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Home My WebLink About2023.01.23 Council Workshop Packet AGENDA City Council Workshop Meeting 7:05 PM - Monday, January 23, 2023 Pasco City Hall, Council Chambers & GoToWebinar Page 1. MEETING INSTRUCTIONS for REMOTE ACCESS - The Pasco City Council Workshops are broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive and on the City’s Facebook page at www.facebook.com/cityofPasco. To listen to the meeting via phone, call (415) 655-0060 and use access code 307-404-066. 2. CALL TO ORDER 3. ROLL CALL (a) Pledge of Allegiance 4. VERBAL REPORTS FROM COUNCILMEMBERS 5. ITEMS FOR DISCUSSION 3 - 22 (a) 2060 and 2163 Housing Program Interlocal Agreements 23 - 67 (b) Pasco School District Capital Facility Plan Update and Impact Fee Report 68 - 151 (c) Review Proposed Process Water Reuse Facility Wastewater Treatment Agreement with Burnham SEV Pasco, LLC 152 - 158 (d) Ordinance - 2023 Revenue Bond for LID No. 151 Debt Service 6. MISCELLANEOUS COUNCIL DISCUSSION 7. EXECUTIVE SESSION Page 1 of 160 (a) Consideration of the Minimum Offering Price for Sale or Lease of Real Estate if There’s a Likelihood that Disclosure Would Decrease the Price per RCW 42.30.110(1)(c); and Discussion with Legal Counsel About Current or Potential Litigation per RCW 42.30.110(1)(i) (15 minutes) 8. ADJOURNMENT 9. ADDITIONAL NOTES 159 - 160 (a) Adopted 2020-2021 Council Goals (Reference Only) (b) REMINDERS • Monday, January 23, 4:00 PM: Hanford Area Economic Investment Fund Advisory Committee Meeting – Ben Franklin Transit Main Conference Room (COUNCILMEMBER PETE SERRANO, Rep.) • Tuesday, January 24, 5:00 PM: HAPO Center (TRAC) Advisory Board Meeting – HAPO Center (COUNCILMEMBER JOSEPH CAMPOS and MAYOR PRO TEM CRAIG MALONEY) • Wednesday, January 25, 7:30 AM: Visit Tri-Cities Board Meeting – 7130 W. Grandridge Blvd., Kennewick (COUNCILMEMBER ZAHRA ROACH, Rep.; COUNCILMEMBER DAVID MILNE, Alt.) • Thursday, January 26, 4:00 PM: TRIDEC Board Meeting – 7130 W. Grandridge Blvd., Kennewick (COUNCILMEMBER IRVING BROWN, Rep.; COUNCILMEMBER DAVID MILNE, Alt.) • Thursday, January 26, 5:30 PM: Benton Franklin Community Action Connections Board Meeting – 720 Court Street, Pasco (COUNCILMEMBER ZAHRA ROACH, Rep.; COUNCILMEMBER PETE SERRANO, Alt.) This meeting is broadcast live on PSC-TV Channel 191 on Charter/Spectrum Cable in Pasco and Richland and streamed at www.pasco-wa.gov/psctvlive. Audio equipment available for the hearing impaired; contact the Clerk for assistance. Servicio de intérprete puede estar disponible con aviso. Por favor avisa la Secretaria Municipal dos días antes para garantizar la disponibilidad. (Spanish language interpreter service may be provided upon request. Please provide two business day's notice to the City Clerk to ensure availability.) Page 2 of 160 AGENDA REPORT FOR: City Council January 20, 2023 TO: Adam Lincoln, Interim City Manager City Council Workshop Meeting: 1/23/23 FROM: Rick White, Director Community & Economic Development SUBJECT: 2060 and 2163 Housing Program Interlocal Agreements I. REFERENCE(S): Proposed 2060 Interlocal Proposed 2163 Interlocal II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: which 2060, SHB Legislature approved Washington the 2002, In State authorized a surcharge for certain recorded documents. The surcharge is dedicated towards capital projects reducing or minimizing homelessness. 2060 Fund eligible uses for capital improvement projects include: • Acquisition of existing residential property. • Acquisition of vacant land. (Application must demonstrate ability to begin construction within two years, and project completion within five years). • Construction costs. (New construction, Rehabilitation, Demolition, On-site infrastructure improvements, Permits, Project Management). • to limited not but costs soft Development Engineering, including Architectural, Insurance, Developer Fees, and Construction Interest. In 2005, the Washington State Legislature adopted HB 2163, which also authorized a surcharge for certain recorded documents, focuses on services to minimize gaps in housing services to vulnerable populations. Page 3 of 160 2163 Fund eligible uses include: • Rental and furnishing of dwelling units for the use of homeless persons. • Costs of developing affordable housing for homeless persons, and services residing families and in homeless formerly for individuals transitional housing or permanent housing and still at risk of homelessness. • Operating subsidies for transitional housing or permanent housing serving formerly homeless families or individuals. • eviction Services to prevent homelessness, such as emergency prevention programs including temporary rental subsidies to prevent homelessness. • Temporary services to assist persons leaving state institutions and other state programs to prevent them from becoming or remaining homeless. • Outreach services for homeless individuals and families. • Development and management of local homeless plans including homeless census data collection. identification of goals, performance measures, strategies, and costs and evaluation of progress towards established goals. • Rental vouchers payable to landlords for persons who are homeless or below thirty percent of the median income or in immediate danger of becoming homeless. • Other activities to reduce and prevent homelessness as identified for funding in the local plan. Both of these Programs were administered by the Benton & Franklin Counties Department of Human Services (DHS) through two separate Interlocal Agreements. In the 2060 Fund Interlocal, the City was represented by three Council Members and a Planning staff member. By contrast, in the 2163 Fund Interlocal, the City was represented by Planning staff with the rest of the committee composed of volunteers from the Continuum of Care. Both Interlocal Agreements have expired and the DHS is seeking renewal from Franklin County and the Cities within for continuation of the Programs . V. DISCUSSION: Mr. Kyle Sullivan with Benton County Department of Human Services will be present at the Council Workshop and provide a summary of the proposed Interlocal Agreements. Page 4 of 160 1 of 9 INTERLOCAL AGREEMENT BETWEEN THE COUNTY OF FRANKLIN AND: THE CITY OF CONNELL, THE CITY OF KAHLOTUS, THE CITY OF MESA, AND THE CITY OF PASCO ADMINISTERING FUNDS GENERATED THROUGH THE AFFORDABLE HOUSING FOR ALL SURCHARGE, RCW 36.22.178 This Interlocal Agreement, hereafter referred to as “AGREEMENT”, is entered into between Franklin County (represented by Benton County Department of Human Services), a political subdivision of the State of Washington, hereinafter referred to as “COUNTY”, with its principal offices located at 1016 North 4th Avenue, Pasco, Washington, 99301; the City of Connell, a municipal corporation with its principal offices located at 104 E. Adams Street, Connell, Washington 99326; the City of Kahlotus, a municipal corporation with its principal offices located at E. 130 Weston, Kahlotus, Washington, 99335; the City of Mesa, a municipal corporation with its principal offices located at 103 Franklin Street, Mesa, Washington 99343; and the City of Pasco, a municipal corporation with its principal offices located at 525 North Third, Pasco, Washington, 99301; hereinafter collectively referred to as “CITIES”. WHEREAS, the Washington State Legislature passed Substitute House Bill 2060 (SBH 2060) during the 57th Legislative session which became effective on June 13, 2002 and was codified as RCW 36.22.178, as thereafter amended; WHEREAS, RCW 36.22.178 directs a thirteen dollar ($13) surcharge, named the “Affordable Housing for All Surcharge,” (hereinafter “the Surcharge”) on certain documents recorded with the County Auditors office for the purpose of providing funds for affordable low-income housing; WHEREAS, RCW 36.22.178 directs that of the funds collected under the Surcharge, five percent (5%) may be retained by the COUNTY to compensate for the collection, administration, and local distribution of the funds, forty percent (40%) of the remaining shall be remitted to the Washington State Department of Commerce and the remaining 60 percent (60%) be retained by the COUNTY; WHEREAS, the portion of the Surcharge retained by the COUNTY shall be allocated to eligible housing activities that serve extremely low and very low- income households in the COUNTY and the CITIES according to an Interlocal Agreement between the COUNTY and the CITIES consistent with county wide and local housing needs and policies; WHEREAS, the parties are authorized to enter into such agreements by virtue of Chapter 39.34 RCW, the Interlocal Cooperation Act; WHEREAS, this Agreement is entered into by the COUNTY under the authority of RCW 36.32.120, RCW 36.22.178, and Chapter 43.185C RCW; and Page 5 of 160 2 of 9 WHEREAS this Agreement is entered into by the CITIES under authority of RCW 36.22.178 and Chapter 43.185C RCW. NOW, THEREFORE, in consideration of the terms and conditions contained herein, it is mutually agreed by and between the COUNTY and CITIES as follows: Sec. 1. Purpose: The purpose of this Agreement shall be to provide for the collection, administration, and allocation of the COUNTY retained portions of the Affordable Housing for All Surcharge, RCW 36.22.178. Sec. 2. Parties: The parties to this Agreement shall be Franklin County (represented by Benton County Department of Human Services), the City of Connell, the City of Kahlotus, the City of Mesa, and the City of Pasco. Sec. 3. Term: This Agreement shall be for five (5) years from the date of execution unless any party elects to terminate the Agreement pursuant to the termination clause of this Agreement. Renewal of this Agreement shall be by separate written agreement of the parties. Sec 4. Administration: Recommendations for the allocation of COUNTY retained portions of the Surcharge shall be made by the Surcharge Oversight Committee (hereinafter “Committee”). All Committee members shall be elected or appointed officials, directors, or employees of the respective government entity which they represent. Each member shall serve at the pleasure of the legislative body appointing them to the position, and their terms shall not be limited or restricted in any other fashion. The Committee shall discharge its duties pursuant to the terms of the Operating Bylaws attached as Exhibit A and hereby adopted by reference. The members of the Committee may change provisions of the Operating Bylaws by majority vote so long as such changes are not contrary to law or to this Interlocal Agreement. All recommendations of the Committee shall be presented by the Administrator of the Benton County Department of Human Services (hereinafter “DHS”) to the Franklin County Board of Commissioners, who shall, by majority vote, make final funding decisions. If the Franklin County Board of Commissioners votes in a manner contrary to recommendations by the Committee, then findings, on the record, shall be made to support such a contrary vote. (a) The Committee shall be composed of the nine (9) representatives to be appointed by the Cities and Franklin County. More specifically: 1. The County Administrator for Franklin County or designee, 2. The City of Pasco shall appoint a minimum of one (1) up to a maximum of four (4) representatives, 3. The Cities of Connell, Kahlotus, and Mesa shall each appoint one (1) representative each to the Committee for a total of three (3), Page 6 of 160 3 of 9 4. The Administrator of DHS or designee, as a non-voting member ex officio. The DHS shall be responsible for the administrative aspects of managing the COUNTY retained portions of the Surcharge. These responsibilities shall include any and all tasks associated with the funding source up to and including but not limited to: managing the Interlocal Agreement, application, and Request for Proposals (RFP) processes, providing technical assistance to interested applicants, administrative support to the Oversight Committee during the process of applicant screening and selection, administration of contracts necessary for selected projects, and contract compliance oversight and monitoring for selected projects. The initial 5% of the surcharge permitted to be retained by COUNTY for administrative purposes shall be allocated to DHS to help defray its expenses, including salaries of employees, necessary in carrying out its responsibilities under this paragraph. All awarded funds shall be disbursed pursuant to an appropriate contract between the award recipient and COUNTY. Such a contract shall ensure that the awarded funds are used solely for purposes permitted by RCW 36.22.178 and shall provide mechanisms for COUNTY to recover the awarded funds if they are misused. Sec. 5. No Separate entity or Joint Property: This Agreement does not provide for or authorize any of the following: a. the acquisition, holding, or disposal of property other than the funds collected hereunder; b. the financing of any joint or cooperative undertaking; c. the creation of any separate legal entity; d. the creation of any right or privilege which may be claimed by any third party not party this Agreement; Sec. 6. Hold Harmless/Indemnification: Each party agrees to be responsible for, and assume liability for, its own wrongful and negligent acts or omissions, or those of its officers, agents or employees to the fullest extent allowed by law, and agrees to hold harmless, indemnify, and defend the other parties from any such liability. In the case of negligence of more than one party, any damages allowed shall be levied in proportion to the percentage of negligence attributable to each party; and each party shall have the right to seek contribution from each of the other parties in proportion to the percentage of negligence attributable to each of the other parties. Sec 7. Governing Law and Venue: This Agreement has been and shall be construed as having been entered into and delivered within the State of Washington, and it is mutually understood and agreed by each signatory party hereto that this Agreement shall be governed by the laws of the State of Washington and any applicable Federal laws and regulations both as to interpretation and performance. Any action hereunder must be brought in the Superior Court of Washington in and for the County of Franklin unless either party determines that a Federal forum is appropriate to the issues raised. Sec. 8. Termination: Notwithstanding any other provision of this Agreement, any party may terminate this Agreement effective January 1st of any given year by giving written notice of intent to terminate by July 1st of the preceding year, with the termination to Page 7 of 160 4 of 9 become effective no earlier than January 1st of the following year. Such notice of termination shall be by appropriate action of the elected governing body of the terminating party and shall be provided to all parties subject to this Agreement. A party may not terminate this Agreement if doing so will be contrary to State law at the time of the intended termination, or if terminating will cause the signatories to this Agreement, or any one of them, to be in violation of State law. Sec. 9. Notice: Any formal notice or communication to be given under this Agreement shall be deemed properly given, if personally delivered, of if mailed postage prepaid and addressed: To: Franklin County To: City of Mesa Attn: County Administrator 103 Franklin Street 1016 North 4th Avenue Post Office Box 146 Pasco, Washington 99301 Mesa, Washington 99343 To: City of Connell To: City of Pasco 104 E. Adams Street 525 North Third Post Office Box 1200 Pasco, Washington 99301 Connell, Washington 99326 To: City of Kahlotus E. 130 Weston Post Office Box 100 Kahlotus, Washington 99335 Sec. 10. No Agency: The parties and their employees or agents performing under this Agreement are not deemed to be employees, officers, or agents of the other parties to this Agreement. Sec. 11. Record Keeping: Records shall be kept by the Benton County Department of Human Services, sufficient to document all activities, actions and decisions made by the parties pursuant to this Agreement. This Agreement does not impose any obligation on individual parties to keep any records beyond what they are required to keep by law. Sec. 12. Assignment: No parties to this Agreement shall have the right to transfer or assign, in whole or in part, any or all of its obligations and rights hereunder. Sec. 13. Amendments or Modifications: This Agreement may be amended, altered, or changed in any manner by the mutual written consent of all parties. If any proposed amendment cannot be agreed to by all of the parties, then the proposed amendment shall not be made and the parties shall conduct their business pursuant to this Agreement as if such proposed amendment was not proposed. Sec. 14. Waiver: No waiver by any party of any term or condition of this Agreement shall be deemed or construed to constitute a waiver of any other term or condition or of any subsequent breach, whether of the same or a different provision of this Agreement. Page 8 of 160 5 of 9 Sec. 15. Severability: If any of the provisions contained in this Agreement are held illegal, invalid, or unenforceable, the remaining provisions shall continue in full force and effect. Sec. 16. Filing: Copies of this Agreement shall be filed with the Franklin County Auditor and the Secretary of State after execution of this Agreement by all parties. Sec. 17. Counterparts: This Agreement may be executed by facsimile and in any number of current parts and signature pages hereof with the same affect as if all parties to this Agreement had all signed the same document. All executed current parts shall be construed together, and shall, together with the text of this Agreement, constitute one and the same instrument. Sec. 18. Effective: This Agreement shall become effective upon approval by all of the parties and recording with the Franklin County Auditor. Dated this _____ day of ______________, 2022. BOARD OF COMMISSIONERS, FRANKLIN COUNTY, WASHINGTON ________________________________________ Chair ________________________________________ Member ________________________________________ Member Attest: Approved as to Form: ___________________________ ___________________________ Clerk of the Board Deputy Prosecuting Attorney Page 9 of 160 6 of 9 CITY OF CONNELL ________________________________ Lee Barrow, Mayor Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 10 of 160 7 of 9 CITY OF KAHLOTUS ________________________________ Dave Wooten, Mayor Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 11 of 160 8 of 9 CITY OF MESA ________________________________ Jim Cronewett, Mayor Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 12 of 160 9 of 9 CITY OF PASCO ________________________________ Blanche Barajas, Mayor Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 13 of 160 WHEN RECORDED RETURN TO: City of Pasco City of Connell City of Mesa City of Kahlotus 525 North 3rd Ave. PO Box 1200 PO Box 146 PO Box 100 Pasco, WA 99301 Connell, WA 99326 Mesa, WA 99343 Kahlotus, WA 99335 INTERLOCAL AGREEMENT BETWEEN THE COUNTY OF FRANKLIN, AND: THE CITY OF PASCO , THE CITY OF CONNELL, THE CITY OF MESA, AND THE CITY OF KAHLOTUS; IN PROVIDING FOR LOCAL HOMELESS HOUSING AND ASSISTANCE PROGRAMS/PLANS This Interlocal Agreement, hereinafter referred to as “Agreement”, is entered into as of the _____ day of ___________________________, 20___ between Franklin County, a political subdivision of the State of Washington, hereinafter referred to as “COUNTY,” with its principal offices located at 1016 North 4th Avenue, Pasco Washington, 99301; the City of Pasco, a municipal corporation with its principal offices located at 525 North 3rd Ave., Pasco, Washington 99301; the City of Connell, a municipal corporation with its principal offices located at 104 E Adams Street, Connell, Washington, 99326-1200; the City of Mesa, a municipal corporation with its principal offices located at 103 Franklin Street, Mesa, Washington 99343; the City of Kahlotus, a municipal corporation with its principal offices located at E 130 Weston, Kahlotus, Washington 99335; hereinafter all the aforementioned cities referred to collectively as “CITIES.” This Agreement is entered into by the COUNTY under the authority of RCW 36.32.120, RCW 36.22.179, and Chapter 43.185C RCW. This Agreement is entered into by the CITIES under authority of RCW 36.22.179 and Chapter 43.185C RCW. This Agreement is in conformity with Chapter 39.34 RCW, the Interlocal Cooperation Act. To carry out the purposes of this Agreement and in consideration of the benefits to be received by each party it is agreed as follows: Sec. 1. Purpose: The purpose of this Agreement shall be to provide for the collection, administration, and expenditure of RCW 36.22.179 funds (also commonly referred to as “HHAA” or “2163” funds, after the name and number of the enacting legislation) to accomplish the purposes of chapter 484, Laws of 2005, RCW 36.22.179, and Chapter 43.185C RCW in the COUNTY’S and CITIES’ providing of local homeless housing programs/plans. Sec. 2. Parties: The parties to this Agreement shall be Franklin County, the City of Pasco, the City of Connell, the City of Mesa, and the City of Kahlotus. Sec. 3. Term: This Agreement shall be for five (5) years from the date of execution unless any party elects to terminate the Agreement per the termination clause of this Agreement. Renewal of this Agreement shall be by separate written agreement of the parties. Sec. 4. The COUNTY shall: 1) By resolution approve and operate a homeless housing program/plan as authorized per Chapter 43.185C RCW. Page 14 of 160 2) File the homeless housing program/plan with the State of Washington Department of Community, Trade, and Economic Development. 3) Collect all funds authorized by RCW 36.22.179. 4) By ordinance create a Homeless Housing and Assistance Fund or Account for deposit of the specified percentage of RCW 36.22.179 funds detailed in Section 4(5)(ii) of this Agreement. 5) Administer all collected RCW 36.22.179 funds in the following sequential order as follows: i) Retain two percent (2%) of all funds collected under RCW 36.22.179 as a COUNTY collection fee. ii) Deposit sixty percent (60%) of the remaining balance of collected RCW 36.22.179 funds into the Homeless Housing and Assistance Fund, six percent (6%) of which subsequently may be paid to the COUNTY general fund to satisfy its administrative costs related to the homeless housing program/plan, and the balance used by the COUNTY for programs that directly accomplish the goals of the Franklin County Five (5) Year Homeless Housing Plan and in accordance with RCW 43.185C.050, as now in effect or hereafter amended. iii) The remaining portion of the funds collected under RCW 36.22.179 funds shall be remitted to the State Treasurer for deposit in the State’s homeless housing account. 6) The COUNTY may enter into a separate Professional Services Agreement with an independent contractor to assist with the continued development and management of the Franklin County homeless housing plan referenced above, and the implementation thereof; and use any or all of the six percent referenced above to pay for such services. 7) The Benton County Department of Human Services is designated as the representative of the COUNTY and as the “local government” as defined in the Act for administering ESSHB 2163 and ESSHB 1359 funds retained by the COUNTY Auditor pursuant to the Act, to be used for the following purposes, within Franklin County: i) Rental and furnishings of units for the use of homeless persons. ii) Costs of developing affordable housing for homeless persons and services for formerly homeless individuals and families residing in transitional housing or permanent housing and still at risk of homelessness. iii) Operating subsidies for transitional housing or permanent housing serving formerly homeless families or individuals. iv) Services to prevent homelessness, such as emergency eviction prevention programs including temporary rental subsidies to prevent homelessness. v) Temporary services to assist persons leaving state institutions and other state programs to prevent them from becoming or remaining homeless. ii) Outreach services for homeless individuals and families. Page 15 of 160 iii) Development and management of local homeless plans including homeless census data collection; identification of goals, performance measures, strategies, and costs and evaluation of progress towards established goals. iv) Rental vouchers payable to landlords for persons who are homeless or below thirty percent of the median income or in immediate danger of becoming homeless. v) Other activities to reduce and prevent homelessness as identified for funding in the local plan. vi) Other duties as required by the State of Washington and the U. S. Department of Housing and Urban Development such as the COUNTY’S administration of the annual Point in Time Count, submission of data and required reports, participation in a Homeless Management Information System (HMIS), and coordination of a countywide homeless housing taskforce. Sec. 5. Each City shall: 1) Be authorized to appoint two (2) persons to the Benton Franklin Housing Continuum of Care which shall serve in an advisory capacity to the Benton County Department of Human Services in regard to the administration of the Homeless Housing Plan. These seats may be filled with elected officials or designees, to be determined by the individual city. 2) This right is in return for the CITIES decision to not receive funds collected by the COUNTY under RCW 36.22.179 for the purpose of operating their own homeless housing program as authorized by RCW 43.185C.080. The funds collected by the COUNTY under RCW 36.22.179 instead shall be directed towards programs that accomplish the goals of the COUNTY’s homeless housing program. 3) By e xecuting this Agreement, the CITIES authorize the COUNTY to contract for services, as referenced in Section 4(6) of this Agreement. Sec. 6. Mutual Cooperation: All parties to this Agreement agree to provide mutual cooperation and make good faith efforts to assist one another in fulfilling the terms of this Agreement. Sec. 7. No Property Acquisition or Joint Financing: This Agreement does not provide for the acquisition, holding, or disposal of property other than the funds collected hereunder. Nor does this Agreement contemplate the financing of any joint or cooperative undertaking. There shall be no budget maintained for any joint or cooperative undertaking pursuant to this Agreement. Sec. 8. Termination: Notwithstanding any other provision of this Agreement, any party may terminate this Agreement effective January 1st of any given year by giving written notice of intent to terminate by July 1st of the preceding year (providing at least 6 months notice), with the termination to become effective no earlier than January 1st of the following year. Such notice of termination shall be by appropriate action of the elected governing body of the terminating party and shall be provided to all parties subject to this Agreement. Page 16 of 160 Sec. 9. Notice: Any formal notice or communication to be given under this Agreement shall be deemed properly given, if delivered, or if mailed postage prepaid and addressed: To: Franklin County To: City of Pasco Attn: County Administrator 525 North Third 1016 North 4th Avenue Pasco, WA 99301 Pasco, WA 99301 To: City of Connell To: City of Mesa 104 E Adams Street 103 Franklin Street P.O. Box 1200 P.O. Box 146 Connell, WA 99326-1200 Mesa, WA 99343 To: City of Kahlotus E. 130 Weston P.O. Box 100 Kahlotus, WA 99335 Sec. 10. Independent Contractors: The parties and their employees or agents performing under this Agreement are not deemed to be employees, officers, or agents of the other parties to this Agreement and shall be considered independent contractors. Sec. 11. Record Keeping: All parties to this Agreement shall maintain books, records, documents, and other evidence that properly reflect all costs of any nature expended in the performance of this Agreement. Such records shall reflect financial procedures and practices, participant records, statistical records, property and materials records, and supporting documentation. These records shall be subject at all reasonable times to review and audit by the parties to this Agreement, the Office of the Washington State Auditor, and other officials so authorized by law. Sec. 12. Non-Discrimination: All parties to this Agreement certify that they are equal opportunity employers. Sec. 13. Liability: Each party to this Agreement shall assume the risk of, be liable for, and pay all damage, loss, cost and expense of its officers, officials, and employees arising out of any duty performed, or not performed, while acting in good faith within the scope of this Agreement. Sec. 14. No Third-Party Beneficiaries: The parties to this Agreement do not intend by this Agreement to assume any contractual obligations to anyone other than the parties to this Agreement. The parties do not intend that there be any third-party beneficiaries. Sec. 15. Assignment: No parties to this Agreement shall have the right to transfer or assign, in whole or in part, any or all of its obligations and rights hereunder without the prior written consent of the other parties. Page 17 of 160 Sec. 16. Amendments or Modifications: This Agreement may be amended, altered, or changed in any manner by the mutual written consent of all parties. Sec. 17. Waiver: No waiver by any party of any term or condition of this Agreement shall be deemed or construed to constitute a waiver of any other term or condition or of any subsequent breach, whether of the same or a different provision of this Agreement. Sec. 18. Severability: If any of the provisions contained in this Agreement are held illegal, invalid, or unenforceable, the remaining provisions shall continue in full force and effect. Sec. 19. Administrator Designee for this Interlocal Cooperation Agreement: The Board of Franklin County Commissioners is designated as the administrator responsible for overseeing and administering this Agreement which provides for a joint and cooperative undertaking. Sec. 20. Filing: Copies of this Agreement shall be filed with the Franklin County Auditor and the Secretary of State after execution of this Agreement by all parties. Sec. 21. Counterparts: This Agreement may be executed by facsimile and in any number of current parts and signature pages hereof with the same affect as if all parties to this Agreement had all signed the same document. All executed current parts shall be construed together, and shall, together with the text of this Agreement, constitute one and the same instrument. Sec. 22. Effective: This Agreement shall become effective upon approval by all of the parties and recording with the Franklin County Auditor. Dated this _____ day of ____________________, 2022. BOARD OF COMMISSIONERS FRANKLIN COUNTY, WASHINGTON ________________________________________ Brad Peck ________________________________________ Clint Didier ________________________________________ Rocky Mullen Attest: Approved as to Form: ___________________________ ___________________________ Clerk of the Board Deputy Prosecuting Attorney Page 18 of 160 CITY OF PASCO _____________________________________ Name: _______________________________ Title: _________________________________ Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 19 of 160 CITY OF CONNELL _____________________________________ Name: _______________________________ Title: _________________________________ Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 20 of 160 CITY OF MESA _____________________________________ Name: _______________________________ Title: _________________________________ Attest: ____________________________ Title: ___________________________ Approved as to Form: _____________________________ Title: ___________________________ Page 21 of 160 CITY OF KAHLOTUS _____________________________________ Name: _______________________________ Title: _________________________________ Attest: ____________________________ Title: ___________________________ Approved as to Form: ____________________________ Title: ___________________________ Page 22 of 160 AGENDA REPORT FOR: City Council January 20, 2023 TO: Adam Lincoln, Interim City Manager City Council Workshop Meeting: 1/23/23 FROM: Rick White, Director Community & Economic Development SUBJECT: Pasco School District Capital Facility Plan Update and Impact Fee Report I. REFERENCE(S): 2021/2022 PSD Impact Fee Payments PowerPoint Presentation PSD 2022 Capital Facility Plan II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: IV. HISTORY AND FACTS BRIEF: In March of 2012, City Council adopted Ordinance No. 4046, which established school impact fees. An Interlocal Agreement (ILA) for implementation and processing of those fees was also approved by both the Pasco School District (PSC) and the City of Pasco. The current impact fees, established by Council through Ordinance No. 4046, are $4,700 (of this amount $17 is retained by the City for offsetting administrative costs) per single family unit and $4,525 per multi-family unit. In applicable circumstances, the PSD collects school mitigation fees from Franklin County developments based on the State Environmental Policy Act (SEPA). Franklin County has not adopted a school impact fee ordinance. This effort is supplemented by the City conditioning the use and extension of City water that include payment of applicable impact fees and conformance with City development regulations in appropriate circumstances. The terms of the Interlocal Agreement between the PSD and the City require the City to review and consider biennial updates of the PSD’s Capital Facilities Plan Page 23 of 160 (CFP) and if appropriate, incorporate the updated CFP into the City's capital facilities element of the Comprehensive Plan. V. DISCUSSION: The District will be requesting that Council consider a District Capital Facilities Plan update adopted by the Board of Directors in November 2022 with a six year planning period. The District would also like to take the opportunity at the Council Workshop to brief Council on the calculation of the fee formula and the details of the District's legal strategy for obtaining school mitigation fees from residential development in the unincorporated area through the SEPA process. The PSD would also like to take the opportunity at the Council Worksho p to brief Council on the calculation of the fee formula and the details of the District's legal strategy for obtaining school impact fees through the SEPA process. The PSD is precluded from using school impact fees for projects that are not included as a part of the capital facilities element of an adopted Comprehensive Plan. In this case, the PSD’s 2022 adopted CFP includes a fourth high school as well as an innovative high school as growth-related projects and the District is hoping to use impact fee revenue to pay for portions of these projects. City staff believes that the PSD’s strategic use of SEPA and the current process of conditioning extension of City utilities, assists in the receipt of applicable mitigation fees in many circumstances for residential development within the unincorporated areas school district. The PSD staff will provide Council an updated presentation and be available for questions. Page 24 of 160 MEMO From: Rick White, Community & Economics Development Director Date: January 18, 2023 Re: 2021 & 2022 School Impact Fees School Impact Fees 2021-2022 Comparison: MONTH 2021 2022 JANUARY $117,075.00 $88,977.00 FEBRUARY $460,716.00 $148,592.00 MARCH $327,810.00 $501,444.00 APRIL $168,588.00 $448,190.00 MAY $163,905.00 $369,211.00 JUNE $ 144,857.00 $107,235.00 JULY $79,611.00 $112,392.00 AUGUST $186,688.00 $148,750.00 SEPTEMBER $103,026.00 $148,230.00 OCTOBER $56,196.00 $159,481.00 NOVEMBER $93,028.00 $98,027.00 DECEMBER $58,983.00 $322,680.00 TOTAL: $1,960,483.00 $2,653.209.00 Page 25 of 160 Pasco School District 2022 Capital Facilities Plan Presentation to the Pasco City Council January 23, 2023Page 26 of 160 Purpose and