Rancho Palos Verdes City Council
   

NOVEMBER 7, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONTRACT SERVICE AGREEMENT FOR ON-CALL BUILDING INSPECTION SERVICES FOR THE CONSTRUCTION OF THE TERRANEA (LONG POINT) RESORT HOTEL NOVEMBER 7, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONTRACT SERVICE AGREEMENT FOR ON-CALL BUILDING INSPECTION SERVICES FOR THE CONSTRUCTION OF THE TERRANEA (LONG POINT) RESORT HOTEL NOVEMBER 7, 2006 RANCHO RANCHO PALOS VERDES CITY COUNCIL AGENDA-CONTRACT SERVICE AGREEMENT FOR ON-CALL BUILDING INSPECTION SERVICES FOR THE CONSTRUCTION OF THE TERRANEA (LONG POINT) RESORT HOTEL



TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: NOVEMBER 7, 2006

SUBJECT: CONTRACT SERVICE AGREEMENT FOR ON-CALL BUILDING INSPECTION SERVICES FOR THE CONSTRUCTION OF THE TERRANEA (LONG POINT) RESORT HOTEL

Prepared by: Ara Michael Mihranian, Principal Planner

RECOMMENDATION

1) Authorize the Mayor and City Clerk to execute a professional service agreement with Group Delta Consultants to provide exclusive on-call building inspection services on an as-needed basis to the City to expedite the construction of the Terranea (Long Point) Resort Hotel; and 2) Approve a reimbursement agreement between the City and Long Point Development, LLC. that identifies the terms of payment for the building inspection services.

BACKGROUND

The construction of the Terranea (Long Point) Resort Hotel is anticipated to break ground in November of this year. Due to the size and scope of the related project construction and the City’s limited existing Building and Safety staff resources, the City’s Building and Safety Division finds it necessary to seek outside building inspection services to accommodate the project applicant’s aggressive construction schedule. The City is seeking to execute a service agreement with a building inspection service consultant to provide professional services on an on-call basis for the construction of the Terranea Resort Hotel. This agenda item is to consider executing a service agreement with Group Delta Consultants for said inspection services and to consider executing a related reimbursement agreement with Long Point Development, LLC., to pay for said inspection services.

DISCUSSION

Basis for the Selection Process

The building inspection process for commercial projects, such as the Terranea Resort Hotel, typically involves two forms of services, deputy special inspections and third party inspections. Deputy special inspections are services provided to and paid for by the property owner that involves oversight of the actual construction process. Typically the developer’s deputy inspector prepares reports summarizing the construction activity for each phase of the project that are eventually submitted to a third party inspector. The third party inspector service is performed by a local jurisdiction (City) or its designee and involves physically inspecting a project at the completion of specific construction phases. The third party inspectors also review the reports prepared by the property owner’s deputy inspector.

On August 28, 2006, the City issued a Request for Proposal (RFP) to consulting firms known by the City and the project applicant to provide third party building inspection services in the general area. According to the RFP, the City was seeking a consultant that is familiar or has experience with the following:

- The unique environmental setting of the Palos Verdes Peninsula

- A minimum of ten (10) years of experience in the field of Building Inspection Service Management consisting of mechanical, electrical, plumbing, structural and Building Code compliance.

- An ability to furnish qualified combination and/or specialized single discipline inspectors specifically dedicated to full time inspections and/or on-call multiple daily inspections exclusively for the Terranea Resort Hotel Project.

- Field Inspectors that possess current International Code Council (ICC) or Uniform Building Code (UBC) Legacy certifications.

- Field Inspectors that possess excellent communication skills and provide clear and concise written documentation of all daily inspections.

- Field Inspectors that have the ability to report to and take direction from the City’s Building Official and/or designees.

- Field Inspectors that are competent in reading and interpreting building plans and specifications.

In response to the RFP, the City received three (3) proposals from the following consulting firms:

- Smith-Emery

- Group Delta

- Hayer Consultants

After reviewing the proposals, the City determined that the three consulting firms who submitted proposals were equally qualified and maintained a billing rate that was generally the same across the board. To better assess the qualifications of each firm, interviews were held by the City’s Building Official and a representative from Long Point Development, LLC. The project applicant was invited to be a part of the interview process because they are requesting this service and are willing to cover the cost of this service in order to meet an aggressive construction schedule.

