HomeMy WebLinkAbout2006 01 18TO THE MEMBERS OF •- • OF
THE CITY OF PARK
NOTICE IS HEREBY GIVEN that a Special Meeting is hereby called to be held on
WEDNESDAY, JANUARY 18, 2006 at 6:00 P.M. in the Council Chamber, 14403 E. Pacific
Avenue, Baldwin Park, CA 91706.
Said Special Meeting shall be for the purpose of conducting business in accordance with
the attached Agenda.
NO OTHER BUSINESS WILL BE DISCUSSED
Dated: January 12, 2006
by-ftyl 11119101 •
"original signed"
Manuel Lozano
Mayor
I, Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park, certify that I caused the
aforementioned Notice and Call of a Special Meeting to be delivered via email (hard copy to follow) to each
Member and to the San Gabriel Valley Tribune, and that I posted said notice as required by law on January 12,
2006.
Rosemary M. Ramirez
Chief Deputy City Clerk
AGENDA
BALDWIN PARK
CITY COUNCIL
JANUARY 18, 2006
SPECIAL MEETING
CITY HALL — COUNCIL CHAMBER
6:00 P.M.
Fill
f
BALDWIN
Manuel Lozano - Mayor
David J. Olivas - Mayor Pro Tern
Anthony J. Bejarano - Councilmember
Marlen Garcia - Councilmember
Ricardo Pacheco - Councilmember
PLEASE TURN OFF CELL PHONES AND PAGERS WHILE MEETING IS IN PROCESS
POR FAVOR DE APAGAR SUS TELEFONOS CELULARES Y BEEPERS DURANTE LA JUNTA
PUBLIC COMMENTS COMENTARIOS DEL PUBLICO
The public is encouraged to address the City Se invita al publico a dirigirse a/ Concilio o cualquiera
Council or any of its Agencies listed on this otra de sus Agencias nombradas en esta agenda,
agenda on any matter posted on the agenda or para hablar sobre cua/quier asunto publicado en la
on any other matter within its jurisdiction. If you agenda o cualquier tema que este bajo su jurisdiccion.
wish to address the City Council or any of its Si usted desea la oportunidad de dirigirse al Concilio o
Agencies, you may do so during the PUBLIC alguna de sus Agencias, podra hacerlo durante el
COMMUNICATIONS period noted on the periodo de Comentarios del Publico (Public
agenda. Each person is allowed five (5) minutes Communications) anunciado en la agenda. A cada
speaking time. A Spanish- speaking interpreter is persona se le permite hablar por cinco (5) minutos.
available for your convenience. Hay un interprete para su conveniencia.
City Council & Community Development Commission
Special Meeting Agenda — January 18, 2006
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SPECIAL MEETING — 6:00 P.M.
CALL TO ORDER
ROLL CALL Councilmembers: Anthony J. Bejarano, Marlen Garcia,
Ricardo Pacheco, Mayor Pro Tern David J. Olivas and Mayor
Manuel Lozano
PUBLIC COMMUNICATIONS
Five (5) minute speaking time limit
Cinco (5) minutos sera el /invite pars hablar
THIS IS THE TIME SET ASIDE TO ADDRESS THE CITY COUNCIL
PLEASE NOTIFY THE CITY CLERK IF YOU REQUIRE THE SERVICES OF AN INTERPRETER
No action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or special
circumstances exist. The legislative body or its staff may: 1) Briefly respond to statements made or questions
asked by persons; or 2) Direct staff to investigate and /or schedule matters for consideration at a future meeting.
[Government Code §54954.2]
ESTE ES EL PERIODO DESIGNADO PARA DIRIGIRSE AL CONCILIO
FAVOR DE NOTIFICAR A LA SECRETARIA SI REQUIERE LOS SERVICIOS DEL INTERPRETS
No se podra tomar accion en algOn asunto a menos que sea incluido en la agenda, o a menos que exista alg(jna
emergencia o circunstancia especial. El cuerpo legislativo y su personal podran: 1) Responder brevemente a
declaraciones o preguntas hechas por personas; o 2) Dirigir personal a investigar y/o fijar asuntos para tomar en
consideracion en juntas proximas. [Codigo de Gobierno §54954.2]
ADJOURN TO CLOSED SESSION OF THE CITY COUNCIL
1. PUBLIC EMPLOYEE PERFORMANCE EVALUATION (GC §54957)
Title: Chief Executive Officer
2. CONFERENCE WITH LABOR NEGOTIATOR (GC §54957.6)
Agency Negotiator: Manuel Lozano, Mayor
Un- represented
Employee: Chief Executive Officer
3. CONFERENCE WITH LEGAL COUNSEL — EXISTING LITIGATION (GC §54956.9(a))
Name of Case: Baldwin Park Community Development Commission vs. Sicairos,
et al.
Case Number: Los Angeles Superior Court Case No. BC326071
City Council & Community Development Commission
Special Meeting Agenda — January 18, 2006
REQUESTS AND COMMUNICATIONS
CERTIFICATION
I, Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park hereby certify
under penalty of perjury under the laws of the State of California, that the foregoing agenda
was posted on the City Hall bulletin board not less than 24 hours prior to the meeting. Dated
this 12th day of January 2006.
Rosemary M. Ramirez
Chief Deputy City Clerk
PLEASE NOTE: Copies of staff reports and supporting documentation pertaining to each item
on this agenda are available for public viewing and inspection at City Hall, 2nd Floor Lobby Area
or at the Los Angeles County Public Library in the City of Baldwin Park. For further information
regarding agenda items, please contact the office of the City Clerk at 626.960.4011, ext. 108 or
626.960.4011, ext. 466 or via e-mail at rramirez(a)-baldwinpark. com or lnieto(Qbaldwinpark. com
In compliance with the Americans with Disabilities Act, if you need special assistance to
participate in this meeting, please contact the Public Works Department or Risk Management at
626.960.4011. Notification 48 hours prior to the meeting will enable staff to make reasonable
arrangements to ensure accessibility to this meeting. (28 CFR 34.102.104 ADA TITLE Il)
City Council & Community Development Commission
Special Meeting Agenda — January 18, 2006
A
XE(YTLAR MEETIRIV
COUNCIL
00 P.M.
Manuel Lozano
David J. Olivas
Anthony J. Bejarano
Marlen Garcia
Ricardo Pacheco
Mayor
Mayor Pro Tern
- Councilmember
Councilmember
Councilmember
PLEASE TURN OFF CELL PHONES AND PAGERS WHILE MEETING IS IN PROCESS
POR FAVOR DE APAGAR SUS TELEFONOS CELULARES Y BEEPERS DURANTE LA JUNTA
PUBLIC COMMENTS COMENTARIOS DEL PUBLICO
The public is encouraged to address the City Se invita al publico a dirigirse al Concilio o cualquiera
Council or any of its Agencies listed on this otra de sus Agencias nombradas en esta agenda,
agenda on any matter posted on the agenda or pars hablar sabre cualquier asunto publicado en la
on any other matter within its jurisdiction. If you agenda o cualquier tema que este bajo su jurisdiccion.
wish to address the City Council or any of its Si usted desea la oportunidad de dirigirse al Concilio a
Agencies, you may do so during the PUBLIC a/guna de sus Agencias, podra hacerlo durante el
COMMUNICATIONS period noted on the periodo de Comentarios del Publico (Public
agenda. Each person is allowed five (5) minutes Communications) anunciado en la agenda. A cada
speaking time. A Spanish speaking interpreter is persona se le permite hablar par cinco (5) minutos.
available for your convenience. Hay un interprete para su conveniencia.
CITY COUNCIL
REGULAR MEETING — 7:00 P.M.
• •-�
INVOCATION
PLEDGE OF ALLEGIANCE
ROLL CALL Councilmembers: Anthony J. Bejarano, Marlen Garcia, Ricardo
Pacheco, Mayor Pro Tern David J. Olivas and Mayor Manuel Lozano
ANNOUNCEMENTS
PROCLAMATIONS, COMMENDATIONS & PRESENTATIONS
• Presentation of Plaque to Kaiser Permanente in recognition of their contribution to the
"People on the Move" program
Five (5) minute speaking time limit
Cinco (5) minutos sera el limite para hablar
THIS IS THE TIME SET ASIDE TO ADDRESS THE CITY COUNCIL
PLEASE NOTIFY THE CITY CLERK IF YOU REQUIRE THE SERVICES OF AN INTERPRETER
No action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or special
circumstances exist. The legislative body or its staff may, 1) Briefly respond to statements made or questions
asked by persons; or 2) Direct staff to investigate and /or schedule matters for consideration at a future meeting.
[Government Code §54954.21
ESTE ES EL PERIODO DESIGNADO PARA DIRIGIRSE AL CONCILIO
FAVOR DE NOTIFICAR A LA SECRETARIA SI REQUIERE LOS SERVICIOS DEL INTERPRETE
No se podra tomar accidn en algun asunto a menos que sea incluido en la agenda, o a menos que exista algona
emergencia o circunstancia especial. El cuerpo legislativo y su personal podran: 1) Responder brevemente a
declaracidnes o preguntas hechas por personas; o 2) Dirigir personal a investigar y/o f jar asuntos para tomar en
consideracoon en juntas proximas. [Codigo de Gobierno §54954.2]
CONSENT CALENDAR
All items listed are considered to be routine business by the City Council and will be approved with one motion. There will be
no separate discussion of these items unless a City Councilmember so requests, in which case, the item will be removed from
the general order of business and considered in its normal sequence on the agenda.
1. WARRANTS & DEMANDS
Staff recommends City Council receive and file.