Background •Capital Facilities Plan (CFP) provides a basis for school impact fees •GMA requires that, to collect school impact fees, the local jurisdiction must adopt the District’s CFP by reference into the jurisdiction’s Comprehensive Plan •PSD first adopted a CFP in 2011 following a recommendation from community summit •City of Pasco in 2012 adopted a school impact fee ordinance •CFP is updated every two years •2016 Update —City adopted but no requested change to fee amount •2018 Update —City adopted but no requested change to fee amount •2019 Update —City adopted but no requested change to fee amount •2022 CFP Update adopted by PSD Board on November 8, 2022 •No requested change to the fee amountPage 27 of 160 Components of a CFP Educational Program Standards Capital Facilities Inventory Enrollment Projections & Capacity Analysis Financing Plan School Impact or Mitigation FeesPage 28 of 160 Enrollment Forecasts and Capacity •Enrollment has grown by more than 2,000 students since 2012 •Enrollment forecasts project student enrollment will grow by nearly 1,200 students by 2028 •Enrollment has grown on average over 400 students each year through 2019 •The 2020-2022 pandemic disrupted student enrollment, however, enrollment is returning to pre-pandemic levels •Growth is projected to continue at all grade levels post- pandemicPage 29 of 160 Planning to Serve Growth: 2017 Bond •Three Rivers Elementary School and Columbia River Elementary School •Ray Reynolds Middle School & Stevens Middle School Expansion •Portable adjustments •Transportation and Maintenance Facility and Cooperative •Land acquisitionPage 30 of 160 Planning to Serve Growth: 2023 Bond •Comprehensive High School #3 •Small Innovative High School •CTE Modernization •Athletic Field at PHS •Land acquisition Bond election is February 14, 2023Page 31 of 160 School Impact Fee Parameters •One time charge on new residential development to address capacity needs created by new residential growth •May only be used to fund capacity projects included within the CFP adopted as a part of a jurisdiction’s Comprehensive Plan •Cannot be the sole source of funding •Must be expended within 10 years •Fees calculated based on a recognized formula developed consistent with GMA requirementsPage 32 of 160 School Impact Fee Formula •Uses growth-related facilities needs and costs identified in the CFP •Identifies a “per dwelling unit” share to ensure that only a portion of the cost to build schools is allocated to new housing ▪A “student generation rate,” which is an actual measure of the number of new students residing in new units, identifies the proportionate impact of a new dwelling unit on school facilities •Include a credit for state funds that the District anticipates receiving toward the capacity project •Includes a credit for the taxes that the new homeowner will pay in the future toward the same capacity improvement •Automatic discount of the calculated fee, after credits are applied, of 25% per the City of Pasco Ordinance –Additional District-discretionary discount reduces the fee furtherPage 33 of 160 Page 34 of 160 2022 Proposed Fees Proposed Impact Fees $4,700 for single homes (discounted by ≈ 52%) $4,525 for multi-family units (discounted by ≈ 77%)Page 35 of 160 2022 CFP Update •City ordinance requires District to submit an updated CFP at least once every two years •District submitted the 2018 CFP in May 2018 without action by the City •2019 CFP was approved by the City •2022 CFP re-establishes the two-year approval cycle and will be presented to the City for approvalPage 36 of 160 Impact Fees vs. Mitigation Fees Impact Fees Mitigation Fees Authority Growth Management Act State Environmental Policy Act PSD Jurisdictions (in control of jurisdiction) City of Pasco Franklin County Applicability All residential units Only non-SEPA exempt developments for which a condition is secured through the SEPA processPage 37 of 160 Collection of Mitigation Fees •Franklin County did not agree to the District’s renewed request to collect GMA school impact fees in 2016, 2018, or 2019 •PSD will renew effort in 2023 with updated CFP •PSD’s only avenue for seeking school mitigation for residential development in the County is through the State Environmental Policy Act •District efforts to collect SEPA mitigation fees prior to 2016 were unsuccessfulPage 38 of 160 Collection of Mitigation Fees •In 2017, PSD revised its procedures related to seeking SEPA mitigation •PSD monitors SEPA notices from Franklin County and provides comments and appeals •All non-exempt residential projects since that time are subject to recorded School Mitigation Agreements –SEPA-exempt development: District has no avenue for seeking school mitigation •The City provides additional support through City’s water connection requirementsPage 39 of 160 Policy 9223—Adopted 2019 •Establishes that school mitigation will be sought from all residential development within the District regardless of jurisdiction in an equitable and comprehensive manner •District shall use all legally available efforts to secure school mitigation from new residential development •Recognizes City of Pasco GMA impact fee ordinance •District shall continue to request adoption of a GMA school impact fee ordinance from Franklin CountyPage 40 of 160 DiscussionPage 41 of 160 WE ARE PASCOPage 42 of 160 Pasco School District 2022-2028 CFP Page 1 of 23 November 8, 2022 BOARD OF DIRECTORS Scott Lehrman, President Steven Christensen, Vice President Jesse Campos, Member Amy Phillips, Member Steve Simmons, Member PASCO SCHOOL DISTRICT NO. 1 2022-2028 CAPITAL FACILITIES PLAN SUPERINTENDENT Michelle Whitney Adopted by the Pasco School Board of Directors on November 8, 2022 Page 43 of 160 Pasco School District 2022-2028 CFP Page 2 of 23 November 8, 2022 Section 6 Financing Plan ........................................ 13 Section 7 School Impact or Mitigation Fees .......... 14 Appendices Appendix A—Charts & Supporting Data… ....... 15 Building Capacity ................................... 16 Building Condition Scores… .................. 17 Projected Enrollments ............................ 18 Needed Capacity ..................................... 19 Necessary Improvements & Costs… .... 20 Capital Facilities Financing Plan ............ 21 Appendix B—Impact Fee Calculations ............. 22 2022 Impact Fee… .................................. 23 TABLE OF CONTENTS Section 1 Introduction ............................................... 3 Section 2 Program Standards ................................... 6 Section 3 Capital Facilities Inventory ....................... 8 Section 4 Enrollment Projections & Capacity ........ 11 Section 5 Capital Facilities Needs…………………..12 Page 44 of 160 Pasco School District 2022-2028 CFP Page 3 of 23 November 8, 2022 SECTION 1 INTRODUCTION A. Purpose of the 2022 Update to the Capital Facilities Plan The Pasco School District (the “District”) in 2011 first adopted a Capital Facilities Plan (the “2011 CFP”) in compliance with the Washington State Growth Management Act, Chapter 36.70A RCW (the “GMA”), and City of Pasco Ordinance 4046 (the “School Impact Fee Ordinance”). The City of Pasco adopted the 2011 CFP on April 16, 2012, and adopted updates to the CFP in 2014, 2016, and 2019. Section 3.133.025 of the School Impact Fee Ordinance describes the elements that must be addressed in the CFP. They include “the District’s standard of service, an inventory of facilities, capacity by grade span, a six year enrollment forecast, facility needs and costs, a finance plan and calculation of the school impact fees.” Once the CFP with these elements is adopted, the Ordinance says “[t]he District shall file an update to its capital facility plan at least once every two years.” And, “[a]t least once every two years, commencing on April 15, 2014, the City Council shall review and consider the District submitted capital facilities plan update.” Following the 2016 CFP, the District adopted an updated CFP in April 2018 and forwarded the 2018 CFP update to the City of Pasco and Franklin County shortly thereafter. The City Council reviewed but did not act on that update. The District subsequently submitted the 2019 CFP to the City and the County, with the City subsequently adopting the 2019 CFP. Franklin County has yet to adopt a version of the District’s Capital Facilities Plan. The global pandemic resulted in extraordinary challenges for the District’s educational programming and planning. The District is now, in the fall of 2022, able to reasonably plan for future growth-related needs and intends for this 2022 CFP update to replace the 2019 CFP for all purposes, including the District’s compliance with the above requirements in the School Impact Fee Ordinance. The 2022 CFP update supplements and updates the core information in the 2011 CFP. The 2022 update also includes an updated calculation for the District’s school impact fees. B. Changes in the Pasco School District The District now serves approximately 18,335 K-12 students (Chart 3 herein – average of headcount enrollment for the 2021-22 school year, with October 1, 2022 enrollment tracking at 18,345 students), an increase of 555 students since 2016. Steady residential development within the District’s boundaries continues. The latest demographics study prepared by the District (Chart 3 herein) projects that enrollment growth will continue at all grade levels over the six-year planning period and beyond. Higher growth is projected at the K-5 and 9-12 levels, with 6-8 enrollment slightly declining in the initial years of the planning period but thereafter returning to 2021 levels and thereafter trending upward. Since the start of 2021 and through September 2022, the City of Pasco approved the construction of 583 single family units and 22 multi-family units. There is also continuing plat activity in the District’s boundaries within unincorporated Franklin County. The District continues to review new residential development applications in Franklin County subject to SEPA review. Additional SEPA-exempt residential development activity may also exist in Franklin County. Over the past 10 years, the District has engaged in community-driven capital planning activities intended to construct all the improvements that are required to serve existing needs (including those from recent residential growth) and forecasted growth. These activities include: Page 45 of 160 Pasco School District 2022-2028 CFP Page 4 of 23 November 8, 2022 November 2013 bond: This bond was developed with several strategies to significantly reduce the cost of the bond projects after the previous bond failed with a 48% yes vote in April 2011. The Board engaged a community task force to provide recommendations regarding strategies for handling enrollment growth. The task force considered multi-track/year-round options, and recommended constructing additional elementary school capacity (vs. a middle school, which would have been a more expensive project) and that the District use the additional elementary capacity to house 6th grade students at the elementary level instead of the middle level. • The three elementary schools approved in the 2013 bond opened in the 2014-2015 school year (one school) and the 2015-2016 school year (two schools). The added capacity allowed the District to complete the plan to transition to a K-6 and 7-8 grade configuration in 2015-2016. November 2017 bond: The District’s voters in November 2017 approved a $99.5 million bond measure with a 60.07% yes vote (approval of a bond requires 60% yes votes) to fund two new elementary schools, a new Middle School #4, and the replacement and expansion of Stevens Middle School. The District’s Community Builders Group recommended these projects for the bond, with the understanding that the additional middle level capacity would cause the district to transition 6th grade back to the middle school. These projects are now complete and the District has moved back to a K-5 and 6-8 grade model. The Board of Directors has authorized a February 2023 bond proposal to its voters, which will include, among other things, funding a new comprehensive high school #3, a small innovative high school, modernized learning spaces for Career and Technical Education (CTE) programs at Pasco and Chiawana High Schools, and land for growth. The District has continued to engage in cost-saving measures in facilities planning, and will continue to use cost-reduction strategies and District construction standards to save taxpayer dollars. Pasco School District’s construction costs have normally been lower than other school construction costs around the State of Washington. Examples of cost- reduction strategies includes the following: • Use property already owned by the district for school sites; • Use the updated Pasco design that has been built multiple times for Pasco schools, thereby saving A/E, construction and maintenance costs; • Curie and Whittier Elementary Schools share one playground, reducing the amount of land to be purchased; • Build larger elementary schools to reduce the total number needed and create efficiencies in operations; • Build schools to serve at least 50 years; and • Maintain school buildings well to ensure they last several decades; • Seek alternative sources of facilities funding such as grants or private donations; • Relocate portable classrooms to locations where enrollment is growing in lieu of purchasing additional portable classrooms, wherever possible. The voters of Washington State passed Initiative 1351 in 2014. The initiative imposes class size values as recommended by the Legislature’s Quality Education Council (QEC). The class size requirements have been implemented in part and delayed in part. Under the Supreme Court’s McCleary decision, the Legislature is under court order to fully fund basic K-12 education, including the K-3 class size reductions. Initiative 1351 class sizes are reflected in Page 46 of 160 Pasco School District 2022-2028 CFP Page 5 of 23 November 8, 2022 Chart 1 and position the District for full legislative implementation. The District implemented All-Day Kindergarten (ADK) in every elementary school in the 2015- 2016 school year. The District added portable classrooms to meet this requirement. In Chart 2 in the Appendix, State scoring matrices show that Pasco School District is effectively maintaining its schools as a community investment and asset, according to a third party review. The schools’ adjusted maintenance score is significantly above its expected score for the facility’s age, demonstrating effective maintenance by the district. These data mean that they will last longer and be able to serve more students before needing to be replaced. Page 47 of 160 Pasco School District 2022-2028 CFP Page 6 of 23 November 8, 2022 SECTION 2 DISTRICT EDUCATIONAL PROGRAM STANDARDS The District’s core and special program needs, which are used to define the standard of service, are addressed in the 2011 Capital Facilities Plan. The District has implemented K-3 class size reduction and All Day Kindergarten and is positioned to implement I-1351’s targets for grades 4- 12. Below is the District’s adopted educational program standards (or standard of service). A. Elementary Educational Program Standards The state is required to provide funding for a student-to-teacher ratio of 17-1 in grades K-3 (15-1 for high poverty schools), consistent with QEC recommendations, Initiative 1351, and McCleary. The class size of 15-17 impacts all elementary schools. Elementary Class Size Requirements-Initiative 1351 Grades K-3 Enacted by the Legislature Grades 4-12 Implementation Delayed Grade Levels Initiative 1351 Class Sizes District Contract Class Sizes High-Poverty Schools Non-High Poverty Schools K-1 15 17 22 2-3 15 17 25 4-6 25 27 4 22 5 23 Capt. Gray Markham Whittier McClintock Robinson Livingston Longfellow Angelou Chess Columbia River Emerson Frost Twain Curie Franklin McGee Three Rivers B. Middle and High School Program Standards Secondary (Middle and High) school class size standards also are projected to be reduced to levels set by Initiative 1351 with recommendations to be mandated under McCleary as noted below. Page 48 of 160 Pasco School District 2022-2028 CFP Page 7 of 23 November 8, 2022 Secondary Class Size Requirements-Initiative 1351 Grades K-3 Enacted by the Legislature Grades 4-12 Implementation Delayed Grade Levels Initiative 1351 Class Size District Contract Class Size High-Poverty Schools Non-High Poverty Schools 6-8 23 25 30 9-12 23 25 30 Max Stevens MS 150/day Ochoa MS McLoughlin MS Reynolds MS Pasco HS Chiawana HS New Horizons HS Page 49 of 160 Pasco School District 2022-2028 CFP Page 8 of 23 November 8, 2022 SECTION 3 CAPITAL FACILITIES INVENTORY As described in the 2011 CFP, the District’s facilities inventory establishes a baseline for determining the facilities necessary to accommodate future demand (student enrollment) at acceptable levels of service. Three schools have been added and one school replaced and expanded since the 2019 update to the CFP, resulting in an increase to the permanent capacity calculation. New high school permanent capacity will be added through the 2028 planning period. The District will also move portables between schools and grade levels as additional capacity is needed. A. Capacity Calculation and Standard of Service The District’s Board of Directors directed staff to conduct a comprehensive review of school building capacity in 2017. The purpose of the review was to ensure consistent, reasonable measures were being used to determine the capacity of each school building, and to provide a safe and equitable standard of service for students throughout the school system. Student safety has been a critical consideration for the District in determining this standard of service. In 2014 and again in 2018, the District conducted a comprehensive safety review of schools, including brick and mortar buildings and portable classrooms. It is the District’s goal to house students in permanent facilities with controlled points of access, which can be best accomplished by housing students in one contained brick and mortar building. Portable classrooms will continue to be used as a temporary solution to provide student housing. However, to achieve the desired standard of service to enhance student and staff safety, portable classrooms should not be counted in the District’s permanent classroom inventory. The state does not count portable classrooms when calculating a school district’s classroom inventory for purposes of eligibility for state assistance for construction. In the 2011 CFP, the District counted some portables into the permanent capacity calculation after consultation with the City of Pasco. Based on the above considerations, however, the 2017 CFP update did not include portable classrooms in calculating permanent capacity but still recognized the capacity purpose. The 2019 CFP and this 2022 CFP update carry forward the 2017 CFP methodology. B. Elementary Schools The District currently has seventeen (17) elementary schools serving grades K-5 and providing capacity to serve 8,898 students in permanent capacity. As of October 1, 2022, there were 8,106 elementary students enrolled. Two new elementary schools, Columbia River Elementary School and Three Rivers Elementary School, providing additional capacity for 1,288 elementary students, were constructed and opened in the 2019 and 2020 school years, respectively. As of the 2022 school year, there are 107 portable classrooms at the elementary schools providing additional capacity to house 2,637 students. The District purchased the former Pasco Senior Center and an adjacent vacant lot from the City in 2016 for the purpose of the converting the building into an early learning facility. The District pursued, and was granted, two capital appropriations from the state totaling $1.3 million dollars Page 50 of 160 Pasco School District 2022-2028 CFP Page 9 of 23 November 8, 2022 to help offset the costs. The Early Learning Center opened in January 2018, with designated programs transitioned to the Center by September 2018. In addition, the District has leased the former Kids World daycare facility on North 20th Avenue in Pasco to provide additional classrooms for early learning. These projects have allowed the District to provide additional capacity for K-5 students in elementary buildings by relocating early learning classes from the elementary buildings to the new facilities. C. Middle Schools The District has four middle schools serving grades 6-8. The middle schools provide permanent capacity to serve approximately 4,134 students. As of October 1, 2022, there were 4,216 students enrolled in those schools. Middle School #4, Reynolds Middle School, and the replacement and expansion of Stevens Middle School added permanent capacity for approximately 1,377 students in 2020 and 2021, respectively. As of the 2022 school year, there are 48 portable classrooms at the middle schools providing additional capacity to house 1,094 students. Since 2011, the District added eighteen (18) new portable classrooms as temporary capacity at the middle school level. The District plans to add portable capacity at the middle school level during the six years of this CFP (either newly purchased or relocated from the elementary grade level). D. High Schools There are two traditional high schools serving grades 9-12. There is permanent capacity in those schools to serve 4,156 students. As of October 1, 2022 there were 6,023 students enrolled. Pasco High School has additional capacity to serve students in 29 portable classrooms and Chiawana High School has additional capacity to serves students in 32 portable classrooms. New Horizons High School moved into a leased brick and mortar building on the Columbia Basin College campus in 2017. The building capacity is 248. With New Horizons the District has a total of 4,404 permanent capacity seats at the 9-12 level. The District shares capacity at Delta, a STEM based high school with Kennewick and Richland School Districts. The District is currently planning, subject to future bond approval, for a third comprehensive high school and a small innovative high school. E. Support Facilities Bus parking has been expanded into the District’s maintenance lay-down yard at the Port of Pasco property (Building 210). The District leased additional space from the Port to replace the lost lay-down yard capacity, and is also leasing additional warehouse space. The November 2017 bond provided funding for expansion of transportation and maintenance facilities, which is expected to be complete in December 2022. Page 51 of 160 Pasco School District 2022-2028 CFP Page 10 of 23 November 8, 2022 F. Land Inventory The District currently owns eleven unimproved parcels, totaling approximately ±180 acres. The District acquired 82.17 acres (two parcels) in 2019 and a 13.00 acre lot was created (from a larger lot) after the development of Columbia River Elementary and Reynolds Middle School. The District is planning to use property in the current inventory for the proposed new comprehensive high school #3 and a small innovative high school if those projects are funded as a part of the 2023 Bond. Burns Road / 2,900 feet west of Broadmoor Blvd 115-180-042 72.50 NE of intersection of East Salt Lake & N. Utah Ave 113473091, 113474045, 113501023, 113501014, 113474054, 113501032 9.46 SE of intersection of East Salt Lake & N. Utah Ave 113501041 2.40 Burns Road & Road 60 114330046, 114330047 82.17 Road 90 / 750' north of Burns Road 115170072 13.00 TOTAL 179.53 Page 52 of 160 Pasco School District 2022-2028 CFP Page 11 of 23 November 8, 2022 SECTION 4 STUDENT ENROLLMENT PROJECTIONS AND CAPACITY BY GRADE SPAN A. Projected Student Enrollment Since 2016, the District received and reviewed four enrollment forecasts. For purposes of the 2022 CFP Update, the District is relying on the comprehensive forecast prepared internally by the District. The forecast considers recent trends, including enrollment anomalies occurring during the Covid-19 pandemic, data provided by MGT of America and demographer Paul Dennis, and information related to known residential development data throughout the District’s boundaries. See Appendix, Chart 3. In October 2011, there were 15,707 students enrolled in grades K-12. In October 2018, there were 18,432 students enrolled, which is an increase of 2,725 students. By 2028, the forecast predicts there will be 19,574 students enrolled in grades K-12, which is an additional 1,142 students over 2018. These projections are down from recent years and reflect enrollment anomalies from the pandemic and the subsequent period. The District plans to watch enrollment closely and will update the CFP accordingly. The District recently added two new elementary schools, which will continue to provide available K-5 capacity to serve new growth within the planning period of this CFP, and will need to add permanent and temporary capacity at the secondary level to serve secondary level needs (including growth needs). B. Capacity by Grade Span Current enrollment at each grade level is identified in Chart 1, which provides the actual enrollment in District facilities as of October 1, 2022. Projected available student capacity was derived by subtracting projected student 2028 enrollment (Chart 3) from total existing October 2022 school capacity (Chart 1). Enrollment in grades K-5 is expected to grow by approximately 299 students by 2028. Growth at the K-5 level is expected to continue beyond the six year planning period. Enrollment at the 6-8 level is projected to grow over the six year planning period and beyond, with approximately 379 middle school students added by 2028. The construction of Reynolds Middle School and the replacement/expansion of Stevens Middle School helped to provide needed capacity to serve recent growth at the 6-8 level and also helped, with grade reconfiguration, to relieve capacity constraints at the K-5 level. Portable additions will likely be needed to address capacity needs at the 6-8 level. Enrollment in grades 9-12 is forecasted for continued growth, adding nearly 551 students by 2028. The District has added capacity for additional students at New Horizons and Pasco High School. However, the District will need to add capacity for at the high school level for purposes of the six year planning period and beyond. The 2023 bond includes a planned new high school #3 and a smaller innovative high school. The current capacity in the existing schools and the capacity that is needed to serve forecast growth through 2028 was revised based on class size reduction targets and construction projects completed through the date of this CFP. Please see Chart 4 in the Appendix. Chart 4 does not consider capacity additions planned through 2028 and beyond. Page 53 of 160 Pasco School District 2022-2028 CFP Page 12 of 23 November 8, 2022 SECTION 5 CAPITAL FACILITIES NEEDS To determine future facility needs, existing school program capacity was compared to projected enrollment throughout the six-year forecast period. See Section 4. In November 2017, the District’s voters passed a $99.5 million bond measure to help fund the construction of two new elementary schools, a new middle school, the expansion and replacement of Stevens Middle School, safety and health improvements at various schools, and improvements to the District’s transportation and maintenance facilities. See Chart 5, Appendix. The 2017 Bond projects are now mostly complete. The District is now planning for a future bond measure to be presented to the voters in February 2023, to fund the construction of a new comprehensive high school #3, a small innovative high school, modernized learning spaces for Career and Technical Education (CTE) programs at Pasco and Chiawana High Schools, athletic field upgrades, and property acquisition. Portable classrooms will be used to provide temporary facilities while funding is secured to construct brick and mortar facilities. The new schools and portable classrooms will provide the needed capacity identified in Section 4 above. The District continues to have available capacity to serve growth at the K-5 level as a result of the recent completion of the new Columbia River Elementary School and Three Rivers Elementary School, funded by the 2017 Bond. The District is in early planning for a new Elementary School #18 and capacity additions as a part of replacement of Livingston Elementary School and McGee Elementary School. In addition to building schools that add capacity for growth, the District will make other improvements to serve students. The improvements will be constructed in phases and cannot occur until bonds are approved by the voters. The District will continue with long term facilities planning efforts using community recommendations to identify which projects should be prioritized. The District will continue to plan for needs beyond 2028. Chart 5 includes estimated permanent improvements and capacity conditioned on future funding. Future updates to this CFP will provide more specific information as to the District’s updated planning. Page 54 of 160 Pasco School District 2022-2028 CFP Page 13 of 23 November 8, 2022 SECTION 6 CAPITAL FACILITIES FINANCING PLAN The District's ability to fund the planned improvements that will add capacity is dependent upon the passage of bond elections at a 60% supermajority and receipt of State Construction Assistance Program (SCAP) funds, also known as “state match” funds. Costs for improvements that add capacity are used to calculate school impact fees. School impact fees, or SEPA mitigation fees collected from some new development projects in unincorporated Franklin County, will be used to pay for a portion of the improvements that add capacity. The majority of the costs to construct the capacity improvements will be paid for with bonds and state match funds. See Section 6 of the 2011 CFP for a complete discussion regarding the framework for financing planned improvements. To serve growth needs identified in this CFP, the District plans to construct new schools consistent with the funding identified in this CFP. Charts 5 and 6 have detailed information on the 2023 Bond projects, with the new comprehensive high school #3, innovative high school, and CTE program improvements at PHS and CHS all being growth-related projects. The District’s voters, through the 2017 Bond, front funded the recently constructed Columbia River Elementary School and Three Rivers Elementary School. Both projects provide continuing available capacity at the K-5 level to serve growth expected at the at grade level over the six year planning period. The District may also add portables to serve interim growth needs. In addition to construction of facilities to add capacity, the District also needs to acquire school sites for future construction, and must make a variety of improvements that are needed at existing facilities. A key Community Builders Group recommendation was to address capital facilities needs related to safety and health. The Capital Facilities Financing Plan in Chart 6 demonstrates how the District intends to fund new construction and improvements to school facilities during the six year planning period (and also includes financing information related to the recently completed elementary schools). Page 55 of 160 Pasco School District 2022-2028 CFP Page 14 of 23 November 8, 2022 SECTION 7 SCHOOL IMPACT OR MITIGATION FEES The District’s ability to fund the improvements that are needed to serve forecast growth depends on new development contributing to the cost to build the schools that will serve the students that live in new housing. The District is collecting school impact fees from development in the City and will continue to seek mitigation fees from developers in Franklin County (and continue to request that Franklin County adopt a GMA-based school impact fee ordinance). The District’s desire and intent is that school mitigation is collected from all residential development within the District in an equitable and comprehensive manner. The District files annual reports with the City regarding the use of the school impact fees. The District has calculated school impact fees using a standard school impact fee formula, adopted by the City of Pasco and many other Washington cities and counties, that complies with the Growth Management Act. The resulting figures are based on the District’s cost per dwelling unit to construct schools needed to serve new development. A student factor (or student generation rate) is used to identify the average cost per dwelling unit by measuring the average number of students generated by each housing type (single-family dwellings and multi- family dwellings). The District hires a consultant to update the student factor methodology based upon the last six years of residential development data within the District, as required by the City of Pasco School Impact Fee Ordinance. In this year’s CFP, the District is continuing to use the student factor used in the 2019 CFP given that the pandemic disrupted typical student enrollment and the District, like other school districts around the State, has found tha t updated figures would not reflect accurately the number of students residing within newly constructed dwelling units. The District will update the student factor in the next update to the CFP. As required under the GMA, credits are applied in the formula to account for State School Construction Assistance funds to be reimbursed to the District and projected future property taxes to be paid by the dwelling unit. The costs of projects that do not add capacity are not included in the impact fee calculations. Furthermore, impact fees will not be used to address existing deficiencies. The following projects are included in the impact fee calculation: • New Elementary School capacity (based on the average cost of Elementary 16 and 17, recently constructed and opened, providing remaining available capacity at the K-5 level to serve growth); and • New Comprehensive High School #3. Please see Chart 6. The calculated impact fee amounts (reduced by 25%), in Appendix B, are $7,421 for each single family residence and $14,640 for each multi-family residence. However, the District is requesting the City continue collecting the current amounts which are: Single Family: $4,700 Multi Family: $4,525 The District began receiving impact fees from the City in 2012. Through July 2022, the District has received approximately $21,274,183.00 in impact fee and mitigation fee revenue. Of that amount, $1,250,000 was used to reduce the principal of the 2013 bond, $5,374,972 has been used for portable classrooms (new and relocated), $4,899,155 has help fund property acquisitions, and $2,000,000 was Page 56 of 160 Pasco School District 2022-2028 CFP Page 15 of 23 November 8, 2022 used to reduce the principal of the 2017 bond. The District plans to use remaining revenue for growth- related projects including portables, land acquisition, and reducing the cost of the 2017 Bond projects. The District will use future impact fees and mitigation fees as allowed by law for growth- related impacts identified in the CFP. Page 57 of 160 Pasco School District 2022-2028 CFP Page 16 of 23 November 8, 2022 CONCLUSION The District continues to use a variety of strategies to plan, reduce costs, and mitigate the effects of student enrollment growth. Receipt of impact fees remains critical to ensuring the District can manage growth by providing sufficient student facilities. The forecast of steady enrollment growth over the next six years underscores the need to use a variety of financing measures, including the passage of bonds, expenditure from the General Fund, and impact fees/SEPA mitigation fees to meet the needs of the community. Page 58 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 15 of 23 October 2022 APPENDIX A Charts with Supporting Data Page 59 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 16 of 23 October 2022 Chart 1 Building Capacity October 2022 Page 60 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 17 of 23 October 2022 Chart 2 Pasco School