Based on information gleaned from the individual proposals and the interview process, Staff believes that Group Delta is the most qualified candidate to provide the City with building inspection services for the following reasons:

- Past Experience with the City – Group Delta has worked for the City’s Public Works Department as field inspectors since 1998. According to Public Works Staff, Group Delta is a high quality and reliable firm that provides timely and concise reports. In addition to working for the City, Group Delta has provided contract field inspection services for other commercial projects similar to the Terranea Resort Hotel, such as the Hyatt Regency Grand Coast Resort Hotel in Huntington Beach (Type I) and the Crowne Plaza Hotel in Garden Grove (Type I). Group Delta has also provided inspection services for residential projects, similar to the Terranea’s villas, casitas, and bungalows, such as the Chatelaine Condominiums in Los Angeles (Type V) and the Avalon Condominiums and Townhomes in Playa del Rey (Type V). For more information on past experiences, see the attached proposal from Group Delta.

The proposed Terranea project involves approximately 80% Type V construction and approximately 20% Type I construction. Type V construction is common for residential structures that utilize standard wood framing, while Type I construction is common for high-rise structures that utilize steel. As described above, Group Delta has experience in both Type V and Type I construction.

- Qualifications of its Staff – According to Group Delta’s proposal, the inspectors committed to work on this project have more than 20 years experience and maintain ICC and UBC certifications. Additionally, the Group Delta project team will consist of inspectors that have the ability to provide inspections for both Type I and Type V construction.

- Ability to provide full-time staff from the general area – Group Delta is located in Torrance and is able to provide on-site inspectors from the immediate area guaranteeing timely reporting to the project site. Group Delta has indicated that in addition to their project team, in the absence of an inspector, additional staff can be assigned to the project in order to avoid delays in conducting daily inspections. Furthermore, in special situations, the City’s Building Official or his designee may be used to complete daily inspections.

- No conflict of interest – According to representatives from Group Delta, the firm is not working for the project applicant nor the building contractor (Turner Construction). Furthermore, Group Delta indicated that they would not accept work from the project applicant and the building contractor during the duration of the service agreement.

Representatives from Long Point Development have indicated their desire to have one firm conduct both third party building inspections and deputy special inspections. The City has a concern with this set-up because of a potential conflict of interest. Since the third party inspectors are to review the deputy inspectors reports, Staff feels that a distinct separation between the two firms inspectors will provide the City with a fair evaluation of the project construction and clearly establish reporting protocol, wherein the third party inspectors are working for the City and not the property owner.

- Group Delta is able to provide liability insurance in the standard amounts required by the City for this type of contractor.

Therefore, Group Delta was selected by City Staff as the most qualified firm to provide the requested building inspection service for the construction of the Terranea Resort Hotel.

Scope of Work

As described in the Services Agreement (attached), Group Delta will function as the City’s on-call third party building inspectors for the construction of the Terranea Resort Hotel and will be asked to perform a variety of services. These include reviewing building plans and inspecting the mechanical, electrical, plumbing and structural components of the project for compliance with Local and State Codes. Furthermore, as an extension of City Staff, Group Delta will report to the City’s Building Official and provide full-time services during the City’s permitted construction hours. The attached Service Agreement has been reviewed and accepted by Group Delta.

Input from Terranea Representatives

As a courtesy, Terranea representatives were invited to review the three (3) submitted proposals and sit in on the interview process. Staff made it clear that while the selection of the inspection firm was at the sole discretion of the City, input from Terranea representatives was strongly encouraged. At the conclusion of the interview process, Terranea representatives notified Staff that they felt Smith-Emery was the most qualified candidate. As a result, Staff met with Terranea representatives to discuss their conclusions. At the meeting, Staff explained that while Group Delta and Smith-Emery are both very qualified firms with capable personnel, qualifications, and experience, Staff felt that Group Delta’s positive past experience with the City weighed heavily in their favor. Furthermore, Staff noted a concern with Smith-Emery because they are currently under contract by Turner Construction for inspection services on projects outside the City. Staff felt that such a situation was contrary to Article VIII of the City’s standard Service Agreement that includes specific language addressing a potential conflict of interest between the City, the building inspection firm, the project applicant, and the project applicant’s contractors.