2. PROPOSED RECOGNITIONS BY THE MAYOR AND CITY COUNCIL FOR THE
PERIOD OF JANUARY 18, 2006 TO JANUARY 31, 2006
Staff recommends City Council approve the preparation and presentation of the awards
as outlined in staff report.
City Council Agenda — January 18, 2006
ME
3. CITY TREASURER'S REPORT
Staff recommends City Council receive and file the report.
4. REQUEST FOR REJECTION AND DENIAL WITHOUT PREJUDICE OF THE
PROPOSED TRANSFER OF THE CITY'S EXISTING CABLE FRANCHISE
AGREEMENT FROM ADELPHIA CABLE SYSTEMS TO TIME WARNER CABLE
SYSTEMS OR COMCAST CABLE SYSTEMS (Continued from December 21, 2005)
Staff recommends City Council waive further reading, read by title only and adopt
Resolution No. 2005 -092 entitled, "A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF BALDWIN PARK, CALIFORNIA, REJECTING AND DENYING WITHOUT
PREJUDICE ONE OR MORE FCC FORMS 394 RELATING TO THE TRANSFER OF
THE CABLE TELEVISION FRANCHISE, AND /OR CONTROL THEREOF, TO AN
ENTITY CONTROLLED BY TIME WARNER INC. OR COMCAST CABLE
COMMUNICATIONS, INC."
5. PROPOSED EMPLOYMENT AGREEMENT WITH MATTHEW LAMB, DIRECTOR OF
COMMUNITY DEVELOPMENT
Staff recommends City Council approve the proposed Employment Agreement with
Matthew Lamb for services as the Director of Community Development and authorize
the Mayor to execute the Agreement.
6. APPROVAL OF FINAL TRACT MAP NO. 60959 AT 4040 STEWART AVENUE —
DEVELOPER: YI HSIANG YEH
Staff recommends City Council approve Final Tract Map No. 60959 and authorize the
Mayor to execute the Subdivision Agreement.
7. FRANCHISE AND UTILITY TAX AUDIT UPDATE
Staff recommends City Council receive and file the report.
8. BUSINESS LICENSE AUDIT UPDATE
Staff recommends City Council receive and file the report.
SET MATTERS - PUBLIC HEARINGS (7:00 P.M. or as soon thereafter as the matter can be heard). If in the future you
wish to challenge the following in court, you may be limited to raising only those issues you or someone else raised at the public hearing
described in this notice or in written correspondence delivered to the City Clerk and /or City Council at or prior to the public hearing.
S. PUBLIC HEARING TO CONSIDER A CONDITIONAL USE PERMIT MODIFICATION
TO ALLOW THE SECONDARY OF b
CASHINGNVIRE TRANSFER FACILITY) INSIDE • •
RESTAURANT (McDONALD'S); CASE NO.: CP-301 MODIFICATION, LOCATION:
Staff recommends the City Council conduct the public hearing and following the public
hearing, waive further reading, read by title only and adopt Resolution No. 2006 -005
entitled, "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BALDWIN PARK
ADOPTING THE FINDINGS OF FACT AND DENYING A MODIFICATION TO AN
EXISTING CONDITIONAL USE PERMIT TO ALLOW A FINANCIAL INSTITUTION AS
A SECONDARY USE WITHIN AN EXISTING FAST FOOD RESTAURANT; CASE NO.:
CP -301 Modification, LOCATION: 14008 RAMONA BOULEVARD."
City Council Agenda — January 18, 2006 Page 3
10. PUBLIC HEARING TO CONSIDER AN EXTENSION TO THE EXISTING URGENCY
ORDINANCE ON THE CREATION OF FLAG LOT SUBDIVISIONS
Staff recommends City Council conduct the public hearing and following the public
hearing adopt the "REPORT OF MEASURES TAKEN TO ALLEVIATE THE
CONDITIONS THAT LED TO THE ADOPTION OF ORDINANCE 1277" and adopt on
urgency, Ordinance No. 1278 entitled, "AN INTERIM ORDINANCE OF THE CITY
COUNCIL OF THE CITY OF BALDWIN PARK DECLARING A MORATORIUM ON THE
CREATION OF FLAG LOT SUBDIVISIONS WITHIN THE CITY OF BALDWIN PARK."
11. PUBLIC HEARING AND AWARD OF CONTRACT FOR AUTOMATED
ENFORCEMENT SYSTEM (RED LIGHT CAMERA PROGRAM)
Staff recommends City Council conduct the public hearing and following the public
hearing 1) award a contract to Redflex Traffic Systems, Inc. for the installation of a
maximum of ten (10) enforcement camera locations throughout the City; 2) direct staff
to proceed with the installation of the program, including any necessary personnel
hiring; and 3) authorize the Mayor and the Chief of Police to execute the Agreement.
12. PUBLIC HEARING ON CRAGMONT STREET IMPROVEMENT ASSESSMENT
DISTRICT 2005 -1, CIP 880 (Continued from October 19, 2005)
Staff recommends City Council conduct the public hearing and following the public
hearing open and tabulate the ballots and then select one of the following: 1) stop the
process whether or not the assessment district is approved because the City cannot
proceed with the street improvement without the dedication of street by a property
owner; OR, 2) based on the input received at the public hearing, if the Council wishes to
proceed with the creation of an assessment district again, then direct staff to either: A)
negotiate with the property owner for the street dedication for a reduced assessment
and initiate the assessment process again based on new allocations OR B) begin
condemnation proceedings if the property owner(s) is /are not in agreement, include the
cost of condemnation with the cost of the assessment and initiate the assessment
process again.
REPORTS
13. DIRECTION AND APPROVAL OF 50TH ANNIVERSARY LOGO AND MARKETING
CAMPAIGN (Continued from January 4, 2006)
Staff recommends City Council 1) authorize the Interim Finance Director to appropriate
$20,000 from account number 103.81.5210; and 2) select and approve a logo for the 50th
Anniversary; and 3) commence the advertising campaign.
City Council Agenda — January 18, 2006 Page 4
CERTIFICATION
I, Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park hereby certify
under penalty of perjury under the laws of the State of California, that the foregoing agenda
was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated
this 12th day of January 2006.
Rosemary M. Ramirez
Chief Deputy City Clerk
PLEASE NOTE: Copies of staff reports and supporting documentation pertaining to each item on
this agenda are available for public viewing and inspection at City Hall, 2nd Floor Lobby Area or at
the Los Angeles County Public Library in the City of Baldwin Park. For further information
regarding agenda items, please contact the office of the City Clerk at 626.960.4011, ext. 108 or
626.960 - 4011, ext. 466 or via e -mail at rramirez(tz).baldwinpark.com or Inieto(7baldwin park. com
In compliance with the Americans with Disabilities Act, if you need special assistance to participate
in this meeting, please contact the Public Works Department or Risk Management at
626.960.4011. Notification 48 hours prior to the meeting will enable staff to make reasonable
arrangements to ensure accessibility to this meeting. (28 CFR 34.102.104 ADA TITLE II)
City Council Agenda — January 18, 2006 Page 5
Iql,
BALDWIN
P A • R • K
_•
FROM:
DA
c
Honorable Mayor and City Council
JAN 18 00
STAFF REPORT]
Hennie E. Apodaca, Interim Finance Director
JANUARY 18, 2006
Warrants and Demands
The purpose of this report is for the City Council to allow the payment of Warrants
and Demands against the City of Baldwin Park.
-• �� r� I I •
The payroll of the City of Baldwin Park consisting of check numbers 169322 —
169499 voids: 196322, 169329, 169333, 169337, 169341 Additionally, Automatic
Clearing House (ACH) Payroll Deposits were made on behalf of City employees
from control number 0001059 - 001220 for the period of December 18, 2005
through December 31, 2005 inclusive, have been presented and hereby ratified, in
the amount of $447,628.41.
General Warrants, including check numbers 154389 to 154649 inclusive, in the
total amount of $147,194.43 constituting claims and demands against the City of
Baldwin Park, are here with presented to the City Council as required by law, and
the same hereby ratified.
Pursuant to Section 37208 of the Government Code, the Chief Executive Officer or
designee does hereby certify to the accuracy of the demands hereinafter referred
to and to the availability of funds for payment thereof.