District Asset Preservation Program 2022 Building Condition Scores OSPI 2020 2021 2022 Building Age in Years Current Draft Score by Age Adjusted B.C.E. Adjusted B.C.E. Adjusted B.C.E. Emerson 26 74 N/R 85.69 79.2 Frost 26 74 N/R 85.34 81.56 Franklin 9 95 N/R 98.42 97.34 McClintock 8 97 N/R 97.69 96.21 Curie 8 97 N/R 98.81 98.04 Chiawana High School 14 90 N/R 94.40 92.05 Delta High School 8 97 N/R 96.10 95.78 Three Rivers 3 100 N/R 100 100 Columbia River 2 100 N/R 100 100 Ray Reynolds Middle School 2 100 N/R 100 100 Stevens Middle School 1 100 N/R 100 100 “B.C.E.” is the Building Condition Evaluation score given by OSPI for those facilities in which State School Construction Assistance Program (state match) dollars were used. The Current Draft Score” is OSPI’s expected score for the age of the facility, given average use and maintenance. Buildings were not reviewed (N/R) in 2019 due to COVID. Pasco High School is no longer assigned a B.C.E. score for purposes of state reporting because of the age of the facility. However, the district continues to monitor and score Pasco High School for internal monitoring purposes. Page 61 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 18 of 23 October 2022 Chart 3 Projected Enrollment Pasco School District Baseline Growth Enrollment Forecast (2021-2040)0.75%1.50%1.75% Grade 2021 2022 2023 2024 2025 2026 2027 2028 2029 K 1,266 1,394 1,312 1,322 1,332 1,342 1,352 1,362 1,372 1 1,316 1,292 1,378 1,388 1,399 1,409 1,420 1,430 1,441 2 1,383 1,327 1,292 1,302 1,311 1,321 1,331 1,341 1,351 3 1,377 1,381 1,340 1,350 1,360 1,370 1,381 1,391 1,401 4 1,385 1,388 1,377 1,387 1,398 1,408 1,419 1,429 1,440 5 1,441 1,389 1,398 1,408 1,419 1,430 1,440 1,451 1,462 6 1,505 1,416 1,375 1,396 1,417 1,438 1,459 1,481 1,503 7 1,505 1,505 1,398 1,419 1,440 1,462 1,484 1,506 1,529 8 1,478 1,493 1,492 1,514 1,537 1,560 1,584 1,607 1,631 9 1,476 1,500 1,516 1,543 1,570 1,597 1,625 1,653 1,682 10 1,427 1,468 1,511 1,537 1,564 1,592 1,620 1,648 1,677 11 1,328 1,418 1,455 1,480 1,506 1,533 1,560 1,587 1,615 12 1,468 1,392 1,546 1,573 1,601 1,629 1,657 1,686 1,716 Total 18,355 18,363 18,390 18,620 18,854 19,090 19,331 19,574 19,821 K-6 9,673 9,587 9,472 9,553 9,635 9,718 9,802 9,886 9,972 K-5 8,168 8,171 8,097 8,158 8,219 8,281 8,343 8,405 8,468 7-8 2,983 2,998 2,890 2,933 2,977 3,022 3,067 3,113 3,160 6-8 4,488 4,414 4,265 4,329 4,394 4,460 4,527 4,595 4,664 9-12 5,699 5,778 6,028 6,133 6,241 6,350 6,461 6,574 6,689 18,355 18,363 18,390 18,620 18,854 19,090 19,331 19,574 19,821 Actual Baseline Forecast Page 62 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 19 of 23 October 2022 Chart 4 2028 Student Capacity and Future Need Building Capacity 2022 Total Capacity (Permanent/Portable) 2022 Oct 22 Enrollment Forecast Enrollment 2028 Needed Capacity (Permanent) 2028 Elementary (K-5) 8,898 11,534 8,106 8,405 --- Middle (6-8) 4,134 5,229 4,216 4,595 461 High (9- 12) 4,403 5,775 6,023 6,574 2,171 “Building Capacity” is the number of classrooms multiplied by the weighted average I-1351 class size for non-high poverty schools, multiplied by a utilization factor to allow for planning time and other uses. “Forecast Enrollment 2028” is based on Chart 3. “Needed Capacity” includes total (permanent/portable) capacity but does not include new capacity planned for completion through 2028, portable additions/relocations, or grade reconfiguration. Page 63 of 160 Pasco School District Capital Facilities Plan Update Appendix A Page 20 of 23 October 2022 Chart 5 Necessary Facility Improvements, Added Capacity and Costs 2022 Update 2023 BOND PROJECT ESTIMATES High School #3 2000 $185,363,000 Innovative High School 600 $37,500,000 CTE PHS/CHS 75 $12,000,000 Athletic Fields N/A $2,000,000 Land Acquisition N/A $10,000,000 Total 2023 Bond Project Estimates 2675 $246,863,000 ESTIMATED PERMANENT IMPROVEMENTS & CAPACITY CONDITIONED ON FUTURE BOND AND STATE ASSISTANCE Livingston Replacement 220 $42,000,000 Middle School #5 900 $61,985,000 New Elementary #18 620 $42,000,000 Land Acquisition (80 acres) N/A $12,000,000 McGee Replacement 220 $42,500,000 McLoughlin MS Replacement 0 $70,000,000 Total Permanent Capacity 1,960 $270,485,000 TEMPORARY CAPACITY IMPROVEMENTS Portable Classrooms 460 $3,250,000 Total 460 $3,250,000 TOTALS 5,095 $520,598,000 Page 64 of 160 Appendix A Page 21 of 23 October 2022 Chart 6 Capital Facilities Financing Plan Project Estimates 2023 Bond Projects and Future Planning: Project Added Capacity Est. Cost Source of Funding Bonds State Match Impact/ Mitigation Fees General Fund February 2023 Bond Projects and Other Improvements High School #3 220 $185,000,000 $140,000,000 $45,000,000 Portion TBD Innovative High School 600 $37,500,000 $37,500,000 $0 Portion TBD CTE CHS/PHS 75 $12,000,000 $12,000,000* $0 Portion TBD Athletic Fields $2,000,000 $2,000,000 Land Acquisition $10,000,000 $10,000,000 Portion TBD Future Bond Projects (Subject to Future Planning & Board Approval) Livingston Replacement 2,000 $42,000,000 $24,360,000 $17,640,000 Portion TBD Middle School #5 900 $61,985,000 $61,985,000 $0 New Elementary #18 620 $42,000,000 $42,000,000 $0 Portion TBD Land Acquisition (80 acres) $10,000,000 N/A N/A Portion TBD McGee Replacement 220 $42,500,000 $24,650,000 $17,850,000 Portion TBD McLoughlin MS Replacement 0 $70,000,000 $40,600,000 $29,400,000 Portion TBD Portable Classrooms 460 $3,250,000 $3,250,000 $0 Portion TBD 2017 Bond Elementary School Projects (for information only; relevant to impact fee calculation): Project Added Capacity Est. Cost Source of Funding Bonds State Match Impact/ Mitigation Fees General Fund Completed New Elementary Schools - 2017 Bond Projects Elementary #16 620 $27,300,000 $18,700,000 $8,600,000 Portion TBD Elementary #17 620 $28,500,000 $19,900,000 $8,600,000 Portion TBD “State Match” refers to funds allocated by the State of Washington through the School Construction Assistance Program administered by OSPI. This number is an estimate of state matching funds and is subject to verification by OSPI. *The “portion TBD” of impact fee revenue used to fund the growth-related capacity projects will be determined based upon impact fee revenue received from new development. Impact fee revenue may be able to offset debt service on the bonds and result in tax savings to the existing community. Pasco School District Capital Facilities Plan Update Page 65 of 160 Pasco School District Capital Facilities Plan Update Appendix B, Page 22 of 23 October 2022 APPENDIX B IMPACT FEE CALCULATIONS Page 66 of 160 Pasco School District Capital Facilities Plan Update Appendix B, Page 23 of 23 October 2022 Page 67 of 160 AGENDA REPORT FOR: City Council January 18, 2023 TO: Adam Lincoln, Interim City Manager City Council Workshop Meeting: 1/23/23 FROM: Steve Worley, Director Public Works SUBJECT: Review Proposed Process Water Reuse Facility Wastewater Treatment Agreement with Burnham SEV Pasco, LLC I. REFERENCE(S): Proposed Wastewater Treatment Agreement (WTA) II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Total Estimated Project Cost: $135 million with provisions for adjustments based on final costs. Estimated monthly Service Fee: $850,000 per month with provisions for adjustments based on final costs. Estimated RNG Revenue: $6 million per year, with provisions for adjustment based on final RNG sales contract. PWRF Processor Revenue: Monthly fee to be determined for Pasco Processing, Twin City Foods, Reser’s, Simplot, Grimmway and Darigold. Community Economic Revitalization Board (CERB) $5 million low-interest loan. Potential Federal Income Tax Credit: $26 million with provisions for adjustments based on final credit. Page 68 of 160 Potential Federal or State Grants: Staff continues to pursue grants for this project to help reduce final costs to the PWRF Processors. IV. HISTORY AND FACTS BRIEF: The City owns and operates an industrial wastewater treatment system to treat industrial wastewater from agricultural food Processors. The system includes the Process Water Reuse Facility (PWRF). The PWRF, requires improvements to sufficiently treat current Processor wastewater such that they continue to meet Ecology permitted limits. The PWRF is currently at or near capacity and requires expansion to enable new Processors to use the facility or existing Processors to expand their operations. Upgrades to the PWRF pretreatment system will significantly improve treatment capacity for the benefit all existing and future agricultural and dairy Processors, customers, and the local community. The PWRF improvements also have a positive impact on the Municipal Wastewater Treatment plant by allowing for the redirection of all agricultural and dairy industrial wastewater away from the WWTP. This frees up much needed capacity at WWTP allowing for increased residential and commercial developments that can be served. On January 10, 2022, staff provided Council a presentation on proposed updates to the Process Water Reuse Facility (PWRF) with the potential to include a Renewable Natural Gas (RNG) option that will help reduce costs to the PWRF Processors. Council indicated support to move forward with the proposed concept. Through processes outlined in Chapter 70A.140 RCW, Water Quality Joint Development Act, Burnham SEV, a renewable natural gas (RNG) Project Developer, was selected to privately finance, design, constr uct, and operate an upgraded industrial wastewater treatment plant that includes a renewable natural gas plant at the PWRF. This Phase 3 project has a 30% completed design and is ready to move forward with final design and construction managed by Burnham SEV. On September 6, 2022, and December 5, 2022, Council approved Work Acceleration Agreement with Burnham SEV. These agreements commit the City to reimburse Burnham SEV up to a maximum of $5.5 million to cover Burnham’s preliminary work until a final Wastewater Treatment Agreement (WTA) is executed. The WTA is anticipated to be approved at the February 6, 2023, Council meeting. Page 69 of 160 V. DISCUSSION: The proposed WTA outlines the terms and conditions for the design, construction, operation, maintenance, and payment of the proposed PWRF Pretreatment Phase 3 project and industrial wastewater treatment services. This Phase 3 project includes facilities that will treat the PWRF Processor’s industrial wastewater using a low-rate anaerobic digester (LRAD), a Rotating Algal Biofilm (RAB)) nitrogen removal system and a renewable natural gas (RNG) system. The RNG will be sold by Burnham on the volunteer RNG m arket. Revenue from the sale of RNG will be used to pay a portion of the capital cost, thus reducing the fees paid by the PWRF Processors. A similar draft Wastewater Treatment Agreement with each PWRF Processor is also being prepared and reviewed by each Processor. This agreement outlines the terms and conditions for the payment to the City for industrial wastewater treatment services provided by Burnham SEV. A draft agreement, incorporating comments from the Processors, will be brought to Council soon for review and approval. Staff recommends approval of the proposed Resolution for the PWRF Wastewater Treatment Agreement with the Burnham SEV. Page 70 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 1 of 81 WASTEWATER TREATMENT AGREEMENT This Wastewater Treatment Agreement (“Agreement”) is entered into [___________] (the “Effective Date”) by and between Burnham SEV Pasco LLC, a Washington limited liability company (“Burnham”), with offices at 1201 Wilson Blvd – 27th Floor, Arlington VA, 22209, and the City of Pasco, Washington (the “City”), a municipality with offices at 525 N 3rd Ave., Pasco, WA 99301 (each a “Party” and together, the “Parties”). RECITALS WHEREAS, the City owns and operates a wastewater utility, including a process wastewater reuse facility (“PWRF”) that operates for the benefit of the City and large agricultural food processors to pretreat, treat, and dispose of approximately one billion gallons of agricultural industrial wastewater by land application on approximatively 1,854 acres of City-owned farmland. See Washington State Discharge Permit No. ST0005369. The existing PRWF consists of a primary treatment process (including two rotary drum screens, one modified clarifier, 12 septic tanks for solids collection from the clarifier, one screw press for solids removal from the rotary drum screens system), one approximately five million gallon pond previously used as solids storage, one approximately eight million gallon pond used as an equalization pond, one approximately 35 million gallon pond for winter storage, and one 115 million gallon (“MG”) pond for winter storage, and an irrigation system for land application of agricultural industrial wastewater; and; and WHEREAS, the City’s current PWRF system has reached it design life and capacity, such that upgrades and expansion are necessary to accommodate new agricultural food processor wastewater. To meet the Washington Department of Ecology’s (“Ecology”) permit requirements to expand the PWRF’s capacity, the City sought a contractor capable of treating agricultural and milk processing industrial wastewater and using the biogas produced from such treatment to generate Renewable Natural Gas (“RNG”). Following a competitive selection process, the City selected Burnham SEV Pasco, LLC (“Burnham”) to develop, design, construct, and operate, a wastewater treatment and nitrogen reduction system (the “System,” as more particularly described in Exhibit A) and integration of Burnham’s RNG production process. Burnham is to finance, construct, own, and operate the System on City-owned property; and WHEREAS, the City is in the process of preparing and submitting a new Washington State Waste Discharge Permit (“Discharge Permit”) application to Ecology, to include the System and all other components of the agricultural industrial wastewater treatment and disposal process. The City will develop, operate and maintain other facilities, including its storage ponds (equalization and winter storage), irrigation system, land application area, and all related assets (e.g., conveyance water pipes, pump stations, wells and appurtenances) (“City Facilities”) and the City intends to be a joint permittee with Burnham under the Discharge Permit with roles and responsibilities for its implementation as defined in this Wastewater Treatment Agreement. WHEREAS, the City has sought to utilize the provisions of RCW 70A.140, the Water Quality Joint Development Act, for the purpose of providing an additional means by which to provide financing, development, and operation of water pollution control facilities needed for achievement of state and federal water pollution control requirements for the protection of the state’s waters. WHEREAS, the System and City Facilities will be supported from rate and fee paid to the City by agricultural waste processors; and Page 71 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 2 of 81 WHEREAS, pursuant to RCW 70A.140.040(9), prior to execution of this Agreement, the Parties were required to submit this “proposed service agreement” to the Department of Ecology to review for consistency with RCW 90.46 and RCW 90.48, as a condition precedent to the City’s authority to execute this Agreement; and WHEREAS, a draft of this Agreement was submitted to the Department of Ecology on October 7, 2022, satisfying the condition precedent to the City’s execution of this Agreement, and the Department of Ecology approved the draft Agreement on [date];and WHEREAS, pursuant to RCW 70A.140.040 (10), prior to execution of this Agreement, the City is required to hold a public hearing and make written findings that it is in the public interest to enter into this agreement and that this agreement is financially sound and advantageous compared to other methods; and WHEREAS, the Parties entered into the Anaerobic Digestion and Renewable Natural Gas Project Work Acceleration Agreement on September 7, 2022, and the Wastewater Treatment, Anaerobic Digestion and Renewable Natural Gas Project Second Work Acceleration Agreement on December 8, 2022 (collectively, the “Work Acceleration Agreements”) allowing Burnham to undertake certain engineering, legal, permitting, regulatory, financing, design, and other activities, including without limitation payments to Swinerton Builders, Inc. (“Swinerton”), and obligating City to reimburse Burnham up to $5,500,000 for such work. NOW, THEREFORE, in consideration of the foregoing and for mutual and valuable consideration, the sufficiency of which are acknowledged, the Parties agree as follows: AGREEMENT 1. Definitions1 “Abnormal Substances” means substances or materials (including viscous, toxic or hazardous substances) that, based on the basis of design provided by City, (i) could not be reasonably anticipated by Burnham as being in the Influent Water, (ii) are present in the Influent Water in a type, concentration or loading that could not be reasonably anticipated by Burnham; or (iii) exceed the design capacity of the System to adequately treat when operated in accordance with Prudent Industry Practices. “Adjusted Treatment Fee” has the meaning given in Exhibit F. “Base Treatment Fee” has the meaning given in Exhibit F. “Burnham Obligation(s)” has the meaning given in Section 3.1. “Change of Law” means after the Effective Date (i) the enactment, adoption, promulgation, modification or repeal of any law or regulation applicable to the System or the production or sale of RNG; (ii) the imposition of any material conditions on the issuance or renewal of any applicable Permit (notwithstanding the general requirements contained in any applicable Permit at the time of application or issue to comply with future laws, ordinances, codes, rules, regulations or similar legislation), or (iii) a change by any governmental authority that establishes requirements affecting owning, supplying, constructing, installing, operating or maintaining the System, or other performance of the obligations of either Party hereunder. 1 [NTD: Execution copy will include cover page, Table of Contents, Table of Exhibits. The Definitions will be moved to a separate and new Exhibit H, and the Recitals will become the new Section 1.] Page 72 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 3 of 81 “Changed Circumstances” has the meaning given in Section 4.2. “City Caused Delay” means any Project delay arising from the City’s failure to comply with the terms and conditions of this Agreement or any City act or failure to act that interferes with Burnham’s obligations under this Agreement and results in a Project delay, excluding any material and clearly identified delays caused by any third-party that is not under the reasonable control of City and excluding any City act or failure to act pursuant to its generally applicable municipal responsibilities. Any City Caused Delay shall extend the COD Longstop Date on a day-for-day basis until such City Caused Delay is resolved, and the City shall be responsible for any and all reasonable, documented losses or additional costs attributable to such City Caused Delay as set forth in Exhibit F. “City Facilities” has the meaning given in the RECITALS. “City Obligation(s)” has the meaning given in Section 4.1. “City Permits” means the Permits that must be obtained and maintained by City as set forth in Exhibit G. “Claims” has the meaning given in Section 10.1. “Commercial Operation” means the date that a Certificate of Substantial Completion is issued in accordance with the Progressive Design Build Agreement signed between Burnham and Swinerton Builders, Inc. dated October 22, 2022, as verified by a third-party engineer. “COD” means the actual date upon which the System reaches Commercial Operation. “COD Longstop Date” has the meaning given in Section 3.1(c). “Confidential Information” means any non-public information, know-how or trade secrets in any form that is designated “confidential” or that a reasonable person should understand is confidential. The following information does not constitute Confidential Information: (i) information that is or becomes generally available to the public other than as a result of a disclosure by either Party in violation of this Agreement, (ii) information that was already known by either Party on a non-confidential basis prior to this Agreement, (iii) information that becomes available to either Party on a non-confidential basis from a source other than the other Party if such source was not subject to any prohibition against disclosing the information to such Party, (iv) information required to be disclosed pursuant to a valid public records request under RCW 42.56; and (v) information that is independently developed by a Party without violating its obligations under this Agreement. “Consumer Price Index” means the United States Department of Labor’s Bureau of Labor Statistics Consumer Price Index, All Urban Consumers, All Items, West Region, (1982-84 equals 100), or the successor of such index. “Daily Damage Rate” means $10,000 per day. “Discharge Permit” has the meaning given in the RECITALS. “DOE Delay” has the meaning given in Section 4.1(b). “Ecology” has the meaning given in the RECITALS. “Effective Date” has the meaning given in the introduction to the Agreement. Page 73 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 4 of 81 “Effluent Water” means wastewater, as measured at the Pond Discharge Station from which the wastewater from the Burnham Supplied Processes enter and is returned to the City as more particularly described in Exhibit A, that meets the specifications in Exhibit D. “Effluent Water Failure” has the meaning given in Section 7.1. “Environmental Laws” means (a) the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq. (“CERCLA”); the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (“RCRA”); the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. 2701 et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; and the Occupational Safety and Health Act, 29 U.S.C. 651 et seq.; and the regulations promulgated pursuant to the above-listed federal statutes, as amended from time to time; and (b) counterpart state laws and regulations of each item listed in subsection (a) above, as amended from time to time. “Fair Market Value” or “FMV” has the meaning given in Section 5.5. “Gross Wen Capital Costs” means additional and incremental capital costs attributable specifically to incorporating into the System the design, construction, and operation of the Gross Wen Process compared to a sequencing batch reactor (SBR) system. “Gross Wen Process Performance Guarantees” has the meaning given in Section 3.1(i). “Gross Wen Process” means an algae-based nitrogen reduction process. “Influent Water” means agricultural and milk processing industrial wastewater that does not contain industrial wastewater in excess of applicable federal and state industrial pre -treatment standards, does not contain Abnormal Substances, and otherwise meets the specifications in Exhibit C, as measured at the point at which the Influent Water is delivered to Burnham as more particularly described in Exhibit A. “Initial Term” has the meaning given in Section 2.1. “Insolvency Event” means with respect to any Party, when: (a) the Party commences a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of such Party or any substantial part of its property, or consents or agrees to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or makes a general assignment for the benefit of creditors, or becomes or is declared insolvent, or acknowledges, in writing, its inability to pay its debts as they become due, or takes any corporate action in any jurisdiction to authorize any of the foregoing; (b) an involuntary case or other proceeding is commenced against the Party seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of such person or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of ninety (90) days; or (c) an order for relief has been entered against that Party under the United States federal, state or other bankruptcy laws of any jurisdiction as now or hereafter in effect. Page 74 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 5 of 81 “Late Payment Rate” has the meaning given in Section 5.3. “Lender(s)” means any third-party lender or financing party providing financing in connection with this Agreement. “Major Maintenance” means repairs and maintenance associated with maintaining System performance consistent with the obligations of this Agreement and consistent with Prudent Industry Practice, including without limitation maintenance, repair, renewal, capital expenditures, reconstruction or replacement of any portion or component of the System, as applicable, of a type that is not normally included as ordinary or routine maintenance and the total cost of such activities exceeds $25,000, as adjusted annually for any change in the Consumer Price Index occurring from January 1 through December 31 of the prior calendar year “Major Maintenance Expenses” means all costs, fees, obligations and other liabilities incurred by Burnham associated with Major Maintenance or replenishing the Major Maintenance Reserve. “Major Maintenance Reserve” means amounts required by Lender(s) to be held in a reserve fund to cover the System’s major maintenance costs. “Material Breach” has the meaning given in section 6.2. “MG” means million gallon(s), as defined in the RECITALS. “Modifications” has the meaning given in Section 5.4. “Net Capital Costs” means actual costs incurred or payable by Burnham or its affiliates in connection with the development, construction and completion of the System, excluding (i) working capital required for System start-up and financing costs; (ii) costs attributable to any City Caused Delay or DOE Delay; (iii) Gross Wen Capital Costs; and (iv) Prevailing Wage Costs. Net Capital Costs will be reduced, dollar- for-dollar, for any payments City makes to Burnham under the Work Acceleration Agreements. “Net RNG Revenue” means all revenue received from the sale of RNG less any operating costs or other costs associated with the sale of RNG (compression, consumables, electricity, marketing expenses, etc.). “Non-Conforming Influent Water” means agricultural and milk processing industrial wastewater delivered or directed by City to the System that fails to meet in any respect or for whatever reason the specifications in Exhibit C. “Non-Material Breach” has the meaning given in Section 6.1. “Notice to Proceed” or “NTP” means the notice that Burnham has provided, in its sole discretion, to the engineering and procurement contractor to begin procurement and commence construction activity at the Site, a copy of which Burnham will promptly provide to the City. “NTP Date” has the meaning given in Section 3.1(b). “NTP Longstop Date” has the meaning given in Section 3.1(b). Page 75 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 6 of 81 “Outstanding Debt” means at the relevant time, the fully amortized aggregate of (without double - counting): all outstanding principal, interest (including default interest to the extent that borrower incurs default interest arising as a result of the City making any payment later than the date that such payment is due under this Agreement, or incurred by borrower due to any other default by the City under this Agreement), banking fees and premiums on financial insurance policies, agent and trustee fees, costs and expenses and other amounts properly incurred owing or outstanding to the Lender(s) by Burnham under or pursuant to its agreement with the Lender(s), including any prepayment costs, make -whole amounts and breakage costs. “Pass-Through Costs” has the meaning given in Exhibit F. “Permits” means the permits, licenses, certificates, clearances, approvals, authorizations, variances, or consents of any governmental authority, department, or agency, including all amendments thereto and replacements thereof, that must be obtained and/or maintained for construction and operation System. “Prevailing Wage Costs” means the costs incurred by Burnham to comply with Section 3.1(j). “Progressive Design Build Agreement” means the Progressive Design Build Agreement signed between Burnham and Swinerton Builders, Inc. dated October 22, 2022. “Prudent Industry Practices” means any of the practices, methods and acts engaged in or approved by a significant portion of the wastewater treatment industry for facilities of similar size and characterist ics to the System or any of the practices, methods or acts, which, in the exercise of reasonable judgment in the light of the facts known or that should reasonably have been known at the time a decision is made, could have been expected to accomplish the desired result at the lowest reasonable cost consistent with law, regulation, permits, codes, standards, equipment manufacturer's recommendations, reliability, safety, environmental protection, economy, and expedition. “PWRF” has the meaning given in the RECITALS. “Remedy” has the meaning given in Section 7.3(e) “Renewable Natural Gas” or “RNG” means biomethane produced by the System that meets natural gas pipeline-quality standards such that the biomethane may blend with, or substitute for, geologic natural gas. “Renewal Term” has the meaning given in Section 2.2. “RNG Credit” has the meaning given in Exhibit F. “RNG Interconnection Agreement” means that certain RNG Facilities Interconnect Agreement anticipated to be executed between Burnham and Cascade Natural Gas Corporation. “RNG Offtake Agreement” means that certain North American Energy Standard Board master agreement, Transaction Confirmation, and Special Provisions, anticipated to be executed between Burnham and Cascade Natural Gas Corporation. “Services” means the services to be provided by Burnham, its subcontractors, agents, or assigns, under this Agreement, as set forth in Exhibit B. “System” means the Burnham-supplied wastewater treatment and RNG production facility and ancillary components as set forth in Exhibit A. Page 76 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 7 of 81 “System Permits” means City Permits or Burnham Permits, as applicable. “Term” has the meaning given in Section 2.2. “Work Acceleration Agreements” has the meaning given in the Recitals. 2. Term 2.1 This Agreement shall become effective upon the Effective Date and terminate thirty (30) years after COD (the “Initial Term”), unless terminated in accordance with this Agreement or extended as provided in Section 2.2. 2.2 Upon expiration of the Initial Term, this Agreement shall automatically extend for two additional five (5)-year periods (each a “Renewal Term” and together with the Initial Term, the “Term”), unless terminated by either Party by sending written notice of termination to the other Party no later than one hundred and eighty (180) days before the end of the Initial Term or any Renewal Term, as applicable. 2.3 At the end of the Term, unless as specified elsewhere in this Agreement, City has the option to purchase all right, title, and interest in and to the System, on an “AS-IS” “WHERE IS” basis, without any warranty or further liability to Burnham. In the event the City elects to exercise this option, (a) the procedures set forth in Section 5.5(a) shall be applied and (b) the purchase price shall be equal to the appraised fair market value determined by considering (i) Sections 5.5(b) and 5.5(e) and (ii) the cost approach for appraisals, which shall account for, among other things, the decline in economic value of the System due to the passage of time. Each Party agrees to cooperate with the other Party to take the necessary actions and execute the necessary documents to effectuate such purchase and sale. Following such purchase and sale, unless as specified elsewhere in this Agreement, neither Party shall owe any further liability or obligation to the other Party. 3. Burnham Obligations 3.1 In addition to any other obligations explicitly set forth herein, Burnham (or its agents, contractors, and subcontractors, which for the purposes of this section shall be referred to as “Burnham”) shall perform or comply with the following obligations (each a “Burnham Obligation” and together the “Burnham Obligations”): (a) Construction Agreement. Burnham shall maintain in full force and effect the Progressive Design Build Agreement and shall enter into any other agreements with service providers necessary to design, develop and construct the System. Burnham shall use commercially reasonable efforts to have City named as a loss payee under performance or surety bonds under the Progressive Design Build Agreement or any such other agreements; (b) Notice to Proceed. Commencing on the Effective Date, Burnham shall make commercially reasonable efforts to conduct all required diligence, obtain the Burnham Permits in accordance with Exhibit G, and issue a Notice to Proceed (“NTP”) for construction of the System within one hundred eighty (180) Page 77 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 8 of 81 calendar days of the Effective Date (“NTP Date”). In all cases, Burnham shall issue its NTP within two hundred seventy (270) calendar days of the Effective Date (“NTP Longstop Date”); provided, however, that the NTP Date and NTP Longstop Date will be extended on a day-for-day basis upon the occurrence of any Force Majeure or due to any City Caused Delay or DOE Delay; (i) If Burnham fails to issue the NTP on or before the NTP Longstop Date each Party has the right, but not the obligation, to terminate this Agreement upon ten (10) business days advance notice, with no further liability owed or owing to the other Party; provided, however, that if City seeks to terminate the Agreement under this section: 1) City must have obtained the City Permits at least sixty (60) calendar days before the NTP Longstop Date and made the rights and obligations of such City Permits reasonably available to Burnham; and 2) City has complied, or if compliance is not yet possible City stands ready to comply, with all applicable City Obligations as set forth in Section 4.1. (c) Commercial Operation. Commencing on NTP, Burnham shall make commercially reasonable efforts to cause the System to reach Commercial Operation within twenty-one (21) months of the NTP Date (“COD”). In all cases, Burnham shall cause the System to reach Commercial Operation within twenty-seven (27) months of the NTP Date (“COD Longstop Date”); provided, however, that the COD and COD Longstop Date dates will be extended on a day- for-day basis upon the occurrence of any Force Majeure or due to any City Caused Delay or DOE Delay. In no circumstances shall any monies accrued but outstanding between the Parties delay Commercial Operation or COD. Burnham shall notify City within ten (10) business days subsequent to the System reaching COD, as confirmed by an independent third-party engineer. At the end of the Term, the System shall remain in Commercial Operation, but subject to City control, unless the Parties agree otherwise; (d) Services. Commencing on COD and throughout the Term, Burnham shall own and operate the System and provide the City with the Services listed in Exhibit B in a manner consistent with Prudent Industry Practices; (e) Effluent Water. Commencing on COD and during the Term, Burnham shall own and operate the System to discharge Effluent Water to City in accordance with Prudent Industry Practices and the specifications, terms, and conditions in Exhibit D; (f) Burnham Permits. Commencing as of the Effective Date, Burnham shall apply for, procure, and maintain throughout the Term, at its sole cost and expense, all Permits reasonably required for the design, construction, operation, or Page 78 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 9 of 81 maintenance of the System, including without limitation the Burnham Permits set forth in Exhibit G, except for any City Permits identified specifically on Exhibit G; and (g) Cooperation. Commencing on the Effective Date, Burnham will cooperate with the City in connection with (1) promptly obtaining any System Permits; (2) promptly providing information necessary for the design, construction, operation, or maintenance of the System as reasonably requested by the City; and (3) any other information or effort as reasonably requested from time to time by City to fulfill each Party’s responsibilities under this Agreement. (h) Pass-Through Costs. Burnham will make commercially reasonable efforts to obtain prudent pricing for the Pass-Through Costs at set forth in Exhibit F. (i) Gross Wen Process Performance Guarantees. Burnham will make commercially reasonable efforts to obtain commercially reasonable performance guarantees for the Gross Wen Process (the “Gross Wen Process Performance Guarantees”). To the extent Burnham is entitled to pursue and receives financial benefits or compensation from the Gross Wen Process Performance Guarantees, Burnham will pass through such financial benefits or compensation to City, without markup, and net of any costs incurred by Burnham associated with pursuing the Gross Wen Process Performance Guarantees. (j) Prevailing Wage. Burnham will satisfy the prevailing wage requirements in RCW 39.12.020. 