Yes.
15. Very good - good company.
16. No problems, always responsive.
17. Yes.
City: Muscle Shoals
Contact Person: Ricky Williams, City Clerk
Phone No.: (256) 383-5675
Subscribers: 4,596
1. 15+
2. Unsure.
3. No; 10 minutes away in Florence.
4. Yes.
5. Very little.
6. Yes.
7. 15 basic channels; 60 standard-no premium channels.
8. Unsure of basic; $35 - standard basic.
9. Yes, one year ago. Added channels and raised rates $1.00.
10. Unsure.
11. Yes.
12. Yes.
508352/2 49
13. 5%; yes
14. No, but talking about it.
15. Very good.
16. None.
17. Yes, just renewed one year ago.
DELAWARE
City: Ne wark
Contact Person: Susan Lamblack, City Administrator
Phone No.: (302) 368-7070
Subscribers: 7,895
1. 6 years.
2. No, but Comcast rebuilt the system.
3. No, 10 miles away.
4. Yes.
5. No.
6. Yes.
7. 12 channels.
8. Unsure.
9. Annually in February.
10. Yes.
11. Yes.
12. Yes.
13.5%; yes.
14. Yes.
15. Excellent.
16. None.
17. Yes, just completed renewal.
It was a smooth process.
City: Wilmington
Contact Person: Lynn Howard, Chief of Staff
Phone No.: (302) 571-4180
Subscribers: 23, 179
1. Unsure.
2. No.
3. Yes.
4. Yes.
5. No.
6. Yes.
7. Unknown.
8. Unknown.
508352/2 50
9. No, not of any significant.
10. Yes.
11.Yes.
12. Yes.
13. Unknown; yes
14. Yes.
15. Good.
16. None.
17. Yes, have not identified any issues to date to indicate they would not grant a new or
renew its existing franchise with Comcast.
MISSISSIPPI
City: Hattiesburg
Contact Person: Willie Horton, Board Member
Phone No.: (601) 545-4501
Subscribers: 13,966
1. 4 years.
2. No.
3. Yes.
4. Yes.
5. No.
6. Yes.
7. 12 channels.
8. Unsure.
9. Annually in January.
10. No.
11.No.
12. No.
13.4%; yes.
14. Unsure.
15.Good.
16. None.
17. Yes.
PENNSYLVANIA
City: Carlisle Borough
Contact Person: Chris Moon/s, Assistant Manager
Phone No.: (717) 249-4422
Number of Subscribers: 6,102
1. Since 1999.
508352/2 51
7.
8.
9.
10.Yes.
11. Yes.
12. No, but in the works- within 1 to 2 years.
13.5%; yes, quarterly.
14. Yes.
15. Good.
No.
Yes.
Yes.
Very few. Those received are related to the following two customer service issues:
1) when calling Comcast's local number someone in New Jersey answers and 2)
Comcast has a new policy that requires a certain number of calls regarding the
same complaint before they will dispatch a truck.
Yes.
$13.48 basic and $24.02 standard.
18 basic channels.
Yes, effective 4/1/02. Recently completed upgrade.
16. Local number transferring to New Jersey and new policy regarding receiving a
certain number of calls regarding the same complaint before a truck/technician is
dispatched.
17, Yes, currently under franchise renewal now. Comcast is offering many upgraded
services.
City: Lancaster City
Contact Person: Charlie Smithgall, Mayor
Phone No.: (717) 291-4701
Number of Subscribers: 15, 172
1. 1-2 years.
2. No.
3. No - 67 miles away.
4. Most are happy.
5. Yes, related to rates.
6. Yes, with the exception of rates.
7. Unsure.
8. Unsure, but very high.
9. Unsure.
10. No.
11. Yes.
12. Not available.
13. Unsure; yes, quarterly.
14. Not yet.
15. Good.
16.Service to residents - not enough people per square mile.
17. Yes, but would send out to bid - still have 4-5 years left on current franchise.
508352/2 52
City: Penn Township, PA
Contact Person: Sharon Harrison, Township Manager
Phone No.: (610) 488-1160
Number of Subscribers: 30
1. Just under 1 year.
2. No.
3. No; 15 miles away.
4. Yes.
5. None.
6. Unknown.
7. Unknown.
8. $45 for basic.
9. Yes, 2-3 months ago there was a minor increase.
10.Yes.
11. Yes; out of Redding.
12.Yes.
13.3-4%; yes.
14. Yes.
15.So far so good.
16. No problems.
17. Yes, they will.
City: Pottsville
Contact Person: Thomas Palamar, City Administrator
Phone No.: (570) 628-4417
Number of Subscribers: 5,591
1. 2 years.
2. No.
3. Yes.
4. Generally, yes.
5. Yes, regarding cost and selection.
6. Yes, technical complaints resolved quickly.
7. 40 basic channels.
8. Approximately $35.00 for basic.
9. Yes, one month ago increased $3.00
10. Yes, no local studio.
11. Yes
12.Yes.
13. Unknown; yes.
14. Yes, just starting this month.
15. Good.
508352./2 53
16. The same problems they would have with any cable operator regarding cost and
selection.
17. Yes, currently under renewal negotiations. The recent technical review had good
results.
City: Steelton
Contact Person: Mike Musser, Manager
Phone No.: (717) 939-6561
Number of Subscribers: 2,204
1. 3-4 years.
2. No, but just finished upgrade to 750 MHz system.
3. Yes.
4. Yes, Internet problems with @home. Comcast's support was great during switch to
new provider.
5. None.
6. Yes.
7. Over 75 and under 100 channels.
8. $35.00 basic cable rate.
9. Yes. More than annually, but well communicated and additional services.
10. Yes.
11. Yes.
12. Unsure.
13.5%; yes.
14. Yes.
15.Good.
16. No, community-oriented.
17. Yes.
City: Waynesboro Borough
Contact Person: Lloyd Hamberger, Manager
Phone No.: (717) 762~2101
Number of Subscribers: 3,477
1. 1-2 years.
2. No.
3. No, 12 miles away.
4. Yes.
5. Very few.
6. Relatively responsive.
7. Unknown.
8. Unknown.
9. Yes, standard increases.
10. Yes, not used.
508352/2 54
11. Yes, not used.
12.Yes.
13.3%; yes.
14.Just started; a great service when it works.
15. Working relationship.
16.Very little; standard irritating complaints. All in all no worse than any other giant
company.
17.Yes, in the middle of negotiating franchise renewal now.
508352/2 55
SECTION 8. ADDITIONAL FRANCHISE ISSUES
Presently being negotiated with AT&T. Issues will be addressed in the final
Resolution.
508352/2 56
SECTION 9. RECOMMENDATIONS
Based specifically on the foregoing information and evaluations, we believe
AT&T Comcast, possesses the necessary legal and technical qualifications based on
the standards of review identified in applicable local, state, and federal laws as
described within this report, subject to the aforementioned conditions referenced in this
report with respect to AT&T Comcast's financial qualifications, we refer the City to
Section 7 of this report for our analysis.
Based on these findings we recommend that the Agencies review this report,
listen to any additional public comment or information, as necessary or appropriate, and
assuming the Agencies determine AT&T Comcast, to be financially qualified, undertake
all necessary action to pass and adopt a Resolution similar in form and content to the
document following these recommendations.
508352/2 57
EXHIBIT A
TRANSFER QUESTIONNAIRE
508352/2 A-1
AT&T COMCAST CORPORATION
TRANSFER QUESTIONNAIRE
March 22, 2002
Prepared by:
Brian T. Grogan, Esq.
Michael R. Nixt, Esq.
Yuri Berndt, Esq.
MOSS & BARNETT
A Professional Association
4800 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-4129
(612) 347-0300 (telephone)
(612) 339-6686 (facsimile)
508352/2 1
INTRODUCTION
Moss & Barnett, A Professional Association, has, as of this date, been retained to
represent the below-listed cities (hereinafter "City") regarding the proposed transfer of
control ("transfer") of the cable television systems and franchises to AT&T Comcast
Corporation ("Applicant"). This list of Cities may be modified and/or increased if
additional communities seek our assistance.
Pursuant to 47 C.F.R. § 76.502(b) a franchising authority that questions the
accuracy of the information provided in FCC Form 394 must notify the cable operator
within thirty (30) days of the filing of Form 394. This Transfer Questionnaire
("Questionnaire") will serve as a request on behalf of the City. for supplemental
information with respect to FCC Form 394.
Cities represented by Moss & Barnett
2.
3.
4·
5.
6·
7.
8.
9.
10.
11.
12.
13.
14.
15·
16.
17.
18.
19.
20.
21.
22.
23.
24.
Atherton, CA
Belmont, CA
Brisbane, CA
Burlingame, CA
Daly City, CA
Foster City, CA
Hillsborough, CA
Millbrae, CA
Portola Valley, CA
Redwood City, CA
San Carlos, CA
South San Francisco, CA
San Mateo, CA
County of San Mateo, CA
Woodside, CA
Hastings, MN
Inver Grove Heights, MN
Lilydale, MN
Mendota, MN
Mendota Heights, MN
South St. Paul, MN
Sunfish Lake, MN
West St. Paul, MN
Watertown, SD
5O8352/2 2
Please provide four (4) copies of Applicant's response to this Questionnaire to:
Brian T. Grogan
Moss & Barnett
4800 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-4129
Please also provide one (1) copy of the Applicant's response to the following
contact persons:
Ms. Jodie M. Miller, Executive Director
Northern Dakota County Cable Communications Commission'
5845 Blaine Avenue East
Inver Grove Heights, MN 55076
Representative on behalf of Inver Grove Heights, Lilydale, Mendota, Mendota Heights,
South St. Paul, Sunfish Lake, and West St. Paul, Minnesota.