• I_ I Lei
Receive and file.
ity of Baldwin Park Jan 10, 2006 11:17am Page 1
ayment History. Bank AP Payment Dates 00/00/0000 to 99/99/9999 Check/ACH#'s 154650 to 154660 Payment Type Check
____________________________________________________________________________
Vend Y8Udon Name Remit# Payee Bank CheCk# Ckk Date Check Amount So
58 AMERICAN HERl AGE LIFE INSURANCE No 154651 12/29/05 975.64
laim# General Description
PO# Stad Contrad0 lm0ice# Invc 0t Gross Amount Discount Amt Discount Used Net Amount
M001/03/0339 12/20/05 975.64 0.00 975.04
SL Distribution &moS Amount Work Qrder# AotCd 08oCripUOA
100'00-2228 855.70 PPA25-0 M0148340839
100-00'2211 119.88 PP#25-2( M040340339
____________________________________________________________________
V8m0 Vendor Ka0o Rem|t0 Payee 06Dk Check# Qhk U3t9 Check Amount Sep
7560 ARAMARK REFRESHMENT SERVICES AP 154652 12/29/05 504.49
la1m# General Description
72911 COFFEE SUPPLIES
PO#Stat C0ntmc# lmmiml
13022 D 6054'506556
605W'5V6WN
GL Distribution
100-81'5330
PO Liquidation
100-01-5330
________________
Vend* Vendor Nam
2599 CALPERS, LONG-TERM PROGRAM
lnvc [% Gross Amount Discount Amt 8iSC00t Used Net Amount
00/21/05 03.00 0.00 103.00
10/03/05 341.49 0.00 341.49
Gross Amount Work N.der# ACtCy 0oS:riptkN
504.49 1 EA ANNUAL PURCHASE ORDER-COFFEE SERV CITY MEETINGS
Amount
504,40
-------------------------------------'---------------
Remit# Payee Bank Check# Chk Date Check Amount Sep
&P 154653 12/25/05 51.61
laiaf General Description
72912 LONG TERM CARE PP126 P/E: 12/17/05
PO# Stat COQtract0 ImmiceW IDvc Dt Gross Amount Discount Amt Discount Used Net A08UDt
4327298 12/27/05 51.61 0,00 51.0
SL Distribution SrD8n Amount Work 0rdOr# AotCd 08SxripUoR
100F00-2207 51.61 PP06 P/E; 12/17/05
--------------------- ______----------------------------------------------------------------------------- ------------------
Vend Vendor Name Remit# Payee bank Cheok# Ckk 03tn Check Amount Sep
8147 CINGUU0 NP 154654 12/29/05 248.48
la|ml General Description
72919 CDERRA WIRELESS AC775 EDGE
PO# Stat Contract# Invoice# Invc Dt Gross Amount Discount Amt Discount Used Net Amount
13419 C 1780019 12/22/U5 00.48 0.00 249.48
� D1�M�thm Gross Amount Work 8rder&ActCd Description
139-27-5745-009 249.48 2 EA CIERRA WIRELESS N775 EDGE
PO Liquidation k0OUDt
130-27-5745'895 09.06
------------ __ ------ _______ --------------------------- --------------------------------------------------------------------
Ik'.S.AP Accounts Payable Release 6.1.3 N^APR00 By SANDRA A (SANDRA)
ity of Baldwin Park Jan, 10. 2006 11:17am Page 2
ayment History, bank AP Payment Dates 00/00]0000 to 99/99/9999 Check/ACH#'s 154650 to 154669 Payment Type Check
______________________________________________________________________________
Vend Vendor Name RemitY Payee Bank Check# Ckk Date Check Amount Sep
3268 LlEOERT SASS0Y WNDMO8E AP 154655 12/29/05 328.00
!aim# General Description
72918 WORKSHOP REGIST 01/11/06 A HA8D N, S KISHOP, M MUR[NO, M SAi& . H HFRM N0EZ, 8 KNIGHT, M PICAZO, P 8UZM N V YALVE8U . S
RUELAS
POI Stat Contract0 Immice#
lmm 0t
Gross Amount Discount Am' Discount Used Net Amount
0
0
32030 0.00 520.00
8L Distribution
&nam Amount
Work Ordm0 ACtCd Description
100-15-5330
32.00
0 KNIGHT 01/11/06
100-45'5330
64.00
A HARBIN, G BISHOP 81/11/06
100'72-5330
3230
M M0R NU 01/11/06
100-75-5330
32.00
H HERN HDEZ 01111100
108'75-5330
32.00
M JALAS 01/11/06
101-41-5530
32.00
V \0LYERD 01/11/06
10-43'5330'030
32.00
8 RUE AS 01/11/06
102-42-5340'014
32.00
P GUIUkN 01/11/06
101'48-5330'00
32.00
U PICA0 01/11106
-------------------------------------------
Vond# Vendor Ham
Remitt Payee
------------ _____________________________
Bank 0OCk# Ckk 08to Omok Amount Sep
7080 NICK ACEDU BUILDERS
5459 PLATINUM PLUS FOR BUSINESS
6P 154656 1212905 550.00
la1x0 General Description
172914 REFUND C&D DEPOSIT 3544 BALDWIN PARK BLVD
PU# Stat C8Qtrac # Imm|co0
Imm 0
Gross Amount Discount Amt Discount Used
Net Amount
0
12/29/05
550,00 0.00
550.00
SL Distribution
Gmoo Amount
Work 0rder8 ACtCd Description
SL Distribution
129-00-2075
550.00
C&D 3544 KALDWIN PK 0L;0
_________________________________________________________________
Vond# Vendor N80o
R80it# Payee
Dank Ch8Ck#
Chk Date Check &0OuDt Sep
864 P[R8'RBIKEMENT
12/3/Vi SVC
AP 154657
12/29/05 153'140,76
laim# General Description
72916 R[1I0]rIENT 025 FULL PART TIME EMPLY P/[: 12/3/05 SRN PER: 12-05'3
PO#Stat Contractl Invoice#
Invc Dt
Gross Amount Discount Amt
Discount Used
Net Amount
0
12/Z9�5
153.140.76
0.00
153,140.76
SL Distribution
Gross hmuuD
Work Order0 AotCd Description
N0-00-2205
50.89430
025 FULL/PT
P/E:
12/3/Vi SVC
12-05-3
100'00-2225
247.40
#25 FULL PT
P/E:
12/3V05 SVC
12-05'3
100-00-2305
______________________________________________________________
101.509.00
#25 FULL P/T P/E:
12/5/05 SYC
12-05-3
YenN# Vendor Name
Romii8 Payee
Bank
Check0 Cbk
Date Omuk Amount Soy
5459 PLATINUM PLUS FOR BUSINESS
AP
154658 12/29/05
566.57
la|0# General Description
72915 DECEMBER STATEMENT MARK KLING
`
�� �a CnU ra�� IDvoi�� lmo 0t Sroa Amount Discount Amt Discount Used Net kNAuDt
0 12/05/05 566.5/ 0.00 566.57
Gross Distribution �oS &mOon Work Urder# AotCd Description
100'23-5330 566.57 MARK KLIN8-DEC STMT
'5.AP Accounts Payable- Release 6.1.3 N*APR700
By SANDRA A (SANDRA)
ity of Baldwin Park Jan 10. 2006 11:17aw Page 4
ayment History, Bank AP Payment Dates 00/00/0000 to 99/99/9999 Check/ACH's 154650 to 154660 Payment Type Check
--------------------------------------------
Vend# Vendor K3mV Re01t# Payee Bank Cheo # [hk Date Check Amount Sep
5747 UNUM LIFE INS. CU OF AMERICA AP 15460 12/29/05 10,782.37
la1nN General Description
72917 JANUARY DISABILITY INS POLICY 10084208 UIY ON 5
PO# Stat Cmntrmt# Im0ice# Invc Dt @rmm Amount Discount Amt 0ionmmt Used Net 60nUDt
JAN 12/29/05 10.782.37 0.00 10,782.37
SL Distribution Gross Amount Work Order# AotCd Description
132'00-4703 10.78237 "NN 0l3AD INS
----------------------------------- _____________________________________________--------
V8Dd# Vendor Name Romit0 Payee Bank OmCk# Ghk [late Check Amount Sep
186 STATE OF CALIFORNIA EMPLOYMENT 0EY AP 1546611 01/04/80 3,060.02
!a!m# General Description
72920 ST TX DEP PPHI SPECIAL, P/E 12/31/05 81-WKLY
PO#Stat Contract# Immim# Imm Dt Gross Amount Discount Amt Discount Used Net Amount
A 81/04/06 3,069.02 's,001.02
GL Distribution QmoS Amount Work 0rdor# AdCd Description
100-00-2221 3.069.02 SPECIAL 0EP PP#01 P/E: 12/31105 0I-WKLY
_ -------------------------------------------- ------------------------------------------ ___________________
Vend# Vendor Name RoN1t0 Payee Bank Ch8uk# Ckk [late Check Amount Sep
7466 EDWARD A LULEYITCH AP 15460 01/05/06 3,911.25
laimf General Description
7207 SRV 12/412/05-12/29/05
PHStat Contract0Invoice# lnvc Dt Gross Amount Discount Amt Discount Used Net Amount
C8P1212 12/29/05 3.911.25 5,911.25
GL Distribution Gross Amount Work Order#ActGd Description
100-12-5030 2,581.42 S8Y 12/12/05'12/29/05
101-12'5050'00 312.90 SRV 12/12/05-12/29/05
101-12-5030'025 912.90 SRN 12/12/05-12/29/05
117-12-5030+050 158.45 SRV 12/12/05-12/29/85
10'12-5030'056 156.45 SRV 12/(2/h5'12/2y/05
1311-12'5030 301.13 SRV 12/12/05-12/29/05
----------------------------- ------------- ____________________ -------------------------------- ____________
Ven # Vendor Name Ro0|t# Payee Bank CheckO Qhk Date Check Amount Sop
06 STATE OF CALIFORNIA EMPLOYMENT BEV AP 15460 01/05/06 22.158.75
lam General Description
7219126 ST TX DEPOSIT PP# 1 E/E; 12/31/05 (MO.SEMI-MU& I-HKLY)
POI Stat Contract# Invoicel
Invc Dt
Gross Amount Discount Amt
Discount Used Net Amount
0
01/05/06
227158.75
22,158.75
8i Distribution
Srmm Amount
Work Drd8r4 ACt(d Description
100-00-2221
26.86
TX PPA01 P/E:
12/31/05
U0,JEM 'DI-WKlY
100-00-2221
565.02
TX PP#01 P/E/
12/31/05
UO,SEN .OI-WKlY
100-00-2221
---------- ------------------- ------------------
21'56637
________________________________________
TX PPN)i P/[-