3.2 If Burnham’s parent company, Burnham Pasco HoldCo LLC, a Delaware limited liability company with offices at 1201 Wilson Blvd – 27th Floor, Arlington VA, 22209 (“Parent”), receives, directly or indirectly through one or more owners of equity issued by Parent in consideration for or otherwise in respect of any U.S. federal income tax credit pursuant to section 48 of the Internal Revenue Code of 1986, as amended and restated, that is available in respect of that portion of the System that constitutes energy property as such term is used in such section, within one hundred eighty (180) days of receiving the cash proceeds from the sale of any tax credit Parent or assignee, as applicable, shall agree with City on a payment schedule where City will receive credit over the length of the Initial Term of $7,200 per month for each $1,000,000 in such cash received for the sale of federal tax credits (rounded to the nearest million). For the purposes of this Section 3.2 only, Parent shall be a third-party beneficiary under this agreement and City shall have the right to enforce this Section 3.2 against Parent. Except as set forth in this Section 3.2, Parent has no rights, obligations, or liabilities and has made no representations and warranties under this Agreement. Page 79 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 10 of 81 Section 3.2 AGREED AND ACCEPTED TO: BURNHAM SEV PASCO LLC CITY OF PASCO, WASHINGTON BURNHAM PASCO HOLDCO LLC By:__________________ By:__________________ By:__________________ Name: Chris Tynan Name: Adam Lincoln Name: Chris Tynan Title: CEO Title: City Manager Title: CEO Date:_______________ Date:_______________ Date:_______________ 4. City Obligations 4.1 In addition to any other obligations set forth herein, including any obligations in Exhibit C, City shall comply with the following obligations (each a “City Obligation” and together the “City Obligations”): (a) Site. No later than February 15, 2023 (the “Site Delivery Date”), the City shall execute a lease with Burnham in the form attached as Exhibit H granting Burnham a sufficient leasehold and all appurtenant rights and privileges necessary for Burnham to construct, operate, and maintain the System and perform the Services, as more particularly described in Exhibit C (the “Site”); (b) Engineering Report/Facility Plan Approval. No later than February 15, 2023, City shall receive approval on the Engineering Report and Facility Plan associated with the City Permits specified in Exhibit G. Any delay in receiving approval on the Engineering Report and Facility Plan beyond February 15, 2023 will be a “DOE Delay.” City shall maintain throughout the Term, at its sole cost and expense, all City Permits as set forth in Exhibit G; (c) Cooperation. Commencing on the Effective Date, the City will cooperate with Burnham in connection with (1) financing the System, including executing any additional approvals, estoppels, consents, or other documents as reasonably requested, (2) promptly obtaining any System Permits; (3) promptly providing information necessary for the design, construction, operation, or maintenance of the System; and (4) any other information or effort as reasonably requested from time to time by Burnham to fulfill each Party’s responsibilities under the Agreement; (d) Influent Water. Commencing on COD and continuing throughout the Term, at City’s sole cost and expense City shall provide Burnham with Influent Water in accordance with the specifications in Exhibit C. If at any time Burnham becomes aware that Influent Water delivered by the City is Non-Conforming Influent Water, Burnham may, in its sole discretion, bypass to the City-owned Storage Pond (as described in Exhibit A) such Non-Conforming Influent Water and promptly provide City with notice of such bypass and the reason for same; provided, however, that Burnham’s acceptance of Non-Conforming Influent Water shall not relieve City of any responsibility or any costs, damages, or Page 80 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 11 of 81 liabilities associated with Non-Conforming Influent Water, and Burnham does not waive any other rights or remedies associated with City’s delivery of Non- Conforming Influent Water. (e) Payment. The City shall pay Burnham in accordance with Section 5; and (f) Financing Cooperation. Commencing on the Effective Date, the City shall cooperate with, and provide Burnham with information concerning, City’s water and sewer utility, including without limitation operational and financial data consistent with and substantially similar to City disclosures provided in connection with City’s issuance of municipal bonds associated with such utility. The City shall execute a continuing disclosure agreement or certificate in connection with the Outstanding Debt that complies with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time, related to its water and sewer utility, substantially similar to the disclosures the City provides in connection with its issuance of municipal bonds in connection with such utility. (g) Nitrogen Management. To the extent that the Discharge Permit’s nitrogen or associated constituent (e.g., nitrates) limits are exceeded resulting in any Claims from Ecology or other third-parties, City shall submit a request to Burnham under Section 5.4 for Modifications to the System reasonably sufficient to bring nitrogen and associated constituent levels within Discharge Permit limits, including without limitation installing more Revolving Algal Biofilm in the Gross Wen Process, grow lights, or installing a moving bed biofilm reactor and any related infrastructure. 4.2 If there are any changes in City’s ability to comply with the City Obligations in Exhibit C, any material change in circumstances at the Site, or a Change of Law that necessitates a change to the System or the services to be provided by Burnham in connection herewith (individually or collectively, “Changed Circumstances”), and not as a result of any actions taken by Burnham that interfere with City’s ability to comply with the City Obligations, City shall be solely responsible for any increased costs incurred by Burnham to operate the System due to such Changed Circumstances. The Parties agree to negotiate any necessary Modifications in accordance with Section 5.4 to accommodate any Changed Circumstances. 5. Payment for System and Services; Change Orders 5.1 Commencing on COD and continuing throughout the Term, City shall pay Burnham the Adjusted Treatment Fee, Pass-Through Costs and any applicable adjustments as calculated and invoiced by Burnham on a monthly basis in accordance with Exhibit F. (a) Except in the case of Material Breach by Burnham, a Force Majeure lasting more than six (6) months, or as explicitly specified in this Agreement, commencing on COD City shall pay to Burnham the Adjusted Treatment Fee each month and through the end of the Term notwithstanding any failure by City to deliver Page 81 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 12 of 81 Influent Water or failure or inability of Burnham to accept Influent Water or deliver Effluent Water. (b) The City acknowledges, covenants, represents, and warrants that all payments made by the City to Burnham shall be deemed operations and maintenance costs of the water/sewer utility pursuant to the Pasco Municipal Code, Section 13.10.010. 5.2 Within ten (10) business days after the end of each month, Burnham will issue to City an invoice in accordance with Exhibit F for the Adjusted Treatment Fee, Pass-Through Costs, and any applicable adjustments billed in the immediately preceding month along with any documentation reasonably necessary to support amounts due by the City. The City shall pay each Burnham invoice within thirty (30) calendar days after receipt; provided, however, that City may, in good faith, dispute the correctness of any invoice, Adjusted Treatment Fee, Pass-Through Costs, and any applicable adjustments or adjust any invoice for any arithmetic or computational error upon written notice to the Burnham, stating the basis for the dispute or adjustment; provided further, however, that City shall remain obligated to pay all undisputed amounts when due. Payment will be made by check, cash or electronic funds transfer, or by another mutually agreeable method(s), to the account determined by Burnham. 5.3 If City fails to pay any amount due to Burnham under this Agreement within five (5) business days of the date such amount is due, then such unpaid amount shall bear interest from the due date until paid in full at the rate of twelve percent (12%) per annum, or, if less, the highest rate permitted by law (“Late Payment Rate”). If the due date of any payment falls on a Sunday or bank holiday, the next business day following such date shall be the last day on which payment can be made without assessment of interest and a late fee. 5.4 At any time during the Term, City may request additional services from Burnham or request any alterations, additions, omissions, modifications, or changes in the scope, schedule, sequence, methods, or performance of the System or Services (together “Modifications”). Burnham agrees to reasonably cooperate with City to evaluate and implement any reasonable Modifications proposed by City; provided, however, that the Parties will agree to any such Modifications using the following process: (a) City shall submit additional services request in writing to Burnham; (b) Burnham shall submit a written change order to City setting forth the Modifications and expected costs of such Modifications; (c) City shall confirm its agreement to such Modifications and to pay all costs associated with such Modifications, if any, by executing such change order and returning it to Burnham; (d) Following receipt of the City’s executed change order, Burnham shall modify Exhibit F to reflect the costs of the agreed upon Modifications; and Page 82 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 13 of 81 (e) Any change order evidencing any such Modifications and the modified Exhibit F will become a part of this Agreement and incorporated by reference. (f) Any disputes over a change order or any associated Modification will be handled in accordance with the dispute resolution procedures in Section 15. 5.5 City Option to Acquire System at Fair Market Value. At any time after the Effective Date, the City shall have an option to purchase the System at Fair Market Value consistent with the requirements of RCW 70A.140.040; provided, FMV shall be determined according to this Agreement Section 5.5. (a) The City shall exercise its option to purchase the System using the following procedure: (i) Following City Council authorization, the City shall send Burnham notice of City’s intention to acquire the System for FMV together with an appraisal of FMV prepared by an independent valuation consultant experienced in the valuation of public utility systems. The consultant shall use the methodology as described in Section 5.5(a)(iv). (ii) Within ninety (90) days of the notice in Section 5.5(a)(i), City shall finalize a plan with Lender(s) for City to either: 1) assume all Outstanding Debt; or 2) pay off of all Outstanding Debt, including without limitation paying any associated breakage fees or costs. In either case, City shall share such plan with Burnham promptly after such plan is finalized. (iii) In the event Burnham disagrees with FMV as determined by the City- engaged consultant, within ninety (90) days of the notice in Section 5.5(a)(i), Burnham shall engage a nationally known and experienced valuation consultant to calculate FMV for the System, using the methodology as described in Section 5.5(a)(iv). (iv) Within one hundred eighty (180) days of the notice in Section 5.5(a)(i), Burnham shall deliver to City a report from the valuation consultant calculating FMV for the System. City shall have thirty (30) days to review the valuation report and agree on the FMV. If the FMV valuations are within ten percent (10%) of each other then the FMV shall be set at the average of the two valuation reports. If the valuation reports are more than ten percent 10% apart, and the Parties are unable to agree on a path forward, then the Parties shall mutually select and share the costs of a third third-party valuation consultant. The third third-party valuation consultant shall be provided both previous valuation reports. Page 83 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 14 of 81 The third valuation consultant shall then conduct a FMV valuation and issue an opinion of FMV within thirty (30) days of being retained. That opinion shall be binding and shall set the FMV. (v) Within one hundred eighty (180) days of agreeing on or determining FMV, City and Burnham shall execute all necessary and customary documents to transfer the System to City in exchange for Burnham receiving FMV. (vi) The City may withdraw its notice of intention to purchase the System for FMV at any time and for any reason. In that case, City may not exercise its option to purchase the System for FMV for one (1) year, starting on the date of withdrawal. (b) Whether determined by Burnham, City, or any valuation consultant, FMV shall be determined using the net present value method of valuation considering all expected revenue and expenses over the life of the System, including all revenue expected to be earned over the life of this Agreement: (i) If the City chooses to assume the Outstanding Debt, the valuation will account for all future equity distributions (including without limitation all costs, expenses, and debt service under the Outstanding Debt) and these equity distributions will be discounted at the City’s then-current cost of capital. (ii) If the City chooses to pay off the Outstanding Debt, the amount necessary to pay off the Outstanding Debt (including, without limitation, all associated fees) will be added to the equity value calculation in Section 5.5(b)(i). (c) Further, the FMV valuation should account for each of the following, in addition to any special considerations in Section 5.5(d): (i) The amount that a willing and able buyer would offer, and a willing and able seller would accept, for the purchase and sale of Burnham’s interest in the System, in an arm’s length transaction, assuming: 1) Neither party is under economic compulsion or has special bargaining power; 2) the buyer possesses all information in the possession of City relating to the System, its condition; and the revenues and age of the asset expenses of Burnham; 3) The event or circumstance that requires determination of fair market value had not occurred and accordingly this Agreement and Burnham’s ownership of the System would remain in effect Page 84 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 15 of 81 and Burnham would remain a going concern for the balance of the Initial Term; 4) There exists no prior, known or reasonably foreseeable unusual temporary event or circumstance specific to the System (e.g., damage, operating performance disruptions or destruction) or to market and economic conditions, positive or negative. If such event or circumstance consists of damage or destruction, FMV will exclude (A) the estimated cost to repair and replace the damage or destruction and (B) the loss of revenues during the estimated time to repair and replace the damage or destruction, and Burnham will retain the right to insurance coverage for loss occasioned thereby; 5) There would occur no future unusual temporary event or circumstance specific to the System (e.g., damage or destruction) or to market and economic conditions, positive or negative, not known or reasonably foreseeable at the time of valuation; 6) There would occur no future Change of Law not known or reasonably foreseeable at the time of valuation; 7) There exists no adverse effect from a City Material Breach or Non-Material Breach, and both Parties would generally continue to perform their respective obligations under this WTA for the remainder of the Initial Term absent early termination; and 8) Short-term impairments to the value of the System such as temporary damage or operating performance shortfalls are reasonably rectified if within Burnham’s responsibility under the Agreement. (ii) Reimbursement to Burnham of any reasonable and documented costs associated with demobilizing operations at the System. (iii) Reimbursement to Burnham of any reasonable and documented costs associated with demobilizing operations, terminating the site lease contemplated in Section 4.1(a), or terminating contracts with third-party contractors (including affiliates), including without limitation any costs and liabilities associated with Burnham’s non-contractual liabilities and indemnity obligations. (iv) Any reimbursement to Burnham under Sections 5.5(c)(ii) and 5.5(c)(iii) shall be the full and agreed reimbursement available to Burnham under Chapter 8.26 RCW for any relocation assistance. Page 85 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 16 of 81 (v) Reimbursement to Burnham of any incremental tax liabilities incurred by Burnham as a result of the exercise of City’s option. (d) Timing of City’s Exercise of Option and Calculation of FMV. (i) If Burnham or City must determine FMV before COD, then it shall be assumed that COD will occur on or before the COD Longstop Date and that the System shall be operational through the Initial Term. 1) In that case, FMV shall account for the capital costs previously expended and expected capital costs to achieve Substantial Completion and COD under the then-current construction schedule. If City and Burnham disagree on the cost to complete estimates, Burnham may choose to complete the System before selling the System to City, with the City’s cost of completion not contemplated in FMV determination. (ii) If Burnham or City must determine FMV before COD or within the first three (3) years of the Initial Term, in addition to the considerations in Section 5.5(d)(i), FMV must assume the System will achieve full operational capacity as contemplated by the Agreement. (iii) If Burnham or the City must determine FMV before Burnham or Parent receives any tax credit contemplated in Section 3.2, the FMV valuation will include the expected value of any tax credit reasonably expected to be received. (e) If the City exercises its right to purchase the System at FMV, City shall be required to assume the terms of the RNG Offtake Agreement and RNG Interconnection Agreement, or enter into replacement agreements on materially similar terms and conditions and for the same duration. 6. Non-Material and Material Breaches of this Agreement 6.1 Any breach under this Agreement by either Party that is not a Material Breach shall be a “Non-Material Breach.” 6.2 The following circumstances shall constitute a “Material Breach” by the applicable non- performing Party: (a) Burnham’s failure to reach Commercial Operation within one hundred eighty (180) calendar days of the COD Longstop Date; provided that, if Burnham fails to reach COD by the COD Longstop Date, Burnham shall pay the City the Daily Damage Rate for each day following the COD Longstop Date until COD is reached or this Agreement is otherwise terminated in accordance with Section 7.4; Page 86 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 17 of 81 (b) The City’s failure to make any payment required under this Agreement and invoiced by Burnham in accordance with Section 5 and Exhibit F; provided, however, that Burnham shall provide written notice of such failure to the City and the City shall have thirty (30) days to submit payment in full following such notice; (c) Burnham’s failure to operate the System or perform the Services consistent with Prudent Industry Practices that results in an Effluent Water Failure lasting more than twelve (12) months; provided, however, that so long as Burnham has provided the City with a written plan, consistent with Prudent Industry Practices and approved by an independent engineer, for resolving such Effluent Water Failure, such failure shall not be a Material Breach; (d) Notwithstanding the provisions in Section 6.2(c) above, Burnham’s failure to operate the System or perform the Services consistent with Prudent Industry Practices that results in an Effluent Water Failure lasting more than twenty-four (24) consecutive months; (e) The City’s material relocation, alteration, addition, improvement, maintenance or repair of the System made without Burnham’s written consent; (f) In respect of either Party, the other Party’s material misrepresentation in connection with this Agreement, fraud or intentional misconduct; (g) In respect of either Party, an Insolvency Event for that Party; 7. Remedies; Cross-Defaults 7.1 Remedies for Non-Material Breach Due to Effluent Water Failure. Burnham’s failure or inability to meet the Effluent Water specifications listed in Exhibit D (“Effluent Water Failure”) shall be a Non-Material Breach of this Agreement, with the liability, costs, and responsibility for remedying an Effluent Water Failure to be determined as follows: (a) Upon either Party’s determination that an Effluent Water Failure has occurred, such Party shall provide a reasonably detailed notice to the other Party explaining the circumstances of such Effluent Water Failure no later than ten (10) days of such determination. The Parties will immediately cooperate and take steps to remedy such Effluent Water Failure consistent with Section 7.7. (b) Burnham will be responsible and have sole discretion for performing all work on the System reasonably required to remedy the Effluent Water Failure. The City will bear all costs and liabilities associated with remedying the Effluent Water Failure except as noted in 7.1(c), with any costs incurred separately by Burnham invoiced to City as Pass–Through Costs or, if necessary, added to Exhibit F using the change order process in Sections 5.4(a) through 5.4(e). Page 87 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 18 of 81 (c) Notwithstanding the above, if Burnham’s failure to operate the System or perform the Services consistent with Prudent Industry Practices was the primary cause of the Effluent Water Failure, Burnham shall bear all costs associated with remedying the Effluent Water Failure. Notwithstanding the above, if the Effluent Water Failure was caused by City’s delivery of Non-Conforming Influent Water, such remedy shall be determined by Section 7.2(c). 7.2 Remedies for Non-Material Breaches of Certain City Obligations. (a) If City fails to timely deliver the Site by the Site Delivery Date in accordance with Section 4.1(a), unless excused by a Force Majeure, such failure shall be a City Caused Delay. (b) If City fails to timely procure Facility Plan approval under Section 4.1(b), unless excused by a Force Majeure, such failure shall be a City Caused Delay. (c) If the City fails to timely comply with the City Obligations in Sections 4.1(c) through (f)) and such failure results in a Project delay, such failure shall be a City Caused Delay. (d) If City fails to deliver Influent Water in accordance with Exhibit C and Section 4.1(d) or delivers Non-Conforming Influent Water, Burnham shall promptly notify City of such failure and City shall be solely responsible for any and all losses, damage to the System, or additional costs incurred by Burnham that were caused by City’s failure or delivery of Non-Conforming Influent Water, including without limitation any additional costs of treating, handling, storing, and disposing of such Non-Conforming Influent Water or discharging Non- Conforming Influent Water to City-Owned Storage Pond. (e) In the event of any damage to the System caused by City’s acts or omissions or breach of this Agreement, City shall remain obligated to perform all of its obligations under this Agreement and City shall reimburse Burnham for the repair and restoration of the System to the same condition as existed immediately before such damage occurred. Burnham shall promptly notify City of any damage to the System caused by City’s acts or omissions. (f) Such remedies in this Section 7.2 shall be non-exclusive, and every other right and remedy be cumulative and in addition to every other right and remedy given under this Agreement or existing at law, in equity, or otherwise now or after the Effective Date, and the assertion or employment of any right or remedy under this Agreement should not prevent the concurrent assertion of any other right or remedy; provided, however, that any disagreements will be resolved by the dispute resolution procedures in Section 15. Any notices required by this Section 7.2 will be provided under the terms and conditions in Section 7.3. 7.3 Remedies for Other Non-Material Breach by Either Party. As promptly as may be reasonably practicable, and in all circumstances no later than thirty (30) business days after Page 88 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 19 of 81 becoming aware of a Non-Material Breach, the performing Party shall provide written notice of the Non-Material Breach to the non-performing Party (“Claim Notice”). The failure by the performing Party to give such prompt notice shall not constitute a waiver except to the extent, if any, that the non-performing Party is materially prejudiced by such failure. Any Claim Notice sent by the performing Party to the non-performing Party shall set forth in reasonable detail, to the extent then known or available: (a) the facts and circumstances giving rise to such Non-Material Breach, including all relevant supporting documentation; (b) the nature of the losses suffered or incurred or expected to be suffered or incurred by the performing Party; (c) a reference to the provisions of this Agreement in respect of which such losses have been suffered or incurred or are expected to be suffered or incurred; (d) the actual amount of losses actually suffered or incurred and, to the extent the losses have not yet been suffered or incurred, a good faith estimate (to the extent reasonably possible, based on the information then known or available) of the amount of losses that could be expected to be suffered or incurred; (e) a reasonably detailed demand for the non-performing Party to take such actions or pay the performing Party any amounts due or reasonably expected to be due to cure the Non-Material Breach (the “Remedy”); and (f) such other information as may be necessary for the non-performing Party to determine whether any limitations under this Agreement may apply. (g) Upon receiving any Claim Notice, the non-performing Party shall perform or pay the Remedy, as applicable, as soon as reasonably practicable, but in any event no later than thirty (30) calendar days. If such Remedy is not reasonably capable of being implemented within thirty (30) calendar days, the Parties shall agree on a longer time to implement the Remedy. If the non-performing Party refuses to comply with the Claim Notice, any disagreements will be resolved by the dispute resolution procedures in Section 15. (h) The Parties agree that a Non-Material Breach will not result in a right for either Party to terminate this Agreement 7.4 Remedies for Material Breach of Either Party (a) Material Breach by Burnham. If Burnham is in Material Breach of this Agreement, the City may, but is not required to, terminate this Agreement by providing Burnham sixty (60) days advance written notice of the Material Breach, during which sixty (60) day period Burnham shall have the opportunity to cure such Material Breach. If Burnham fails to cure and City exercises its Page 89 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 20 of 81 termination right, prior to such termination, the City shall elect one of the following: (i) Assumption of Financing. Subject to Lender(s)’ consent, City shall assume the Services under this Agreement and Burnham’s obligation to pay the Outstanding Debt pursuant to an agreement between the City and the Lender(s); or (ii) Right of First Refusal. Following termination, Lender(s) may choose to liquidate System assets, sell the System at fair market value, or continue to operate the System pursuant to Section 16.5. If Lender(s) choose to liquidate System assets or sell the System, the City shall have a right of first refusal to purchase the System at Fair Market Value as determined in Section 5.5(b) through 5.5(d). The City and Burnham shall execute any agreements or documents necessary to effectuate the City’s election of either of the above. If the City assumes the Services under this Agreement, City covenants that it will assume the terms of the RNG Offtake Agreement and RNG Interconnection Agreement, or enter into replacement agreements on materially similar terms and conditions and for the same duration. (b) Material Breach by City. If City is in Material Breach of this Agreement, Burnham may, but is not required to, terminate this Agreement by providing City sixty (60) days advance written notice of the Material Breach, during which sixty (60) day period City shall have the opportunity to cure such Material Breach. If City fails to cure and Burnham exercises its termination right, City shall owe to Burnham as direct damages, and not as a penalty, the undiscounted value of the City’s payments to Burnham for the remainder of the Term (excluding Pass- Through Costs), as reasonably calculated by the Parties using their respective third-party consultants, in accordance with Exhibit F, and any breakage or early termination fees arising from the termination of the RNG Offtake Agreement and RNG Interconnection Agreement. 7.5 Termination of City Lease. If the site lease contemplated in Section 4.1(a) and attached as Exhibit H terminates due to the material default of either Party under that site lease, this Agreement shall terminate concurrently with the termination of the site lease. If the site lease terminates due to Burnham’s material default under the site lease, Burnham shall be considered in Material Breach of this Agreement, with all applicable remedies available to the City under 7.4(a). If the site lease terminates due to City’s material default under the site lease, City shall be considered in Material Breach of this Agreement, with all applicable remedies available to Burnham under 7.4(b). 7.6 Liquidated Damages. The Parties acknowledge and agree that with respect to the damages payable under 6.2(a), it would be impracticable to determine accurately the extent of the loss that the City would have in such case, it is in the Parties’ interests to establish certainty as to the damages payable, and such damages are in the nature of liquidated damages, do not constitute Page 90 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 21 of 81 a penalty, and are a genuine and reasonable pre-estimate of the damages likely to be sustained by the City in such case. 7.7 Good Faith Efforts. In the case of any actual or anticipated breach of this Agreement, each Party agrees to use good faith efforts to take such commercially reasonable actions as necessary to expeditiously resolve the underlying circumstances including without limitation cooperating with the other Party to obtain any new or modified System Permits or other approvals necessary or appropriate in connection with the ownership, occupation, possession or use of the System; provided, however, that in all circumstances neither Party shall be required or be deemed to have waived any defenses it may have under any applicable law or contract. 8. Title, Ownership, and Risk of Loss; Transfer or Environmental Attributes 8.1 City acknowledges that the System at all times during the Term of this Agreement shall be owned by Burnham and will at all times remain Burnham’s personal property (and not fixtures), notwithstanding that such System or any part of such System may become attached to the Site or any real property. City shall take no action that is inconsistent with Burnham’s ownership of and title to the System and no provision of this Agreement shall be interpreted as giving City any right to operate the System. Burnham may mark or identify the System with labels, plates or other markings showing ownership. City shall not remove any such identifying marks. 8.2 The Parties agree that the transfer of custody of Influent Water to Burnham as contemplated hereunder shall constitute a bailment and that no sale of personal property, waste, or transfer of title to the Influent Water has occurred. City understands and agrees that, during the period of bailment, the Influent Water will be processed and thereafter will be delivered as Effluent Water in a different form than which it was delivered to Burnham. 8.3 Commencing on COD and continuing until the conveyance of the System to City that will occur at the Term of this Agreement, City assumes the sole risk of condemnation of City’s Site and any adverse effects arising from such condemnation. 8.4 City agrees to transfer all title and interest to all carbon credits, greenhouse gas offsets, green tags, renewable energy credits, production tax credits, allowances or offsets for air emissions, “M-RETs,” “RINs,” “LCFS” credits, or any other local, state, regional, federal, or international environmental programs providing incentives or credits, or any other environmental attributes, however entitled, associated with biogas, RNG, renewable transportation fuels, bio- fertilizers, or other products generated by the anaerobic digestion, processing of organic materials, or otherwise from the Influent Water or operation of the System (collectively, “Environmental Attributes”), including without limitation the ability of the Influent Water, or any portion thereof, to produce RNG and any credits, grants, or incentive payments derived therefrom, to Burnham. Such title and interest transferred from City to Burnham shall include all rights to generate, manage, advertise, claim, promote, and market for sale such Environmental Attributes and RNG. 8.5 The City agrees to reasonably assist and cooperate with Burnham in securing Environmental Attributes, and otherwise as may be reasonably necessary to carry out the Page 91 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 22 of 81 purposes of this Agreement, including from time to time submitting documentation or certifications regarding the Influent Water or the System. 9. Representations and Warranties 9.1 Each Party represents and warrants that it has full power and authority under the laws of the State of Washington to enter into this Agreement. 