Mr. Brian Moura, Chairman
SAMCAT
600 Elm Street
San Carlos, CA 94070-3085
Representative on behalf of Atherton, Belmont, Brisbane, Burlingame, Daly City, Foster
City, Hillsborough, Millbrae, Portola Valley, Redwood City, San Carlos, South San
Francisco, San Mateo, County of San Mateo, and Woodside, California.
Mr. David M. Osberg, City Administrator
City of Hastings
101 4th Street East
Hastings, MN 55033
Mr. Stanton Fox, City Attorney
City of Watertown
23 Second Street, NE
Watertown, SD 57201
In answering these questions please identify each City to which your response
applies.
1. Current Franchises
Please provide a list of fifty (50) cable communications systems owned, operated
or controlled by Comcast Corporation. This list will be used as a reference to solicit
information from cities presently served by Comcast. When preparing the list, please
provide the following information.
50835222 3
A. Name of Franchise Holder (Municipality/State);
B. Contact Person and Phone Number;
C. Date of Franchise Award;
D. Date on which Comcast Began Providing Service to the Community;
E. Number of Current Subscribers; and
F. Legal Name of Franchisee.
2. Chan.qes to the System
Is the Applicant proposing or will the Applicant undertake any technical changes
in the system.
3. Chanqes in the Operation of the System
Is the Applicant proposing, or will the Applicant undertake any changes in the
operation of the system including, but not limited to, the following areas: rate increases,
programming, customer service practices, billing practices, personnel, etc.? Please
describe in detail.
4. Future Plans
Please provide any applicable information to help explain any future plans
Applicant may have regarding the implementation of new technologies into the system
serving the City. How will the introduction of these new technologies impact the growth
of the system in the City?
5. New Services
Does the Applicant have any plans to add new services to the existing system?
Please describe any potential services which Applicant may consider providing over the
system.
6. Proqramminq Line-up
Will Applicant make any changes to the programming line-up in the City?
7. Billinq System
Please describe any changes Applicant will make in the current billing system.
Will subscribers see a new billing system and if so, what modifications or improvements
will result due to a change in the billing format?
508352/2 4
8. Bindinq Arbitration
Will AT&T's mandatory arbitration process, contained in AT&T's "Consumer
Service Agreement" be imposed upon subscribers by Applicant?
9. Customer Service
A. Since quality of service depends on adequate staffing and training of
career professionals:
(1) How many technicians and customer se .ryice employees are
currently employed by the existing franch'isee to service customers
in each City referenced in this Questionnaire?
(2) Will the Applicant, at a minimum, maintain this employment level
after the merger?
(3) What is the average length of service of technicians and customer
service employees?
(4) Will there be any planned cutbacks in staff, operations or locations
for customer service centers?
B. What customer service phone numbers will be used, e.g.,.will they change
from existing numbers?
C. Will customer service be centralized, and if so, where and how will it
accommodate any increase in telephone traffic?
D. Identify the internal, AT&T Broadband and Comcast national benchmarks
for customer service performance.
10. Technical and Manaqerial Employees
Please explain whether Applicant will retain employees currently providing
technical and managerial services for the system serving the City.
11. System Up.qrade
Please describe any and all plans to upgrade and/or rebuild the system serving
the City. Will these plans be altered or in any way impacted by the transfer?
508352/2 5
12. Hi.qh Speed Data
Please describe Applicant's plans regarding implementation of high speed data
services in the system serving the City.
13. Financial Qualifications
Please provide the following financial information:
Ao
The annual financial forecasts for a five (5) year period from the effective
date of the merger, relating to the business, earnings, cash flow, capital
expenditures, assets, liabilities and prospects of. the AT&T Comcast
Corporation, including projected income statements, balance sheets and
statements of cash flow with an explanation of the appropriate
assumptions and estimates. The explanation should include a list of
potential sources of cash for capital expenditures and operating cash flow.
A detailed schedule of expected synergies of the merger transaction
including amounts and timing of cost savings as well as expenses
expected to be incurred as a result of the merger (severance, contract
termination costs, etc.).
Co
A detailed schedule of long and short debt to be held or projected to be
secured by AT&T Comcast Corporation at the time of the formation and
merger including debt service schedules, interest rates, restrictive
covenants and other related fees.
Do
A detailed schedule of all substantial debt guarantees including amount
guaranteed, entity incurring the guaranteed debt and their relationship to
AT&T Comcast Corporation, and the payment schedule.
Bo
A detailed schedule of substantial investments including name of entity
(including trusts and joint ventures), amount of investment and a
description of each entity's activities.
Fo
A detailed schedule of all substantial fixed fee arrangements including
name of entity, type of service, amount of fixed fee, and payment
schedule.
AT&T and Comcast have told Wall Street that the merged AT&T Comcast
will boost AT&T's current profit margins from 22% to Comcast's 39%.
This is a 44% increase in profit margins. How will AT&T Comcast meet
these higher profit margins without cutting service or infrastructure
investment? Will the price of service go up to meet these higher profit
targets?
508352/2 6
AT&T and Comcast in their joint proxy statement to the Securities and
Exchange Commission state that the merged AT&T Comcast will realize
$1 to $2 billion annually in reduced expenditures. Where will these cuts
come from?
According to Comcast and AT&T's financial statements for 2001, Comcast
spent $20 less per subscriber on capital expenditures than AT&T (AT&T:
$240 compared to Comcast: $219). Does this mean that after the merger
there will be less money spend on cable infrastructure? How will the
merged AT&T Comcast be able to meet its infrastructure commitments to
this community?
Jo
Please comment on any projected cost increase's to the current services
offered by Applicant over the next two (2) years.
Each of the Cities referenced on page I of this Questionnaire hereby
specifically reserve of all of their rights to seek additional information with
respect to FCC Form 394. In addition, each of the Cities also reserve the
right to seek additional information and/or clarification regarding AT&T
Corp.'s compliance with existing franchise obligations and technical
performance requirements of AT&T's systems.
- END OF QUESTIONNAIRE -
50835~'2 7
EXHIBIT C
DIRECTOR OF FINANCE
650 877-8509
Via Certified Mail and copy via fax to (925) 973-7104
March 27,2002
Mr. Kent Leacock
Vice President, Franchising and Local Govern. ment Affairs
AT&T Broadband
P.O. Box 5147
San Ramon, CA 94583
Re: AT&T - Comcast Application
Dear Mr. Leacock:
I am writing to you regarding the Form 394 Application for a change in control of the cable
franchise with the City, related to the proposed merger between AT&T Broadband and
Comcast. The City received the Form 394 on or around February 26, 2002. Based on our
preliminary review, the City does not believe that the Application is complete. The
application also fails to address the resolution of significant issues of non-compliance
discussed below. Since the 120-day time limit to complete review of the Application does
not begin until we have received a complete Form 394, the City does not consider that period
to have begun. Although the City is making this informational request within the initial 30-
day period provided for such inquiries, it reserves its right to make additional requests and
inquiries related to those contained within this letter.
I. Incomplete Application
Section 2(b) of the Application states that the version of the contract submitted is not
complete and refers to Exhibit B, which states that certain schedules and exhibits have been
omitted as unnecessary or confidential. The City disputes AT&T's characterization of the
necessity of all of the exhibits and schedules and reserves its right to request copies of them
in the future. For the present, City requests copies of the following exhibits and schedules:
CITY HALL ANNEX
400 GRAND AVENUE · P.O. BOX 711 · SOUTH SAN FRANCISCO, CA 94083
Letter to AT&T Regarding Form 394
March 27, 2002
Page 2
Mer~er Agreement
· Exhibit E- AT&T Broadband Financial Statements
· Exhibit F- Admission Agreement
· AT&T Disclosure Schedule
· Comcast Disclosure Schedule
Separation and Distribution Agreement
· Exhibit A- AT&T Communications Financial Statements
· Exhibit C- Employee Benefits Agreement ..
· Exhibit E- Interim Services and Systems Replication Agreement
If you believe that the entirety of any of these exhibits and schedules is confidential, please
provide me with a detailed explanation of the basis for that conclusion. If you believe that
portions of any of these exhibits and schedules contain confidential information, you may
redact the confidential information from the copies provided to the City, with a detailed
explanation of the basis for that conclusion.
Additionally, the Application does not contain information and documents required by the
City's Municipal Code Sections 6.76.080 and 6.76.130 of the City's Cable Television
Franchise Ordinance. A copy of the applicable provisions of the ordinance is attached.
Please provide all of the information and/or documentation listed in the attachment.
II. Outstanding Areas of Non-Compliance
A. Interconnection Issues
Form 394 does not provide information about the resolution of on-going non-compliance
by AT&T Broadband with the terms of the Franchise Agreement. The San Mateo
County Telecommunications Authority (SamCat), of which the City is a member, has
provided AT&T Broadband with notice of their opinion that AT&T Broadband has
violated the Franchise Agreement by failing to interconnect with RCN and San Bruno
Cable for the purpose of providing access to each system's educational and governmental
channels. To complete its review of the application for a change in control, the City will
require additional information about AT&T Comcast Corp.'s technical qualifications to
take control of the franchise, specifically what measures the new company can and will
agree to take to satisfy its obligation under the Franchise Agreement to interconnect with
those other cable systems. Moreover, the City Council will not approve the requested
change in control until a satisfactory agreement on the resolution of the interconnection
issue has been reached.
B. Other Items of Non-Compliance
Under our existing franchise agreement dated January 1, 1996, and as amended by a
formal side agreement dated May 12, 1999, there are several terms that will require
Letter to AT&T Regarding Form 394
March 27, 2002 Page 3
action and/or further information prior to finalizing any consent by the City for the
change of control.
1. The Bank of New York has informed us that AT&T's required $75,000 letter of
credit has expired. This letter of credit was required under the terms of the side
letter dated May 12, 1999. That letter of credit was intended for the City to use as
a Security Fund, and will need to be re-established within 30 days.