Terranea representatives agreed that both Smith-Emery and Group Delta were both capable firms to perform the required inspections and that they would abide by the City’s decision.

Reimbursement Agreement with Terranea

Costs associated with the proposed building inspection services will be borne by the project applicant. Based on the City’s adopted fee schedule, building permit fees for this project are based on total square footage and have been calculated to be $866,548.17 (not including grading permit fees). According to the project applicant, construction is estimated to take between 26 and 36 months. According to their proposal, Group Delta is proposing to provide the on-call building inspection services for 36 months at a cost of $828,500.00 with additional services requested by the City and/or project applicant to be based on time and material basis.

It is anticipated that the applicant will deposit $866,548.17 into a trust account that will be drawn on monthly to cover the inspection services for each month. A standard 10% City administration fee will be charged every time a payment from the account is processed that will cover the cost of Staff’s time to manage the account.

In the event construction of the project exceeds the 36-month schedule, the project applicant has agreed to cover additional costs incurred by the extended schedule so that full-time building inspection services can continue without disruption. Likewise, if the project is completed in a manner whereby the cost of the building inspection services ends up less than $866,548.17, the applicant will be refunded the excess fees paid. The City Attorney has prepared a reimbursement agreement between the City and the project applicant that addresses this issue for review and approval by the City Council (see attachment). The attached reimbursement agreement has been transmitted to Long Point Development, LLC.

CONCLUSION

Group Delta Consultants is a highly qualified firm, with extensive experience and professional credentials, and is familiar with the Local and State Building Codes. As such, Staff supports executing a service agreement with Group Delta Consultants for providing the City with on-call building inspection services for the construction of the Terranea Resort Hotel.

FISCAL IMPACT

Given the approval of a reimbursement agreement between the City and Terranea that will ensure that the costs associated with the building inspection services are borne by the applicant, no fiscal impact will result to the City’s general fund.

ALTERNATIVES

In addition to Staff's recommendation, the following alternatives are available for consideration by the City Council:

1) Direct Staff to make modifications to the proposed contract and bring the revised contract back for further discussion at a future meeting.

2) Direct Staff to issue a new Request for Proposal (RFP).

Respectfully submitted:

Joel Rojas

Director of Planning, Building and

Code Enforcement

Reviewed by:

Les Evans

City Manager

Attachments (some of the following documents are not available electronically and can be viewed at City Hall).

- Service Agreement between the City and Group Delta Consultants

- Draft Reimbursement Agreement between the City and Long Point Development, LLC.

- Group Delta Consultant’s Proposal

PROFESSIONAL SERVICES AGREEMENT

FOR BUILDING INSPECTION SERVICES

THIS AGREEMENT is made and entered into this 17th day of October, 2006, by and between the CITY OF RANCHO PALOS VERDES, hereinafter referred to as “CITY”, and GROUP DELTA CONSULTANTS, INC., hereinafter referred to as “CONSULTANT”.

RECITALS

The City wishes to use the professional services of Consultant to provide building inspection services for the City in connection with the construction of the Terranea resort hotel by Long Point Development, LLC (“Developer”), including, but not limited to, the hotel structure, and the villas, casitas, bungalows, club house, restaurant facilities, swimming pools and golf course (“the Project”).

Consultant has represented that it has a specialized knowledge and understanding of, and experience with, building inspection services relating to the construction of large commercial developments, including field plan reading for commercial and residential structures that comprise structural, mechanical electrical and plumbing systems; construction material and methods verification by means of on-site monitoring; foundation and vertical / horizontal structural assemblies design and, fire wall assemblies, accessibility, fenestration and waterproofing systems and that Consultant is qualified to perform said services for City in connection with the Project.