12/31/05
U0,SEMI,Dl-WKLY
CS.&P Accounts Payable Release 6.1.3 N*APR1100 By SANDRA A (SANDRA)
ity of Baldwin Park Van 10. 2006 11:17a0 Page, 5
aymeDt History. Bank AP Payment Bates 00/00/0000 to 99/99/9999 fheok/ACH0'o 154650 to 154668 Payment Type Check
__________________________________________________________
Vond0 Vendor Nome Rom t# Payee Bank Check0 Chk Date Check Amount 38p
7009 0ORENE OARNY AP 154664 01/05/06 450.00
laim# General Description
72925 CASE# 190989 HECTOR GARAY PP101 PE: 111/111/05
PO8Stat Contract#Imm(ce# Invc Dt Gross Amount Discount Amt Discount Used Net Amount
0 01/05/0,5 450.00 450.00
SL Distribution 80ao Amount Work 0rd0r0 ACtCd Description
100-00-2231 450.00 H 0ARAY PPK014 PE 12/31/05
__________________________________________________________________
Vend# Vendor N8xm Romitt Payee Bank Ck8ck# Chk 08to Check Amount Sep
7463 ANNA HARRIS AP 154663 01/05/06 821.77
laim# General Description
72024 CASE#S8FSS61350 RAUL MART NEI PP01 P/[: 12/31/05
POtStat Contract0Invoicel ImmDt Gross Amount Discount Amt Discount Used Net Amount
0 01/05/06 821.77 821.77
SL Distribution SrOSS Amount Work Drder0 4utC4 Description
100-00-2231 688.00 H MA0OkEZ PP001 P/E: 12/31/0
100-00'2231 135.77 R M6RTlNE17 PP#01 P/E/ 12/31/05
------------------------------------------------------------------
Vond0 Vendor Name REmitf Payee Bank Ckomk# Chk Date Check Amount Sep
267 COURT TRUSTEE AP 154606 01/05/06 536.00
la1mi General Description
72923 CASE#GD 020433 ARMANDO LOPEZ PP# i P/E: 12/31/05
PO# Stat Contract#Invoicel Invc Dt Gross Amount Discount Amt Discount Used Net Amount
V 01/05/06 536.00 53�.00
SL Distribution Gross Amount Work Order0 ACt0 Description
100-00-2231 556.00 A LONZPP#01 P/E: 12/31/05
__________________________________________________________________
V8Od# Vendor WRN8 Rem1t0 Payee Bank Cheok0 Chk Date Check Amount Sep
4406 RIVERSIDE CO 0IST ATTORNEY AP 154667 01/001105 326.08
l8iml8eneral Description
72929 C68E# 404477N12 KEVIN KDRKMANPP0 1 P/E: 12/31/05 IN0000230028
PU0 St8t CoR rad0 Immicel Invc Dt Gross Amount Discount Amt Discount Used Not A0nUU
0 01/00/05 526.00 30.00
6L Distribution G[OSS Amount Work Ordor# ActCd Description
100-00-2231 326.00 K0RKMAN PP101 P/E: 12/31/05
-------------------------------------------------------------------
CS.AP Accounts Payable RoIuaoo 6.1.3 N*APR700 By SANDRA A (SANDRA)
am m �mm /:xxm r�� v
�y Of 0ol��iD Par ,
ymenC History. Bank AP Payment Bates 00/00/000 to 99Y99/998 Cherck/ACH#'S 154650 to 154668 Payment Type Check
________________________________________________________________________
ond# Vendor Name 8om t& Payee Bank Check0 Ckk Date Check Amount Sep
105 P.E.R.S. AT7N: HEALTH BENEFITS AP 04668 01/09/06 130,087.87
ai08 General Description
2930 PP125'0 INV8 K2006010555000
POI Stat CODtra:t0 I00ice# IDvC 0t Gross Amount UioouU8t kmt Discount Used Net Amount
H2006010505000 01/09/06 130,087.67 138,087.67
SL Distribution Gross Amount Work 0rd8r# kdCd Description
100-00'2204 39.56 PP025-0
100-00-2504 127,135.87 M25-26
100-00-2211 2.498.95 PP025-0
100-81-5140 413.28 PP125'0
����������������������������������������������������������----------------
By SANDRA A (SANDRA)
,,!,S,AP Accounts Payable Release 6.1.3 N*APR700
Gity of Baldwin Park Jan 10, 2006 11:17am Page 7
Payment History. Bank AP Payment Dates 00/00/0000 to 99/99/9999 Check/ACH#ls 154650 to 15960 Payment Type Check
Paid Checks: Blank pages purposely omitted: Non—issued "VOID" checks:
G'heck court 17 3 154650
Check Total 320,501.30 154660
PO Liquidation Total 704.45
Backup Withholding Total 0.00
Paid by ACH:
A C�
I Count 0
i
.A.CH Total 0.00
4 Liquidation Total 0.00
P
Backup Withholding Total
1 0100
lotal Payments:
-'ayment Count 17
-'ayment Total 128,501 H
Liquidation Total 704.45
'.ackup Withholding Total Ma
Joid Checks:
-.heck Count 0
,heck Total MO
Liquidation Total OM
'ackup Withholding Total 0,00
S.AP AcCOUIntS Payable Release 6.1,3 N*APR700 By SANDRA A (SANDRA)
JAN 1 + lildr
ITEM r
?RCITY Y OF BAL ®WIN PARK STAFF AFF REPOR
, CONSENT CALENDAR
BALDWIN
P A,R,K
TO: Mayor and City Council
w
FROM: Vijay Singhal, Chief Executive Officer
r
DATE: January 18, 2006
SUBJECT: Proposed Recognitions by the Mayor and City Council for the period
January 18, 2006 to January 31, 2006
.-
The purpose of this report is to seek approval of the City Council of requests for
plaques, proclamations and certificates; and to recap approved emergency requests.
REQUESTS /RECAP
As of January 18, 2006, the following requests have been received for the period from
January 18, 2006 to January 31, 2006
The following emergency requests for plaques and certificates were approved by the
Chief Executive Officer and were ordered and /or prepared:
Tlme /Date /Place of
Date Needed
Requested By
List of Honorees
Presentation
American Heart
Annual "Go Red" month in
7:00 pm, Wednesday,
Proclamation
Association
February
February 1, 2006
02/01/06
The following emergency requests for plaques and certificates were approved by the
Chief Executive Officer and were ordered and /or prepared:
It is recommended that the City Council approve the preparation and presentation of the
above plaques and certificates.
Prepared By: Sharon Thompson, Executive Secretary to CEO
Time /Date/Place of
Date Needed
Requested By
List of Honorees
Presentation
Mayor Pro Tern
Grace Castro, Executive
12:00 p.m., Thursday,
Plaque
Olivas
Director, Baldwin Park
January 5, 2006
1/5/06
Chamber of Commerce
Courtyard Marriott
It is recommended that the City Council approve the preparation and presentation of the
above plaques and certificates.
Prepared By: Sharon Thompson, Executive Secretary to CEO
CITY OF BALDWIN PARK
TREASURER'S REPORT
December 2005
ESTIMATED
INVESTMENT INTEREST PURCHASE MATURITY PAR CURRENT BOOK MARKET
DESCRIPTION RATE DATE DATE VALUE PRINCIPAL VALUE VALUE
Certificate of Deposit
4.00
12/01/05
02/01/06
100,000.00
100,000.00
100,000.00
100,000.00
Bonds
821,871.20
City Miscellaneous Cash
96,953.50
Redevelopment Agency
20,633.86
Housing Authority
140,954.61
Federal Home Loan Bank
2.270
12/20104
12/20/06
500,000.00
500,000.00
500,000.00
500,000.00
Federal Home Loan Mort.
3.004
12/02/04
07114/06
500,000.00
498,000.00
498,000.00
498,000.00
3.050
12115/04
06115/06
500,000.00
500,000.00
500,000.00
500,000.00
2.890
12/15/04
03/15/06
1,000,000.00
1,000,000.00
1,000,000.00
1,000,000.00
State of California Local
Agency Investment Fund
City
3.81
Varies
Varies
711,865.74
711,865.74
711,865.74
711,865.74
Redevelopment Agency
3.81
Varies
Varies
7,527,808.07
7,527,808.07
7,527,808.07
7,527,808.07
Housing Authority
3.81
Varies
Varies
690,996.83
690,996.83
690,996.83
690,996.83
Fiscal Agent Mutual Funds Varies Varies Varies 6,613,348.79 6,613,348.79
6,613,348.79 6,613,348.79
$ 18,144,019.43 $ 18,142,019.43
$ 18,142,019.43
Total Investments $
18,142,019.43
Cash
City General Checking
821,871.20
City Miscellaneous Cash
96,953.50
Redevelopment Agency
20,633.86
Housing Authority
140,954.61
Financing Authority
4,723.04
Total Cash
1,085,136.21
Total Cash and Investments $
19,227,155.64
Schedule of Cash and Investments includes all financial assets as included in the Comprehensive Annual Financial
Report.
There were no investment transactions made for the month of December, except for deposits /withdrawals made with the Local Agency
Investment Fund. Market value for the Federal National Mortgage Association was obtained from Bank of the West. Market
values for other investments approximate cost. The weighted average maturity of the investment portfolio is
3.103% months.
In compliance with the California Government Code Section 53646 et seq., I hereby certify that sufficient investment
liquidity and anticipated revenues are available to meet the City's expenditure requirements for the next six months
that all investments are in compliance to the City's Statement of Investment Policy.