9.2 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY MAKES NO WARRANTY OR REPRESENTATION OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED. ALL IMPLIED WARRANTIES INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED. 10. Indemnification 10.1 Indemnification by Burnham. Burnham agrees that it will indemnify, defend, and hold harmless the City, and its employees, directors, officers, managers, members, and subcontractors (as applicable in the circumstances), (the “City Indemnified Party”) from, against, and in all respect of all liabilities, losses, lawsuits, penalties, claims, settlement payments, costs and expenses, interest, awards, judgments, damages, fines or demands (including the costs, expenses and reasonable attorneys’ fees on account thereof) (collectively “Claims”) incurred by the City Indemnified Party to third parties arising out of or in connection with (or alleged to arise out of or be in connection with): (a) any personal injury to, or death of, any person, or loss or damage to property arising out of or in connection with the negligence or willful misconduct of Burnham or any of its officers, members, employees, agents, representatives or subcontractors in connection with its obligations or rights under this Agreement; (b) any Burnham Material Breach or Burnham Non-Material Breach; (c) Burnham’s acts or omissions under this Agreement that result in an Effluent Water Failure and are the primary cause of a violation of the effluent limitations in the City’s Waste Discharge Permit, through no fault or contributory negligence of the City or any third party; (d) any Burnham non-compliance with applicable law, including Environmental Laws; (e) any nuisance condition caused by Burnham’s acts or omissions under this Agreement; and (f) any other matter identified as requiring indemnification by Burnham under this Agreement. Page 92 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 23 of 81 (g) Burnham shall not, however, be required to reimburse or indemnify any City Indemnified Party for any Claim to the extent any Claim arises from: (i) any City Material Breach or City Non-Material Breach; (ii) the negligence or willful misconduct of any City Indemnified Party; (iii) the City’s acts or omissions that cause a violation of the City’s Discharge Permit (including the City’s supply of Non-Conforming Influent Water or failure to otherwise supply Influent Water in accordance with Exhibit C); (iv) any Abnormal Substances; (v) any Force Majeure event; (vi) any act or omission of any City Indemnified Party responsible for or contributing to the Claim; or (vii) any matter for which the risk has been specifically allocated to the City hereunder. A City Indemnified Party shall promptly notify Burnham of the assertion of any claim against it for which it is entitled to be indemnified hereunder, shall give Burnham the opportunity to defend such claim, and shall not settle the claim without the approval of Burnham which approval shall be in Burnham’s sole discretion. These indemnification provisions are for the protection of the City Indemnified Parties only and shall not establish, of themselves, any liability to third parties. The provisions of this subsection 10.1 shall survive termination of this Agreement. 10.2 Indemnification by the City. (a) The City agrees that to the extent permitted by law, it will indemnify, defend, and hold harmless Burnham, and its employees, directors, officers, managers, members, shareholders, subsidiaries, and subcontractors (as applicable in the circumstances), (the “Burnham Indemnified Parties”) from, against, and in all respect of all Claims incurred by the Burnham Indemnified Party to third parties arising out of or in connection with (or alleged to arise out of or be in connection with): (i) any personal injury to, or death of, any person, or loss or damage to property arising out of the negligence or willful misconduct of City or any of its officers, members, employees, agents, representatives or subcontractors in connection with its obligations or rights under this Agreement, (ii) any City Material Breach or City Non-Material Breach; Page 93 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 24 of 81 (iii) the City’s acts or omissions that cause a violation of the City’s Discharge Permit (including the City’s supply of Non-Conforming Influent Water or failure to otherwise supply Influent Water in accordance with Exhibit C or any other failure attributable to City Facilities), through no fault or contributory negligence of Burnham or any third party; (iv) any violation of the fixed dissolved solids effluent limit in the Discharge Permit; (v) any violation of the nitrogen and associated constituent (e.g., nitrates) effluent limits in the Discharge Permit; (vi) any Abnormal Substances; (vii) any soil or groundwater contamination caused by the City’s application of Effluent Water to the designated land treatment site via spray irrigation, through no fault or contributory negligence of Burnham or any third party; (viii) any environmental defect on, under or in the Site on or before the Effective Date of this Agreement or that otherwise arise out of or relate to the City’s activities prior to the Effective Date of this Agreement; (ix) any City non-compliance with applicable law, including Environmental Laws; (x) any nuisance condition caused by the City’s acts or omissions under this Agreement; and (xi) any other matter identified as requiring indemnification by City under this Agreement. (b) The City shall not, however, be required to reimburse or indemnify any Burnham Indemnified Party for any Claim to the extent any such Claim is due to (i) any Burnham Material Breach or Burnham Non-Material Breach; (ii) the negligence or willful misconduct of any Burnham Indemnified Party; (iii) Burnham’s acts or omissions under this Agreement that result in an Effluent Water Failure and are the primary cause of a violation of the effluent limitations in the City’s Waste Discharge Permit; provided, however, that the City shall continue to indemnify Burnham for any and all violations of effluent limitations of fixed dissolved solids and nitrogen and associated constituent (e.g., nitrates); (iv) any Force Majeure event; Page 94 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 25 of 81 (v) any act or omission of any Burnham Indemnified Party responsible for or contributing to the Claim; or (vi) any matter for which the risk has been specifically allocated to Burnham hereunder. A Burnham Indemnified Party shall promptly notify the City of the assertion of any claim against it for which it is entitled to be indemnified hereunder, shall give the City the opportunity to defend such claim, and shall not settle the claim without the approval of the City which approval shall be in the City’s sole discretion. These indemnification provisions are for the protection of the Burnham Indemnified Parties only and shall not establish, of themselves, any liability to third parties. The provisions of this subsection 10.2 shall survive termination of this Agreement. 10.3 Title 51, Revised Code of Washington Waiver. For the purposes of RCW 4.24.115, any Claims by either Indemnified Party where there exists concurrent negligence of (i) the indemnitee or the indemnitee's agents or employees, and (ii) the indemnitor or the indemnitor's agents or employees, such Claims are valid and enforceable only to the extent of the indemnitor's negligence. For purposes of the indemnities provided pursuant to this Section 10, each Party specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW, and all other applicable Industrial Insurance/Worker’s Compensation Acts or their equivalent. Further, the indemnification obligations under this Agreement shall not be limited in any way by any limitations on the amount or type of damages, compensation, or benefits payable to or for any third party under Workers’ Compensation Acts, Disability Benefits Acts, or other Employee Benefit Acts; provided, this waiver of immunity under this Article extends only to claims against one by the other Party hereto, and does not include, or extend to, any claims by either Party’s employees directly against that Party. By initialing below, each Party certifies that the waiver of immunity contained in this Section 10 was mutually negotiated. BURNHAM SEV PASCO LLC CITY OF PASCO, WASHINGTON By:__________________ By:__________________ 11. Limitation of Liability IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY UNDER THIS AGREEMENT OR ANY INDEMNITY OFFERED THEREUNDER FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, SPECULATIVE, INDIRECT, REMOTE OR CONSEQUENTIAL DAMAGES, DAMAGES FOR LOST PROFITS OR DAMAGES BASED ON A MULTIPLE OF EARNINGS OR DIMINUTION IN VALUE OR ANY SIMILAR DAMAGES. 12. Insurance 12.1 Burnham shall maintain, and require each of its subcontractors to maintain, during the construction period before COD, and after COD, in full force and effect for the duration of the Term, insurance with the following coverages and limits: Page 95 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 26 of 81 Coverage Policy Limits (a) Worker’s Compensation Statutory requirements (b) Employer’s Liability $2,000,000 each occurrence (c) Comprehensive General Liability, including bodily injury and property damage $2,000,000 each occurrence (d) Auto Liability including bodily injury and property damage $1,000,000 each occurrence (e) Property Insurance (inclusive of Builders Risk during the construction period before COD, and Physical Damage Coverage after COD) Replacement Cost 12.2 Burnham shall provide certificates of insurance evidencing such coverage at such times as City may reasonably from time-to-time request. 12.3 City shall maintain in full force and effect at all times during the term of this Agreement insurance with the coverages and limits set forth below: Coverage Policy Limits (a) Worker’s Compensation Statutory requirements (b) Employer’s Liability $1,000,000 each occurrence (c) Comprehensive General Liability, including bodily injury and property damage $1,000,000 each occurrence (d) Auto Liability including bodily injury and property damage $1,000,000 each occurrence 12.4 City shall provide certificates of insurance evidencing such coverage at such times as Burnham may from time to time request. All coverage required by this Agreement shall include a waiver of subrogation. 12.5 The Parties shall meet within sixty (60) days of the fifth (5th), tenth (10th), fifteenth (15th), twentieth (20th), and twenty-fifth (25th) anniversaries of the Effective Date to review the insurance requirements to ensure sufficient coverage under this Agreement. To the extent a Party believes that any insurance coverage is insufficient, the Parties agree to negotiate in good faith to determines appropriate insurance coverage and, if necessary, will modify this Agreement accordingly. 13. Force Majeure 13.1 In the event either Party is rendered unable, wholly or in part, to carry out its respective obligations under this Agreement, except for any obligation to make payment, due to circumstances beyond its reasonable control, including, without limitation, strike, riot, lockouts or other disturbances, flood, natural disaster, acts of God, war or civil insurrection, an epidemic, Page 96 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 27 of 81 pandemic, quarantine, national emergency or other unforeseeable circumstances beyond its reasonable control (a “Force Majeure”), then written notice setting out the reason for non- performance shall be given to the other Party by the Party claiming Force Majeure promptly following discovery thereof. Upon receipt of such notice, the obligations of the affected Party shall be suspended during the period of the Force Majeure and any deadline or date certain for performance shall be extended by a period equal to the period of the Force Majeure. Every reasonable effort shall be made by the Parties to avoid delay and limit any period during which performance under this Agreement might be suspended. 14. Confidentiality 14.1 Except as set forth herein, (i) neither Party will disclose Confidential Information of the other Party to any third party, and (ii) each Party will use the other Party’s Confidential Information only for purposes of the transactions contemplated by this Agreement; provided, however, that a Party in possession of the other Party’s Confidential Information may disclose Confidential Information as required to comply with orders of governmental entities that have jurisdiction over it or as otherwise required by law. 14.2 Each Party agrees to (i) take reasonable steps to protect the other Party’s Confidential Information (which steps will be required to be at least as protective as those that the receiving Party takes to protect its own Confidential Information), (ii) notify the other Party promptly upon discovery of any unauthorized use or disclosure of Confidential Information; and (iii) cooperate with the other Party to help regain control of any Confidential Information that is the subject of any such unauthorized use or disclosure and prevent further unauthorized use or disclosure of such Confidential Information. 14.3 Each Party may disclose the other Party’s Confidential Information to its subcontractors, agents, legal counsel, accountants, consultants, financing parties, or representatives to the extent necessary in furtherance of this Agreement, and then only on a “need to know” basis in connection with the transactions contemplated hereby and on a confidential basis. 14.4 This Agreement shall be considered a public document and will be available for inspection and copying in accordance with the Public Records Act, chapter 42.56 of the Revised Code of Washington (the “Act”). If Burnham considers any record, in whole or in part, provided to City under this Agreement, whether in electronic or hard copy form, to be protected from disclosure under the Act, Burnham shall make reasonable efforts to clearly identify each such record with words such as “CONFIDENTIAL,” “PROPRIETARY” or “BUSINESS SECRET.” If a request is made for disclosure of any Burnham Confidential Information, the City shall promptly notify and provide Burnham with a copy of such request. In all cases, the City will ultimately determine whether the requested material should be made available under the Act. If City determines that the material is subject to disclosure, City will notify Burnham of its decision and allow Burnham ten (10) business days to take whatever action it deems necessary to protect its interests. If Burnham fails or neglects to take such action within said period, City will release the record(s) or portions thereof reasonably deemed by City to be subject to disclosure. City shall not be liable to Burnham for inadvertently releasing records pursuant to a disclosure request not clearly identified by Burnham as “CONFIDENTIAL,” “PROPRIETARY” or “BUSINESS SECRET.” Page 97 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 28 of 81 15. Governing Law and Disputes 15.1 This Agreement shall be interpreted in accordance with the laws of the State of Washington without giving effect to its choice of law principles. 15.2 Any disagreement between Burnham and City which cannot be resolved in accordance with this Agreement shall be referred to the senior management of each Party who shall attempt to resolve the dispute in good faith. To aid resolution by the Parties’ senior management, Burnham’s and City’s representatives shall promptly prepare and exchange memoranda stating the issues in dispute and their positions, summarizing the negotiations which have taken place and attaching relevant documents. If the Parties’ senior management resolves the dispute, such resolution shall be reported in writing to and shall be binding upon the Parties. 15.3 If, despite the good faith efforts described in Section 15.2, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, the Parties may seek to agree on a forum for mediation to be held at a mutually agreeable site. 15.4 If, despite good faith efforts described in Section 15.2 and 15.3, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, (including the determination of the scope or applicability of this Agreement to arbitrate), shall be determined by arbitration in Seattle, Washington before a single arbitrator who is an experienced attorney in the discipline that is the subject of the dispute and whom shall be jointly selected by Burnham and the City. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. The arbitrator shall issue a reasoned, written decision which will be binding on the Parties. Judgment may be entered upon the arbitrator’s decision in any court of competent jurisdiction, and each Party agrees to submit to the personal jurisdiction of any such court for the purposes of any such actions or proceedings to enter or enforce such judgement. 15.5 Should either party employ an attorney to enforce any of the provisions of this Agreement, the non-prevailing Party in any final judgment agrees to pay the other Party’s reasonable expenses, including reasonable attorneys’ fees and expenses in or out of litigation and, if in litigation, trial, appellate, bankruptcy or other proceedings, expended or incurred in connection therewith, as determined by a court of competent jurisdiction. 15.6 The venue for any judicial proceedings relating to this Agreement shall be the Superior Court for the State of Washington in Franklin County. 16. Miscellaneous 16.1 Amendment and Waiver. No amendment or waiver of any provision of this Agreement shall be valid unless contained within a writing executed by City and Burnham and which references the specific section to be amended or waived. No other amendment or waiver shall have any effect, regardless of its formality, consideration, detrimental reliance or conduct of one or more Parties. Any waiver of any term or condition hereof shall not be construed as a waiver of Page 98 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 29 of 81 any subsequent breach or as a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. 16.2 Assignment. Either Party, or its assigns as applicable, may assign its rights under this Agreement with the prior consent of the other Party, not to be unreasonably withheld, conditioned or delayed; provided that consent will not be required if assignment is made to (i) an affiliate of the assigning Party, provided that such affiliate assumes in writing all of the obligations of such assigning Party hereunder; (ii) any person or entity that acquires, directly or indirectly, all or substantially all of the assets of the ultimate parent of such Party (including as a result of a change of control transaction, whether by sale of stock, sale of assets, merger, consolidation or otherwise); and (iii) if Burnham or Burnham’s lender is the assignor, the assignee appoints an O&M operator with at least five (5) years of experience operating wastewater treatment plants and demonstrating proficiency operating RNG equipment, or who has a service plan to remotely monitor RNG equipment with experienced RNG technicians. 16.3 Collateral Assignment. Burnham may directly or indirectly collaterally assign, mortgage, or pledge its interests in this Agreement for the purpose of financing the System without City’s consent and the City agrees that it shall enter into agreements with the Lender(s) or bond trustee for the Outstanding Debt or any other financing instruments for purposes of any such assignment. 16.4 Counterparts; E-Signatures. This Agreement may be executed by the Parties in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement. A signature of a Party transmitted to the other Party by facsimile, PDF or other electronic means shall constitute the original signature of such Party for all purposes (“Electronic Signature”). 16.5 Lender Right to Cure. If Burnham incurs a Material Breach under this Agreement, the City agrees and acknowledges that Lender(s) may, but do(es) not have the obligation to, (i) acquire title to the System, (ii) cure all defaults and breaches that are capable of cure, and (iii) assume any Burnham Obligation under this Agreement, in which case the City shall recognize such Lender(s) as if such Lender(s) had been the original party to this Agreement. City further agrees to make commercially reasonable efforts to negotiate amendments to this Agreement or otherwise cooperate with the Lender(s) if Lender(s) assume any Burnham Obligations. Nothing in this Section 16.4 will operate to infringe the City’s option to purchase the System for FMV under Section 5.5. 16.6 Merger. This Agreement, including any Exhibits, contains the total agreement of the Parties, and all agreements oral or written entered into prior to or contemporaneously with the execution of this Agreement are excluded. This Agreement shall be binding upon the Parties, their successors and assigns. 16.7 Notice. Any notices or other communications required or permitted hereunder shall be in writing and sent to the appropriate addresses designated below (or to such other address or addresses as may hereafter be furnished by one Party to the other Party in compliance with the terms hereof), by hand delivery, by electronic email (if listed below), by UPS, FedEx, or DHL next-day service, or by registered or certified mail, return receipt requested, postage prepaid. Page 99 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 30 of 81 If to City: City of Pasco Adam Lincoln City Manager 525 N 3rd Avenue Pasco, WA 99301 If to Burnham: Attn: General Counsel Burnham SEV Pasco LLC c/o Burnham RNG LLC 1201 Wilson Blvd – 27th Floor Arlington VA 22209 With a copy to: With a copy to: Eric Ferguson eferguson@kerrlawgroup.net legal@burnhamdev.com 16.8 No Third-Party Beneficiaries except Lender(s). This Agreement is solely for the benefit of the Parties and their respective successors, Lender(s), and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that Burnham’s Lender(s) shall have only such third-party beneficiary rights arising from Section 16.5 or as otherwise explicitly granted in the Agreement, and City and Parent shall have such rights and obligations specifically enumerated in Section 3.2. 16.9 Severability. In the event that any clause in this Agreement is deemed unenforceable or invalid, the balance of the Agreement shall remain enforceable. 16.10 No Presumption. The Parties agree that (i) this Agreement was negotiated fairly between them at arm’s length and that the final terms of this Agreement are the product of the Parties’ negotiations, (ii) this Agreement shall be deemed to have been jointly and equally drafted by them, and (iii) the provisions of this Agreement therefore are not to be construed against either Party on the grounds that such Party drafted or was more responsible for drafting the provisions. 16.11 Eminent Domain. Nothing in this Agreement shall impact City’s ability to exercise its eminent domain rights under Chapter 8.12 RWC; provided, however, that any damages or fair market value determined under Chapter 8.12 RWC shall be calculated pursuant to Section 5.5(b) through Section 5.5(e) of this Agreement. [signature page follows] Page 100 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 31 of 81 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date. BURNHAM SEV PASCO LLC CITY OF PASCO, WASHINGTON By:_________________________________ By:______________________________ Name: Chris Tynan Name: Adam Lincoln Title: CEO Title: City Manager Date:________________________________ Date:_____________________________ Page 101 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 32 of 81 Exhibit A Burnham-Supplied System The System is composed of the following primary components, however, Modifications may be made in accordance with Section 5.4 or revisions may be made to accommodate final design: 1. Headworks System: a system that accepts the Influent Water (pumped by others) and routes the Influent Water to the next process. 2. Anaerobic Digester System and Bypass Stations a. Anaerobic Digester System: a system that holds multiple days of Influent Water at conditions (i.e., temperature, limited oxygen) that produce biogas (mainly methane and carbon dioxide, other trace gases). The reacted water is then routed to the next process or bypass station. The biogas generated is routed to the gas processing system. b. Bypass - Headworks System to Nitrogen Reduction System: a bypass system where Influent Water is from the Headworks System directly to the Nitrogen Reduction System. This system would be used during upset conditions (Anaerobic Digester System / supporting equipment), or during occurrences when the Influent Water volume exceeds the specification. c. Bypass - Headworks System to City-owned Storage Pond: a bypass system where Influent Water is routed from the Headworks System directly to a City-owned Storage Pond. This system would be used during upset conditions (Anaerobic Digester System / Nitrogen Reduction System / supporting equipment), or during occurrences when the Influent Water exceeds the specification. 3. Nitrogen Reduction System and Bypass Station a. Nitrogen Reduction System: a system that is designed to improve levels of the Influent Water characteristics to levels within the effluent specification limits. The reacted water is then routed to the next process. Biosolids and sludge is created during this process. b. Bypass – Nitrogen Reduction System to City-owned Storage Pond: a bypass system where Effluent Water from the Anaerobic Digester System is routed from the discharge of the Anaerobic Digester System around the Nitrogen Reduction System directly to the City - owned Storage Pond. This system would be used during upset conditions (Nitrogen Reduction System / supporting equipment), or during occurrences when the Influent Water volume and/or characteristics are higher than the specification. 4. Gas Processing: a system that processes the biogas generated from the anaerobic reactors and upgrades it to RNG (separating practically all of the methane from the biogas). RNG is then sent to the compression, metering, interconnect to gas utility. During upset conditions the biogas is sent to the flare for destruction. 5. Multi-use Building: a building designed to contain some of the headworks and grit removal system process as well as Motor Control Center, Restrooms, Office, and Maintenance Shop. 6. Influent and Effluent Sampling: a. Sampling of the Influent Water will be established at a location just prior to entering the Headworks. b. Sampling of the Effluent Water will be established for each discharge source (Anaerobic Digester System and the Nitrogen Reduction System) prior to entering the City-owned Storage Pond or Irrigation Pump System. Page 102 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 33 of 81 Exhibit B BURNHAM OBLIGATIONS Burnham will supply the following wastewater treatment services to the City with respect to the System described in Exhibit A 1. Operation, Routine Maintenance, and Management of the System. 1.1. Burnham will be responsible for all operations and maintenance obligations required to ensure operation of the System in accordance with the Agreement and an Ecology-approved operations and maintenance manual. Burnham shall perform the following Services: a) Day-to-day operations and monitoring for the System; b) Staffing the System sufficient for the operation and maintenance of the System, including with operators certified, as needed, at the appropriate level; c) Performing scheduled routine, preventative, and ongoing maintenance as specified by the equipment manufacturer and consistent with Prudent Industry Practices to ensure the long-term operation of System infrastructure; d) Performing routine maintenance, repairs, and replacements as needed on System components; e) Maintaining operations and routine maintenance records for the supplies needed for System operation and routine maintenance; and f) Ordering and payment for supplies and equipment for routine operations and maintenance of the System. Burnham’s payment for supplies and equipment for routine operations and maintenance of the System shall be in accordance with this Agreement and, where appropriate, considered a Pass-Through Cost subject to the terms in Exhibit F. 1.2. Burnham will communicate with the City as is reasonable and necessary regarding Burnham’s operation, routine maintenance, and management of the System. 2. Capital Improvements; Major Maintenance; Modifications 2.1. Burnham will perform capital improvements, Major Maintenance and Modifications. 2.2. Annual Major Maintenance Budget. Beginning in on April 1 following the first anniversary of COD, and continuing annually on April 1 throughout the Term, Burnham will provide the City with a projected annual maintenance budget through April 1 of the following year, and for each of the next two (2) subsequent year, in accordance with Prudent Industry Practices. The City may object to such budget solely for the purpose of disputing that the projected maintenance is not in accordance with Prudent Industry Practice, within fifteen (15) Page 103 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 34 of 81 business days. If the Parties are unable to determine a resolution to any such objection, an independent third-party engineer shall be consulted by the Parties to resolve such objection. If the Parties are unable to agree on a resolution after such consultation, the Parties shall follow the dispute resolution process set forth in Section 15. 2.3. Should Ecology or other applicable regulatory authority establish new or different effluent limits under the Discharge Permit that potentially require Modification(s) to the System, the Parties shall cooperate to evaluate any required Modification(s) to the System. The City shall be responsible for paying for the costs of any such Modifications as provided in Section 5.4 of the Agreement and Exhibit F. 3. State Waste Discharge Permit Compliance, Generally 3.1. The City is responsible for obtaining the Discharge Permit. Both City and Burnham shall be responsible for Permit compliance. 3.2. Relative roles and responsibilities for the City and Burnham to implement and comply with the Permit are defined in the Agreement and this Exhibit B. Burnham’s responsibilities for performance standards and regulatory, reporting, and recordkeeping requirements under the Discharge Permit are limited to those set forth in Section 4 of this Exhibit B. 3.3. Burnham’s operations will be performed to comply with portions of the City’s Discharge Permit relevant to the System and to prevent nuisance conditions. 3.4. Burnham will provide commercially reasonable and necessary support to the City for the Discharge Permit application and renewal processes. 4. Performance Standards and Regulatory, Reporting, and Recordkeeping Requirements 4.1. Burnham’s responsibilities for performance standards and regulatory, reporting, and recordkeeping requirements are solely and exclusively for the operation of the System. All aspects of City Facilities, including but not limited to implementation and enforcement of the City’s pretreatment program, are the sole and exclusive responsibility of the City and such City Facilities are outside the scope of this Agreement and Burnham’s obligation to perform Services and operate the System in accordance with the Agreement. 4.2. Burnham’s performance standard responsibilities are set forth in Section 3 of the Agreement; specifically, Burnham shall provide Effluent Water to City in accordance with Exhibit D; provided that Burnham’s responsibility for supplying Effluent Water in accordance with Exhibit D is conditioned upon City supplying Influent Water in accordance with Exhibit C. 4.3. Burnham will be responsible for Influent Water and Effluent Water metering/monitoring as more fully described in Section 5 of this Exhibit B; 4.4. For any monitoring and sampling requirements for the System, including monitoring Influent Water to the System and Effluent Water from the System, Burnham will perform any Page 104 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 35 of 81 laboratory analysis through an accredited laboratory or as otherwise required by the Discharge Permit. 4.5. The City will be responsible for all reporting to Ecology under the Discharge Permit, including any reporting for non-compliance with the Permit. Burnham will be responsible for the provision of any required monitoring and reporting data and information regarding the System to the City, including identifying and reporting to the City any non-compliance or bypasses within the boundaries of the System. 4.6. Burnham will retain a copy of all monitoring reports for the System for a period of three years or for the period of time expressly provided for in the State Waste Discharge Permit’s records retention requirements. 4.7. Upon the publication of the draft Discharge Permit, the Parties agree to develop a schedule with Burnham’s additional responsibilities for regulatory compliance and reporting and recordkeeping requirements under the Discharge Permit. The Parties agree to amend this Exhibit B to incorporate the schedule prior to issuance of the final Discharge Permit. 5. Metering; Water Quality 5.1. Burnham will install one or more meters as may be necessary to accurately measure the amount and composition of Influent Water delivered by City to Burnham and the amount and composition of Effluent Water delivered to City for purposes of billing City and other monitoring requirements as established in the Discharge Permit. 5.2. Burnham will calibrate, and maintain Meter devices to ensure the accuracy of the measurements is consistent with Prudent Industry Practices, the manufacturer’s recommendation, and approved operation and maintenance manual procedures for the device and the waste stream. Burnham will establish the calibration frequency for the Meter(s) in the operation and maintenance manual that conforms to the frequency recommended by the manufacturer. 5.3. Subject to reasonable advance notice, Burnham will provide City with access to the Meter(s) during regular business hours for the purpose of inspecting or monitoring the quantity and quality of Influent Water or Effluent Water. 5.4. City may request periodic testing of any Meter by providing written notice of such request to Burnham. Burnham will conduct such testing; provided that the City may, at its sole cost and expense, hire an independent third-party to conduct such testing. If, during any such testing, the Meter is found to be within a five percent (5%) accuracy range, then the cost of such test shall be borne by the City. If the meter is inaccurate by more than five percent (5%), Burnham shall at Burnham’s sole expense, cause the inaccuracy to be promptly corrected, and the Parties agree that any amounts due or paid for any Services shall be adjusted by the same percentage as the inaccuracy of the Meter, from the date of the City’s written request through the date upon which the inaccuracy is corrected, as verified by an independent third-party. Page 105 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 36 of 81 6. Sludge Removal and Disposal 6.1. Burnham will be responsible for removing anaerobic sludge and grit from the System and disposal of such sludge and any associated sludge disposal permits. 6.2. All sludge and grit removal and disposal related to City Facilities will be the sole and exclusive responsibility of the City. 7. System Access and Inspections 7.1. Burnham shall provide Ecology access to conduct inspections of the System during regular business hours to determine compliance with the Discharge Permit. 7.2. Burnham shall provide the City access and the right to conduct inspections of the System and its records during all hours at the City’s sole expense and risk following reasonable notice to ensure that the System is being properly maintained in accordance with the Agreement and this Exhibit B. 8. Payment of Permit Fees and Fines 8.1. The City is responsible for all Discharge Permit fees. 8.2. If Ecology assesses any fines or penalties under the Discharge Permit as a result of an Effluent Water Failure caused primarily by Burnham, or Burnham’s failure to provide the City with required reporting information regarding the performance of the System, Burnham shall indemnify City under Section 10.1 of the Agreement. 9. System Maintenance 9.1. City acknowledges that each and all of Burnham’s Obligations under Section 3 of the Agreement and this Exhibit B are subject to and conditioned upon Burnham’s right and obligation to perform on the System routine and periodic maintenance, emergency maintenance, and any maintenance necessary to correct anomalies or unanticipated conditions as reasonably required from time to time. In such circumstances, Burnham may direct Influent Water to City-Owned Storage Pond. 9.2. Burnham shall provide City with advance notice of any routine and periodic maintenance activities that require the system to be offline within ten (10) calendar days of the commencement of such routine and periodic maintenance activities. 