2. Exhibit D-1 of the Agreement requires that several public buildings be connected
"with the highest level of basic service." To the best of our knowledge, the
following buildings have not yet been connected for free cable service, and we
request they be connected within 90 days:
a) Grand Ave. Library, 306 Walnut Ave.
b) Siebecker Center, 510 Elm Court
c) Paradise Valley Park, Boys & Girls Club - Hillside and School Street
d) Orange Memorial Park- 2 buildings
e) Westborough Park, Recreation Center Westborough and Galway
f) Swimming Pool Facility, 725 Tennis Drive
Section 2.6 of the Agreement requires that Worker's Compensation and General
Liability insurance be maintained at certain levels. We have not received an
updated insurance certificate for worker's compensation, so this is required within
30 days.
III.
Additional Requests Under the Terms of Our Franchise Agreement
The City hereby requests grant funds in the amount of $.30 per subscriber per
month effective July 1, 2001, as stated in Section 5.1 and Exhibit C of the
Agreement. Such funds are needed to pay for facility and programming costs
associated with operating the Educational programming of Peninsula TV. These
funds are also needed to reimburse the City for costs incurred to upgrade our City
Council Chambers over the past year to provide enhanced audio/visual displays
during Council meetings.
As you may know, the City chooses to participate in Peninsula TV rather than
operate its own educational programming, and the City therefore pays Peninsula
TV an annual fee for its share of the programming. That fee covers the capital
and facilities costs incurred by Peninsula TV to provide Educational and
Governmental Affairs public interest programming. At least 100 hours of original
programming per month are provided by Peninsula TV on behalf of the City of
South San Francisco and other viewers.
The City hereby requests, under Exhibit C to our Agreement, a second
Educational/Governmental (EG channel). This request will allow AT&T to
Letter to AT&T Regarding Form 394
March 27, 2002 Page 4
broadcast Peninsula TV at all times, including when our City Council and
Planning Commission meetings are broadcast. Currently, when Council and
Planning Commission meetings are broadcast, Peninsula TV programming is pre-
empted.
As part of this request, the City requests that AT&T provide scrolling public
service announcements on the new second channel when Council and Planning
Commission meetings are not being broadcast. The scrolling announcements
were produced and broadcast by AT&T in the past. Finally, we request that
Peninsula TV stay on the current cable channel (26) to be consistent with the
other cities on the Peninsula.
o
Section 3.3 of the Agreement requires AT&T to provide emergency alert
capability with the ability to "transmit an emergency alert signal to all
participating subscribers, in the form of an audio override capability to permit
Grantor {South San Francisco} to interrupt and cablecast an audio message on all
channels simultaneously in the event of disaster or public emergency".
Please provide the City with:
a) technical confirmation that this capability exists, and
b) detailed documentation on how we would utilize this system to
communicate with the public in the event of an emergency.
After receiving this information, the City reserves the right to request an on-site
meeting with our emergency response departments and with technical
representatives from AT&T to go over the materials provided.
Section 3.4 of the Agreement requires that "standby power generating capacity at
the cable communications system control center and at all hubs capable of
providing at least 12 hours of emergency supply" be provided. Please confirm
that this capacity is in place.
o
Section 3.1 of the Agreement requires that an upgrade was to have occurred,
"including hybrid fiber optic/coaxial system design or better, with nodes covering
no more than 2,000 homes on the average." Please confirm that this standard has
been met.
Letter to AT&T Regarding Form 394
March 27, 2002
Page 5
o
Exhibit D-3 of the Agreement requires that all public schools in South San
Francisco, including Westborough Middle School, be provided with a cable
connection of "the highest level of basic cable service." Please provide
documentation that these connections have been made.
On June 9, 1999, by the adoption of Resolution No. 79-99, the City Council
approved a Letter Agreement with TCI Cablevision of California, xvhich
controlled the cable franchise with the City prior to AT&T Broadband. The
Letter Agreement, dated May 12, 1999 by TCI, settled then-outstanding
compliance disputes by, among other things, imposing additional performance
and reporting requirements on the franchisee. Its terms were not incorporated into
the Franchise Agreement. As a condition of approving AT&T's request to change
control of the franchise to AT&T Comcast Corp., the City expects that the
Franchise Agreement will be amended to include the terms of the Letter
Agreement.
The San Mateo County Telecommunications Authority (SamCat), of which the City is a
member, has hired consultants to review information related to AT&T/Comcast's
qualifications and to review rates for all member cities. To the extent that those
consultants may, on behalf of SamCat, request information regarding those issues, the
City reserves its right to obtain additional information on those issues after the expiration
of the City's initial 30-day period to make informational inquiries. Finally, pursuant to
Section 6.76.080(f) of the Municipal Code, the City expects to receive reasonable
compensation for its costs of processing the Application, and that those costs will not be
passed through to consumers.
If you have any questions about the foregoing requests, please feel free to contact me at
(650) 877-8509. Once the City has received a complete Form 394, we will commence
our review of the Application. Upon completing that review, I will contact you about the
City's continuing concerns regarding the change in control. I look forward to speaking
with you further about this matter.
Sirkcerely,
Finance Direct6r ' - fi'
Attachment: Municipal Code Sections
cc: City Manager, City Attorney
Brian Moura
Chair, SAMCAT
c/o City of San Carlos
600 Elm Street
San Carlos, CA 94070-3018
Letter to AT&T Regarding Form 394
March 27, 2002
Page 6
Kathi Noe,
Director, Government Afl'airs, Peninsula Area
AT&T Broadband
1691 Bay'port Avenue
San Carlos, CA 94070
AT&T Broadband
188 Inverness Drive West
Room 6-042
Englewood, CO 80112
George Kozitza
Superintendent of Schools
South San Francisco Unified School District
398 B Street
South San Francisco, CA 94080
6.76.130 Applications--Conl s. Page 1 of 1
6.76.130 Applications--Contents.
An application for an initial franchise for a cable television system shall contain, where applicable:
(a) A statement as to the proposed franchise and service area;
(b) Resume of prior history of applicant, including the expertise of applicant in the cable television
field;
(c) List of the partners, general and limited, of the applicant, if a partnership, or the percentage of
stock owned or controlled by each stockholder, if a corporation;
(d) List of officers, directors and managing employees of applicant, together with a description of
the background of each such person;
(e) The names and addresses of any parent or subsidiary of applicant or any other business entity
owning or controlling applicant in whole or in part, or owned or controlled in whole or in part by
applicant;
(f) A current financial statement of applicant verified by a certified public accountant audit or
otherwise certified to be true, complete and correct to the reasonable satisfaction of the city;
(g) Proposed construction and service schedule;
(h) Any reasonable additional information necessary to ensure franchise compliance that the city
deems applicable. (Ord. 1175 § 2 (part), 1995)
http://www.ordlink.com/codes/sosanfran/_DATA/T.../6 76 t30_Applications__Content.htm 3/26/2002
6.76.080 Franchise nontrans' ~ble. Page i of 2
6.76.080 Franchise nontransferable.
(a) Grantee shall not sell, transfer, lease, assign, sublet or dispose of, in whole or in part, either by
forced or involuntary sale, or by ordinary sale, contract, consolidation or otherwise, the franchise
or any of the rights or privileges therein granted, without the prior consent of the council and then
only upon such terms and conditions necessary to ensure compliance with the franchise as may
be prescribed by the council, which consent shall not be unreasonably denied or delayed. Any
attempt to sell, transfer, lease, assign or otherwise dispose of the franchise without the consent of
the council shall be null and void. The granting of a security interest in a franchise or any other
grantee assets, or any mortgage or other hypothecation, shall not be considered a transfer for the
purposes of this section.
(b) The requirements of subsection (a) of this section shall apply to any change in control of
grantee. The word "control" as used herein is not limited to major stockholders or partnership
interests, but includes actual working control in whatever manner exercised. In the event that
grantee is a corporation, prior authorization of the council shall be required where ownership or
control of more than twenty percent of the voting stock ol grantee is acquired by a person or
group of persons acting in concert, none of whom own or control the voting stock of the grantee
as of the effective date of the franchise, singularly or collectively.
(c) Grantee shall notify grantor in writing of any foreclosure or any other judicial sale of all or a
substantial part of the franchise property of the grantee or upon the termination of any lease or
interest covering all or a substantial part of said franchise property. Such notification shall be
considered by grantor as notice that a change in control of ownership of the franchise has taken
place and the procedures under this section for obtaining the consent of grantor to such change
in control of ownership shall apply.
(d) For the purpose of determining whether it shall consent to such change, transfer or acquisition
of control, grantor may inquire into the qualifications of the prospeclive transferee or controlling
party, and grantee shall assist granlor in such inquiry. In seeking grantor's consent to any change
of ownership or control, grantee shall have the responsibility of insuring that the transferee
completes an application in form and substance reasonably satisfactory to grantor, which
application shall include the information required under subsections (a) through (h) of Section
6.76.130 of this chapter. An application shall be submitted to grantor not less than one hundred
twenty days prior to the date of transfer or within sixty days after the notice specified in subsection
(c) o[ this section. The transferee shall be required to establish that it possesses the qualifications
and financial and technical capability to operate and maintain the system and comply with
franchise requirements for the remainder of the term of the franchise. If the legal, financial,
character, and technical qualifications of the applicant are satisfactory, the grantor shall consent
to the transfer of the franchise within one hundred twenty days after submission of the application
in accordance with federal law. The consent of the grantor to such transfer shall not be
unreasonably denied or delayed.
(e) Any financial institution having a pledge of the grantee or its assets for the advancement of
money for the construction and/or operation of the franchise shall have the right to notify the
grantor that it or its designee satisfactory to the grantor shall take control of and operate the cable
television system, in the event of a grantee default of its financial obligations. Further, said
financial institution shall also submit a plan for such operation within thirty days of assuming such
control that will insure continued service and compliance with all franchise requirements during
the term the financial institution exercises control over the system. The financial institution shall
not exercise control over the system for a period exceeding one year unless extended by the
grantor in its discretion and during said period of time it shall have the right to petition the grantor
to transfer the franchise to another grantee.