IN CONSIDERATION of the foregoing recitals and the covenants hereinafter set forth, the parties hereto mutually agree as follows:

SCOPE OF CONSULTANT’S SERVICES

Consultant shall, in a professional and timely manner, perform the following services, when requested by the City:

Under the direction of the Building Official or the Building Official’s designee, provide daily:

“On-site” qualified building inspectors for scheduled called inspections by Developer or Developer’s designee for conformance verification of the construction with approved plans; current adopted building codes; local ordinances, and conditions of approval as set forth by the City of Rancho Palos Verdes.

All of Contractor’s inspectors shall check in with the Building Official or the Building Official’s designee on a daily basis and shall be available to be contacted by the Building Official or the Building Official’s designee during the work day for consultation.

Inspectors shall maintain a computer generated log of all called-inspections including the time of requested inspection, location, and disposition of inspection findings. Inspectors also shall maintain a written daily journal identifying daily environmental conditions, schedule of called inspections, meetings, conversations, RFI submittals, telephone, internet or other correspondence with Developer, Developer’s contractor, EOR, AOR, or deputy inspectors.

Inspectors shall document all deviations found during inspections and shall provide a verbal and written notice to contractor and a written copy for the Building Official.

The Inspector of record shall secure all documents, correspondence, correction notices and or any other sensitive correspondence from viewing by all non-inspection individuals at all times. All documents shall be removed from the job trailer daily and shall be stored at the City of Rancho Palos Verdes or at the home office of Group Delta Consultants, Inc. Any deviation from this policy shall be only with the written permission of the Building Official.

PERFORMANCE OF SERVICES

Consultant shall perform all services and duties pursuant to this Agreement in a professional and timely manner, at the direction of the Building Official or the Building Official’s designee. All directives, instructions, or other communications from City to Consultant shall be through the Building Official or the Building Official’s designee. Consultant shall estimate the time frame to complete each project, which shall be subject to review and approval either by the Director of Planning, Building and Code Enforcement (“Director”) or the Director’s designee.

TERM

This Agreement shall commence when the building permit is issued by the City for construction of the Terranea hotel resort, and shall terminate when a certificate of occupancy is issued for the hotel resort hotel, unless otherwise extended in writing by the parties hereto.

COMPENSATION FOR SERVICES

City shall pay Consultant for its professional services rendered and costs incurred pursuant to this Agreement in accordance with the rates and amounts set forth in the fee and cost schedule attached hereto as Exhibit “A” and incorporated herein by this reference. The schedule of hourly rates shall be effective through the term of this contract and are not subject to increases due to cost of living or inflation adjustments.

City may request in writing that Consultant perform additional services not covered by the specific Scope of Work set forth in this agreement, and Consultant shall perform such services and will be paid for such additional services in accordance with Consultant’s schedule of hourly rates attached hereto as Exhibit “A” and incorporated herein by reference.

Consultant shall submit to City, by not later than the tenth (10th) day of each month, its bill for services rendered and costs incurred during the previous month. If Consultant’s bill is properly prepared and received by City by not later than the tenth (10th) day of the month, City shall pay Consultant all uncontested amounts set forth in Consultant’s bill by not later than 30 days after the date that the bill was received by the City. City shall pay all uncontested invoices received after the 10th of the month not later than forty-five (45) days after City’s receipt of Consultant’s invoice. It is further agreed that the periodic billings are correct, conclusive and binding unless City notifies Consultant in writing within City twenty (20) days from the date of receipt of the invoice of any alleged inaccuracies, discrepancies or errors in billing.

All payments due Consultant shall be paid to:

Group Delta Consultants, Inc.

2291 W. 205 th Street, Suite 105

Torrance, CA. 90501-1459

In the event City fails to pay any undisputed amounts due Consultant within forty-five (45) days after invoices are received by City, then City agrees that Consultant shall have the right to consider said default a breach of this Agreement and may be terminated by Consultant without liability to Consultant upon ten (10) working days advance notice to City.

PERSONNEL

Consultant shall provide all personnel necessary to properly perform the services and duties required under this Agreement, and shall at all times direct such personnel in the performance of such services and duties. Michael D. Reader, Vice President of Group Delta Consultants, Inc. shall be principally responsible for Consultant’s obligations and performance under this Agreement and shall serve as the principal liaisons between City and Consultant. Consultant shall not designate representatives or liaisons other than Michael D. Reader without the prior written consent of either the City Building Official or Director of Planning, Building and Code Enforcement, except for temporary re-assignments in the case of vacation, illness or emergency, in which case, Consultant shall provide oral notification to either the City Building Official or the Director.