Approved by:
Hennie E. Apodaca
Interim Finance Director
.w
TO:
C 2661,
1# s , ;
Honorable Mayor and City Counclmembers
Amy L. Harbin, City Planner
January 18, 2006
JAN 1 2006
ITEM o
REPORT STAFF
SUBJECT: Continued from December 21, 2005. Request for rejection and
denial without prejudice of the proposed transfer of the City's
existing cable franchise agreement from Adelphia Cable
Systems to Time Warner Cable Systems or Comcast Cable
Systems
The purpose of this report is to provide the City Council with an update on the City's
Cable Franchise Agreement with Adelphia Cable and request that the City Council
reject and deny the proposed transfer of our franchise agreement with Adelphia Cable
System to either Time Warner Cable System or Comcast Cable System.
On July 2, 2002, the City Council approved a nine -month extension with Adelphia Cable
to allow staff to evaluate alternatives as Adelphia Cable had filed for bankruptcy. This
extension expired in April 2003 and, in accordance with Federal Law, has been
progressing forward on a month -to -month basis since.
In late 2004, the City entered into an agreement with Telecommunications management
Corp. (TMC) to conduct a Franchise Compliance Audit, FCC Proof of Performance
Review and Physical Plant Safety Inspection of Adelphia's operations. Several areas
of concern were noted in those audit findings and in August, staff forwarded the audit
findings to Adelphia Cable requesting that the violations to the physical plant, which
posed substantial risks to the health and safety of the general public, be corrected
within ten (10) days. According to a letter dated October 4, 2005, Adelphia Cable
stated that they corrected all outstanding compliance issues regarding the physical
plant that were specifically noted in the audit. However, they didn't sweep the entire
physical plant, as the Breach Notice and Audit requested. Therefore, there may be
several outstanding material violations with the physical plant.
Request for Rejection and Denial of Franchise Agreement Transfer
January 18, 2006
Paqe 2
However, Bill Martecorena with Rutan and Tucker representing Baldwin Park and
several other cities in the southern California area in their cable franchise agreement
negotiations has been working diligently in attempting to access documents to review
from Time Warner Cable related to the FCC Forms 394 (Transfer Forms) which are
dated June 10, 2005. Only on October 31, 2005 was Mr. Martecorena granted
restricted access to the documents.
The primary request for the rejection and denial of the transfer is that Time Warner
and /or Comcast have failed or refused to provide the following information to Mr.
Martecorena related to the proposed transfer application:
1) Complete and accurate copies of relevant transactional documents;
and
2) Financial disclosure; and
3) How will the transfer potentially impact cable services; and
4) Potential impact of various agreements between the SEC and
Department of Justice and Time Warner.
Furthermore, a final item of note that has not been addressed is the integration and /or
absorption of the City's Century-TCI Partnership (currently administered by Adelphia)
into either Comcast Cable Systems or Time Warner Cable Systems.
Time Constraints Surrounding this Rejection and Denial
The original FCC Form 394 was submitted to the Franchising Authorities on June 10,
2005. This Form focuses on the legal, technical and financial qualifications of a
proposed transferee (e.g. Time Warner Cable and /or Comcast Cable). FCC rules allow
for a 120 day review period by Franchising Authorities. However, during Mr.
Martecorena's review of the FCC Form 394, he requested a significant amount of
additional information related to the FCC Form 394, which both Time Warner Cable and
Comcast Cable have been hesitant to provide. Due to the lack of availability of the
requested information, in late September, Mr. Martecorena requested an extension of
time under FCC Regulations to review and act upon the additional information provided
related to the FCC Form 394.
The current extension which was granted by Adelphia Cable on December 7, 2006, is
scheduled to expire on January 20, 2006. As of the date of the printing of this staff
report, staff has not received a request for an extension.
M Val K91 A I I I 11.111 • • .••. . . �• •• • •
C:\Amy\AMY\WORD \Reports \Council Reports\Adelphia Cable Franchise Denial of Transfer.doc
Request for Rejection and Denial of Franchise Agreement Transfer
January 18, 2006
Paqe 3
AND/OR CONTROL THEREOF, TO AN ENTITY CONTROLLED BY TIME WARNER
INC. OR COMCAST CABLE
ATTACHMENTS
*Attachment #1, Letter from Thomas E. Carlock, representing Adelphia Cable dated
December 7, 2005
*Attachment #2, Resolution 2005 -092
CAAmy\AMY\WORD \Reports \Council Reports\Adelphia Cable Franchise Denial of Transfer.doc
1 1
1`
44 a 9: 1 1111 1111 1111 1 1 11111 *WI II I i 1
C:\Amy\AMY\WORD \Reports \Council Reports\Adelphia Cable Franchise Denial of Transfer.doc
3100 Ocean Park Blvd., Suite 300
Santa Monica, CA 90405
Writer's Direc t: (310) 314-8922
Adelphima Fax: (310) 314-8979
Internet- ww\,%,.adeIphia.corn
E -mail: tom.carlock@adelphia.com
07 December 2005
Ms. Amy Harbin
Planning Dept,
City of Baldwin Park
14403 East Pacific Ave.
Baldwin Park, CA 91706
I am writing pertaining to an extension of the time regarding the 120-day transfer
application approval time period for the City of Baldwin Park to act on the FCC Form 394 dated
June 10, 2005.
Accordingly, without waiving any of our respective rights under federal law, please let
this letter serve as Adelphia's consent to an extension of time under FCC regulations for the
City of Baldwin Park to act on the FCC Form 394 to January 20, 2006.
Please feel free to contact me at my direct number 310-314-8921
cc: Ms. Kristy Hennessey
Mr. Phil Urbina
1 1
C:\Amy\AMY\WORD \Reports \Council Reports\Adelphia Cable Franchise Denial of Transfer.doc
RESOLUTION 2005 -092
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
BALDWIN PARK, CALIFORNIA REJECTING AND
DENYING WITHOUT PREJUDICE ONE OR MORE FCC
FORMS 394 RELATING TO THE TRANSFER OF THE
CABLE TELEVISION FRANCHISE, AND /OR CONTROL
THEREOF, TO AN ENTITY CONTROLLED BY TIME
WARNER INC. OR COMCAST CABLE
COMMUNICATIONS, INC.
WHEREAS, the City of Baldwin Park (the "City ") has received one or more FCC
Forms 394 (collectively, the "Application ") requesting consent of the City Council to the
assignment of the cable television franchise, or control thereof, (the "Franchise ")
granted to an entity currently controlled by Adelphia Communications Corporation
( "Adelphia ") (the "Franchisee "), to an entity (the "Proposed Transferee ") ultimately
controlled by Time Warner Inc. ( "TWI ") or Comcast Cable Communications, Inc.
( "Comcast ") (the "Transfer ");
WHEREAS, City has tendered numerous information requests to the parties
submitting the Application (the "Applicants ") relating to, among other things, the legal,
technical, and financial qualifications of the Proposed Transferee, and the potential
impact on rates and services; and
WHEREAS, the Applicants have failed or refused to timely provide requested
information in relation to, among other things, the following issues:
(1) Complete and accurate copies of the relevant transactional
documents, including all exhibits and schedules thereto, which are
necessary for the City to exercise its legislative authority in
reviewing the Transfer.'
The exhibits and schedules to the transactional documents were ultimately provided, subject
to a Non - Disclosure Agreement, on November 11, 2005. In order to obtain these documents,
representatives of the City had to spend literally months attempting to negotiate an appropriate
Non - Disclosure Agreement which complied with relevant state law and provided for the
disclosure of the requested documents upon terms and conditions such that they could be
utilized by the legislative body in terms of making a final decision. For months, the Applicants
proposed to provide disclosure upon terms and conditions which either failed to comply with
relevant state law, provided the documents upon a basis which rendered them unusable in the
deliberate process, or hinged their provision upon contortions of the attorney - client privilege
which exceeded its legitimate scope and potentially conflicted with public policy. As a result,
some of the requested documents, but certainly not all of them, were provided 140 days into the
process and without sufficient time to have them fully integrated into the due diligence analysis.
124/022700 -0003
661654.01 x01/03/06
(2) The provision of financial disclosure relating specifically to that
entity or entities which will possess a legally enforceable obligation
to comply with franchise obligations.2
(3) The provision of requested information relating to how the Transfer
will potentially impact cable services including, without limitation,
how will the operational changes be implemented in Southern
California, how call center operations will be handled, if and how
local offices will be merged or reorganized, how and when will local
construction and equipment needs be financed and prioritized, what
will be the rollout schedule for new services, and other issues which
relate directly to the day -to -day operations of the Proposed
Transferee.
(4) The potential impact of the Settlement Agreement between the
Securities and Exchange Commission ( "SEC ") and TWI and the
Deferred Prosecution Agreement between TWI and the Department
of Justice ( "DOX) upon Proposed Transferee's legal technical, and
financial qualifications and the continued viability of TWI and /or
TWC and their affiliates and subsidiaries; and
WHEREAS, the Applicants unreasonably delayed or refused or failed to provide
a material portion of the requested information; and
WHEREAS, the City has reviewed the FCC Form 394, all supplemental
information submitted in relation thereto, as well as information compiled in any
compliance audit, and the various Staff reports and related documents; and
WHEREAS, the following documents, without limitation, are deemed to be
incorporated into the Administrative Record relating hereto:
(1) Letter of William M. Marticorena to Sheila R. Willard and Gary Matz dated
June 29, 2005;
Relatively late into the due diligence process, the Applicants did offer to provide a written
guaranty of Time Warner Cable Inc. ( "TWIG "). The vast majority of the financial disclosure was
not provided at the TWIC level but rather at the Time Warner Inc. ( "TWI ") level, the ultimate
parent. At this point in time, no audited financial data has been provided specifically relating to
TWIC, although revenue and cost allocations are contained in the filings of TWI. The financial
condition of TWIC is rendered more problematic by the public announcements as to the
intended reorganization of TWIC through the spin off of the interests held by Comcast therein
and the intended IPO relating to that entity. Given the fact that the vast majority of the financial
disclosure has been provided at the TWI level and further given the fact that the corporate and
financial structure of TWIC appears to be a moving target at this point in time, it cannot be
safely concluded without additional analysis that TWIC constitutes a legally and financially
sufficient guarantor within the meaning of the applicable franchise ordinance and franchise
agreement.