(f) Upon transfer, grantee shall reimburse grantor for grantor's reasonable processing and review
expenses in connection with a transfer of the franchise or of control of the franchise, including
without limitation costs of administrative review, financial, legal and technical evaluation of the
proposed transferee, consultants (including technical and legal experts and all costs incurred by
such experts), notice and publication costs and document preparation expenses. A franchise may:
provide a limit on the amount of such reimbursement. Any such reimbursement shall not be
charged against any franchise fee due to grantor during the term of the franchise. (Ord. 1175 § 2
(part), 1995)
http:Ywww.ordlink.com/codes/sosanfran/_DATA/TI.../6 76 080_Franchise_nontransfer.htm 3/26/2002
StaffReport
DATE:
TO:
FROM:
SUBJECT:
June 12, 2002
The Honorable Mayor and City Council
Director of Public Works
McLellan Drive Extension Joint Venture Project - Resolution Authorizing the City
Manager to Enter Into an Agreement With the Town of Colma, and the County of
San Mateo for Construction Project
RECOMMENDATION:
It is recommended that City Council adopt a resolution authorizing the City Manager to enter into
agreements with the Town of Colma and the County of San Mateo for the construction of the
McLellan Extension.
BA CKGROUND/DISCUSSION:
In the 1970' s, the County of San Mateo drafted an environmental document for the construction of a
connecting street from Mission Road to Hillside Boulevard at the eastern city limits of Colma. The
document was prepared in draft form, but was never completed or approved. The project lay
dormant for almost 20 years.
In 1990, the City of South San Francisco requested proposals for environmental engineering studies
for a road (Hickey Boulevard Extension) to connect the present intersection of Hickey Boulevard at
E1 Camino Real to Hillside Boulevard. Impacts of this project were analyzed in an Environmental
Assessment and Initial Study prepared for the City of South San Francisco in 1994. That
Environmental Impact Report (EIR), however, was never certified by the City. The larger project
included the construction of a four-lane road on a new alignment between E1 Camino Real and
Mission Road. Under that project the section of roadway between Mission Road and Hillside
Boulevard would also be four lanes.
But again, just short of completion, the City abandoned the total project and turned a portion of the
project over to BART for construction of the street between E1 Camino Real and Mission Road as a
mitigation project for the BART construction.
Staff Report
TO:
RE:
DATE:
The Honorable Mayor and City Council
McLellan Drive Extension Joint Venture Project - Resolution Authorizing the City
Manager to Enter Into an Agreement With the Town of Colma, and the County of San
Mateo for Construction Project
June 12, 2002
PAGE: 2 of 3
The City will enter into two Agreements. One with the Town of Colma and the other with the
County of San Mateo.
The agreement with the Town of Colma will address, but not limited to the following:
· Funding Contribution $850,000
· Attendance to project meetings, review of project costs and schedules
· Final approval of project
· Maintenance responsibilities between City of South San Francisco and the Town of
Colma
The Agreement with the County of San Mateo will address, but not limited to the following:
· Funding Contribution of $1,100,000 consisting of:
A. $290,000 Past Expenses
B. $810,000 Remaining Funds
· Transfer of County property which said project is to be constructed within 30 days of
Notice to Proceed
· Execute necessary documents to transfer maintenance responsibility to City of South
San Francisco for Catchment Basins on San Bruno Mountain that have or will be
constructed per the Joint Powers Association (JPA) entered into between the County
and City on June 21, 1983
PURPOSE:
The main purposes for constructing the Hickey Boulevard extension to Hillside Boulevard are to
improve circulation in the area, to provide easier access to the BART station from Hillside
Boulevard, and to reduce traffic on roads that traverse through residential neighborhoods, such as
Evergreen Drive.
There are currently few routes that traverse the City of South San Francisco in the east-west
direction. Evergreen Drive and Holly Avenue are local streets that connect Hillside Boulevard to
Mission Road. Traffic on these roadways is intended to handle local traffic only and the roads are
not designed for through traffic.
Staff Report
TO:
RE:
DATE:
The Honorable Mayor and City Council
McLellan Drive Extension Joint Venture Project - Resolution Authorizing the City
Manager to Enter Into an Agreement With the Town of Colma, and the County of San
Mateo for Construction Project
June 12, 2002
PAGE: 3 of 3
The project would provide another east-west link connecting the 1-280 freeway to Hillside Boulevard
in the north section of South San Francisco, thus relieving congesting on the Westborough/Chestnut
Avenue east-west route.
FUNDING:
The project is a joint venture between the City of South San Francisco, Town of Colma, and the
County of San Mateo. Each partners' responsibilities have been identified and will be separate
agreements with the City of South San Francisco.
CONCLUSION:
This staff report recommends that City Council approve a resolution allowing the City Manager to
approve and accept the agreements.
John/Gibbs'---.~
of Public Works
Dire/~tor
Approved:
Michael A. Wilson
City Manager
ATTACHMENTS:
Resolution
Draft Agreement with Town of Colma
Draft Agreement with County of San Mateo
JG/ed
RESOLUTION NO.
C1TY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA
A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER
INTO AN AGREEMENT WITH THE TOWN OF COLMA AND THE
COUNTY OF SAN MATEO FOR THE CONSTRUCTION OF THE
MCLELLAN EXTENSION
WHEREAS, staff recommends that the City Manager be authorized on behalf of the City to
enter into an agreement with the Town of Colma and the County of San Mateo for the construction
of the McLellan Extension Project; and
WHEREAS, the main purposes for constructing the Hickey Boulevard extension to Hillside
Boulevard are to improve circulation in the area, provide easier access to the BART station from
Hillside Boulevard, and to reduce traffic on roads that traverse through residential neighborhoods,
such as Evergreen Drive.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby authorizes the City Manager to prepare and execute an
agreement consistent with the terms set forth in the staff report with the Town of Colma and the
County of San Mateo for the construction of the McLellan extension.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the day of
,2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
DRAFT
AGREEMENT BY AND BETWEEN THE CITY OF
SOUTH SAN FRANCISCO, THE TOWN OF COLMA AND
THE COUNTY OF SAN MATEO FOR THE ROADWAY
CONSTRUCTION PROJECT CONNECTING HILLSIDE
BOULEVARD AND MISSION ROAD WITHIN THE
TOWN OF COLMA
THIS AGREEMENT is made and entered into this day of ., 2002; by and
between the City of South San Francisco, a municipal corporation of the State of California,
hereinafter referred to as "CITY", the Town of Colma, a municipal corporation of the State of
California, hereinafter referred to as "TOWN", and San Mateo County, hereinafter referred to as
"COUNTY", a of the State of California,
RECITALS
WHEREAS, it is in the public interest to construct a new arterial roadway in the Town of Colma
between Hillside Boulevard and Mission Road, adjacent to the City limit of South San Francisco
and in the vicinity of the South San Francisco Bay Area Rapid Transit (BART) Station, scheduled
to open in the Fall of 2002, hereinafter referred to as "PROJECT"; and
WHEREAS, the project lies within the jurisdictional limits of the Town of Colma; and the Town
Council has approved at their regular meeting held on December 12th, 2001, the conceptual plans
as prepared and provided by the City, and
WHEREAS, the County purchased and is the property owner of the right-of-way, approximately
ninety (90') feet in width, for the purpose of the constructing an arterial roadway from Hillside
Boulevard to Mission Road as initially prepared in the City-County Highway Plan of 1962, and
WHEREAS, the County shall dedicate to the Town the right-of-way property after the
construction of the new roadway is complete, and
WHEREAS, the formal name of the roadway shall be determined by the Town of Colma City
Council, prior to purchasing and installing any roadway name signage, the filing of the "Notice of
Completion" with the County upon completion of the construction, and acceptance of the
roadway by the Town, and
WHEREAS, a future Maintenance and Operation Agreement shall be entered into by and
between the City and the Town prior to completion, approval and acceptance of the construction
work, by the Town, and; it is understood by all parties that the future Maintenance and Operation
Agreement between the City and the Town, shall include an equitable cost sharing of future
maintenance costs and responsibilities, and it is understood by all parties it is not financially
feasible for the Town to accept sole financial responsibility in providing the future maintenance
upon completion of the project improvements, and agreement shall remain in effect throughout
the existence of the roadway, unless a termination date is determined and agreed to by both the
City and the Town and specified in the Maintenance and Operation Agreement, or by amendment
to the Maintenance and Operation Agreement, and
WHEREAS, it understood by all parties that in the event a future Maintenance Agreement is not
entered into upon completion of the project that as a default, the City will pay the Town fifty
(50%) percent of the actual maintenance costs incurred, until a Maintenance Agreement is signed
and agreed to, and
Page 1 of 9
MAY2002
WHEREAS, within the conceptual plans prepared by the City the addition of two lanes to provide
a future four lane, two-way directional, arterial roadway is viable by removal of the median island
and preservation of the ninety (90') feet width of right-of-way, and
WHEREAS, after completion, acceptance and dedication of the roadway to the Town, the City
and Town agree to share the costs equally for designing and constructing up to two traffic lanes,
and shall enter into a separate agreement to design and construct the two-lane improvements,
provided that traffic volumes and level of service determined by a standard traffic study justifying
this improvement, and
WHEREAS, it is in the public interest for the City, Town and County to construct the project to
the roadway standards typical for an urban area as that in the City and the Town, and in a
cooperative and economical manner by all parties sharing the costs of related expenses to design
and construct the new roadway which shall benefit the City, Town, County and the region as a
whole, and
WHEREAS, the City, Town and County desire to share the costs of the Project;
NOW, THEREFORE, in consideration of their mutual promises and agreements, and subject to
the terms, conditions, and provisions hereinafter set forth, the parties hereto agree as follows:
Page 2 of 9
MAY2002
AGREEMENT
DEFINITIONS
a. City, shall refer to the City of South San Francisco.
b. Town, shall refer to the Town of Colma.
c. County, shall refer to the County of San Mateo.
d. Approved Plans, Specifications and Bidding Document, shall mean as approved
by the City, Town and County.
e. BART, shall refer to Bay Area Rapid Transit Authority.
f. Project, shall refer to the completion of the design and construction as intended in
the conceptual roadway plans approved by the Town in December of 2001.
g. Future Maintenance and Operation Agreement, shall refer to a Maintenance and
Operation Agreement to be entered into by the City and Town for cost sharing and
defining the future maintenance requirements and responsibilities associated with the
improvements of the project.