Consultant shall notify City in writing of its recommendation of the retention of any supplemental sub-consultants and the need there for. However, City shall have the exclusive authority to determine whether such sub-consultants shall be retained pursuant to Consultant’s recommendation.

DUTIES OF CITY

City shall provide or make available to Consultant, without charge or expense, all information, data, records, maps, reports, plans, equipment, or other material in its possession necessary for carrying out the services and duties contemplated under this Agreement.

OWNERSHIP OF DOCUMENTS

City and Consultant agree that all records, data, reports or other documentation prepared by, in response to, or as a result of the performance of this Agreement shall be the sole property of City, and are to remain confidential, and shall not be released or otherwise made available to any person, entity or organization without the express prior written approval of City. Copies of any data, records, reports or other documents held by Consultant shall be delivered to City upon demand. During the term of this Agreement, Consultant may retain one copy of each document for its records.

No reports, maps or other documents produced in whole or in part under this Agreement shall be the subject of an application for copyright by or on the behalf of Consultant. It is agreed that all records, data, reports or other documents generated by Consultant for City can only be used for the specific location and/or specific improvement without the written consent of Consultant.

CONFLICT OF INTEREST

Consultant agrees not to accept any employment or representation during the term of this Agreement which is or may likely make Contractor “financially interested” (as provided in California Government Code Sections 1090 and 87100) in any decision made by City on any matter in connection with which Consultant has been retained pursuant to this Agreement.

Consultant also warrants that it is not, at the time this Agreement is entered into, engaged in any employment or representation which will or may likely make Consultant “financially interested” in any decision made by City on any matter in connection with which Consultant has been retained pursuant to this Agreement.

INDEMNIFICATION AND INSURANCE

Indemnification. Consultant will defend, indemnify and hold harmless City, its City Council, Boards, Commissions and its officers, employees and agents (collectively “CITY”), against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of Consultant, its agents, officers or employees, in performing any of the services under this Agreement. City will indemnify and hold harmless Consultant, its agents, officers or employees against any claim, loss or liability that arises because of the sole or primary negligence or willful misconduct of City personnel or its other agents or if Consultant is named as a party in a lawsuit simply because Consultant is performing work on City’s behalf and there is no allegation of any wrong doing on the part of the Consultant.

General Liability. Consultant shall at all times during the term of the Agreement carry, maintain, and keep in full force and effect, a policy or policies of Comprehensive General Liability Insurance, with minimum limits of one million dollars ($1,000,000.00) for each occurrence and in the aggregate, combined single limit, against any personal injury, death, loss or damage resulting from the wrongful or negligent acts by Consultant. Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best’s Insurance Guide with a rating A VII or better.

Professional Liability. Consultant shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of professional liability insurance with a minimum limit of one million dollars ($1,000,000.00). Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best’s Insurance Guide with a rating of A VII or better.

Automobile Liability. Consultant shall at all times during the term of this Agreement, carry, maintain, and keep in full force and effect a policy or policies of automobile liability insurance with a minimum limit of one million dollars ($1,000,000.00) per accident for bodily injury and property damage. Said policy or policies shall be issued by an insurer admitted in the State of California and rated in Best’s Insurance Guide with a rating of A VII or better.

Worker’s Compensation. Consultant agrees to maintain in force at all times during the performance of work under this Agreement worker’s compensation insurance as required by the law. Consultant shall require any subcontractor similarly to provide such compensation insurance for their respective employees.

Notice of Cancellation.

All insurance policies shall provide that the insurance coverage shall not be canceled by the insurance carrier without thirty (30) days prior written notice to City. Consultant agrees that it will not cancel or reduce said insurance coverage.

Consultant agrees that if it does not keep the aforesaid insurance in full force and effect, City may either immediately terminate this Agreement or, if insurance is available at a reasonable cost, City may take out the necessary insurance and pay, at Consultant’s expense, the premium thereon.