9.3. Burnham may perform emergency maintenance activities as reasonably required under the circumstances. In the case of emergency maintenance activities, Burnham shall provide notice to City as soon as practicable. 10. Indemnification Page 106 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 37 of 81 Burnham’s sole and exclusive responsibility for wastewater treatment services to the City with respect to the System is limited to the services in this Exhibit B. Consistent with the indemnification provisions in Section 10 of the Agreement, the City will indemnify, defend, and hold harmless Burnham against any Claims unrelated to Burnham’s services set forth in this Exhibit B. Page 107 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 38 of 81 Exhibit C City Obligations City shall supply the Site for the System, as more particularly described below: Site Description: The Site is defined as the North-West ~30 acre undeveloped section of parcel # 113090085 in Franklin County, WA; adjacent to the Northern-most and Western-most properly lines, running East to the largest exiting storage pond, and South to the existing service road and IPS boundary. Access: Burnham, including Burnham visitors, contractors, and service providers, shall have unencumbered access to the Site and all associated easements and right-of-ways. Utilities: 1. Power: a. City to provide adequately sized underground raceway/conduit to Site boundary. b. Burnham responsible to coordinate with utility provider to provide power through City raceway to facility. 2. Communications: a. City to provide adequately sized underground raceway/conduit to Site boundary. b. Burnham responsible to coordinate with communications provider to provide communications through City raceway to facility. 3. Potable Water: City to provide adequate water source (for use: domestic, fire, and process w/in facility) at Site boundary. 4. Effluent Water Disposal: City to provide disposal with connection piping at Site boundary. 5. Influent Water Supply: City to provide supply with connection piping at Site boundary. Page 108 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 39 of 81 City shall supply Influent Water with flows, constituent concentrations, and loads that do not exceed by ten percent (10%) the following values: Influent Characteristics to Wastewater Treatment System Parameter Influent Avg. Annual Daily Flow (MGD) 4.38 Max. 28-Day Flow (MGD) 8.56 Max. Instantaneous Flow (GPM) 9,200 BOD, Annual Avg. (mg/L) 3,590 BOD, Annual Avg. Daily Load (lb/d) 131,035 BOD, Load Max. 28-Day (lb/d) 300,000 TSS, Annual Avg. (mg/L) 2,140 TSS, Annual Avg. Daily Load (lb/d) 78,170 TSS, Load Max. 28-Day(lb/d) 227,885 TN, Annual Avg. (mg/L) 114 TN, Annual Avg. Daily Load (lb/d) 4,170 TN, Load Max. 28-Day (lb/d) 8,140 Temperature Range (°F) 50- 95 Ph 4-10 Page 109 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 40 of 81 Exhibit D Burnham-Supplied Effluent Water The System is designed and intended to bypass Influent Water around portions of the process based on the Influent Water characteristics as described below: a) Influent Water flows above the Max. 28-Day Flow (MGD) and Max. Instantaneous Flow (GPM), as stated in Exhibit C, will typically bypass the Anaerobic Digester System. When Influent Water flows are below this threshold, Burnham will typically send materially all Influent Water through the Anaerobic Digester System. b) The Nitrogen Reduction System will typically be bypassed when Influent Water flows are above 4 MGD. When flows are below 4 MGD, Burnham will typically send materially all Effluent Water from the Anaerobic Digester System to the Nitrogen Reduction System. When flows are above 4 MGD, a portion of the Effluent Water from the Anaerobic Digester System will bypass the Nitrogen Reduction System and be returned directly to the City-owned Storage Pond. Burnham shall supply Effluent Water in accordance with the following specifications, which in all cases shall be conditioned upon City providing Burnham with Influent Water in accordance with the City’s Obligations in Exhibit C. Anaerobic Digester System Effluent Discharge Quality Requirements 2 Based on 28-day average, as measured on BVF reactor system effluent. Parameter Design Value2 BOD. Avg. (mg/L) <350 Page 110 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 41 of 81 Exhibit E [Reserved] Page 111 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 42 of 81 Exhibit F Pricing Schedule Base Treatment Fee: $850,000 per month Adjusted Treatment Fee: 1. Within thirty (30) calendar days of COD, Burnham shall provide the City with an invoice for the first adjusted Base Treatment fee (the “Adjusted Treatment Fee”), which shall be calculated by Burnham as follows, provided that the total amount of any increase in the Adjusted Treatment Fee for items a, b, c(iii), and c(iv) below (and excluding c(i), c(ii), and d) may not exceed $170,000 (the “Adjusted Treatment Fee Cap”): a. If the Net Capital Cost exceeds $108,000,000, the Base Treatment Fee will be increased in increments of $9,000 per month for each $1,000,000 of increased costs (rounded to the nearest million). b. If the Net Capital Cost is less than $108,000,000, the Base Treatment Fee will be decreased in increments of $9,000 per month for each $1,000,000 of decreased costs (rounded to the nearest million). c. The Base Treatment Fee assumes that the System is financed with senior debt to cover 80% of total necessary costs (“Loan-to-Value” or “LTV”) (this includes the Net Capital Cost, financing costs, working capital, commissioning costs, etc.) at a total weighted-average cost of debt at 5.0%. For clarity, all debt calculations include only debt incurred by Burnham and do not include any debt at any Burnham affiliates, including without limitation Burnham’s parent company. i. For every 10 bps above a total weighted-average cost of debt above 5.0%, the Base Treatment Fee will be increased by $5,250. ii. For every 10 bps below a total weighted-average cost of debt above 5.0%, the Base Treatment Fee will be decreased by $5,250. iii. For every 1% increase in LTV, the Base Treatment Fee will be decreased by $12,750. iv. For every 1% decrease in LTV, the Base Treatment Fee will be increased by $12,750. d. The Base Treatment Fee will be increased by $9,000 per month for each $1,000,000 (rounded to the nearest million) of Gross Wen Capital Costs, Prevailing Wage Costs and costs attributable to City Caused Delays or a DOE Delay. Annual Modifications to the Adjusted Treatment Fee The Adjusted Treatment Fee will be subject to further modification as follows: 1. Commencing on COD, Burnham will modify the Adjusted Treatment Fee to reflect any percentage adjustment in the Consumer Price Index measured from April 2022 to the month and year Page 112 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 43 of 81 immediately preceding the month and year in which COD occurs. This first modification of the Adjusted Treatment Fee will be the Adjusted Treatment Fee calculated and invoiced by Burnham through March 31 of the first calendar year occurring after the calendar year in which COD occurs. 2. Commencing on April 1 of the first calendar year following the year in which COD occurs, and occurring annually on April 1 of each calendar year through the Term, Burnham shall modify the Adjusted Treatment Fee based on changes in the Consumer Price Index and/or increases in the amount of Influent Water or Non-Conforming Influent Water accepted by the System that occurred during the immediately preceding calendar year (e.g., a modified Adjusted Treatment Fee will be calculated and take effect on April 1, 2025 to reflect circumstances occurring from January 1, 2024 through December 31, 2024). Burnham will calculate such annual modifications to Adjusted Treatment Fee as follows: a. The then-current Adjusted Treatment Fee will be adjusted for any change in the Consumer Price Index occurring from January 1 through December 31 of the prior calendar year; provided, however, that on April 1 of the first calendar year occurring after COD, such Consumer Price Index adjustment shall be measured from the month COD occurred through December 31 of the prior year (e.g. if COD occurs Jun 1, 2024, the adjustment will be measured from June 1, 2024 through December 31, 2024); and b. If the System accepted more than 1,600 MG of Influent Water or Non-Conforming Influent Water during the prior calendar year, the Adjusted Treatment Fee will be increased by .03% per MG for each MG accepted above 1,600 MG. There will be no adjustment for volume of water if the total volume of Influent Water or Non-Conforming Influent Water is less than 1,600 MG. Such annually modified Adjusted Treatment Fee shall remain fixed for the next twelve (12) months, through March 31 of the subsequent year. Burnham shall document any annual modifications to the Adjusted Treatment Fee and provide City a form summarizing the annual modification to the Adjusted Treatment Fee with the first invoice issued after such modified Adjusted Treatment Fee goes into effect. Pass-Through Costs: The following costs incurred by Burnham will be passed through to City with a ten-percent (10%) markup for administrative costs, and will be invoiced to the City on a monthly basis: o Solid waste disposal (including anaerobic sludge; periodic digester scrapes and clean-outs and any algae or biomass removed from the Gross Wen Process) o Consumables (including replacement parts & associated rental equipment) o Major Maintenance Expenses o Additional City or Pasco PWRF taxes or costs other than costs directly associated with the System The following costs incurred by Burnham will be passed through to City with no markup for administrative costs, and will be invoiced to the City on a monthly basis: o Electricity o Purchased natural gas for system heating use Page 113 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 44 of 81 o All state and local taxes with the exception of income taxes (e.g., sales tax, B&O tax, property tax, as applicable) o Rental payments made to City under the site lease RNG Credit. Burnham shall reduce or increase all invoiced amounts to City by the amount of any RNG Credit, if any, available for the applicable invoiced month. The RNG Credit amount will be the amount greater than or less than $350,000 (as adjusted for 50% of change in Consumer Price Index from April 2022) that Burnham earns in Net RNG Revenue in the previous month. If Burnham’s Net RNG Revenue is greater than $350,000, the City’s invoiced amount will be reduced by the amount that the Net RNG Revenue exceeds $350,000. If the Burnham’s Net RNG Revenue is less than $350,000, the City’s invoiced amount will increase by the amount that the Net RNG Revenue is below $350,000. Page 114 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 45 of 81 Exhibit G System Permits City Permits City will procure and maintain, as necessary, the following Permits for the System (the “City Permits”): Permit Name Permit Type Agency State Wastewater Discharge Permit Water Ecology Burnham Permits Burnham will procure and maintain, as necessary, the following Permits for the System (the “Burnham Permits”): Permit Name Permit Type Agency Notice of Construction Air Ecology SEPA Review General Franklin Co. Conditional Use (CUP) Use Franklin Co. Industrial Storm Water Water Ecology Solid Waste Permit (If Necessary) Waste Ecology Dam Safety (If Necessary) Water Ecology Page 115 of 160 506180225.9 FINAL DRAFT 1.20.23 Page 46 of 81 EXHIBIT H [[Form of Site Lease]] Page 116 of 160 506180225.9 K&L Gates Draft 9.27.22 Page 47 of 81 Basic Terms Summary of the Lease Agreement between Burnham SEV Pasco, LLC and the City of Pasco dated [__] The following table contains a summary of the basic terms of the Lease Agreement (“Basic Terms Summary”) for indicative purposes only and is not intended to be binding on the parties thereto. The provisions and terms summarized in the Basic Terms Summary are more specifically described and defined in the Lease Agreement. In the event of any conflict or inconsistency between the Basic Terms Summary and the Lease Agreement, the terms of the Lease Agreement will govern. Lessor Lessor’s Address City of Pasco 525 N 3rd Avenue Pasco, WA 99301 Lessee Lessee’s Address Burnham SEV Pasco, LLC 1201 Wilson Blvd – 27th Floor Arlington, VA 22209 Lessor Property The 82.95 acres of land owned by Lessor, as described in Exhibit B to the Lease Agreement, which includes the land to be leased by Lessee. Leased Property The 37.33 acres of land owned by Lessor, as described in Exhibit C to the Lease Agreement, to be leased by Lessee. Opening Term Payment Lessee will pay Lessor $25,200.00 annually during the Opening Term. Initial Term Payment Lessee will pay Lessor $25,200.00 annually during the Initial Term and any Renewal Term. Opening Term The Opening Term will commence on the Agreement Date and continue until the earlier to occur of (a) the COD and (b) the COD Longstop date, unless terminated pursuant to the terms of this Lease Agreement. If the COD Longstop date occurs prior to the COD (i.e., the COD does not occur), then this Lease Agreement shall terminate at the end of the Opening Term. Initial Term The Initial Term will commence on the COD and continue for thirty (30) years. Renewal Terms Term will automatically renew for two (2) additional five-year Renewal Terms. Page 117 of 160 Page 48 of 81 LEASE AGREEMENT THIS LEASE AGREEMENT (this “Agreement”) is entered into by BURNHAM SEV PASCO, LLC, a Washington limited liability company (“Lessee”) and the CITY OF PASCO, a municipal corporation of the State of Washington (“Lessor” and collectively with Lessee, the “Parties” or, as the context requires, “Party”) and is effective as of the date this Agreement has been last signed by a Party (the “Agreement Date”). In consideration of the mutual promises contained herein, the Parties, intending to be legally bound, agree as follows: RECITALS This Agreement is made with reference to the following facts: A. Concurrently herewith, Lessor and Lessee intend to enter, or have entered, into the Wastewater Treatment Agreement (the “WTA”) a copy of which is attached hereto as Exhibit E and incorporated herein by this reference. Pursuant to the terms thereof, Lessor desires to contract with Lessee to develop, design, construct, and operate, a wastewater treatment system (the “System”) in Pasco, Washington, as more particularly described in the WTA. B. As a condition to Lessee’s agreement to enter into the WTA with Lessor, Lessor has agreed to enter into this Agreement and, among other things, grant to Lessee sufficient leasehold and appurtenant rights and privileges necessary for Lessee to construct, operate, and maintain the System, upon the terms and conditions set forth in this Agreement. AGREEMENT NOW THEREFORE, in consideration of the premises and the WTA, the receipt and sufficiency of which are hereby acknowledge, the parties hereby agree as follows: ARTICLE 1: Term 1.1 The initial term of this Agreement shall begin on the Agreement Date and shall continue until the earlier to occur of (a) the COD and (b) the COD Longstop date, in each case unless this Agreement is earlier terminated in accordance with its terms (such initial term is hereinafter referred to as the “Opening Term”). 1.2 During the Opening Term, Lessee may, in its sole discretion, terminate this Agreement (a) effective upon thirty (30) days’ notice to Lessor, (b) on the NTP Longstop Date in the event Lessee does not issue NTP by the NTP Longstop Date, or (c) if the WTA is no longer in full force and effect following the Effective Date of the WTA. If the COD does not occur prior to the COD Longstop date (i.e., the COD does not occur), then this Agreement shall terminate at the end of the Opening Term. 1.3 On the COD, an additional term of this Agreement shall commence and shall continue, unless earlier terminated in accordance with the provisions of this Agreement, for a period of thirty (30) years following the COD (the “Initial Term”). Page 118 of 160 Page 49 of 81 1.4 The Initial Term shall automatically renew for two (2) additional five (5) year terms (each such additional term, a “Renewal Term”) unless terminated by Lessee by written notice delivered to Lessor at least one hundred and eighty (180) days prior to the expiration of the Initial Term or the then-current Renewal Term, as applicable, consistent with the terms and conditions hereof. ARTICLE 2: Lease; Easement 2.1 Lessor hereby grants to Lessee and Lessee hereby leases from Lessor, for the Term, an exclusive and irrevocable right to access and use the Leased Property, together with the rights and privileges appurtenant thereto, in accordance with this Agreement. (a) Lessor hereby grants to Lessee and Lessee’s employees, members, managers, affiliates, invitees, agents, contractors and subcontractors (collectively, “Representatives”) and those of their affiliates (collectively, “Lessee Parties”), irrevocably for the duration of the Term, an access easement and right of way over, across, under and through the Lessor Property, and (subject to Lessor’s approval, not to be unreasonably withheld) any surrounding or nearby premises owned by Lessor,3 in order for Lessee Parties to access the Leased Property and to build, maintain, and install any road, improvements, equipment, fences, gates, signs, communication lines or facilities, pipelines, or anything else reasonably necessary for the System Activities (as defined below) (collectively, “Lessee Improvements”). (b) Lessor shall provide the Lessee Parties with all access to the Leased Property necessary to allow Lessee to perform all System Activities, including ingress and egress rights through the Lessor Property, any third-party owned neighboring properties necessary to access the Lessor Property, and within the Leased Property, for Lessee and the Lessee Parties to access the System and Lessee Improvements. Without limiting the foregoing, to the extent Lessor has any beneficial easement rights in favor of or necessary to access the Leased Property, Lessor shall provide that Lessee has the right to utilize any such beneficial easements. (c) Lessor shall use its commercially reasonable efforts to provide sufficient space for: temporary storage and staging of equipment; parking of construction crew vehicles and temporary construction trailers; rigging and material handling; and for all other facilities reasonably necessary during the System Activities. (d) Lessor and its authorized representatives shall at all times have access to and the right to observe the installation work, subject to compliance with Lessee’s safety rules and Prudent Industry Practices, but shall not interfere with the System Activities or handle any Lessee equipment or the System without written authorization from Lessee. 2.2 Without limitation to Lessee’s other rights under this Agreement, Lessor agrees to use its best efforts to cure any defect in, or objection Lessee provides in writing to Lessor regarding, any Existing Lien or any other Lien encumbering or affecting the Leased Property or Lessee’s rights in relation thereto. 3 NTD: Open item. Parties to confirm location of easement(s)/license(s) including, but not limited to, easement/license for ingress and egress (and maintenance terms) related thereto. Page 119 of 160 Page 50 of 81 ARTICLE 3: Payment 3.1 Opening Term Payment. During the Opening Term, the rent payable by Lessee to Lessor shall be $25,200.00 annually (“Term Payment”), subject to adjustments, if any, set forth below. The Opening Term Payment shall be paid annually. The first payment of Opening Term Payment shall be paid to Lessor within thirty (30) days after the Agreement Date. Each Opening Term Payment thereafter shall be due annually within thirty (30) days of Lessor’s written notice to Lessee. 3.2 Initial Term Payment. During the Initial Term and any Renewal Term, the rent payable by Lessee to Lessor shall be $25,200.00 annually (“Initial Term Payment” and collectively with the Opening Term Payment, “Rent”). The Initial Term Payment shall be paid annually to Lessor with the first such annual Initial Term Payment to be paid within thirty (30) days of Lessor’s written notice to Lessee, provided such notice occurs after the COD. Each subsequent payment shall be due annually within thirty (30) days of Lessor’s Written Notice to Lessee during the Initial Term and any Renewal Term. 3.3 Additional Rent Terms. Lessor acknowledges and agrees that the Rent is the only rent or fee Lessee shall be obligated to pay Lessor in connection with this Agreement. Rent shall be offset against any amounts due and payable to Lessee pursuant to the WTA or otherwise paid by another method agreed by the Parties in writing. ARTICLE 4: Taxes 4.1 Lessee shall pay all applicable personal property Taxes on the System and any applicable leasehold excise Taxes in respect of the Leased Property. Lessee shall not be liable for any real property Taxes during the Term levied against the Leased Property. Unless prohibited by Applicable Law, Lessee shall not be responsible for any Taxes imposed on the income of the Lessor derived from the Leased Property or otherwise. 4.2 If a Party fails to pay directly, or reimburse the other Party for, Taxes for which the first Party is responsible under this Agreement, the other Party may in its sole discretion elect to pay the same directly to the taxing authority and in such event shall be entitled to recover such amount from the first Party with interest thereon at a rate equal to the lower of (a) one and a half percent (1.5%) per month or (b) the highest rate permitted under Applicable Law. Lessee may offset against any amounts owing to Lessor hereunder any Taxes paid by Lessee pursuant to this Section 4.2 for which Lessor is responsible. ARTICLE 5: System 5.1 System Activities. Lessor agrees to allow Lessee and the other Lessee Parties, throughout the Term, to develop, engineer, design, construct, install, interconnect, operate, maintain, monitor, clean, repair, replace, and remove the System in its entirety or any component thereof and engage in such other activities as are for the benefit thereof or purpose incidental thereto (such development, construction and other activities collectively, “System Activities”) on and from the Leased Property. Lessor acknowledges that the System Activities will or may require, among other things, physical installation of the System on the Leased Property, delivery of feedstock to the System, and transport of RNG from the Leased Property by pipeline or vehicle, Page 120 of 160 Page 51 of 81 and Lessor consents to such physical installation, delivery, transport and any other lawful activities relating to the System. Without limiting the foregoing, Lessee shall have the right to alter, modify, relocate, or remove any structures as may exist on the Leased Property as of the Agreement Date. 5.2 Permits and Incentives. Each party shall obtain and maintain certain Permits as required under the WTA. In the event the WTA terminates, each party shall maintain such Permits as reasonably required by Applicable Law. 5.3 Utilities and Water. Lessee shall be responsible for payment for any upgrades to existing utility systems that Lessee deems necessary for the System Activities that do not constitute Major Maintenance Expenses. Lessor shall cooperate in good faith with Lessee in Lessee’s efforts to obtain utility services to and from the Leased Property including any necessary easements on adjacent property. Lessor shall be responsible for Pass-Through Costs during the Term that are needed or used by Lessee. Lessor shall permit Lessee to arrange for and install separate metering service on the Leased Property to record and account for Lessee’s utility use. Lessor shall make available, at Lessor’s cost, potable water and any other utilities as agreed to under the WTA to Lessee in sufficient quantities for the construction and operation of the System. 5.4 Ownership of System. (a) Lessor acknowledges and agrees that, at all times during the Term, the System, including all constituent elements or components thereof, (i) is exclusively owned by Lessee or Lessee’s Affiliate, (ii) is and shall continue to be the personal property of Lessee and not Lessor, and is not and shall not become or be deemed part of or fixtures to the Leased Property or the Lessor Property, and (iii) shall be installed, operated, and maintained exclusively by Lessee or its Representatives in Lessee’s sole discretion and not Lessor unless otherwise agreed by the Parties in writing. Unless otherwise agreed in writing, Lessor shall not engage in any System Activities. (b) Lessor consents to Lessee, in Lessee’s sole discretion, filing, on behalf of Lessor, a disclaimer of the System as a fixture of the Lessor Property or the Leased Property in the office where real estate records are customarily filed in the jurisdiction of the Lessor Property. (c) Lessor acknowledges that Lessee is the owner of all Environmental and Tax Attributes attributable to the System, along with any other products or services of any kind produced by the System. (d) At the end of the Term or in the case of Lessor exercising its buyout right under Section 5.5 of the Wastewater Treatment Agreement, unless as specified elsewhere in this Agreement, Lessor has the option to purchase for fair market value, using the procedures in Section 5.5 of the Wastewater Treatment Agreement executed between the Parties, all right, title, and interest in and to the System, on an “AS-IS” “WHERE IS” basis, without any warranty or further liability to Lessee. Each Party further agrees to cooperate with the other Party to take the necessary actions and execute the necessary documents to effectuate such purchase and sale. Following such transfer, unless specified elsewhere in this Agreement including, but not limited to, in this Section 5.4(d), neither Party shall owe any further liability or obligation to the other Party. The provisions of this Section 5.4(d) shall survive the expiration or earlier termination of this Agreement. Page 121 of 160 Page 52 of 81 ARTICLE 6: Representations and Warranties 6.1 Mutual Representations and Warranties. Each Party represents and warrants to the other Party: (a) Existence. Such Party is duly and validly formed, existing and in good standing under the laws of the state of its formation or organization and has all requisite power and authority to enter into and perform its obligations under this Agreement. Such Party is duly qualified or licensed to do business in each jurisdiction where the failure to duly qualify or become licensed would adversely affect such Party’s ability to perform its obligations under this Agreement. (b) Authorization. The execution, delivery and performance by such Party of this Agreement, and the consummation of the transactions contemplated by this Agreement, have been duly and validly authorized by all necessary action on the part of such Party. (c) Enforceability. This Agreement constitutes the legal, valid and binding obligations of such Party enforceable against such Party in accordance with its terms , except as such enforceability may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws, now or hereafter in effect, relating to creditors' rights generally. (d) Consents and Approvals. No consent or approval by, filing with or notice to any Person (including third parties or Governmental Authorities) is required on the part of such Party or any of its Affiliates for the valid execution and delivery of this Agreement and the performance of its obligations hereunder and thereunder, other than those that have been obtained and are in full force and effect. (e) No Violation. Such Party’s execution and delivery of this Agreement and performance of its obligations hereunder and thereunder do not and will not (i) violate or conflict with the organizational documents of such Party; (ii) violate or conflict with any law or any order of any court or other Governmental Authority which is binding on (A) such Party or any Affiliate of such Party or (B) assets of such Party or any Affiliate of such Party; or (iii) violate, result in a default under or result in the termination, acceleration or mandatory prepayment of (with or without the giving of notice, the passage of time or both) any obligation under any contract or indebtedness to which such Party or any Affiliate of such Party is party or by which any such Party or any such Party’s assets are bound. 6.2 Lessor represents and warrants to Lessee: (a) Lessor is the fee simple owner of, and has good and marketable title to, the Lessor Property (including the Leased Property). Lessor’s ownership of the Lessor Property (including the Leased Property) is subject to no Liens or exceptions to title other than Liens, if any, expressly disclosed in writing by Lessor to Lessee prior to the Agreement Date. Lessor is the sole owner of the Lessor Property (including the Leased Property) and has the unrestricted right and authority to execute this Agreement and to grant to Lessee the rights granted hereunder. (b) To the best of Lessor’s knowledge, (i) no underground tanks are now located or at any time have been located within the Leased Property or any portion thereof, and Page 122 of 160 Page 53 of 81 (ii) there is no and has never been any violation or alleged violation with respect to the Leased Property, or the presence, generation, storage, disposal or release of Hazardous Substances in, on or under the Leased Property or within two hundred (200) feet of the Leased Property, of any Environmental Law, including laws, rules or regulations relating to Hazardous Substances. (c) Lessor is not a party to any, and to Lessor’s knowledge, there are no pending or threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any kind or nature whatsoever against Lessor (i) challenging the validity or propriety of this Agreement, and/or transactions contemplated in this Agreement or (ii) which could reasonably be expected to have a material adverse effect on the ownership or operation of the Lessor Property or any part thereof or interest therein. (d) To the best of Lessor’s knowledge, there are no currently existing options, rights of refusal, sales contracts, mineral rights requiring substantial use of the surface or other rights in favor of any third parties relating to the Lessor Property or any interest therein, which could interfere with the development, construction, installation, maintenance or operation by Lessee of the System or that allow any party other than Lessee to develop a renewable energy project or that could adversely affect Lessee’s use of the Lessor Property or obtaining the benefits intended under this Agreement. (e) The Parties acknowledge that Lessor is in the process of a subdivision, lot line adjustment, or boundary adjustment (as may be required) to cause the Leased Property to be a separate and independent legal lot of record.4 Prior to the establishment of such legal lot of record, Lessor agrees to indemnify, defend, and hold harmless Lessee and all Lessee Parties from any costs or claims that may arise by reason of any non-compliance with respect to zoning laws applicable to the Leased Property (including, without limitation, (i) legal fees and court costs, and (ii) consequential or punitive damages). ARTICLE 7: Insurance5 7.1 Insurance to be Maintained; Obligations with Respect Thereto (a) Lessee shall maintain comprehensive general liability insurance with respect to the Leased Property and the Lessor Property of which the Leased Property is a part, in the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate per annum with responsible companies qualified to do business in the state in which the Lessor Property is located and in good standing therein insuring both Lessee and Lessor as additional insured against injury to persons or damage to property as provided. (b) Lessor shall maintain insurance coverage of such types and amounts as may be customary, prudent, and reasonable in light of Lessor’s ownership of and activities conducted on the Lessor Property, naming Lessee as additional insured. (c) The Parties shall provide each other with certificates for such insurance at or prior to the commencement of the Term, and thereafter within 30 (thirty) days prior to the 4 NTD: Open item to discuss and get status. 5 NTD: Open item. Under review by Lessee’s risk management team. Page 123 of 160 Page 54 of 81 expiration of any such policies. All such insurance certificates shall provide that such policies shall not be cancelled without at least 30 (thirty) days prior notice to each insured named therein. 7.2 Lessor and Lessee shall each maintain on their respective personal property on or about the Lessor Property a policy of “all risk” property insurance, with vandalism and malicious mischief endorsements, to the extent of at least 100 percent (100%) of full replacement value of its personal property. Lessor and Lessee shall each maintain worker's compensation insurance to the extent required by Applicable Law. 7.3 Lessee shall maintain workers’ compensation insurance as required by law. ARTICLE 8: Covenants 8.1 Lessee Covenants. Lessee shall not directly or indirectly cause, create, incur, assume or allow to exist any Lien on or against the Lessor Property; the foregoing does not preclude the imposition of a Lien on the System by Lessee’s Lender or as permitted under Article 14, provided that such Lien shall not create any Lien on the real property of Lessor. 