SCOPE OF PROJECT
The Project consists of full construction of an asphalt paved, two-lane roadway that
widens to a four-lane roadway at each intersection to the existing connecting roadways;
Hillside Boulevard and Mission Road, respectively. The widening at these intersections
will be built to accommodate the necessary mining movements. In addition, the new
roadway construction includes, but is not limited to, providing the following
improvements, within the Project limits as shown on the approved plans, specifications
and bidding documents:
a. Asphalt pavement, designed and constructed, at minimum, to the recommendations
of the project's Design Engineer and Geotechnical Engineer.
b. Signage, striping and pavement markings.
c. Full curb and gutter along roadway with smooth transitions into existing.
d. Designated bicycle lane on North side.
e. Median island with landscaping and irrigation and street lighting.
f. Landscaping and irrigation along streetscape.
g. Sidewalk on the North side.
h. Storm drainage system, designed and constructed, at minimum, to the
recommendations of the project's hydraulic study, evaluating the impact of the
constructed roadway project on the existing adjacent properties and downstream
drainage systems.
i. A new three (3) way signal at the intersection of Hillside Boulevard.
j. Signal modifications at the intersection of Mission Road. to the existing signal
installed by BART, as recommended by the Traffic Analysis Report for the project.
k. Retaining walls at grade transitions.
1. Sound wall between Town and City limit along residential property.
m. Installation of underground utilities and services; water, power, communication
services and cable television.
n. Installation of fire protection services, fire hydrants.
From the conceptual improvement plans necessary revisions include, but are not limited
to the following modifications:
Page 3 of 9
MAY2002
o. Street lighting to be selected by the Town of Colma Planning Department meeting
Town's design standards.
p. Fire protection improvements as required by Fire District, with fire hydrant details to
the Town of Colma Standard Detail.
q. Landscaping plans to meet Town of Colma standards for streetscape improvements
and as described in the Town's General Plan.
o
SCOPE OF WORK
Lead Agency - The Town and County agree to designate the City as the Lead
Agency for the Project. The City shall perform the following:
i. Complete any necessary environmental review that may be required beyond the
Mitigated Negative Declaration prepared and completed by the County.
ii. Prepare plans and specifications in accordance to Standard Specifications and
Details for Public Works Construction as approved by the City and the Town.
iii. Prepare the Engineer's Cost Estimate, provide copies of the plans,
specifications, and estimate to the Town and County for review and approval.
iv. Advertise, collect, open and review bids.
v. Prepare and award contract to the lowest responsive responsible bidder.
vi. Inspect construction, administer and perform the management of the
construction contract, issue change orders, approve and process progress
payments, coordinate with utility companies for installing improvements and
raising facilities to grade as necessary.
vii. Coordinate final walk-through, prepare punch list, recommend final acceptance.
viii. Complete "As-Builts" for the work performed and provide copies to the Town
and County for records.
ix. Review, process, comment and respond to Project correspondence, requests for
information, meetings and related services in a timely and professional manner.
Designated Project Managers. The designated Project Manager for the City of
South San Francisco for the duration of the Project is John Gibbs, Director qfPublic
Works. The City's Project Manager shall have all the necessary authority to direct
technical and professional work within the scope of the Agreement and shall serve as
the principal point of contact with the Town of Colma and San Mateo County. The
designated Project Manager for the Town of Colma for the duration of the Project is
_Richard Mao, Ci_ty Engineer. The Town's Project Manager shall have all the
necessary authority to review and approve and accept technical and professional
work within the scope of the Agreement and shall serve as the principal point of
contact with the City and the County. The designated Project Manager for the
County is Neil Cullen, Director qfPublic Works. The County's Project Manager
shall have all the necessary authority to review and approve and accept technical and
professional work within the scope of the Agreement and shall serve as the principal
point of contact with the City and the Town.
Administering Agent. In exercising this Agreement, the City shall be the
administering agent, and, as such, shall possess all powers common to both the City
of South San Francisco and the Town of Colma, that may be necessary to effectuate
the purpose of this Agreement, subject only to the manner of exercise of such powers
provided herein and the restrictions imposed by law upon the City of South San
Francisco in exercise of such powers.
Page 4 of 9
MAY2002
Project Engineering and Construction Town Assistance. The Town and County
agree that the Town shall assist the City in implementing and administrating the
Project whenever such activities, or portions of the Project require the Town's
participation. The Town shall perform the following: Accept and provide necessary
plan checking of the plans, specifications, bidding documents and engineer's estimate
of the Project and as it relates to the Town. Review, process, comment and respond
to Project correspondence, requests for information, meetings and related services in
a timely and professional manner. Attend scheduled project meetings, pre-bid
meeting, pre-construction meeting and weekly construction meetings during normal
business hours. Attend final walk-through of the Project and prepare and deliver a
punch list of contract items within five (5) working days after the walk-through.
COST SHARING OF PROJECT
go
Project Total Cost Estimate. The estimated cost for completing the design work,
off-site wetland mitigation and construction of the Primary Improvement, as
described in Section 1.2.1, is $3,050,000, three million, fifty thousand dollars. It is
understood and agreed that the City, Town and the County will share the costs for
funding this project. Provided the lowest responsible bidder's amount is equal to or
greater then $3.05M, the cost share distribution is as follows:
a. City of S.S.F.
b. Town of Colma
c. County of San Mateo
An amount not-to-exceed $1,100,000.
An amount not-to-exceed $ 850,000.
An amount not-to-exceed $1,100,000.
The City may only award the Contract up to the amounts as shown for the Town and
the County. Any additional funding requested by the City from the Town and the
County shall require a signed resolution approval from the individual Jurisdiction's
Council or Governing Board.
The City shall accept full and exclusive responsibility for any amounts awarded to
the Contractor beyond $3.05M, unless the Town or the County provides a signed
resolution approving and authorizing the exact amounts beyond the initial not-to-
exceed amount. The City will make any request for any additional funding in writing
to both the Town and the County, with an itemized breakdown of costs requested,
prior to the City awarding the Bid to the Contractor, should the City elect to make
such a request.
The City, Town and County agree to negotiate a cost share ratio split to equitably
divide financial obligations given either of the two events: (1) the lowest responsible
bid is less then the cost estimate of $3.05M, or (2) the City awards a contract amount
to the lowest responsible bidder that is less then $3.05M.
Town Reimbursement Project Costs. The Town agrees to pay the City for all
actual Project costs for work performed within the jurisdictional limits of the Town
up to the amount not-to-exceed $850,000. Prior to award of the construction
contract, the Town shall provide financial evidence and confirmation in writing to the
City authorizing the exact amount approved payable to the City.
Page 5 of 9
MAY2002
f.
County Reimbursement Project Costs. The County agrees to pay the City for all
actual Project costs for work performed within thc jurisdictional limits of the Town.
The County's sham is estimated to bc an amount not-to-exceed $1,100,000. Prior to
award of thc construction contract, thc County shall provide financial evidence and
confirmation in writing to thc City authorizing thc exact amount approved payable to
the City.
Change Orders. The City shall submit any requests for change orders to the County
and the Town's Project Managers for review and approval. The City shall obtain
prior written approval from the County and the Town's Project Managers for any
change orders affecting the Project. The Town shall have final approval of any
change orders affecting the Project.
Project Materials by Weight. For any project materials measured by weight, the
Contractor shall deliver all weight slips, provided by a certified weighmaster, to the
City's Project Manager who will be responsible for forwarding copies thereof, with
corresponding invoices, to the County and Town's Finance Department for
processing. The City shall be responsible for verifying project materials, quantities
and specifications, provided by the Contractor, are accurate and meet all
requirements of the Project's approved plans, specifications and bidding documents.
Project Final Payments. Upon completion and acceptance of the Project, the City
shall forward to the County and the Town, within thirty (30) days, a statement of
ALL Project costs and an invoice for funds due to the City for work on the Project
within the Town, if any. This statement shall clearly list the costs of construction of
all Project work completed within the jurisdictional limits of the Town based on the
actual contract unit prices paid and negotiated change orders, if any. The City shall
bill the County and the Town for the balance due for all Project work completed
within the Town's jurisdictional boundaries. The County and the Town shall submit
payment to the City the balance of funds due within forty-five (45) days of billing.
FUTURE MAINTENANCE AND OPERATION AGREEMENT
go
Maintenance and Operation Agreement between City and Town. Prior to
completion, approval and acceptance of the construction work by the Town, a future
Maintenance and Operation Agreement shall be entered into, by and between the City
and the Town. The agreement shall include an equitable fifty-fifty cost sharing of
future maintenance and operational costs and responsibilities. This agreement is
essential for ensuring the proper maintenance of the new improvements as it is not
financially feasible for the Town to accept sole financial responsibility in providing
these services upon completion of the project.
The future Maintenance and Operation Agreement shall remain in effect throughout
the existence of the roadway, unless a termination date is determined and agreed to
by both the City and the Town and specified in the Maintenance and Operation
Agreement, or by amendment to the Maintenance and Operation Agreement. Items
in the Maintenance and Operations Agreement, include but are not limited to, all
project improvements in the As-Built Plans and Project Specifications.