Certificate of Insurance. At all times during the term of this Agreement, Consultant shall maintain on file with the City Clerk certificates of insurance showing that the aforesaid policies are in effect in the required amounts. The comprehensive general liability policy or policies and any professional liability insurance policy shall contain an endorsement naming the City as an additional insured, which Consultant shall maintain on file with the City Clerk.

Primary Coverage. The insurance provided by Consultant shall by primary to any coverage available to City in relation to the services provided under this agreement. The insurance policies (other than worker’s compensation and professional liability) shall include provisions for waiver of subrogation.

TERMINATION

This Agreement may be terminated at any time, with or without cause, by The City of Rancho Palos Verdes upon thirty (30) days and ninety (90) days prior written notice by Consultant. Notice shall be deemed given upon deposit in the United States Mail or a certified or registered letter, postage prepaid, return receipt requested, addressed to the other party, or upon personal service of such notice to the other party, at the address set forth in Article XI.

In the event of termination or cancellation of the Agreement by Consultant or City, due to no fault or failure of performance by Consultant, Consultant shall be paid compensation for all services performed by Consultant, in an amount to be determined as follows: for work done in accordance with all of the terms and provisions of this Agreement, Consultant shall be paid an amount equal to the amount of services performed prior to the effective date of termination or cancellation in accordance with the schedule attached hereto as Exhibit “A”; provided, in no event shall the amount of money paid under the foregoing provisions of this paragraph exceed the amount which would have been paid to consultant for the full performance of the services described in Article IV and the authorization to proceed for the uncompleted project(s).

In the event of such termination, all finished or unfinished documents, reports, charts, data, studies, surveys, in the possession of Consultant under this agreement shall be returned to City, at City’s option.

GENERAL PROVISIONS

Fair Employment Practices/Equal Opportunity Acts. In the performance of this Agreement, Consultant shall comply with all applicable provisions of the California Fair Employment Practices Act (California Government Code Sections 12940-48) and the applicable equal employment provisions of the Civil Rights Act of 1964 (42 U.S.C. 200e-217), whichever is more restrictive.

Non-discrimination. Consultant shall not discriminate as to race, creed, religion, gender, color or national origin in the performance of its services and duties pursuant to this Agreement, and will comply with all rules and regulations of the City relating thereto.

Legal Action.

Should either party to this Agreement bring legal action against the other, the case shall be filed in Los Angeles County, California, and the party prevailing in such action shall be entitled to reasonable attorney’s fees, which shall be fixed by the judge hearing the case, and such fee shall be included in the judgment.

Should any legal action about a project between City and a party other than Consultant require the testimony of Consultant when there is no allegation that Consultant was negligent, City shall compensate Consultant for its testimony and preparation to testify at the hourly rates in effect at the time of such testimony.

Compliance with Applicable Law. Consultant shall comply with all applicable laws, ordinances and codes of the Federal, State and local governments in carrying out its duties under this Agreement.

Assignment. This Agreement shall not be assignable by either party without the prior written consent of the other party. Notwithstanding the foregoing, Consultant may use the services of persons and entities not in its employ, when it is appropriate and customary to do so upon prior approval by City. Such persons and entities include, but are not limited to, specialized consultants. Consultant’s use of others for additional services shall not be unreasonably restricted by City, provided Consultant notifies City in advance.

Independent Consultant. Consultant is and shall at all times remain, as to City, a wholly independent Consultant. Neither City nor any of its agents shall have control over the conduct of Consultant or any of Consultant’s employees, except as herein set forth. Consultant expressly warrants not to, at any time or in any manner, represent that it, or any of its agents, servants or employees, are in any manner the agents, servants or employees of City, it being distinctly understood that Consultant is, and shall at all times remain to City, a wholly independent contractor and Consultant’s obligations to City are solely such as are prescribed by this Agreement.

Titles. That titles used in this Agreement are for general reference only and are not part of this Agreement.

Extent of Agreement. This Agreement and Exhibit “A” represents the entire and integrated Agreement between City and Consultant and supersedes all prior negotiations, representations or agreements, written or oral. This Agreement may be modified or amended only by a subsequent written agreement signed by both parties.