124/022700 -0003
661654.01 a01/03/06 -2-
(2) Letter of Sheila R. Willard to William M. Marticorena dated July 12, 2005;
(3) Letter of Gary Matz to William M. Marticorena dated July 12, 2005;
(4) Letter of William M. Marticorena to Sheila R. Willard and Gary Matz dated
July 29, 2005;
(5) Letter of Gary Matz to William M. Marticorena dated August 12, 2005;
(6) Letter of Gary Matz to William M. Marticorena dated August 19, 2005;
(7) Letter of Gary Matz to William M. Marticorena dated August 19, 2005;
(8) Letter of William M. Marticorena to Sheila R. Willard and Gary Matz dated
August 22, 2005;
(9) Letter of William M. Marticorena to Sheila R. Willard and Gary Matz dated
August 25, 2005;
(10) Letter of Gary Matz to William M. Marticorena dated September 27, 2005;
(11) Letter of William M. Marticorena to Gary Matz dated September 27, 2005;
(12) Letter of Sheila R. Willard to William M. Marticorena dated September 30,
2005;
(13) Letter of Gary R. Matz to William M. Marticorena dated October 7, 2005;
(14) Letter of William M. Marticorena to Gary Matz dated October 12, 2005;
(15) Letter of Gary R. Matz to William M. Marticorena dated October 28, 2005;
(16) Letter of Gary Matz to William M. Marticorena dated November 14, 2005;
(17) Letter of Kristy Hennessey to Mary Morales dated November 15, 2005
(PCTA); and
(18) Final Report by Front Range Consulting, Inc. and Ashpaugh & Sculco,
CPAs, PLC, Regarding the Proposed Transfers of the Cable System from Adelphia
Communications Corporation and Comcast Cable Communications, Inc. to Time
Warner Cable.
WHEREAS, all of the information provided by the Applicants including, without
limitation, the Applications, the transactional documents, numerous SEC disclosure
documents, and other information provided to the City and retained in the files of the
City, its attorneys and /or consultants, is hereby incorporated by reference into the
Administrative Record and is available upon request;
124/022700 -0003
661654.01 a01 /03/06 -3-
WHEREAS, the Franchise Agreement has expired as of this date without
renewal, extension, or otherwise;
WHEREAS, the expiration of the Franchise Agreement was not a result of the
City stalling, frustrating, or otherwise interfering with the orderly process for renewal
under Section 546 of the Cable Communications Policy Act of 1984, as amended (the
"Cable Act ") to the detriment and prejudice of the Cable Operator;
WHEREAS, the Cable Operator possesses no statutory rights pursuant to
Section 537 of the Cable Act, or otherwise, given the expired and extinguished nature of
the Franchise Agreement (Comcast of California 1, Inc., et al. v. City of Walnut Creek,
California, Order Denying Plaintiffs' Motion for Preliminary Injunction, p.p.s. 10 -13
(N.D.Cal., Case No. C05 -00824 (WHA) (2005)); and
WHEREAS, the City has determined that it would not be in the public interest in
the exercise of its legislative discretion to approve the Transfer at this point in time and
has determined that it would be in the public interest to disapprove the Transfer without
prejudice subject to potential future and further consideration;
NOW, THEREFORE, the City Council of the City of Baldwin Park, does hereby
resolve as follows:
Section 1: The Application for approval of the Transfer is hereby rejected and
denied without prejudice for one, or more, or all of the following reasons:
A. Failure to timely provide "additional information required by the terms of
the Franchise Agreement or applicable state or local law ";
B. Failure to timely provide other requested additional information;
C. Failure on the part of the Applicant to timely cooperate with Staff, its
attorneys and consultants, in performing due diligence relating to the Application, the
legal, technical, and financial qualifications of the Proposed Transferee and /or the
impact of the transaction upon cable television rates and /or services;
D. Failure to timely cure any outstanding breach of franchise, as listed below,
prior to or as an express condition of approval of the transaction in a manner acceptable
to the City Manager:
1. Failure to comply with applicable Construction Codes.
E. Failure to demonstrate the legal, technical and financial qualifications of
the Transferee;
F. Failure to provide a written financial guarantee, acceptable as to form and
substance by the City Manager [County Administrative Officer], of the legal entity(s) for
which financial disclosure was provided in the Application of and /or additional filings;
and
124/022700 -0003
661654.01 x01/03/06 -4-
G. Filing FCC Forms 394 providing for potentially different Transferees.
H. The facial invalidity of the FCC Form 394 relating to the "Exchange
Transaction" based upon the lack of legal authority for Comcast to execute said form.
I. Due to the specific circumstances that exist in this matter, the
unconditional grant of a franchise transfer during the "renewal window ", or subsequent
to the expiration of the franchise, destroys or significantly impedes the proper operation
of the renewal provisions of Section 626 of the Cable Act and results in the inability of
the City to consider, for the purposes of renewal, the operating history of the existing
franchisee. The unconditional grant of a franchise transfer at this point in time during
the "renewal window ", as established by Section 626 of the Cable Act, circumvents its
legislative intent, terminates the ability of the City to consider, as envisioned by the
statute, the operating history of the existing franchisee, the existing franchisee's
compliance or lack thereof, with applicable law, and the legal, technical and financial
qualifications of the existing franchisee, which is the entity which filed the application for
renewal pursuant to Section 626 and thus invoked the protections and burdens of
Section 626 of the Cable Act.
J. The approval of the Transfer would not be in the public interest.
K. The expired and extinguished nature of the Franchise Agreement
eliminates any right on the part of the Applicants to require the approval of the Transfer
pursuant to Section 537 of the Cable Act, or otherwise, and the approval of a transfer of
an expired and extinguished franchise at this point in time based upon the facts set forth
in the record, without any commitment as to renewal, extension, or otherwise on the
part of the Applicants, will create a significant risk to the City based upon the uncertain
nature of the Cable Operator's continued occupancy of the public rights -of -way and
operation of the cable system. (See, Comcast of California I, Inc. v. City of Walnut
Creek, California, Id. at p. 14).
Section 2. The Recitals above are hereby declared to be true, accurate, and
correct.
Section 3. The Proposed Transferee has failed to demonstrate that it is a
legally, technically and financially qualified applicant for the following reasons:
(A) The burden of proof is upon the Proposed Transferee to
demonstrate its legal, technical, and financial qualifications to
assume control of the Franchise and the Franchisee.
(B) The Proposed Transferee has failed to present any business plan
or other documents indicating its short -term and long -term intent as
to how it will operate the cable television system and how it intends
to achieve an acceptable and reasonable return of and on its
investment.
124/022700 -0003
661654.01 a01/03/06 -5-
(C) The City has attempted to carefully review the financial
qualifications of the Proposed Transferee. In order to determine
the qualifications of a buyer for a cable television system, or a
series of cable television systems, it is necessary to not only review
the personal wealth, or lack thereof, of the individual or entity
assuming control of the franchise operations, but it is also
necessary to evaluate the economic reasonableness of the
transaction to determine whether the transaction will impose
unreasonable financial burdens upon the purchaser which could
result in material rate increases beyond that associated with normal
operation of a cable system, reduction in service quality based
upon cost cutting and expense minimalization, a combination
thereof, a premature sale of the system, or financial insolvency.
The lack of financial qualifications on the part of the Proposed
Transferee can impose significant and serious financial
consequences upon the City and its subscribers. The Proposed
Transferee has failed to provide the necessary information to
perform this critical analysis.
(D) The individual wealth of a Proposed Transferee, corporate or
personal, is only the starting point for the financial qualification
analysis. Obviously, if the Proposed Transferee does not possess
sufficient cash or borrowing capacity to acquire necessary
proceeds to close the transaction, financial unsuitability is
established. In addition, if the Proposed Transferee does not
possess sufficient financial resources, by way of cash or
reasonable and customary borrowing capacity, to operate the
system, meet current and long -term liabilities when due including,
but not limited to, capital expenditure requirements, financial
unsuitability is the logical conclusion. However, even in the case of
a Proposed Transferee which possesses sufficient cash to close
the transaction and operate the system consistent with franchise
requirements, there are circumstances under which a buyer or
Proposed Transferee may assume such financial obligations that
render it financially impossible for that buyer, absent massive
influxes of additional capital, to operate that cable television system
in a manner which pays current and long -term liabilities, covers
debt service, and provides a reasonable and adequate return of
and on equity investment.