Page 6 of 9
MA Y 2002
Failure to Execute into Maintenance and Operation Agreement. In the event a
future Maintenance and Operation Agreement is not executed prior to completion of
the project, the City and the Town agree that as a default, the City will pay the Town
fifty (50%) percent of the actual maintenance costs incurred, until a. Maintenance and
Operation Agreement is signed and executed. In this event, the Town shall be
responsible for maintaining the roadway and all improvements in the As Built plans,
and shall invoice the City fifty (50%) percent for all related maintenance costs
incurred. The City agrees to pay for all invoicing by the Town for the maintenance
costs incurred by the Town within thirty-days (30) of billing. The City agrees to pay
a service charge to the Town of 1.5% per month, which is an annual rate of 18%,
which will be added to all amounts thirty-days (30) or more outstanding.
o
°
FUTURE EXPANSION OF TWO ADDITIONAL LANES
ao
Future Agreement between City and Town for Roadway Expansion. After
completion, acceptance and dedication of the roadway to the Town, the City and
Town agree to share the costs equally, (City will fund fifty percent (50%) and Town
will fund fifty percent (50%)), for all costs and expenses agreed to and incurred to
design and construct up to two additional traffic lanes. The City and Town shall
enter into a separate agreement to design and construct the two-lane improvements,
provided that traffic volumes and level of service determined by a standard traffic
study justify this improvement. The conceptual plans prepared by the City provide
for the addition of two lanes in each direction. The removal of the median island and
preservation of the ninety (90') feet width of right-of-way is required for furore lane
expansion.
INSURANCE AND IDEMNIFICATION
a. Neither the County or the Town nor any officer, official, or employee thereof, shall
be responsible for any damage or liability occurring by reason of anything done or
omitted to be done by the City under or in connection with any work, authority or
jurisdiction delegated to the City under this Agreement. It is understood and agreed
that, pursuant to Government Code Section 895.4, the City shall indemnify, defend,
and hold the County and the Town harmless from any liability including reasonable
costs and attorney's fees imposed for injury (as defined by Government Code Section
810.8) occurring by reason of anything done or omitted to be done by the City under
this Agreement.
b. Neither the City, nor any officer, official, or employee thereof, shall be responsible
for any damage or liability occurring by reason of anything done or omitted to be
done by the County or the Town under or in connection with any work, authority or
jurisdiction delegated to the County or the Town under this Agreement. It is
understood and agreed that, pursuant to Government Code Section 895.4, the County
and the Town shall indemnify, defend and hold the City harmless from any liability
imposed for injury (as defined by Government Code Section 810.8) occurring by
reason of anything done or omitted to be done by the County or the Town under this
Agreement.
c. The City shall require the contractor to secure and maintain in full force and effect at
all times during construction of the Project and until the Project is accepted by the
Page 7 of 9
MA Y 2002
o
City, public liability and property damage insurance in forms and limits of liability
acceptable to the City, Town and County, naming the City, Town and County, and
their respective officers, employees and agents as additional insured from and against
all damages and claims, loss liability, cost or expense arising out of or in any way
connected with the construction of the Project.
The Contractor and all Sub-Contractors shall meet the Town of Colma insurance
standards. The City shall provide a list of all Contractors and Sub-Contractors to the
Town prior to award of bid of the project.
ADDITIONAL PROVISIONS
The parties' waiver of any term, condition or covenant, or breach of any term,
condition or covenant shall not be construed as a waiver of any other term condition
or covenant or breach of any other term, condition or covenant.
This Agreement contains the entire Agreement between the City, Town and the
County relating to this Project. Any prior agreements, promises, negotiations, or
representations not expressly set forth in this Agreement are of no force or effect.
If any term, condition or covenant of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions of this
Agreement shall be valid and binding of the City, Town and the County.
d. This Agreement shall be govemed and construed in accordance with the laws of the
State of California.
e. This Agreement may be executed in counterparts and will be binding as executed.
f. The Term of the Agreement shall commence upon execution of the Agreement by
both parties and terminate upon Project acceptance and final payments.
g. All changes or extensions to this Agreement must be in writing in the form of an
amendment and approved by all parties.
TERMINATION
ao
Either the City, the Town or the County may terminate the Agreement at any time
prior to award of the construction contract for the Project upon thirty (30) days'
written notice to the other parties. If the Agreement is terminated, the County and the
Town shall pay to the City, their proportion of all actual documented completed costs
incurred to the City, for the Project's portion of work, up to the day of receipt of the
written notice of termination. The County and the Town will submit payment within
forty-five (45) days from receipt of the itemized City Invoice for the Project portion
of work.
bo
Once the construction contract for the Project has been awarded, the Agreement may
only be terminated with the mutual written consent and terms acceptable to all
parties, the City, Town and the County.
Page 8 of 9
MA Y 2002
10. NOTICES
Notices required under this Agreement may be delivered by first class mail addressed to the
appropriate party at the following addresses:
CITY OF SOUTH SAN FRANCISCO
John Gibbs
Director of Public Works
City Hall
400 Grand Avenue
South San Francisco, CA 94083
TOWN OF COLMA
Richard Mao, P.E.
City Engineer
Public Works / Engineering
1188 E1 Camino Real
Colma, CA 94014-3212
COUNTY OF SAN MATEO
Neil R. Cullen
Director of Public Works
555 County Center, 5th Floor
Redwood City, CA 94063-1665
IN WITNESS WHEREOF, the parties have executed the AGREEMENT the day and year first set
forth above.
APPROVED AS TO FORM:
CITY OF SOUTH SAN FRANCISCO,
a municipal corporation
City Attorney
South San Francisco
By:
Michael Wilson, City Manager
South San Francisco
APPROVED AS TO FORM:
TOWN OF COLMA,
a municipal corporation
Roger Peters, City Attorney
Town of Colma
By:
Herb Moniz, Interim City Manager
Town of Colma
APPROVED AS TO FORM:
COUNTY OF SAN MATEO
County Attorney
County of San Mateo
By:
John L. Maltbie, County Manager
County of San Mateo
Page 9 of 9
MA Y 2002
DRAFT
F:\USERS~tDMIN\CITIES~SSF~2002~Hickey Draft Agreement Rev May 24, 2002 Rc-v June 4.~lOC
AGREEMENT
COST SHARING AGREEMENT FOR
THE CONSTRUCTION OF HICKEY BOULEYARD
BETWEEN MISSION ROAD AND HILLSIDE BOULEVARD
COLMAJ SOUTH SAN FRANCISCO AREA
THIS AGREEMENT, made and entered into this ~. day of , , 2002, by and
between the COUNTY OF SAN MATEO, a political subdivision of the State of California,
hereinafter called "County", the CITY OF SOUTH SAN FRANCISCO, a municipal corporation
of the State of California, hereinafter called "City".
WITNESSETH:
WHEREAS, City wishes to have the Extension of Hickey Boulevard, a new road,
constructed between Mission Road and Hillside Boulevard hereinafter called "Project"; and
WHEREAS, County wishes to transfer the responsibility for maintaining catchment
basins on San Bruno Mountain to the City, that have been or will be constructed in conjunction
with thc South Slope Developm~t which is occurring within the corporate limits of City, and
which is currently exercised by the Joint Powers Authority for the Maintenance of Catchment
Basins on San Bnmo Mountain; and
WHEREAS, the proposed Project lies within the corporate limits of the Town of Colma,
hereinafter called "Town," and on property owned by County as shown on Exhibit "A" which
exhibit is attached hereto and made a part of this agreement; and
WHEREAS, County is Mlling to participate in the cost of said Project and to transfer
title to said property where said Project is proposed to be constructed: and
WHEREAS, City is willing to accept re,ponsibility for maintaining catchment basins on
San Bruno Mountain within their corporate limits or within property owned by County and
which are being or have been constructed in conjunction with the South Slope Development.
NOw, THEREFORE, IT IS AGREED AS FOLLOWS:
A. County agrees to:
provide funding in the amount not to exceed One Million One Hundred
Thousand Dollars( $1,100,000) consisting of:
a)
Two H'andred Eighty Four Thousand Six Hundred and Eighty Two
Dollars($284,682) in past expenses incurred by the County for right of
way acquisition and preparation of the Project's environmental
document; and
b) Eight Hundred Fifteen Thousand Three Hundred and Eighteen Dollars(
-2-
$815,318) to partially finance the construction of the Project which is
more particularly defined by the Contract Plans entitled McLellan Drive
Extension - Project 51-13231-0201, Bid No. 2321, and for which bids
were opened on April 25, 2002. Said additional funds shall be paid to the
City after any necessary documents as provided in Section A3 and
Section B1 of this agreement are executed, a~d after the contractor has
been working on the project for at least 30 working days.
transfer title of County's property, upon which said Project is to be constructed,
to the Town, as agreed to by City, within 30 days after the award ora contract and
the issuance ora Notice to Proceed to the contractor for construction of the
Project. ']['he title to said property will provide that County shall receive thirty six
(36%) of the value of the property, or any portions thereof, if the property or any
portions thereof are sold, or other wise transferred to a third party, or are used by
Town for other than road purposes. The value of said property will be established
by an appraisal if there is a dispute as to market value of said property. The
appraiser shall be agreed to by the parties and the expense of the appraisals shall
be shared equally.
execute m~y necessary documents with the City to terminate the Joint l~xercise of
Powers Agreement of the Maintenance of Catchment Basins on San Bruno
Mountain (JPA) entered by and between the County and City on June 21, 1983.
Said documents shall also obligate the City to assme all responsibility for the
-3-
catchment basins that have or will be constructed in conjunction with the
development of the South Slope of San Bruno Mountain. The South Slope is
defined as that area as shown on that certain subdivision map filed with the
County Recorder in Book 121 of Subdivision Maps beginning at Page 21.