Legal Construction

This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced and governed under the substantive laws of the State of California, without giving effect to conflict of laws principles.

This Agreement shall be construed without regard to the identity of the persons who drafted its various provisions. Each and every provision of this Agreement shall be construed as though each of the parties participated equally in the drafting of same, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement.

The article and section, captions and headings herein have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction.

Whenever in this Agreement the context may so require, each gender shall be deemed to refer to and include any other gender and the singular shall refer to and include the plural.

Notices. All notices pertaining to this Agreement shall be in writing and addressed as follows:

If to Consultant:

Michael D. Reader, Vice President, Group Delta Consultants, Inc.

Group Delta Consultants, Inc.

2291 W. 205 th Street, Suite 105

Torrance, CA. 90501-1459

If to City:

City Manager

City of Rancho Palos Verdes

30940 Hawthorne Boulevard

Rancho Palos Verdes, California 90275

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

GROUP DELTA CONSULTANTS, INC.

By: _____________________________

Its: _____________________________

(Title)

By: _____________________________

Its: _____________________________

(Title)

Dated: _____________________________

CITY OF RANCHO PALOS VERDES

By: _____________________________

Mayor

Dated: _____________________________

Attest:

__________________________

City Clerk



INSPECTION CONTRACT REIMBURSEMENT AGREEMENT

(City of Rancho Palos Verdes/Terranea Resort)

THIS AGREEMENT is made as of November 7, 2006, by and between the City of Rancho Palos Verdes, a body corporate and politic (“City”), and Long Point Development, LLC, a Delaware Limited Liability Company (“Developer”).

RECITALS

A. Developer has applied to City, and received approval, for a conditional use permit (“CUP”), coastal permit and a parcel map to construct a destination resort hotel complex at the former Marineland site (“the Project”).

B. The Project is a large-scale development that will take several years to construct, with numerous inspections of the construction by City’s building and safety staff. City and Developer wish to insure that City will have adequate staff to conduct the inspections so that construction of the Project is not delayed. Accordingly, City and Developer wish to have City retain the services of an outside firm to conduct inspections of the construction work for the Project on behalf for and under the direction of City, but at Developer’s expense.

C. City and Developer desire to enter into this Agreement for the purpose of establishing the rights and responsibilities of each party with respect to securing an outside firm to conduct the building and safety inspections for the Project and the reimbursement of the costs associated therewith.

NOW, THEREFORE, in consideration of performance by the parties of the promises, covenants, and conditions herein contained, the parties agree as follows:

1. Inspection of Work.

City shall diligently review Developer’s plans and shall promptly inspect construction work that is performed for the Project in compliance with applicable laws, including all applicable building, plumbing and electrical codes. To that end, City shall retain the services of Group Delta Consultant’s Inc. (“Consultant”) to perform such work on behalf of City under the direction of City’s Building Official. Developer acknowledges that this Agreement does not constitute a commitment by City to approve any particular component of the Project.

2. Payment.

A. Developer agrees to reimburse City in full for all costs and expenses incurred pursuant to the contract between City and Consultant, the consultant selected by City to perform these services on City’s behalf for the Project.

B. Within thirty days of execution of this Agreement, Developer shall pay City a lump sum deposit in the amount of $____138,083.00______ (“Initial Deposit”), which deposit represents City’s best estimate of Developer’s obligation hereunder for inspection services during the first six month period of City’s agreement with Consultant. City shall hold such funds on behalf of Developer in a City trust fund that has been created for that purpose. If City expends the funds that are deposited by Developer before the end of such six month period, then City shall provide Developer written notice of such shortfall along with an estimate of the funds that will be needed to pay for the inspection services during the remainder of such six month period. Developer shall provide said additional funds to City within ten days of the date of the written notice from City. Inspection work shall be suspended if the City does not receive payment during said ten-day period, until such time as Developer makes the requested payment to City.

C. City subsequently shall estimate the amount that will be necessary to pay for Consultant’s inspection services during any successive six month period, which determination shall be based on the actual costs and expenses generated during the preceding six month period as well as the construction work that City and Developer anticipate will occur during the next six months. Developer shall pay City a lump sum deposit in the amount estimated by City to be sufficient to cover the inspection costs for the next six months, within ten days of the date of City’s estimate. Inspection work shall be suspended if the City does not receive payment during said ten-day period until such time as Developer makes the requested payment to City.