8.2 Lessor Covenants. (a) Lessor shall not directly or indirectly cause, create, incur, or assume any Lien on, affecting or with respect to the System (including any constituent element or component thereof) or any interest therein. Lessor shall immediately notify Lessee of the existence of any such Lien, shall promptly cause the same to be discharged and released of record without cost to Lessee, and shall indemnify Lessee against all costs and expenses (including reasonable attorneys’ fees) incurred in discharging and releasing any such Lien or that otherwise arose as a result of such Lien. (b) Lessor and its authorized representatives and invitees shall not conduct activities on, in or about the Leased Property or the Lessor Property in a manner that has any likelihood of causing damage to, impairment of, or otherwise adversely affecting the System, or that are not in accordance with Lessee’s safety protocols with respect to the System, and Lessor shall not permit any other lessee at the Lessor Property or any other person to do so. Lessor’s activities and any grant of rights Lessor makes to any Person, whether located on the Lessor Property or elsewhere, shall not, currently or prospectively, interfere with: the construction, installation, maintenance or operation of the System, whether located on the Lessor Property or elsewhere; access over the Lessor Property to the Leased Property or the System; any System Activities; or the undertaking of any other activities permitted under this Agreement. (c) Lessor acknowledges that certain aspects inherent to the operation of the System may result in some nuisance, such as visual impacts, possible increased noise levels, possible odor, and other possible effects of renewable natural gas production and transportation. Without limiting the grant of easements made in Article 2 of this Agreement, Lessor understands and has been informed by Lessee that the System may result in some nuisance, and hereby accepts such nuisance, waives its right to object to such nuisance, and agrees to indemnify and defend Lessee from any third party claims concerning such nuisance, in each case provided that Lessee complies with its obligations in this Agreement. Page 124 of 160 Page 55 of 81 (d) Lessor shall not violate any Environmental Law in connection with or related to Lessor’s ownership or use of the Lessor Property, including without limitation any such violation which may have occurred by Lessor, or Lessor’s employees, members, managers, affiliates, invitees, or agents (collectively, “Lessor Parties”) or any other person prior to the Agreement Date. In conformance with the requirements of Applicable Law, Lessor shall clean up, remove, remedy and repair any soil or ground water contamination and damage caused by the release or disposal of any Hazardous Substances by Lessor or any Lessor Party in, on, under, or about the Leased Property or within two hundred (200) feet of the Leased Property. (e) Lessor covenants that Lessee shall have quiet and peaceful possession of the Leased Property and the rights granted by this Agreement for the entire Term without hindrance, interruption, suit, trouble or interference of any kind by Lessor or any other Person claiming (whether at law or in equity) by, through or under Lessor. Lessor covenants and agrees to and with Lessee: (i) not to allow any Liens against the Leased Property during the Term other than Liens expressly consented to by Lessee in writing or a Lessor Mortgage with respect to which a nondisturbance agreement in a form approved by Lessee has been executed pursuant to Section 15.1 (collectively, “Permitted Liens”), (ii) to promptly pay when due any and all obligations secured by Liens against the Leased Property (including Permitted Liens), (iii) not to allow any default to occur under obligations secured by Liens against the Leased Property (including Permitted Liens), and (iv) in accordance with Section 15.1, to obtain a nondisturbance agreement from the holders of all Lessor Mortgages. In lieu of paying amounts secured by Liens that are not Permitted Liens, Lessor may provide a bond or other adequate security in accordance with Applicable Law and the reasonable requirements of Lessee. (f) Lessor, in its ministerial role as a governmental agency, shall not enforce or promulgate any law or other governmental regulation in a manner that unduly prejudices, preferences, or burdens Lessee relative to other third parties subject to Lessor’s jurisdiction. Lessor shall not take any action as a governmental agency that would cause Lessee to be in breach of this Agreement. For avoidance of doubt, Lessor shall not change zoning laws or permit requirements in a manner that discriminates against Lessee’s rights under this Agreement or the WTA. ARTICLE 9: Indemnification 9.1 Each Party (the “Indemnifying Party”) shall defend, indemnify and hold harmless the other Party and the directors, officers, shareholders, partners, members, agents and employees of such other Party, and the respective Affiliates of each thereof (each, an “Indemnified Party” and, collectively, the “Indemnified Parties”), from and against all Claims resulting from (a) injury to or death of persons, and damage to or loss of property to the extent caused by or arising out of the negligent acts or omissions of, or the willful misconduct of, the Indemnifying Party (or its contractors, agents or employees), (b) violation of Applicable Law (including any Page 125 of 160 Page 56 of 81 Environmental Law) by the Indemnifying Party (or its contractors, agents or employees), (c) a breach or default in the performance of any obligation to be performed by the Indemnifying Party under the terms of this Agreement, (d) any other matter identified as requiring indemnification, or (e) with respect to Lessee as the Indemnifying Party, the release or t hreatened release of any Hazardous Substance at, on, above or below the Leased Property that has been caused by Lessee or Lessee's contractors, agents or employees following the Agreement Date, and with respect to Lessor as the Indemnifying Party, the release, threatened release, removal, treatment, storage, disposal, disposition, mitigation, or cleanup of any Hazardous Substance at, on, above or below the Leased Property prior to the Agreement Date or, following the Agreement Date, the release or threatened release of any Hazardous Substance at, on, above or below the Leased Property that has not been caused by Lessee or Lessee's contractors, agents or employees. Without limiting the foregoing, the indemnification obligations set forth herein include Claims brought against any Indemnified Party by any third party. Nothing in the foregoing shall require the Indemnifying Party to indemnify the Indemnified Party for any Claims to the extent caused by or arising out of the Indemnified Party’s Event of Default, the negligent acts or omissions of, or the willful misconduct of, the Indemnified Party, any Force Majeure event, any act or omission of any Indemnified Party responsible for or contributing to the Claim, or any matter for which the risk has been specifically allocated to a particular Party hereunder. 9.2 Indemnification Procedures. A Lessee Indemnified Party shall promptly notify Lessor of the assertion of any claim against it for which it is entitled to be indemnified hereunder, shall give the Lessor the opportunity to defend such claim, and shall not settle the claim without the approval of the Lessor which approval shall be in the Lessor’s sole discretion. These indemnification provisions are for the protection of the Lessee Indemnified Parties only and shall not establish, of themselves, any liability to third parties. 9.3 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY UNDER THIS AGREEMENT OR ANY INDEMNITY OFFERED THEREUNDER FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, SPECULATIVE, INDIRECT, REMOTE, OR CONSEQUENTIAL DAMAGES, DAMAGES FOR LOST PROFITS OR DAMAGES BASED ON A MULTIPLE OF EARNINGS OR DIMINUTION IN VALUE, OR ANY SIMILAR DAMAGES. FOR THE AVOIDANCE OF DOUBT, THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES SHALL INCLUDE THOSE ARISING UNDER STRICT LIABILITY. 9.4 Survival. The provisions of this Article 9 shall survive termination of this Agreement. ARTICLE 10: Condemnation 10.1 Contests. If, during the Term, any competent authority or entity for any public or quasi-public purpose (“Condemnor”) seeks to take or condemn all or any portion of the Leased Property, Lessor and Lessee shall use all reasonable and diligent efforts, each at its own expense, to contest such taking. 10.2 Termination Due To Condemnation. Except as otherwise set forth in the WTA, if at any time during the Term, any Condemnor shall condemn all or any portion of the Leased Page 126 of 160 Page 57 of 81 Property, or the System, so that the purposes of this Agreement are frustrated, then, at Lessee’s option, (a) this Agreement shall be modified to revise the definition of Leased Premises to reflect such portion not condemned or (b) this Agreement shall cease and terminate, in either event, upon the earlier of (i) the date that the Condemnor takes physical possession of the Leased Property or the System, (ii) the date that Lessee is, in its sole judgment, no longer able or permitted to operate the System on the Leased Property in a commercially viable manner, or (iii) the date title vests in the Condemnor. In the event Lessee elects to terminate this Agreement, as provi ded in the foregoing sentence, Lessee shall continue to pay all amounts payable hereunder to Lessor until the earlier of such dates, at which time Lessor and Lessee shall be relieved of any and all further obligations and conditions to each other under this Agreement, except (A) Lessor shall pay to Lessee a sum representing the total value of the Outstanding Debt, minus the value of any insurance proceeds received or owed to Lessee or Lender arising from a System casualty preceding the effective date of termination (and Lessor shall make such payment to Lessee on the effective date of termination), and (B) the Parties shall be responsible for any indemnity obligations or other obligations which by their terms survive the expiration or termination of the Agreement. 10.3 Distribution of Award. For any taking covered by this Article 10, all sums, including damages and interest, awarded shall be paid and distributed to Lessee and Lessor in accordance with their respective interests under this Agreement. 10.4 Notwithstanding the provision in Section 17.6 of this Agreement, unless Lessor is the Condemnor, this Article 10 shall control in the event of a conflict between the terms in this Agreement and the WTA. This Article 10 shall survive the expiration or earlier termination of this Agreement. ARTICLE 11: Events of Default, Remedies and Damages 11.1 Events of Default. Each of the following shall constitute an “Event of Default” by a Party (the “Defaulting Party”): (a) such Party’s material misrepresentation in connection with this Agreement, fraud, or intentional misconduct; (b) failure of such Party to pay any amount due and payable under this Agreement; (c) failure of such Party to perform any material obligation (other than a payment obligation) under this Agreement; (d) an Insolvency Event occurs with respect to such Party; (e) the occurrence of (i) a Material Breach of the WTA by a Defaulting Party, or (ii) the WTA is terminated by reason of a breach by the Defaulting Party thereunder. 11.2 Remedies. Page 127 of 160 Page 58 of 81 (a) Event of Default by Lessee. (i) If Lessee is the Defaulting Party, Lessor may, but is not required to, terminate this Agreement by providing Lessee sixty (60) days advance written notice of the Event of Default, during which sixty (60) day period Lessee shall have the opportunity to cure such Event of Default. (ii) If Lessee fails to cure and Lessor exercises its termination right, such termination shall be effective upon the date that each of the following conditions is satisfied: 1) Lessor shall pay to Lessee a sum representing the total value of the Outstanding Debt, minus the value of any insurance proceeds received or owed to Lessee or Lender arising from a System casualty preceding Lessee’s Event of Default; and 2) Lessor and Lessee shall execute any agreements or documents necessary to complete the transfer of the System to Lessor in accordance with the terms of the WTA and this Agreement. (iii) Subject to Section 11.5 of this Agreement, if Lessee is the Defaulting Party, beyond any applicable notice and cure periods set forth in Section 11.2(a)(i) of this Agreement, in addition to the remedies set forth in Section 11.2(a)(i)(1), above, Lessor may seek any and all available remedies at law or in equity. (iv) Notwithstanding anything to the contrary set forth herein, Lessor may not terminate this Agreement by reason of any Lessee default so long as the WTA is in effect. (b) Event of Default by Lessor. (i) If Lessor is the Defaulting Party for a non-monetary default, Lessee may, but is not required to, terminate this Agreement by providing Lessee sixty (60) days advance written notice of the Event of Default, during which sixty (60) day period Lessor shall have the opportunity to cure the Event of Default (except for breaches predicated upon Lessor’s nonpayment, in which case a 30-day cure notice and cure period shall apply). 1) If Lessor fails to cure and Lessee exercises its termination right, Lessor shall owe to Lessee as direct damages, and not as a penalty: (a) The greater of (x) the undiscounted value of Lessor’s payments to Lessee for the remainder of the Term (excluding Pass-Through Costs), as Page 128 of 160 Page 59 of 81 reasonably calculated by Lessee, in accordance with Exhibit F of the WTA and this Agreement, or (y) the Outstanding Debt; and (b) The total amount owed by Lessee to terminate any subcontracts or agreements entered by Lessee in connection with the WTA (including without limitation any engineering and procurement agreement(s) and operations and maintenance agreement(s)). (ii) Subject to Section 11.5 of this Agreement, if Lessor is the Defaulting Party, beyond any applicable notice and cure periods set forth in Section 11.2(b)(i) of this Agreement, in addition to the remedies set forth in Section 11.2(b)(i)(1), Lessee may seek any and all available remedies at law or in equity. (c) Events under the WTA. Notwithstanding anything to the contrary in this Article 11, if either Party is in default per Section 11.1(e), then the Defaulting Party shall get the benefit of any notice and cure period under the WTA or this Agreement, whichever is longer, but shall not get the benefit of both cure periods. 11.3 Event of Default or Anticipated Breach. In the case of any Event of Default under or anticipated breach of this Agreement, each Party agrees to use good faith efforts to take such commercially reasonable actions as necessary to expeditiously resolve the underlying circumstance; provided, however, that in all circumstances neither Party shall be required or be deemed to have waived any defenses it may have under Applicable Law or contract. 11.4 Lender Right to Cure. If Lessor is the Defaulting Party under this Agreement, Lessor agrees and acknowledges that Lender(s) may, but do(es) not have the obligation to, (i) acquire title to the System, (ii) cure all defaults and breaches that are capable of cure, or (iii) assume any Lessee obligation under this Agreement, in which case Lessor shall recognize such Lender(s) as if such Lender had been the original party to this Agreement. 11.5 Dispute Procedures. Provided the WTA is in full force and effect, the Parties agree that all disputes under this Agreement shall be governed by Section 6 and Section 7 of the WTA as if such sections had been set forth herein. ARTICLE 12: Force Majeure Except as otherwise set forth herein, in the event either Party is rendered unable, wholly or in part, to carry out its respective obligations under this Agreement, except for any obligation to make payment, due to circumstances beyond its reasonable control, including, without limitation, strike, riot, lockouts or other disturbances, flood, natural disaster, acts of God, war or civil insurrection, an epidemic, pandemic or viral or communicable disease outbreak, quarantine, national emergency or other unforeseeable circumstances beyond its reasonable control (a “Force Majeure”), then written notice setting out the reason for non-performance shall be given to the other Party by the Party claiming Force Majeure promptly following discovery thereof. Upon receipt of such notice, the obligations of the affected Party shall be suspended during the period of the Force Majeure and any deadline or date certain for performance shall be extended by a period Page 129 of 160 Page 60 of 81 equal to the period of the Force Majeure. Every reasonable effort shall be made by the Parties to avoid delay and limit any period during which performance under this Agreement might be suspended. ARTICLE 13: Dispute Resolution 13.1 This Agreement shall be interpreted in accordance with the laws of the State of Washington without giving effect to its choice of law principles. 13.2 Any disagreement between Lessor and Lessee which cannot be resolved in accordance with this Agreement shall be referred to the senior management of each Party who shall attempt to resolve the dispute in good faith. To aid resolution by the Parties’ senior management, Lessor’s and Lessee’s representatives shall promptly prepare and exchange memoranda stating the issues in dispute and their positions, summarizing the negotiations which have taken place and attaching relevant documents. If the Parties’ senior management resolves the dispute, such resolution shall be reported in writing to and shall be binding upon the Parties. 13.3 If, despite the good faith efforts described in Section 13.2, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, the Parties may seek to agree on a forum for mediation to be held at a mutually agreeable site. 13.4 If, despite good faith efforts described in Section 13.2 and 13.3, the Parties are unable to resolve a dispute or claim arising out of or relating to this Agreement or its breach, termination, enforcement, interpretation or validity, (including the determination of the scope or applicability of this Agreement to arbitrate), shall be determined by arbitration in Seattle, Washington before a single arbitrator who is an experienced attorney in the discipline that is the subject of the dispute and whom shall be jointly selected by Lessor and Lessee. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. The arbitrator shall issue a reasoned, written decision which will be binding on the Parties. Judgment may be entered upon the arbitrator’s decision in any court of competent jurisdiction, and each Party agrees to submit to the personal jurisdiction of any such court for the purposes of any such actions or proceedings to enter or enforce such judgement. 13.5 Should either Party employ an attorney to enforce any of the provisions of this Agreement, the non-prevailing Party in any final judgment agrees to pay the other Party’s reasonable expenses, including reasonable attorneys’ fees and expenses in or out of litigation and, if in litigation, trial, appellate, bankruptcy or other proceedings, expended or incurred in connection therewith, as determined by a court of competent jurisdiction. ARTICLE 14: Financing 14.1 Lender. Notwithstanding any other provision, Lessee shall have the right to encumber its interest in this Agreement, the System and any of Lessee’s other improvements located on the Leased Property by mortgage, lease, deed of trust or similar instrument or Page 130 of 160 Page 61 of 81 instruments and by security agreement, fixture filing and financing statements or similar instrument or instruments in favor of Lender. Lessor represents and warrants as follows: (i) such encumbrance by Lessee will not violate any term or condition of any covenant or restriction affecting the Lessor Property or the Leased Property; (ii) there is no existing Lien upon the Lessor Property or the Leased Property that could attach to the System an interest adverse to or senior to Lessee’s Lenders’ security interest therein; and (iii) there exists no event or condition which constitutes a default, or would, with the giving of notice or lapse of time, constitute a default under the Agreement. 14.2 Rights of Lender. (a) In the event of a foreclosure or seizure of Lessee’s rights or property or the exercise of any other right under any security agreement granted by Lessee to a Lender, Lessor agrees to permit such Lender to exercise any and all rights of Lessee hereunder. (b) Lessor agrees to execute any consent to assignment reasonably requested by any Lender to evidence and give effect to the provisions of this Article 14. Lessor shall be timely provided with current addresses for all Lenders and their assignees. At Lessee’s request, Lessor shall amend this Agreement to include any provision that may reasonably be requested by an existing or proposed Lender, and shall execute such additional documents as may reasonably be required to evidence such Lender’s rights hereunder. (c) Further, Lessor shall, within thirty (30) days after receipt of written request from Lessee or any existing or proposed Lender, execute and deliver thereto a certificate to the effect that Lessor (i) recognizes a particular entity as a Lender under this Agreement and (ii) will accord to such entity all the rights and privileges of a Lender hereunder, in addition to any estoppel or certificate required under Section 17.4. (d) All Lenders shall be deemed third party beneficiaries of the rights granted to Lessee under this Agreement. ARTICLE 15: Subordination; Non-Disturbance At Lessee's request, Lessor shall obtain from holders of any mortgage(s) now or subsequently granted by Lessor and recorded against the Leased Property and to any renewals, modifications, refinancings and extensions thereof (“Lessor Mortgages”), execution and delivery to Lessee of a nondisturbance agreement, in recordable form with terms and conditions acceptable to Lessee, in its sole discretion, under the terms of which the holder of the Lessor Mortgage covenants and agrees to and with Lessee (i) not to disturb Lessee in its possession of the Leased Property or in the enjoyment of its rights hereunder, and (ii) to notify Lessee of any defaults by Lessor in the performance of its obligations secured by the Lessor Mortgage, and (iii) to provide Lessee a reasonable period of time after Lessee’s receipt of notice of Lessor’s default to cure said default (which period shall be not less than forty-five (45) days in the event of payment defaults and ninety (90) days in the event of non-payment defaults, and which period shall be extended if default cannot reasonably be cured within such period, provided Lessee has promptly commenced and is diligently performing actions to cure the default), before exercising any rights to foreclose upon or otherwise take ownership of the Leased Property. Page 131 of 160 Page 62 of 81 ARTICLE 16: Recordation; Confidentiality6 16.1 Memorandum of Lease and Easement. The Parties agree that this Agreement shall not be recorded, but the Parties shall execute and record a memorandum of lease and easement agreement (“Memorandum of Lease”) in recordable form substantially in the form of Exhibit D with the applicable registry of deeds in the jurisdiction in which the Lessor Property is located, which Memorandum of Lease shall contain a reference to the easements and covenants granted by Lessor to Lessee hereunder and shall otherwise be in form and content reasonably acceptable to Lessee. Recordation of the Memorandum of Lease shall be at Lessee’s expense. 16.2 Confidentiality. (a) Except as set forth herein, (i) neither Party will disclose Confidential Information of the other Party to any third party, and (ii) each Party will use the other Party’s Confidential Information only for purposes of the transactions contemplated by this Agreement; provided, however, that a Party in possession of the other Party’s Confidential Information may disclose Confidential Information as required to comply with orders of governmental entities that have jurisdiction over it or as otherwise required by law. (b) Each Party agrees to (i) take reasonable steps to protect the other Party’s Confidential Information (which steps will be required to be at least as protective as those that the receiving Party takes to protect its own Confidential Information), (ii) notify the other Party promptly upon discovery of any unauthorized use or disclosure of Confidential Information; and (iii) cooperate with the other Party to help regain control of any Confidential Information that is the subject of any such unauthorized use or disclosure and prevent further unauthorized use or disclosure of such Confidential Information. (c) Each Party may disclose the other Party’s Confidential Information to its subcontractors, agents, legal counsel, accountants, consultants, financing parties, or representatives to the extent necessary in furtherance of this Agreement, and then only on a “need to know” basis in connection with the transactions contemplated hereby and on a confidential basis. Without negating the foregoing, Lessor agrees and acknowledges that Lessee may disclose this Agreement and all matters relevant to Lessee’s rights and obligations hereunder (including, without limitation, correspondence with Lessor) to Lessee’s Lender(s) for any financing related purpose, and that such disclosure shall not be in violation of this Agreement. (d) This Agreement shall be considered a public document and will be available for inspection and copying in accordance with the Public Records Act, chapter 42.56 of the Revised Code of Washington (the “Act”). If Lessee considers any record, in whole or in part, provided to Lessor under this Agreement, whether in electronic or hard copy form, to be protected from disclosure under the Act, Lessee shall make reasonable efforts to clearly identify each such record with words such as “CONFIDENTIAL,” “PROPRIETARY” or “BUSINESS SECRET.” If a request is made for disclosure of any Lessee Confidential Information, Lessor shall promptly notify and provide Lessee with a copy of such request. In all cases, Lessor will ultimately determine whether the requested material should be made available under the Act. If Lessor 6 NTD: Public Records Act obligations still under review. Page 132 of 160 Page 63 of 81 determines that the material is subject to disclosure, Lessor will notify Lessee of its decision and allow Lessee ten (10) business days to take whatever action it deems necessary to protect its interests. If Lessee fails or neglects to take such action within said period, Lessor will release the record(s) or portions thereof reasonably deemed by Lessor to be subject to disclosure. Lessor shall not be liable to Lessee for inadvertently releasing records pursuant to a disclosure request not clearly identified by Lessee as “CONFIDENTIAL,” “PROPRIETARY” or “BUSINESS SECRET.” ARTICLE 17: Miscellaneous 17.1 Definitions. Capitalized terms used in this Agreement shall have the meaning set forth in Exhibit A hereto or as otherwise defined herein. 17.2 Interpretation. Except where otherwise expressly provided or unless the context otherwise necessarily requires, in this Agreement the following shall apply. Reference to a given section, exhibit, annex or schedule is a reference to a section, exhibit, annex or schedule of this Agreement, unless otherwise specified, and all schedules, exhibits and annexes hereto are hereby made a part hereof and incorporated herein by such reference. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. The terms “this Agreement”, “hereof”, “herein”, “hereto”, “hereunder” and “herewith” refer to this Agreement as a whole. If the time for performing an obligation under this Agreement expires on a day that is not a business day, the time shall be extended until that time on the next business day. With respect to the determination of any period of time, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”. The words “shall” and “will” have the same meaning. The words “include,” “includes” or “including” and words of similar import shall be deemed to be followed by the phrase “without limitation” and shall not be limited by any enumeration or otherwise; any pronoun or pronouns used herein shall be deemed to include both the singular and the plural and to cover all genders; the use of the words “or,” “either” and “any” shall not be exclusive. The provisions of this Section 17.2 shall survive any expiration or termination of this Agreement. 17.3 Governing Law; Remedies. This Agreement shall be governed by the laws of the State of Washington, without regard to the conflicts of law rules of any jurisdiction. 17.4 Assignment. (a) The burdens of the lease, easements and other covenants, rights and obligations contained in this Agreement shall run with and against the Lessor Property and shall be a charge and burden thereon for the duration of this Agreement. Lessor shall provide at least 30 days’ prior written notice to Lessee of any sale, assignment or transfer (“Transfer”) of any of Lessor’s interest in the Lessor Property (or any part thereof) or in this Agreement. In addition, any such Transfer shall be expressly subject to this Agreement. Lessor shall notify Lessee of the closing of such Transfer, and if applicable, the name and contact information of the successor to Lessor’s interest and payment instructions for Rent and other amounts due under this Agreement; provided, that Lessor shall indemnify Lessee for losses arising from Lessee’s payment of Rent or other amounts as so directed. Until such notice of closing is received, Lessee shall have no duty to any successor to Lessor’s interest, and Lessee shall not be in default under this Agreement if it Page 133 of 160 Page 64 of 81 continues to make all payments to the original Lessor before such notice is received. Under no circumstances shall a Transfer by Lessor include the System. (b) This Agreement shall be binding on and inure to the benefit of the Parties’ successors and permitted assignees. (c) Lessee may assign, pledge as collateral (in accordance with Article 14, with respect to a Lender), sell or transfer this Agreement or the System or any of Lessee’s rights or obligations under this Agreement or rights in and to the System (a) to any Affiliate of Lessee or (b) to any Lender or as part of any transaction Lessee or any Affiliate of Lessee may enter into with any Lender; Lessor hereby consents to any such assignment, pledge, sale or transfer. Lessor acknowledges that Lessee or an Affiliate of Lessee may obtain financing (including, without limitation, any form of debt, equity or lease financing) or credit support from one or more Lenders in relation to the development, construction, ownership, transfer, operation or maintenance of the System. Any Lender (or its wholly owned assignee or designee), or any person acquiring the Lessee’s leasehold estate pursuant to foreclosure of a mortgage or a deed or assignment in lieu of such foreclosure, may, upon acquiring the leasehold estate, upon prior written approval of Lessor, which shall not be unreasonably withheld, conditioned or delayed, sell and assign the leasehold estate on such terms and conditions as it may determine and thereafter be relieved of all obligations under this Lease accruing from and after the date of such sale and assignment. (d) Both Parties agree in good faith to consider and to negotiate changes or additions to this Agreement that may be requested by the Lenders. Lessor agrees to execute any consent, estoppel or acknowledgement in form and substance requested by such Lenders (including those consents and other documents pursuant to Article 14, in the case of a collateral pledge to a Lender); any such Lender shall be deemed to be an intended third-party beneficiary of the provisions of this Agreement. (e) Either Party, without charge, at any time and from time to time, within five (5) business days after receipt of a written request by the other Party, shall deliver a written instrument, duly executed, certifying to such requesting Party, or any other Person specified by such requesting Party (including any Lender): (i) that this Agreement is unmodified and in full force and effect, or if there has been any modification, that the same is in full force and effect as so modified, and identifying any such modification; (ii) whether or not to the knowledge of any such Party there are then existing any offsets or defenses in favor of such Party against enforcement of any of the terms, covenants and conditions of this Agreement and, if so, specifying the same and also whether or not to the knowledge of such party the other party has observed and performed all of the terms, covenants and conditions on its part to be observed and performed, and if not, specifying the same; and (iii) such other information as may be reasonably requested by the requesting Party. Any written instrument given hereunder may be relied upon by the recipient of such instrument, except to the extent the recipient has actual knowledge of facts contained in the certificate. 17.5 Material Change in Law. In the event of a Material Change in Law, the Parties shall, to the extent necessary and possible, reform this Agreement to ensure compliance and conformity with such Material Change in Law and to restore or retain the Parties’ original benefits and burdens under this Agreement. For purposes of this Agreement, a “Material Change in Law” Page 134 of 160 Page 65 of 81 shall mean: (a) the adoption, promulgation, change, repeal or modification after the Agreement Date of any laws, codes, regulations, statutes or orders, (b) an interpretation or application by a Governmental Authority of a law which had not been made, or which if made, was different than a prior interpretation of or application by such Governmental Authority or another Governmental Authority, or (c) the imposition of any material condition in connection with the issuance, renewal, extension, replacement or modification of any permits after the Agreement Date that in the case of (a), (b) or (c): (i) establishes requirements for the construction, financing, ownership, operation or maintenance of the System that are materially more restrictive than the most restrictive requirements in effect as of the Agreement Date, and (ii) has a material and adverse effect on the Lessee’s quiet enjoyment of and/or value obtained from the Leased Property. 17.6 Entire Agreement. This Agreement and the WTA, including any exhibits, schedules or annexes attached hereto and thereto, constitute the entire agreement and understanding between the Parties with respect to Lessee’s leasehold interests and supersedes all prior written and oral agreements, discussions, or representations between the Parties, including any non-disclosure agreements; provided that in the case of any conflict or inconsistency between or among the terms of this Agreement and the WTA, the terms of the WTA will govern provided that the WTA is in full force and effect. 17.7 Severability. If a court or other body of competent jurisdiction finds, or the Parties mutually believe, any provision of this Agreement, or portion thereof, to be invalid or unenforceable, such provision will be enforced to the maximum extent permissible so as to effect the intent of the Parties, and the remainder of this Agreement will continue in full force and effect. 17.8 Modification, Waiver. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in a writing signed by the Parties. Waiver by a Party of a breach of any provision of this Agreement will not operate as a waiver of any other or subsequent breach. 17.9 Notices. Unless otherwise expressly provided in this Agreement, any notice, request, demand, waiver, consent, approval or other communication that is required or permitted under this Agreement shall be in writing and shall be sent by personal delivery, facsimile transmission, electronic mail, overnight courier, or regular, certified, or registered mail, return receipt requested, to the Lessee or the Lessor, as applicable, at the address below, or to such other addresses as the Parties may specify from time to time in writing. Notices and other communications shall be effective upon personal delivery, receipt of electronic transmission, the promised delivery date after deposit with overnight courier, or five (5) days after deposit in the mail. The Parties deem documents faxed, emailed or sent electronically as PDF files or comparable electronic medium to the specified addresses to be original documents. If to Lessee: Burnham SEV Pasco, LLC 1201 Wilson Blvd – 27th Floor Arlington, VA 22209 With a copy to: legal@burnahmdev.com Page 135 of 160 Page 66 of 81 If to Lessor: City of Pasco Adam Lincoln City Manager 525 N 3rd Avenue Pasco, WA 99301 With a copy to: Eric Ferguson eferguson@kerrlawgroup.net 17.10 Third Party Beneficiary. Except as otherwise provided in this Agreement, this Agreement does not create or imply any rights of or obligations to Persons other than the Parties. 17.11 Survival. The provisions of this Agreement that should reasonably be considered to survive termination of this Agreement shall survive any termination of this Agreement. For the avoidance of doubt, surviving provisions shall include Article 1 (Term); Article 5 (System transfer) Article 9 (Indemnification); Article 11 (Events of Default, Remedies and Damages); Article 13 (Dispute Resolution); Article 17 (Miscellaneous); and Exhibit A (Definitions). 