B. City agrees to:
execute any necessary documents with the County to terminate the Joint Exercise
of Powers Agreement of the Maintenance of Catchment Basins on San Bruno
Mountain (J'PA) entered by and between the County and City on June 21, 1983,
and to obligate the City to assume all responsibility for the catchment basins that
have or will be constructed in conjunction with the developmem of the South
Slope of San Bruno Mountain. The South Slope is defined as that area as shown
on that certain subdivision map filed with the County Recorder in Book 121 of
Subdivision Maps beginning at Page 21. Termination of the J-PA and assumption
of responsibilities for catchment basins by the City shall be accomplished prior to
the County providing funds for the Project pursuant to this agreement.
Finance either w/th its own funds or with funds other than funds administered by
the County, all other Project costs that may be incurred by either the City or Town
in conjunction with the construction or maintenance of said Project or property to
be transferred from Co .unty to the Town as agreed to by City.
-4-
Consider the funds provided by County as gas tax funds, and to be responsible for the
appropriate use of gas tax funds, and to submit to the State Controller of the State of
California all notices and reports for the expenditure of gas tax funds as permitted by
law.
C. The City shall indemnify, defend, and hold harmless the County, their officers, agents,
and employees from all claims, damages, suits or actions of every name, kind, and description,
arising out of or relating to the matters covered by the agreement to the extent that such claims,
suits or actions are due to the negligence or willful misconduct of the City or the City's failure to
perform obligations required of the City under this agreement.
D. The County shall indemnify, defend, and hold harmless the City, their officers, agents,
and employees from all claims, damages, suits or actions of every name, kind, and description,
arising out of or relating to the matters covered by this agreement to the extent that suer claims,
suits or actions are due to the negligence or willful misconduct of the County or the County's
failure to perform obligations required of the County under this agreement.
E. Thc duty to indemnify and hold harmless includes the duties to defend as set forth in
Section 2778 of the California Civil Code.
F. The City shall require the Contractor to maintain insurance levels of and to
require the Contractor to name the County, its officers, agents, and employees and the County as
additional insured on all insurance documents for this project and to include all work performed
-5-
on behalf of the City and County in the bonds, warranties and guaranties to be furnished by the
Contractor. The benefits arising under this Section F. shall include the respective directors,
officers, employees and agents o£the parties hereto.
G. This agreement shall be binding upon the respective successors and assigns of the parties
hereto.
-6-
IN WITNESS WHEREOF, the parties hereto, by their duly authorized representatives,
have affixed their hands on the day and year first above written.
"County"
COUNTY OFSANMATEO
BY
Jerry Hill, President
Board of Supervisors
County of San Mateo
ATTEST:
Clerk, Board of Supervisors
"City"
CiTY OF SOUTH SAN FRANCISCO
BY
, City of South San Francisco
ATTEST:
City Clerk
-7-
AGREEMENT FOR THE MAINTENANCE OF CATCHMENT BASINS ON
SAN BRUNO MOUNTAIN
This Agreement, made and entered into this day of _., 2002, by
and between the County of San Mateo (herein after called "County") and the City of South San
Francisco (herein after called "City ");
__W!~T_NE_S SE T 1t:
WHEREAS, City and County previously entered into that certain Joint Powers
Agreement dated June 21, 1983, attached hereto as Exhibit "A" (hereinafter referred to as
"Joint Powers Agreement"), which created a joint powers authority (hereinafter referred to as
"Authority") whose duty it is to provide for the maintenance &catchment basins on San Bruno
Mountain; and
WHEREAS, City and County have determined that the terms and conditions of the Joint
Powers Agreement do not provide the most economical or expeditious method of providing for
the maintenance of the catchment basins; and
WHEREAS, City and County have determined that it would be in the best interest of
both agencies to terminate the Authority and provide for the maintenance of the catchment basin
through a new agreement; and
WItEREAS, it is thc intent &this agreement to transfer the authority and obligation to
maintain all of the catchment basins referenced in the Joint Powers Agreement from the Authority
to the City; and
WItEREAS, this agreement and the covenants and conditions contained herein, are made in
consideration for County's agreement to provide a portion of the funding for the extension of
Hickey Boulevard, as set forth in that certain Agreement entitled "Cost Sharing Agreement for the
Construction of rickey Boulevard between Mission Road and Hillside Boulevard - Colma South
San Francisco Area."
NOW THEREFORE, for and in consideration of the mutual benefits, covenants and
conditions set forth herein, City and COunty agree as follows:
1) Thc Joint Powers Agreement, a copy of which is attached hereto as Exhibit
"A ", shall terminate on the day that this agreement has been executed by both City and County.
The governing board of the Authority may meet one time after the date of termination for the
purpose of concluding any outstanding business if such meeting is necessary.
2) This agreement shall remain in effect in perpetuity unless it is agreed in
writing by both City and County that it shall be terminated or modified.
3) City hereby agrees to maintain the catchment basins contemplated in the
Terrabay Specific Plan and access roads connecting the catchment basins to private roads of the
Terrabay development (hereinafter called "access roads"). Said catchment basins are defined as
certain debris and siltation basins, deflection walls, check dams and other debris flow control
facilities contemplated in the Terrabay Specific Plan dated
A list of the catchment basins is contained in Exhibit "B" attached hereto. The City's
obligation to maintain shall apply to all catchment basins contemplated in the Joint Powers
Agreement, including basins to be constructed in the future.
4) City shall have the right to review and approve plans and specifications for
the construct/on of catchment basins and access roads which may be built within the unincorporated
area of the County as part of the Terrabay development (or any successor development), prior to
construction thereof. City will not withhold its approval unreasonably.
5) City shall have the right to inspect and approve the catchment basins and
access roads as constructed~
6) City shall accept for maintenance those catchment basins and access
roads that have been built in accordance with the plans as approved by City.
7) City shall have the duty to maintain the catchment basins. Specifically,
City shall do this following:
(a) Ensure that the catchment basins are clean prior to October 30th of
each year. Catchment basins shall be considered clean if eighty-five pement (85%) or more of the
design capacity of each basin is available for the deposit of material, unless a different capacity is
otherwise mutually determined and agreed upon by both City and County.
(b) Inspect and clean the catchment basins to meet the requirements of
7(a) above after each storm that results in a total rainfall of more than 1.25 inches w/thin a
twenty-four hour per/od as recorded at the San Francisco International Airport.
(c) Clean the catchment basins at such other times as City deems
necessary to provide sufficient volume to capture the extreme event debris flow. In any event,
catchment basins shall be cleaned whenever the volume of sediment or debris in any catchment
basin reaches the point that the "extreme event volume" for the hydrolog/c basin, is reduced below
the value shown in Column I of Exhibit 'B" attached hereto.
8) City shall become responsible for the maintenance of catchment
basins as provided for above only upon the occurrence of the following events:
(a) For each basin located within the corporate limits of the City - at, er
each catchment basin has been built and the owner of the property upon which the catchment basin
is located transfers title to the property, including the right of ingress and egress to the basins, to the
City. Existing catchment basins are located on lots 37I, 378, 384 and 387 in that certain
subdivision known as Terrabay as shown on that certain map entitled "MAP OF TERRABAY'
filed at Volume 121 at Pages 65 through 79 inclusive, of Subdivision Maps in the Office of the
County Recorder.
(b) For each basin located within the unincorporated area - after the
catchment basin has been built and an easement or fee title to the property upon which the
catchment basin is located has been transferred to the City~ including the right of ingress and egress
to the basin.
9) To the extent that the final maps for the Terrabay development note that
future dedications are to be made to the Authority, City and County agree that such dedications
shall be made to City.
10) This agreement contains the entire agreemem between the parties hereto
with respect to the matters covered, and supersede all prior agreements, written or oral, between
the parties. No other agreement, statement or promise made by any party not contained herein
shall be binding or valid.
11) The parties agree that each party and counsel for each party has reviewed this
agreement, that this agreement shall be deemed for all purposes to have been jointly drafted
by all parties hereto, and that any rule of construction to the effect that ambiguities
are to be resolved against the ckaiting party shall not apply in the interpretation of this agreement
or any amendment thereto.
12) This agreement may be executed in counterparts.
13) HOLD HARMLESS
h is agreed that County shall defend, hold harmless, and indemnify City, its officers
and employees, from any and all claims for injuries or damage to persons and/or
property, which arise out of the terms and conditions of the Agreement and which
result from the negligent acts or omissions of County, its officers or employees.
It is further agreed that City shall defend, hold harmless, and indemnify
County, its officers and employees, from any and all claims for injuries or damage to persons and/or
property, which arise out of terms and conditions &this Agreem{mt and which result from the
negligent acts or omissions of City, .its officers, or employees.
In the event of concurrent negligence of City, its officers or employees, and
County, its officers or employees, then the liability for any and all claims for injuries or damages to
persons or property which ar/se out of the terms and conditions of this Agreement shall be
apportioned according to the California theory of comparative negligence.
3
IN WITNESS WHEREOF, the parties have executed this agreement as of the day and year
first above written:
COUNTY OF SAN MATEO
Jerry Hill, President
Board of Supervisors
County of San Mateo
Attest:
Clerk of Board
CITY O1~ SOUTH SAN FRANCISCO
Mayor
Attest:
City Clerk
4
TOTAL P.12
DATE:
Staff Report
June 12, 2002
TO:
The Honorable Mayor and City Council
FROM:
Director of Public Works
SUBJECT:
McLellan Drive Extension - Joint Venture Project Between Town of Colma, San
Mateo County, and the City of South San Francisco (Managing Partner)
Project No. 51-13231-0201 (TR-01-2), Bid No. 2321
RECOMMENDATION:
It is recommended that the City Council adopt a resolution authorizing the following:
Award the construction contract for McLellan Drive Extension to Bauman Landscape, Inc.,
Richmond, CA in an amount not to exceed $1,889,259.
Amend the 2001-2002 Capital Improvement Program (CIP) for this project to add $258,000 from the
funds to come from Measure A ($188,000) and Gas Tax ($70,000).
Amend the 2001-2002 Capital Improvement Program (CIP) to add $1,660,000 to the project from the
reserve fund to pay for Colma and San Mateo County's share until they can provide the funds. As
they pay, the reserve fund will be reimbursed.