D. City shall refund to Developer any amount of Developer’s deposits that remain unexpended at the end of the Project. For purposes of this paragraph, “the end of the Project” means the time at which: (i) City’s contractual obligations to Consultant have been fully satisfied; and (ii) Developer has completed construction of the Project to City’s satisfaction, as demonstrated by City’s issuance of a certificate of occupancy for all of the structures that are being constructed by Developer as part of the Project.

3. Conflicts of Interest.

A. During the existence of City’s contract with the Consultant, and for a period of 1 year after completion of the Project, neither Developer, nor any of its representatives, agents or other persons acting in concert with Developer, shall enter into any financial relation-ship with the Consultant or with any City official or employee. Nor, during such period, shall Developer propose to enter into any future relationship with the Consultant or with any City official or employee.

B. Developer warrants that it has not entered into any arrangement to pay financial consideration to, and has not made any payment to, Consultant or any of Consultant’s agents or employees. Developer further warrants that is has not entered into any arrangement to pay financial consideration to, and has not made any payment to, any City official, agent or employee that would create a legally cognizable conflict of interest as defined in the Political Reform Act (California Government Code Sections 87100 et seq.).

C. Subject to the reimbursement requirements set forth above, Developer acknowledges and agrees as follows with respect to inspection services performed by City and Consultant in connection with the Project:

1. City has sole discretion to select which of its employees and contractors are assigned to conduct inspection services and work on the Project.

2. City has sole discretion to direct the work and evaluate the performance of the employees and contractors assigned to work on the Project, and City retains the right to terminate or replace at any time any such person.

3. City has sole discretion to determine the amount of compensation paid to employees or contractors assigned to work on the application.

4. City, not Developer, shall pay employees and contractors assigned to work on the application from a City trust account.

D. The parties acknowledge and agree that processing of Developer’s Project is not contingent on the hiring of any specific contractor, and that City may replace Contractor should City determine in its sole discretion to do so.

E. The parties acknowledge and agree that Developer’s duty to reimburse City is not contingent upon City’s approval or disapproval of any component of the development of the Project or upon the result of any action of the City.

4. Notices. Any notices, bills, invoices or reports required by this Agreement shall be deemed received on (a) the day of delivery if delivered by hand during receiving party’s regular business hours or by facsimile before or during receiving party’s regular business hours; or (b) on the second business day following deposit in the United States mail, postage prepaid, to the addresses below, or to such other addresses as the parties may, from time to time, designate in writing pursuant to this section.

City:

City of Rancho Palos Verdes

30940 Hawthorne Boulevard

Rancho Palos Verdes, CA 90275

Attention: City Manager

Fax: 310-835-5749

Developer:

Long Point Development, LLC

6610 Palos Verdes Drive South, Suite A.

Rancho Palos Verdes, CA. 90275

Attention: Eric Flynn / Tim Richardson

Fax: 310-802-7450

5. General Provisions.

Should either party to this Agreement bring legal action against the other, the case shall be filed in Los Angeles County, California, and the party prevailing in such action shall be entitled to reasonable attorney’s fees, which shall be fixed by the judge hearing the case, and such fee shall be included in the judgment.

This Agreement represents the entire and integrated Agreement between City and Developer and supersedes all prior negotiations, representations or agreements, written or oral.

This Agreement may be modified or amended only by a subsequent written agreement signed by both parties.

This Agreement is made and entered into in the State of California and shall in all respects be interpreted, enforced and governed under the substantive laws of the State of California, without giving effect to conflict of laws principles.

This Agreement shall be construed without regard to the identity of the persons who drafted its various provisions. Each and every provision of this Agreement shall be construed as though each of the parties participated equally in the drafting of same, and any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

“City”

CITY OF RANCHO PALOS VERDES

By:

MAYOR

ATTEST:

__________________________

CITY CLERK

“Developer”

LONG POINT DEVELOPMENT, LLC

By:

Its

By:

Its