17.12 Signatures. This Agreement may be signed in one or more counterparts, including by PDF or comparable electronic medium, each of which shall be deemed an original, with the same force and effectiveness as though executed in a single document. [SIGNATURE PAGES FOLLOW] Page 136 of 160 Page 67 of 81 The Parties, through their duly authorized representatives below, have executed this Agreement as of the Agreement Date. LESSEE BURNHAM SEV PASCO, LLC, a Washington limited liability company By:___________________________ Name: Chris Tynan Title: CEO Date:________________________ STATE OF ________________ COUNTY OF ________________ This record was acknowledged before me on ________________ by ________________ as ________________ of BURNHAM SEV PASCO, LLC. (Signature of notary public) (Title of office) My Commission Expires: (Date) (Stamp) Page 137 of 160 Page 68 of 81 LESSOR CITY OF PASCO, a Washington municipal corporation By:___________________________ Name:_________________________ Title:________________________ Date:________________________ STATE OF WASHINGTON COUNTY OF FRANKLIN This record was acknowledged before me on ________________ __, 20__ by ________________ as ________________ of the CITY OF PASCO. (Signature of notary public) (Title of office) My Commission Expires: (Date) (Stamp) Page 138 of 160 Page 69 of 81 EXHIBIT A DEFINITIONS Capitalized terms not defined herein are as defined in the WTA. The following words and phrases shall have the meanings set forth herein: “Affiliate” means, with respect to a Person, any Person that directly or indirectly controls, is controlled by, or is under common control with such Person; “Applicable Law” means any applicable law, statute, code, rule, regulation, ordinance, decree, judgment, directive, permit, license, registration, guideline, approval, ruling, injunction, decision or other requirement of a Governmental Authority; “Initial Term” is defined in Section 1.3; “Initial Term Payment” is defined in Section 3.2; “Condemnor” is defined in Section 10.1; “Confidential Information” means any non-public information, know-how or trade secrets in any form that is designated “confidential” or that a reasonable person should understand is confidential. The following information does not constitute Confidential Information: (a) information that is or becomes generally available to the public other than as a result of a disclosure by either Party in violation of this Agreement, (b) information that was already known by either Party on a non- confidential basis prior to this Agreement, (c) information that becomes available to either Party on a non-confidential basis from a source other than the other Party if such source was not subject to any prohibition against disclosing the information to such Party, and (d) information that is independently developed by a Party without violating its obligations under this Agreement; “Defaulting Party” is defined in Section 11.1; “Agreement Date” is defined in the preamble to this Agreement; “Environmental and Tax Attributes” means any and all benefits, emissions reductions, offsets, allowances, carbon credits, portfolio credits, environmental credits, renewable energy credits or certificates, emissions reduction credits, emissions allowances, green tags, rebates, subsidies, payments or other credits or incentives that are attributable to the System or the production or processing of biogas or renewable natural gas from the System or its displacement of conventional energy or fuel or avoidance of emissions, including investment Tax credits, production Tax credits, depreciation benefits, deductions and other Tax credits, Tax benefits, Tax incentives or Tax-related grants available under any Applicable Law relating to the construction, ownership or operation of, or production of energy from, the System; for the avoidance of doubt, “Environmental and Tax Attributes” includes credits generated for any state of Federal Low Carbon Fuel Standard and Federal Renewable Identification Numbers (“RINs”) generated in accordance with the Energy Policy Act of 2005; “Environment” means soil, land, surface or subsurface strata, surface waters, groundwaters, drinking water supply, sediments, and ambient air. Page 139 of 160 Page 70 of 81 “Environmental Law” means all Applicable Laws, including, without limitation, laws relating to consumer leasing and protection, pertaining to the environment, human health or safety, or natural resources, including, but not limited to, (a) releases of Hazardous Substances into the Environment; (b) the presence, manufacture, generation, processing, distribution, use, sale, treatment, recycling, receipt, storage, disposal, transport, arranging for transportation, treatment or disposal, or handling of any Hazardous Substances; or (c) imposing liability with respect to any of the foregoing. To the extent that it relates to the handling of and exposure to hazardous or toxic materials or similar substances, the term “Environmental Law” includes: the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Superfund Amendments and Reauthorization Act of 1986, the Emergency Planning and Community Right to Know Act (42 U.S.C. §§ 11001 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §§ 6901 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (also known as the Clean Water Act) (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300f et seq.), the Endangered Species Act (16 U.S.C. §§ 1531 et seq.), the Migratory Bird Treaty Act (16 U.S.C. §§ 703 et seq.), the Bald and Golden Eagle Protection Act (16 U.S.C. §§ 668 et seq.), the Oil Pollution Act of 1990 (33 U.S.C. §§ 2701 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.), and the Occupational Safety and Health Act of 1970 (29 U.S.C. §§ 651 et seq.), the regulations promulgated pursuant to the above-listed federal statutes, and any similar or analogous state and local statutes or regulations promulgated thereunder, as each of the foregoing may be amended or supplemented from time to time in the future, in each case to the extent applicable with respect to the property or operation to which application of the term “Environmental Law” relates; “Event of Default” is defined in Section 11.1; “Force Majeure” is defined in Article 12; “Governmental Authority” means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau, commission, or entity, or any arbitrator with authority to bind a party under Applicable Law; “Hazardous Substance” means any (a) hazardous substance as defined by any Environmental Laws; (b) any petroleum or petroleum product, oil or waste oil; (c) any hazardous material, toxic substance, toxic pollutant, solid waste, municipal waste, industrial waste, hazard ous waste, flammable material, radioactive material, pollutant or contaminant or words of similar meaning and regulatory effect under any applicable Environmental Laws; and (d) any other chemical, material, or substance (whether solid, liquid or gaseous) exposure to which or whose discharge, emission, disposal or release is prohibited, limited, or regulated under any applicable Environmental Laws. “Hazardous Substance” includes any mixture or solution of the foregoing, and all derivatives or synthetic substitutes of the foregoing; “Indemnified Party” and “Indemnified “Parties” are defined in Section 9.1; “Indemnifying Party” is defined in Section 9.1; “Opening Term” is defined in Section 1.1; Page 140 of 160 Page 71 of 81 “Opening Term Payment” is defined in Section 3.1; “Leased Property” means the portions of the Lessor Property identified in Exhibit C attached hereto; “Lessee” is defined in the preamble to this Agreement; “Lessee Improvements” is defined in Section 2.1; “Lessee Parties” is defined in Section 2.1; “Lessor” is defined in the preamble to this Agreement; “Lessor Mortgages” is defined in Article 15; “Lessor Parties” is defined in Section 8.2; “Lessor Property” means the real property, including all buildings and improvements, located in Franklin County, Washington as more particularly described in Exhibit B hereto; “Lien” means any lien, mortgage, security interest, charge, pledge or other encumbrance; “Memorandum of Lease” is defined in Section 16.1; “Party” and “Parties” are defined in the preamble to this Agreement; “Permitted Liens” is defined in Section 8.2; “Person” means any individual, corporation, partnership, limited partnership, proprietorship, association, limited liability company, firm, trust, estat e or other enterprise or entity; “Renewal Term” is defined in Section 1.4; “Rent” is defined in Section 3.2; “System Activities” is defined in Section 5.1; “Taxes” means any and all federal, state, local or foreign tax, fees, levies, assessments, duties, imposts, tariffs or other charges of any kind imposed or authorized by a Governmental Authority; “Term” means the term of this Agreement, including the Opening Term and the Initial Term, as may be extended or renewed to the extent permitted under the provisions of this Agreement; “Transfer” is defined in Section 17.4(a); “Wastewater Treatment Agreement” or “WTA” means that certain Water Treatment Agreement attached as Exhibit E to this Agreement. “year” means a consecutive twelve-month period. Page 141 of 160 Page 72 of 81 EXHIBIT B LESSOR PROPERTY Description of Lessor Property The Lessor Property includes Lot 1 and Lot 2 as depicted in the Record of Survey included in this Exhibit B. Lot 2 is described below. Lot 1 is described in Exhibit C. Lot 2 is that parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4, Township 9 North, Range 30 East, Willamette Meridian, Franklin County, Washington, described as follows: Beginning at the Southwest corner of said South Half; Thence North 88°45’19” East along the South line of said South Half, 2636.99 feet to the Southeast corner thereof; Thence North 03°16’11” East along the East line of said South Half, 1370.29 feet to the Northeast corner thereof; Thence South 88°53’57” West along the North line of said South Half, 1334.97 feet; Thence South 00°02’45” West, 1131.07 feet; Thence South 88°53’39” West, 413.99 feet; Thence South 00°00’00” East, 120.00 feet; Thence South 88°45’20” West, 958.71 feet to the West line of said South Half; Thence South 03°06’31” West along the West line of said South Half, 119.99 feet to the POINT OF BEGINNING; Containing 45.62 acres, more or less. Together with and subject to easements, reservations, covenants and restrictions apparent or of record. [Record of Survey to be inserted] Page 142 of 160 Page 73 of 81 EXHIBIT C LEASED PROPERTY Description of Leased Property The Leased Property, also described as Lot 1, is that parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4, Township 9 North, Range 30 East, Willamette Meridian, Franklin County, Washington, described as follows: Beginning at the Southwest corner of said South Half; Thence North 03°06’31” East along the West line of said South Half, 119.99 feet to the TRUE POINT OF BEGINNING; Thence continuing North 03°06’31” East along said West line, 1256.65 feet to the Northwest corner of said South Half; Thence North 88°53’57” East along the North line of said South Half, 1305.39 feet; Thence South 00°02’45” West, 1131.07 feet; Thence South 88°53’39” West, 413.99 feet; Thence South 00°00’00” East, 120.00 feet; Thence South 88°45’20” West, 958.71 feet to the TRUE POINT OF BEGINNING; Containing 37.33 acres, more or less. Together with and subject to easements, reservations, covenants and restrictions apparent or of record. There are no existing improvements on the Leased Property. The Lease Property is further identified as Lot 1 in the Record of Survey depicted in Exhibit B. Page 143 of 160 Page 74 of 81 EXHIBIT D Form of Memorandum of Lease [Attachment] Page 144 of 160 Page 75 of 81 RECORDING REQUESTED BY AND AFTER RECORDING MAIL TO: Burnham SEV Pasco, LLC 1201 Wilson Blvd – 27th Floor Arlington, VA 22209 _____________________________________________________________________ (Space Above for Recorder’s Use Only) MEMORANDUM OF LEASE AND EASEMENT AGREEMENT _____________, 20__ THIS MEMORANDUM OF LEASE AND EASEMENT AGREEMENT (this “Memorandum”) is entered into as of [__], by and between Burnham SEV Pasco, LLC (“Lessee”) and the City of Pasco (“Lessor”) and refers to that certain Lease Agreement dated [__], entered into by and between Lessor and Lessee (the “Agreement”). Capitalized terms used but not defined herein shall have the meanings attributed to same in the Agreement. 1. Lessor has leased to Lessee the Leased Property described in Exhibit 1 attached hereto upon the terms and conditions specified in the Agreement. 2. Lessor is the owner of that certain real property located in Franklin County, Washington, legally described on Exhibit 2 attached hereto and incorporated herein by reference (the “Lessor Property”). The Leased Property comprises a portion of the Lessor Property. 3. [The Agreement grants Lessee a non-exclusive easement and right of way over, across, under and through the Lessor Property, and any surrounding or nearby premises owned by Lessor, for Lessee, its employees, invitees, agents, contractors and subcontractors to access the Leased Property and to build, maintain, and install, among other things, any road, improvements, equipment, fences, gates, signs, communication lines or facilities as more specifically set forth in the Agreement.]7 4. The Opening Term of the Agreement commences on the Agreement Date and continues until the earlier to occur of (a) the COD and (b) the COD Longstop date. If the COD Longstop date occurs prior to the COD (i.e., the COD does not occur), then the Agreement shall terminate at the end of the Opening Term. The Initial Term commences on the COD, and continues for a period of thirty (30) years thereafter. The Agreement term automatically renews for two (2) additional five-year Renewal Terms unless terminated by Lessee. The easement rights granted by Lessor to Lessee pursuant to the Agreement are for a term coterminous with the Agreement. 5. The consideration given for the lease is indicated in the Agreement. 7 NTD: Open item. Parties to confirm location of easement(s)/license(s) including, but not limited to, easement/license for ingress and egress (and maintenance terms). Page 145 of 160 Page 76 of 81 6. This Memorandum shall inure to the benefit of and be binding upon Lessor and Lessee and their respective successors and permitted assigns; provided, however, that this Memorandum is solely for public notice and recording purposes and shall not be construed to alter, modify, limit, expand, diminish or supplement any of the terms or provisions of the Agreement or any of the rights granted to or covenants made by Lessor or Lessee under the Agreement. In the event of any conflict between the terms and provisions of this Memorandum and the terms and provisions of the Agreement, the terms and provisions of the Agreement shall prevail. This Memorandum shall continue to constitute notice of the Agreement, even if the Agreement is subsequently amended. 7. This Memorandum may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Memorandum may be transmitted via facsimile or other electronic means and a manual or electronic signature of the undersigned transmitted via such means shall be deemed an original signature for all purposes and have the same force and effect as a manually-signed original. [SIGNATURE PAGES FOLLOW] Page 146 of 160 Page 77 of 81 LESSEE BURNHAM SEV PASCO, LLC, a Washington limited liability company By:___________________________ Name:_________________________ Title:________________________ Date:________________________ STATE OF ________________ COUNTY OF ________________ This record was acknowledged before me on ________________ by ________________ as ________________ of BURNHAM SEV PASCO, LLC. (Signature of notary public) (Title of office) My Commission Expires: (Date) (Stamp) Page 147 of 160 Page 78 of 81 LESSOR CITY OF PASCO, a Washington municipal corporation By:___________________________ Name:_________________________ Title:________________________ Date:________________________ STATE OF WASHINGTON COUNTY OF FRANKLIN This record was acknowledged before me on ________________ __, 20__ by ________________ as ________________ of the CITY OF PASCO. (Signature of notary public) (Title of office) My Commission Expires: (Date) (Stamp) Page 148 of 160 Page 79 of 81 EXHIBIT 1 DESCRIPTION OF LEASED PROPERTY The Leased Property is that parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4, Township 9 North, Range 30 East, Willamette Meridian, Franklin County, Washington, described as follows: Beginning at the Southwest corner of said South Half; Thence North 03°06’31” East along the West line of said South Half, 119.99 feet to the TRUE POINT OF BEGINNING; Thence continuing North 03°06’31” East along said West line, 1256.65 feet to the Northwest corner of said South Half; Thence North 88°53’57” East along the North line of said South Half, 1305.39 feet; Thence South 00°02’45” West, 1131.07 feet; Thence South 88°53’39” West, 413.99 feet; Thence South 00°00’00” East, 120.00 feet; Thence South 88°45’20” West, 958.71 feet to the TRUE POINT OF BEGINNING; Containing 37.33 acres, more or less. Together with and subject to easements, reservations, covenants and restrictions apparent or of record. There are no existing improvements on the Leased Property. Page 149 of 160 Page 80 of 81 EXHIBIT 2 DESCRIPTION OF THE LESSOR PROPERTY The Lessor Property is that parcel of land being a portion of the South Half of the Northwest Quarter of the of Section 4, Township 9 North, Range 30 East, Willamette Meridian, Franklin County, Washington, described as follows: Beginning at the Southwest corner of said South Half; Thence North 88°45’19” East along the South line of said South Half, 2636.99 feet to the Southeast corner thereof; Thence North 03°16’11” East along the East line of said South Half, 1370.29 feet to the Northeast corner thereof; Thence South 88°53’57” West along the North line of said South Half, 1334.97 feet; Thence South 00°02’45” West, 1131.07 feet; Thence South 88°53’39” West, 413.99 feet; Thence South 00°00’00” East, 120.00 feet; Thence South 88°45’20” West, 958.71 feet to the West line of said South Half; Thence South 03°06’31” West along the West line of said South Half, 119.99 feet to the POINT OF BEGINNING; Containing 45.62 acres, more or less. Together with and subject to easements, reservations, covenants and restrictions apparent or of record. Page 150 of 160 Page 81 of 81 EXHIBIT E Wastewater Treatment Agreement [Attachment] Page 151 of 160 AGENDA REPORT FOR: City Council January 17, 2023 TO: Adam Lincoln, Interim City Manager City Council Workshop Meeting: 1/23/23 FROM: Darcy Buckley, Director Finance SUBJECT: Ordinance - 2023 Revenue Bond for LID No. 151 Debt Service I. REFERENCE(S): Ordinance II. ACTION REQUESTED OF COUNCIL / STAFF RECOMMENDATIONS: Discussion III. FISCAL IMPACT: Equipment Replacement Fund - $3,238,198 IV. HISTORY AND FACTS BRIEF: Local Improvement Districts (LIDs) are a means of assisting benefitting properties by providing a means to finance needed capital improvements through the formation of special assessment districts. In March 2020, Local Improvement District (LID) No. 151, Northwest Sewer LID, was established via Council approval of Ordinance No. 4483. The ordinance allowed the financial mechanism to support construction of a new sanitary sewer trunk line and other sewer improvements in the Broadmoor area of the City. During the construction phase of the project, interim project financing was supplied by the City. As the General Fund had sufficient reserves to support the project, the fund earned a reasonable amount of interest for this interim financing effort allowing the avoidance of larger costs associated with external debt issuance. Page 152 of 160 V. DISCUSSION: At the meeting of September 26, 2022, Council approved Ordinance No. 4612, Local Improvement District No. 151, Northwest Sewer LID, setting the final assessment amount, $3,241,424. Following final assessment, property owners were provided notice of a 30-day interest free prepayment period. The purpose of the prepayment period is to allow for payment of any or all outstanding assessments prior to issuance of debt. During the prepayment period, ending November 16, 2022, payments in the amount of $3,226 were received. The remaining unpaid assessments in Northwest Sewer LID No. 151 are $3,238,198. The outstanding assessment balance is relatively low for traditional debt financing strategies. Obtaining outside debt financing would assign a fixed debt issuance cost that is high in comparison to the principal value of the debt. As a lower cost alternative, staff recommends that the City consider financing the debt using reserves of the Equipment Replacement Fund. This alternative avoids some debt issuance costs that would be incurred via external financing. It also provides an investment opportunity for the Equipment Replacement Fund. To determine an appropriate rate of interest, the City used the guidance of D.A. Davidson, the City's investment advisors, to assign 5.25% interest rate. This is a rate comparable to that expected if the City determined to issue external tax exempt debt to fund the LID. The current Local Government Investment Pool (LGIP) daily yield rate is 4.38%. While the LGIP interest rate varies with the market, typically it is low, as the dollars invested can be withdrawn for use with little notice. The higher, fixed interest rate provided by the internal funding benefits both the Equipment Replacement Fund by providing slightly greater interest earnings and serves to lower annual LID assessments by foregoing more costly external funding. Finally, the long term savings nature of the Equipment Replacement Fund supports the bond maturity date of February 19, 2040. Page 153 of 160 FG: 100882096.1 ORDINANCE NO. ________ AN ORDINANCE OF THE CITY OF PASCO, WASHINGTON, RELATING TO LOCAL IMPROVEMENT DISTRICT NO. 151; FIXING THE TERMS OF THE LOCAL IMPROVEMENT DISTRICT NO. 151 BOND; PROVIDING FOR THE PURCHASE OF SUCH BOND BY THE CITY FROM FUNDS ON DEPOSIT IN THE CITY’S EQUIPMENT REPLACEMENT FUND; AND FIXING THE TERM OF AND INTEREST RATE ON LOCAL IMPROVEMENT DISTRICT NO. 151 ASSESSMENT INSTALLMENTS. THE CITY COUNCIL OF THE CITY OF PASCO, WASHINGTON, DO ORDAIN as follows: Section 1. Recitals; LID Formation and Purpose. (a) Pursuant to Ordinance No. 4483, passed on March 2, 2020, and as corrected by Ordinance No. 4483A, the City Council of the City of Pasco, Washington (the “City”), created Local Improvement District No. 151 (“LID No. 151”) to finance the cost of constructing a new sanitary sewer trunk line and other improvements in the City’s Northwest (Broadmoor) area (the “Project”). (b) The total amount of the assessment roll in LID No. 151 was $3,241,424.12, as confirmed by Ordinance No. 4612, passed on October 3, 2022. The 30-day period for making cash payments of assessments without interest expired on November 16, 2022, and $3,226 of assessments have been paid. The balance of assessments unpaid on the assessment roll for LID No. 151 is $3,238,198 (rounded to the nearest dollar). (c) The City has determined to issue its Local Improvement District No. 151 Bond (the “Bond”) in a total principal amount of $3,238,198 to finance costs of the Project not paid from assessments in LID No. 151 that have been paid. (d) RCW 39.59.040(1) provides that any local government in the state of Washington may invest in bonds of any local government in the state of Washington. Page 154 of 160 FG: 100882096.1 Page 2 (e) The City desires to obtain an investment return, comparable to the tax-exempt interest rate that the Bond would bear if sold in the municipal bond market, on the portion of the funds available in the City’s Equipment Replacement Fund that it otherwise would regularly invest but instead are used to make an interfund loan to LID No. 151, evidenced by the Bond, to finance costs of the Project not paid from assessments in LID No. 151. The City finds it in the best interest of the City that the Bond be purchased by the City from funds on deposit in the City’s Equipment Replacement Fund and available for investment. Section 2. Bond Fund. There is established in the office of the Finance Director (the “Finance Director”) for Local Improvement District No. 151 a special local improvement district fund to be known and designated as Local Improvement Fund, District No. 151 (the “Bond Fund”). All money presently on hand representing collections pertaining to installments of assessments and interest thereon in LID No. 151 shall be transferred to and deposited in the Bond Fund, and all collections pertaining to assessments on the assessment roll of LID No. 151 when hereafter received shall be deposited in the Bond Fund to pay principal of and interest on the Bond. Section 3. Authorization and Description of the Bond. The Bond shall be issued in the total principal amount of $3,238,198, being the total amount on the assessment roll of LID No. 151 remaining uncollected as of the date of this ordinance. The Bond shall be dated its date of delivery; shall mature on February 19, 2040; shall be in fully registered form; and shall be numbered R-1. The Bond shall bear interest at the rate of 5.25% [6% estimated in Ordinance No. 4612] per annum computed on the basis of a 360-day year of twelve 30-day months, payable annually on each October 16, beginning October 16, 2023. Section 4. Appointment of Bond Registrar; Registration and Transfer of Bond. The Finance Director of the City is appointed Bond Registrar for the Bond. The Bond shall be issued Page 155 of 160 FG: 100882096.1 Page 3 to the City’s Equipment Replacement Fund (the “Registered Owner”) only in registered form as to both principal and interest and shall be recorded on books or records maintained by the Bond Registrar (the “Bond Register”). The Bond Register shall contain the name and mailing address of the Registered Owner. The Bond may not be assigned or transferred by the Registered Owner. When the Bond has been paid in full, both principal and interest, it shall be surrendered by the Registered Owner to the Bond Registrar, who shall cancel the Bond. Section 5. Payment of the Bond. Both principal of and interest on the Bond shall be payable solely out of the Bond Fund, and from the Local Improvement Guaranty Fund of the City, consistent with chapter 35.54 RCW. Section 6. Prepayment Provisions. The City reserves the right to prepay principal of the Bond prior to its stated maturity on any date, at par plus accrued interest to the date fixed for prepayment, whenever there shall be sufficient money in the Bond Fund to prepay the principal of the Bond over and above the amount required for the payment of the interest then due on the Bond. Interest on the principal of the Bond so prepaid shall cease to accrue on the date of such prepayment. Section 7. Purchase and Sale of the Bond. The City shall purchase the Bond at a price of par with funds on deposit in the City’s Equipment Replacement Fund that the Finance Director determines are available for that purpose. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bond and for the proper application and use of the proceeds of the sale thereof. Section 8. Fixing the Term of and Interest Rate on Assessments. Payments of assessments in LID No. 151 shall be paid in fifteen (15) equal annual installments of principal, together with interest due on the unpaid balance. The interest rate on the installments and Page 156 of 160 FG: 100882096.1 Page 4 delinquent payments of LID No. 151 is fixed at the rate of 5.25% [6% estimated in Ordinance No. 4429] per annum. Each delinquent installment of assessments is subject, at the time of delinquency, to a 5% penalty levied on both principal and interest due on that installment, and all delinquent installments also will be charged interest at the rate of 8% per annum as set forth in Pasco City Code 14.05.050. Section 9. Effective Date of Ordinance. This ordinance shall be in full force and effect from and after five days from the date of its passage and publication as provided by law. PASSED by the City Council, of the City of Pasco, Washington, on this 6th day of February, 2023, and signed in authentication of its passage this 6th day of February, 2023. CITY OF PASCO, WASHINGTON By Blanche Barajas, Mayor ATTEST: Debra Barham, City Clerk APPROVED AS TO FORM: Kerr Ferguson Law, PLLC, City Attorney Published: Page 157 of 160 FG: 100882096.1 CERTIFICATE I, the undersigned, the duly appointed, qualified and acting Clerk of the City of Pasco, Washington, and keeper of the records of the City Council (herein called the “Council”), DO HEREBY CERTIFY: 1. That the attached Ordinance No. ______ (herein called the “Ordinance”) is a true and correct copy of an ordinance of the Council, as finally passed at a regular meeting of the Council held on the 6th day of February, 2023, and duly recorded in my office. 2. That said meeting was duly convened, held and provided an opportunity for public comment, in all respects in accordance with law, and to the extent required by law, due and proper notice of such meeting was given; that a legal quorum was present throughout the meeting and a legally sufficient number of members of the Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been duly fulfilled, carried out and otherwise observed, and that I am authorized to execute this certificate. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pasco, Washington, as of this 6th day of February, 2023. Debra Barham, City Clerk (SEAL) Page 158 of 160 QUALITY OF LIFE Promote a high-quality of life through quality programs, services and appropriate investment and re- investment in community infrastructure including, but not limited to: • Completion of Transportation System Master Plan and design standard updates to promote greater neighborhood cohesion in new and re-developed neighborhoods through design elements, e.g.; connectivity, walkability, aesthetics, sustainability, and community gathering spaces. • Completion of the Parks, Recreation and Open Space Plan and development of an implementation strategy to enhance such services equitably across the community. • Completion of the Housing Action and Implementation Plan with a focus on a variety of housing to address the needs of the growing population. FINANCIAL SUSTAINABILITY Enhance the long-term viability, value, and service levels of services and programs, including, but not limited to: • Adopting policies and strategic investment standards to assure consistency of long-range planning to include update of impact fees, area fees to specific infrastructure, and SEPA mitigation measures related to new development, e.g.; schools, traffic, parks, and fire. COMMUNITY TRANSPORTATION NETWORK Promote a highly functional multi-modal transportation system including, but not limited to: • Application of the adopted Transportation System Master Plan including development of policies, regulations, programs, and projects that provide for greater connectivity, strategic investment, mobility, multi -modal systems, accessibility, efficiency, and safety. COMMUNITY SAFETY Promote proactive approaches for the strategic investment of infrastructure, staffing, and equipment including, but not limited to: • Adoption and develop implementation strategies for Comprehensive Fire Master Plan aimed at maintaining the current Washington State Rating Bureau Class 3 community rating. • Collaboration with regional partners to influence strategies to reduce incidences of homeless by leveraging existing resources such as the newly implemented 0.1% mental health sales tax, use of resource navigator programs, and other efforts. • Development of an implementation strategy for the Comprehensive Police Master Plan to support future service levels of the department to assure sustainability, public safety, officer safety, crime control, and compliance with legislative mandates. ECONOMIC VITALITY Promote and encourage economic vitality including, but not limited to: • Implementation of the Comprehensive Land Use Plan through related actions including zoning code changes, phased sign code update, and development regulations and standards. • Completion of Area Master Plans and environmental analysis complementing the Comprehensive Land Use Plan such as Downtown and Broadmoor Master Plans. • Development of an Economic Development Plan, including revitalization efforts. COMMUNITY IDENTITY Identify opportunities to enhance community identity, cohesion, and image including, but not limited to: • Development of a Community Engagement Plan to evaluate strategies, technologies, and other opportunities to further inclusivity, community engagement, and inter-agency and constituent coordination efforts. • Support of the Arts and Culture Commission in promoting unity and the celebration of diversity through art and culture programs, recognition of significant events or occurrences, and participation/sponsorship of events within the community. Page 159 of 160 CALIDAD DE VIDA Promover una calidad de vida alta a través de programas de calidad, servicios, inversiones y reinversiones apropiadas en la infraestructura de la comunidad incluyendo, pero no limitado a: • Terminar el Plan de Transportación para promover más cohesión entre nuestras vecindades actuales y re-desarrolladas a través de elementos de diseño, p.ej. conectividad, transitabilidad, sostenibilidad estética, y espacios para reuniones comunitarias. • Terminar el Plan de los Parques, la Recreación, y los Espacios Vacíos y el desarrollo de una estrategia de implementación para mejorar tales servicios justamente a lo largo de la comunidad. • Terminar el Plan de Acción e Implementación de Viviendas con un enfoque en una variedad de viviendas para tratar las necesidades del aumento en la población. SOSTENIBIILIDAD FINANCIERA Mejorar la viabilidad a largo plazo, el valor, y los niveles de los servicios y los programas, incluyendo, pero no limitado a: • Adoptar las políticas y los estándares de inversión estratégica para asegurar consistencia en la planificación a largo plazo para incluir la actualización de las tarifas de impacto, las tarifas en áreas de infraestructura específica, y las medidas de mitigación SEPA relacionadas con el nuevo desarrollo, p.ej. escuelas, tráfico, parques, e incendios. RED DE TRANSPORTACION COMUNITARIA Promover un sistema de transportación multimodal en alta operación incluyendo, pero no limitado a: • Aplicar el Plan de Transportación que fue adoptado, incluyendo el desarrollo de las políticas, las reglas, los programas, y los proyectos que proporcionan más conectividad, inversión estratégica, movilidad, sistemas multimodales, accesibilidad, eficiencia, y seguridad. SEGURIDAD COMUNITARIA Promover métodos proactivos para la inversión estratégica en la infraestructura, el personal, y el equipo incluyendo, pero no limitado a: • Adoptar y desarrollar estrategias de implementación para el Plan Comprehensivo para Incendios. Con el propósito de mantener la clasificación comunitaria actual en la tercera Clase del Departamento de Clasificación del Estado de Washington. • Colaborar con socios regionales para influenciar estrategias que reduzcan los incidentes de personas sin hogar al hacer uso de los recursos actuales como el impuesto de ventas de 0.1% implementado recientemente para la salud mental, el uso de programas para navegar los recursos, y otros esfuerzos. • Desarrollar una estrategia de implementación para el Plan Comprehensivo de la Policía para apoyar los niveles futuros de servicio del departamento para asegurar la sostenibilidad, la seguridad pública, la seguridad de los policías, el control de crímenes, y el cumplimiento con los mandatos legislativos. VITALIDAD ECONOMICA Promover y fomentar vitalidad económica incluyendo, pero no limitado a: • Implementar el Plan Comprehensivo del Uso de Terreno a través de acciones relacionadas, incluyendo cambios de los códigos de zonificación, actualización en las etapas de los códigos de las señales, y el desarrollo de las reglas y los estándares. • Terminar los Planes de las Áreas y un análisis ambiental el cual complementa al plan integral de uso de la tierra como a los Planes del Centro y de Broadmoor. • Desarrollar un Plan de Desarrollo Económico, el cual incluya esfuerzos de revitalización. IDENTIDAD COMUNITARIA Identificar oportunidades para mejorar la identidad comunitaria, la cohesión, y la imagen incluyendo, pero no limitado a: • Desarrollar un Plan de Participación de la Comunidad para evaluar las estrategias, las tecnologías, y otras oportunidades para promover la inclusividad, la participación de la comunidad, y los esfuerzos interdepartamentales y de coordinación de los constituyentes. • Apoyar a la Comisión de las Artes y Cultura al promover la unidad y la celebración de la diversidad a través de programas de arte y cultura, reconocer eventos o acontecimientos significantes, y participar/patrocinar eventos dentro de la comunidad. Page 160 of 160