BACKGROUND:
This project will construct a two lane road between Mission Road and Hillside Boulevard. This will
improve circulation and access of traffic around the new BART station that will open in December
2002. It will also provide better east/west access for the residents of South San Francisco. The road
is designed to be expanded to four lanes in the future and will be eligible for Federal funding when
expansion is justified.
Following is a tabulation of the bids received on April 25, 2002:
.fl
Bidder Base Bid Bid Alt. No. I Base Bid + Alt I Bid Alt. No. 1I
Bauman Landscape, Inc. $1,628,559 $260,700 $1,889,259 $966,780
Richmond, CA
Pavex Construction Division $1,803,595 $215,580 $2,019,175 $1,051,080
Redwood City, CA
O.C. Jones & Sons, Inc. $1,817,830 $217,590 $2,035,420 $936,000
Berkeley, CA
Bay Pacific Pipelines, Inc. $1,686,639 $355,980 $2,042,619 $1,055,600
Novato, CA
Staff Report
To: The Honorable Mayor and City Council
Re: McLellan Drive Extension
Date: June 12, 2002
Page: 2 of 3
Ghilotti Bros., Inc. $1,854,654 $196,704 $2,051,358 $1,155,140
San Rafael, CA
Interstate Grading & Paving, $1,843,752 $227,805 $2,071,557 $963,280
Inc.
South San Francisco, CA
O'Grady Paving, Inc. $1,735,932 $382,680 $2,118,612 $1,160,700
Mountain View, CA
Ghilotti Construction Co. $1,959,263 $251,625 $2,210,888 $883,075
Santa Rosa, CA
McGuire & Hester $1,974,434 $418,380 $2,392,814 $1,289,200
Oakland, CA
Engineer's Estimate $1,815,325 $407,400 $2,222,725 $873,200
Specifications require that the award be made to the contractor with the lowest Base Bid plus
Alternate Bid I. Staff recommends that the construction contract be awarded to Bauman Landscape,
Inc. in the amount of $1,889,259. The project also includes two items from Bid Alternate 11 schedule
item #6 sleeves ($7,480) and item #8 textured concrete ($11,900). Deleted from base Bid are Items
24, 25, 26, & 27 for the Water System (-$53,650).
The following is a summary of the Project Cost:
Design and Administration
Right-of-way and Environmental documents
Construction
Change order for landscaping (future)
Change order for sleeves/textured concrete
Change order to delete fire hydrants
Construction Contingencies
Construction Management
Wetland Mitigation
$ 225,000
$ 290,000
$1,889,259
$ 250,000 (Not in Bauman Contract)
$ 19,380
$ (53,650)
$ 193,001
$ 102,010
$ 135,000
TOTAL $3,050,000
Construction is expected to start in the month of July 2002 and be completed by November 2002.
FUNDING:
Project costs will be divided between San Mateo County ($1,100,000), Town of Colma ($850,000)
and South San Francisco ($1,100,000).
Staff Report
To:
Re:
Date:
The Honorable Mayor and City Council
McLellan Drive Extension
June 12, 2002
Page: 3 of 3
An existing fire protection system serving the school is in place. The County will be reimbursed for
right of way and environmental document costs. South San Francisco to be reimbursed for the
design and administrative costs in preparations of the contract documents. The total project funding
breakdown is as follows:
$1,100,000
$ 85O,OOO
$1,100,000
$3,050,000
South San Francisco
Town of Colma
San Mateo County
Project was budgeted for $864,000 in South San Francisco's 2001-2002 CIP. Another $258,000 is
required to meet our cost commitment for the project. South San Francisco has already paid the
Design and Administrative costs of $225,000 and needs to provide $875,000 more. Colma will
forward their share $850,000 and San Mateo County will forward $810,000 (deducting the $290,000
they already paid for right-of-way and environmental document costs) to South San Francisco.
South San Francisco will use reserve funds to cover Colma's and the County's share to encumber the
projects funding. When the funds are received from Colma and the County, they will be credited
back into South San Francisco's reserve fund. Agreements are in place that identify San Mateo
County and Colma's responsibilities to the project (to be approved by City Council).
BY: Joh~Gi--bb'~
Dir6ctor of Public Works
Approved: /~, ~ //~'1~ Michael A. Wilson
City Manager
ATTACHMENTS: Resolution
McLellan Drive Extension Breakdown
FgdJG/ed
RESOLUTION NO.
CITY COUNCIL, CITY OF SOUTH SAN FRANCISCO, STATE OF CAL~ORNIA
A RESOLUTION AWARDING THE CONSTRUCTION CONTRACT
FOR MCLELLAN DRIVE EXTENSION TO BAUMAN LANDSCAPE,
INC., IN AN AMOUNT NOT TO EXCEED $1,889,259 AND AMENDING
THE 2001-2002 CAPITAL IMPROVEMENT PROGRAM BUDGET (NO.
02-17) FOR THIS PROJECT TO ADD $258.000 FROM THE FUNDS TO
COME FROM MEASURE A ($188,000) AND GAS TAX ($70,000) AND
AMENDING THE 2001-2002 CAPITAL IMPROVEMENT PROGRAM
BUDGET TO ADD $1,660,000 ($810,000 FROM SAN MATEO COUNTY
AND $850,000 FROM THE TOWN OF COLMA) TO THE PROJECT
FROM THE RESERVE FUND TO PAY FOR COLMA AND SAN MATEO
COUNTY'S SHARE
WHEREAS, the City desires to award the construction contract to the lowest responsible
bidder, Bauman Landscape, Inc. in an amount not to exceed $1,889,259 for the McLellan Drive
Extension project; and
WHEREAS, the project costs will be divided between San Mateo County ($1,100,000, Town
of Colma ($850,000) and South San Francisco ($1,100,000).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San
Francisco that the City Council hereby awards the construction contract for the McLellan Drive
Extension Project to Bauman Landscape, Inc., in an amount not to exceed $1,889,259 and amending
the 2001-2002 Capital Improvement Program for this project to add $258,000 from the funds to
come from Measure A ($188,000) and Gas Tax ($70,000) and amending the 2001-2002 Capital
Improvement Program to add $1,660,000 ($810,000 from San Mateo County and $850,000 from the
Town of Colma) to the project from the reserve fund to pay for Colma and San Mateo County's
share.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
City Council of the City of South San Francisco at a meeting held on the day of
__, 2002 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST:
City Clerk
F:\file cabinefiCurrent Reso's\6-12McLellanDrive.extension.res.doc
McLellan Extension
Base Bid Schedule $1~628,559
Water System :'
~ ~ $53,650 ~
i
Sound Wall : ~'~:~ ::;: '' ~" t3,400
3'
Keystone
Wall
Sidewalk
Sleeves ~:;: :'
Textured Concrete
$!,~854~9~9
Contract Award
Contract Change
Oreder Number I
Base Bid Plus Alternate Schedule I plus Bid Item.
6 and 8 of the Alternate Bid Schedule II
Delete Bid Items 24,25,26 &27
$1,908,639
-$53,650
Revise Contract Amount
$1,854;989
May 15, 2002
Gateway Childcare Center
Draft Project Schedule Dec
35 Contract Documents Phase Client kick off meeting 1day Wed1116102Wed1116102
36 Prepare 50% CD coordination package 9wks Mon 10/14/02 Fri 12/13/02
37 500/0 Cd coordination package due 1 day Mon 12/16/02 Mon 12/16/02
38 50% CD Client review meeting 1 day Wed 12/t8/02 Wed 12/18102
39 issue 50% CD coordination package and new backgrounds 1day aon 12/23/02 !aon 12/23/02
40 Prepare 75% CD coordination package 4 wks Mon 1/6/03 Fri 1/31/03 I~
41 75°/0 Cd permit documents package due 1 day Fri 1/31/03 Fri 1/31/03
42 75% CD Client review meeting and sign off I day Wed 2/5103 Wed 2/5/03
43 ,ssue 75% 00 permit documents package 1 day Mon 2/10/03 Mon 2/10/03
4~Submit permit documents 1day Mort 2/10/03 ~on 2/10/03
45 Prepare 100% CD Bid documents 4 wks Tue 2/25/03 Mon 3/24/03 I ~ 2/2!
46 Prepare specifications 4 wks Tue 2/25/03 Mon 3/24/03
~, 100% co bid documents due 1day ~on 3/24/03~ ~on 3/24/03
48 100% CD Client Review/Approval Meeting 1 day Wed 2/26103 Wed 2/26103
~ S~D P,ASE 31 days Mon 3/3/03 Mo. 4/14/03
50 Begin Bid period 1 day Mon 3/3/03 Mon 3/3/03
51 Send out invitations to bid 1 day Fri 3/7/03 Fri 3/7/03
52 Bid Period 15 days Mort 3/10/03 Fri 3/28/03 I~ 3/!°
=3 Bids Due 1 day fri 3/28/03 fri 3/28/03 i i i i ~3/~ i
54 Value Engineering 1 wk Mon 3/31/03 Fri 4/4/03
55 Issue Construction Documents I day! Mon 4/14/03 aon 4/14/03
56 CONSTRUCTION ADMINISTRATION PHASE 176 days: Mon 4/21103 Mon 12/22/03
57 Begin Construction Administration I day Mort 4/21/03 Mon 4/21/03
58 Construction Team kick off meeting I day Wed 4/23/03 Wed 4/23/03
59 Construction Period 35 wks Mon 4/21/03 Fri 12/19/03
50 Substantial Completion I day Mon 12/1/03 Mon 12/1/03 ~ ~ i i i i ~ i i i ~ i ~1~.
6~ Project punch list period 3wks Mon 12/1/03 Fri 12/19/03
62 Project Turn Over l day Mon 12/22/03 Mon 12/22/03
StarkweatherBondy architecture LLP Gateway Project Schedule Draft 2.rnpp
2