(E) In this particular case, all, or substantially all, of the independently -
audited financial information provided by the Applicants in relation
to the Transfer has been provided at the TWI level. Information
relating to TWIC has, in whole or at least material part, constituted
allocations of parent -level information without independent
verification. In addition, the Applicants have informed the City, as
well as the financial community as a whole, that they intend to
124/022700 -0003
661654.01 a01/03/06 —6—
implement a material restructuring of TWIC which will involve,
based upon information provided by the Applicants, the redemption
of an eighteen percent (18 %) interest held by Comcast, through an
FCC - mandated trust and the creation of a new publicly- traded
company in which TWI will retain an approximate 84% ownership
interest and 90% of the voting interest. Little if any information has
been provided regarding the financial and legal structure of TWC
subsequent to its restructuring and thus significant uncertainty
exists as to whether or not any disclosure provided in relation to
TWIC, independently audited or otherwise, will survive the
restructuring. In addition, and without limitation, the Applicants
have refused to guaranty post- closing, certain indices of financial
health, or lack thereof, including the amount of debt, debt -to- equity
ratios, and other important financial indicators and predictors of
financial health. Thus, without said guarantees, information
provided "as of closing," although relevant, is not necessarily
indicative of long - range financial structuring, especially in light of
announced changes in the ownership and financial structure of
TWIC. The Applicants have further failed to provide meaningful
assurance to the City that the financial commitments made "as of
closing" will carry forward in the future.3 As a practical matter, it is
relatively commonplace over the past several years for major cable
operators to significantly increase their debt load or otherwise
modify "at closing conditions," as times moves on. For example,
and without limitation, the amount of debt ultimately incurred by
Adelphia, for both legitimate and allegedly illegitimate purposes,
significantly exceeded the debt as of the day of closing of the
transfer of the cable system to Adelphia.
(F) The existence of the SEC Settlement and the Deferred Prosecution
Agreement, and the circumstances surrounding its entry, create
serious doubts and concerns regarding the legal, financial and
technical qualifications of the Proposed Transferee, and /or
TWI /TWIC. First, it must be noted that the alleged commission of
illegal acts, including without limitation security fraud by Adelphia
cause, or materially contributed to, the Adelphia Bankruptcy and all
of the negative impacts upon subscribers and local franchising
authorities that flowed therefrom. The existence of the Deferred
Prosecution Agreement, and the circumstances surrounding its
entry, provides a strong and independent basis for rejection of the
Transfer absent the provision, which provision has not been
provided as of this date, of assurances that the type of acts and
omissions which allegedly occurred in relation to the SEC Litigation
and the Deferred Prosecution will not repeat on a going forward
3 In fact, the Applicants have even refused to guaranty that the Franchise will end up in the
hands of a TWI affiliate.
124/022700 -0003
661654.01 a01/03/06 —7—
basis and that the SEC Settlement Agreement and the Deferred
Prosecution Agreement themselves, and their implementation, will
not materially hinder the operational and financial status of TWI and
its subsidiaries.4 Any allegation that these settlements are
irrelevant to this Transfer based upon the fact that entry is between
TWI, the parent entity, and the SEC /DOJ is simply wrong for
several reasons. First, TWI possesses a controlling interest in both
TWIC and the Proposed Transferee and thus its operating history,
its management philosophy, its compliance, or lack thereof, with
applicable law, directly speaks to its going forward control of the
Proposed Transferee and this cable franchise and system.
Second, the Deferred Prosecution Agreement does directly involve
the operation of TWI's cable subsidiary since several of the
agreements which have been earmarked for review by the
Independent Monitor appointed by the DOJ involve programming
agreements relating to the cable division. The fact that these
programming agreements have been earmarked for further scrutiny
casts doubt upon the operating history of the cable division and
directly brings into analytical focus its prior compliance with
applicable law and its legal, financial and technical qualifications.
At a minimum, it is reasonable to defer approval of the Transfer
until the Independent Monitor has concluded its examination as to
whether or not TWI's cable division had committed prohibited
and /or unlawful acts in relation to programming and other contracts
directly related to the operation of its cable systems.
(G) The Applicants have failed to provide evidence denying the
existence of the various risks described above or demonstrating the
potential benefits to the City and subscribers which might justify the
incurrence of the risks described above.
4 The SEC Settlement Agreement and the Deferred Prosecution Agreement, as well as
ancillary agreements, do not contain any special admission of liability on the part of TWI or any
related entity. Thus, any conclusions must be based upon information inferred from the
existence of the SEC Settlement Agreement and the Deferred Prosecution Agreement, and its
ancillary documents, as well as the allegations and other information set forth in those
documents. Although guilt or innocence cannot be conclusively established by the legislative
body based upon the information contained in those documents, as well as other information
disclosed by TWI in its public filings, as well as extrinsic information contained in the trade and
popular press, it does appear reasonable to conclude that reasonable grounds existed to
believe that violations may have occurred. As a practical matter, rational business entities, such
as TWI, do not enter into settlement agreements involving the payment of over half a billion
dollars unless those entities believe that reasonable grounds exist in relation to a finding of
culpability. In addition, the City has recently learned that TWI has recently agreed to a $2.65
Billion settlement of certain private civil claims (In Re AOL Time Warner, Inc. Securities and
ERISA Litigation (MDL Docket 1500, 02 -Civ -5575 (SWK)).
124/022700 -0003
661654.01 a01/03/06 'g-
(H) Given the risks associated with the Transfer, as identified above, it
will not be in the public interest for the City to unconditionally
approve the Transfer at this time. This disapproval of the Transfer
contained herein is without prejudice and may be reconsidered by
the City Council when and if the Applicants are able to present
evidence demonstrating the Proposed Transferee's technical and
financial suitability and the lack of a negative impact on rates and /or
services.
(1) The Applicants have asked the City to determine the legal,
technical, and financial qualifications for the Transfer based
primarily upon the legal, technical, and financial qualifications of the
proposed parent entity. The Applicants have failed to present
sufficient information to the City sustaining, if otherwise sustainable,
a finding of legal, technical, and financial qualifications other than in
relation to TWI and /or TW IC. More specifically, and without
limitation, absent the financial qualifications of TWI as set forth in
the FCC Form 394, the Applicants could make no reasonable
argument whatsoever for a finding of financial qualification.
Notwithstanding the Applicants' reliance upon the financial
disclosure of the parent entity, the City has been informed by
authorized attorneys for the Applicants that no transfer agreement
can include TWI as an obligated party thereto.5 It is reasonable to
conclude that the proposed parent entity is not willing to commit the
assets set forth in the FCC Form 394 to franchise obligations and
thus the use of the financial qualifications of the proposed parent
entity is inappropriate since those assets are not pledged or
otherwise made legally available for the performance of franchise
obligations. Thus, based upon the express refusal of the proposed
parent entity to commit the financial resources identified in the FCC
Form 394, or any specific portion thereof, to performance of
franchise obligations, the Proposed Transferee is hereby found not
to possess the financial qualifications to control the Franchise.
Section 4. The Franchisee, which is currently controlled by Adelphia, has filed
an application for renewal pursuant to Section 626 of the Cable Act. By invoking the
benefits and burdens of the renewal provisions of the Cable Act, the Franchisee has
initiated a statutorily- created process whereby its operating history throughout the
franchise term constitutes the relevant operating history for the purposes of
consideration in the renewal process. Both the express language and legislative intent
of Section 626 of the Cable Act rewards those cable operators who have, throughout
their franchise term, complied with franchise requirements, complied with applicable
law, and possess the legal, technical, and financial qualifications for renewal. On the
other hand, the same statutory scheme potentially penalizes those franchisees who fail
5 A Guaranty from TWIC is certainly more substantial but not without its own problems as
explained above.
124/022700 -0003
661654.01 a01/03/06 -9-
to meet one or more of these statutory criteria. The unconditional grant of a transfer
potentially eliminates the ability of the City to consider the relevant operating history of
Adelphia and thus destroys or materially impedes the proper operation of the renewal
provisions of the Cable Act. The unconditional approval of the Transfer at this point in
time would, in essence, make a mockery of the renewal provisions of Section 626 and
encourage the going forward "laundering" of franchises and franchisees which have
failed to comply with the renewal criteria set forth in the Cable Act through late -term
sales. Although the Franchisee was not required to invoke the benefits and burdens of
Section 626 in seeking renewal of its franchise, having made that election, the statutory
scheme can only be properly implemented through a completion of that process with the
existing Franchisee.
Section 5. A transfer of the Franchise, transfer of actual or managerial control
of the Franchise, and /or transfer of control of the Franchisee, shall be deemed a
material breach of the Franchise.
Section 6. The decision pursuant to this Resolution shall, without further action
of the City Council, constitute an act of the Franchising Authority within the meaning of
47 C.F.R. § 76.502 and a "final decision" of the City Council within the meaning of
§§ 617(e) of the Cable Television Consumer Protection and Competition Act of 1992,
Pub. L.No. 103 -385, 106 Stat. 1477 (1992).
Section 7. This denial, disapproval, and rejection issued pursuant to the
authority of this Resolution shall be deemed "without prejudice" to the ability of the
Applicant to file another FCC Form 394 relating to the same or a different transaction.
However, nothing herein shall limit the authority of the City Council, or their written
designee, to reject any subsequent FCC Form 394 based upon the same grounds set
forth in the written notice of denial or such other grounds as might exist in relation to
said future FCC Form 394.
PASSED and ADOPTED by the City Council of the City of Baldwin Park at a
regular meeting held on the 18th day of January, 2006.
Manuel Lozano, Mayor
124/022700 -0003
661654.01 a01/03/06 _10_
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES SS
CITY OF BALDWIN PARK
I, Rosemary R. Ramirez, City Clerk of the City of Baldwin Park, California hereby
certify that the foregoing Resolution was duly adopted at a regular meeting of the City
Council of the City of Baldwin Park, held at the 18th day of January, 2006, by the
following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Rosemary R. Ramirez,
City Clerk of the City of Baldwin Park
124/022700 -0003
661654.01 a01 /03/06
�n
V A R . A
TO: Honorable Mayor and City Council Members
r.,
FROM: Georgina Knight, Personnel /Risk Manager
DATE: January 18, 2006
SUBJECT: Proposed Employment Agreement with Matthew Lamb, Director of
Community Development
The purpose of this report is to request Council approval of an employment agreement
for the position of Director of Community Development.
BACKGROUND
Following an extensive recruitment, the City Council has directed that an employment
agreement be finalized with Matthew Lamb, for service to the City as the Director of
Community Development. At its special meeting on December 22, 2005, the City
Council directed staff to extend an offer of employment to Mr. Lamb.
DISCUSSION
Attached is a proposed agreement with Matthew Lamb, to serve the City as the Director
of Community Development. The proposed agreement is similar in format to
employment agreements developed in the past for Executive positions, and provides
the following general terms:
1. Employee shall begin his employment on January 23, 2006.
2. Base annual compensation at the rate of $117,500 per year.
3. Future salary adjustments to be based on an annual performance evaluation,
with the first such evaluation taking place after six months of service.
4. The employee shall serve at the pleasure of the City Council.
5. If the employee is terminated while not in breach of the agreement or for reasons
other than malfeasance in office, employee shall receive a lump sum cash
payment equal to three (3) months aggregate base salary.
In addition, the Director of Community Development will receive the same benefits
similar to those provided to other employees in the City's Executive Team.
FISCAL IMPACT
The proposed salary and benefits are equal to the amount that was budgeted in the'
2005 -2006 City budget. The Director of Community Development position is allocated
among the following funds: Redevelopment Agency, Housing, CDBG and Air Quality
Improvement.
RECOMMENDATION
It is recommended that the City Council approve the proposed employment agreement
with Matthew Lamb, for services as the Director of Community Development, and
authorize its execution by the Mayor.
2
11 i i
THIS AGREEMENT is made and entered into by and between the City of Baldwin Park,
a general law city (hereinafter "City ") and Matthew Lamb, an individual (hereinafter
"Employee ").
Section 1. Duties
1. City agrees to employ Employee as the Director of Community Development with
the responsibility of managing, directing and monitoring the Community
Development Department to include planning, building and safety, code
enforcement, economic development, redevelopment and municipal housing
under the direction of the City Council and the Chief Executive Officer.
2. The Employee shall perform other related and necessary duties as required by
law and designated by the City Council, the Chief Executive Officer or the
governing boards of the Other Agencies (collectively, the "Governing Boards ").
4. The City Council, Chief Executive Officer and Director of Community
Development shall mutually establish performance goals and objectives to be
met by the Director of Community Development for each year of this agreement.
Said objectives shall be established as part of the evaluation process. The City
agrees to conduct a performance evaluation after six (6) months from the date of
this Agreement, and also upon each annual anniversary date of this Agreement.
5. The Director of Community Development hereby agrees to perform faithfully and
to the best of his abilities all the duties pertaining to said office as may be
required by the laws of the City of Baldwin Park and the State of California
relating to municipal corporations, and the rules and regulations of the City of
Baldwin Park, which are now in force or which may be put in force during the
term herein stated, and further shall perform such other tasks and duties as may
be designated by the City Council or the Governing Boards, and that the parties
hereto agree that said position as the Director of Community Development shall
be deemed and construed to be a full -time position.
1. The term of employment shall commence January 23, 2006, and shall continue
until terminated as set forth in this Agreement.
2. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right
of the City to terminate the service of the Employee as an "at- will" Employee.
3. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right
of the Employee to resign at any time from position with City provided Employee
gives to City thirty (30) day written notice prior to the effective date of Employee's
resignation, unless the parties otherwise agree.
Section 3. Compensation /Benefits
1 City agrees to pay as salary to the Employee during the period he is serving as
the Director of Community Development a base annual salary of $117,500 per
year. Said salary may be modified from time to time by an amendment to this
Agreement, or amended salary resolution approved and adopted by the City
Council, based upon the performance evaluation conducted pursuant to
Paragraph 4 of Section 1, above. The evaluation shall be conducted in
accordance with specific criteria jointly developed and finalized by the City and
Employee, and shall be used in determining whether there should be an increase
in salary.
2. Benefits:
a. The City shall provide to Employee all fringe benefits as are now, or as
may hereafter be given to all department heads of City. The present
benefits are detailed in Attachment "A" attached hereto, entitled "Executive
Employee Benefit Matrix".
• ROTIT., •
1. In the event Employee is not in breach of this Agreement, and is terminated by
the City Council for reasons other than malfeasance in office, City shall place
Employee a lump sum cash payment equal to three (3) months aggregate base
salary. In the event Employee is terminated because of malfeasance in office,
including, but not limited to, his conviction of any illegal act involving moral
turpitude or personal gain to him, City shall have no obligation to provide such
leave of absence but may terminate Employee immediately without any
severance pay.
1. The text herein shall constitute the entire Agreement between the parties.
2. This Agreement shall be effective as of January 18, 2006, or such later date as
Employee shall have successfully completed a pre-employment physical
examination.
3. This Agreement shall only be modified in writing by the parties.
By
Manuel Lozano
Mayor
Date
ATTEST:
Rosemary M. Ramirez
Deputy City Clerk
Matthew Lab'
Direct'br of 60�munity Development
Date 10),
AGREEMENT
THIS AGREEMENT is made and entered into by and between the City of Baldwin Park,
a general law city (hereinafter "City ") and Matthew Lamb, an individual (hereinafter
"Employee ").
Section 1. Duties
City agrees to employ Employee as the Director of Community Development with
the responsibility of managing, directing and monitoring the Community
Development Department to include planning, building and safety, code
enforcement, economic development, redevelopment and municipal housing
under the direction of the City Council and the Chief Executive Officer.
2, The Employee shall perform other related and necessary duties as required by
law and designated by the City Council, the Chief Executive Officer or the
governing boards of the Other Agencies (collectively, the "Governing Boards ").
4. The City Council, Chief Executive Officer and Director of Community
Development shall mutually establish performance goals and objectives to be
met by the Director of Community Development for each year of this agreement.
Said objectives shall be established as part of the evaluation process. The City
agrees to conduct a performance evaluation after six (6) months from the date of
this Agreement, and also upon each annual anniversary date of this Agreement.
5. The Director of Community Development hereby agrees to perform faithfully and
to the best of his abilities all the duties pertaining to said office as may be
required by the laws of the City of Baldwin Park and the State of California
relating to municipal corporations, and the rules and regulations of the City of
Baldwin Park, which are now in force or which may be put in force during the
term herein stated, and further shall perform such other tasks and duties as may
be designated by the City Council or the Governing Boards, and that the parties
hereto agree that said position as the Director of Community Development shall
be deemed and construed to be a full -time position.
The term of employment shall commence January 23, 2006, and shall continue
until terminated as set forth in this Agreement.
2. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right
of the City to terminate the service of the Employee as an "at- will" Employee.
3. Nothing in this Agreement shall prevent, limit or otherwise interfere with the right
of the Employee to resign at any time from position with City provided Employee
gives to City thirty (30) day written notice prior to the effective date of Employee's
resignation, unless the parties otherwise agree.
Section 3. Compensation /Benefits
1. City agrees to pay as salary to the Employee during the period he is serving as
the Director of Community Development a base annual salary of $117,500 per
year. Said salary may be modified from time to time by an amendment to this
Agreement, or amended salary resolution approved and adopted by the City
Council, based upon the performance evaluation conducted pursuant to
Paragraph 4 of Section 1, above. The evaluation shall be conducted in
accordance with specific criteria jointly developed and finalized by the City and
Employee, and shall be used in determining whether there should be an increase
in salary.
2. Benefits:
a. The City shall provide to Employee all fringe benefits as are now, or as
may hereafter be given to all department heads of City. The present
benefits are detailed in Attachment "A" attached hereto, entitled "Executive
Employee Benefit Matrix ".
Section 4. Termination and Severance Pay
1. In the event Employee is not in breach of this Agreement, and is terminated by
the City Council for reasons other than malfeasance in office, City shall place
Employee a lump sum cash payment equal to three (3) months aggregate base
salary. In the event Employee is terminated because of malfeasance in office,
including, but not limited to, his conviction of any illegal act involving moral
turpitude or personal gain to him, City shall have no obligation to provide such
leave of absence but may terminate Employee immediately without any
severance pay.
1. The text herein shall constitute the entire Agreement between the parties.
2. This Agreement shall be effective as of January 18, 2006, or such later date as
Employee shall have successfully completed a pre - employment physical
examination.
3. This Agreement shall only be modified in writing by the parties.
CITY OF BALDWIN PARK
By
Manuel Lozano
Mayor
Date
ATTEST:
Rosemary M. Ramirez
Deputy City Clerk
EMPLOYEE
B
Matt e 0 r -w La of Ct
Direc o munity Development
DatelLli." (o,, 2ax,
I
SUBJECT: APPROVAL OF FINAL TRACT MAP NO. 60959 at 4040 Stewart
Avenue (Developer Yi Hsiang Yeh from Arcadia)
This report requests that the City Council approve Final Tract Map No. 60959 pursuant to
the State Subdivision Map Act and Section 152.07 of the City of Baldwin Park Municipal
Code.
�T�Ze.T:�111�1�
The proposed tract map is for a fourteen ( 14) Condominium Unit Subdivision. This project
is located at 4040 Stewart Avenue. The project area is approximately 50,000 square feet
as part of this subdivision. The developer proposed to install all off site improvements
including curb and gutter, street lights, street trees, and sewer main line. The attached
map shows the proposed subdivision.
The developer for this project is Yi Hsiang Yeh from Arcadia. The developer has satisfied
all the conditions established for this project.
The final map and the following documents are in order and on file with the Engineering
Division.
1. A copy of the subdivision agreement executed by the sub - divider.
2. Final Tract Map No. 60959.
3. Performance bond in the amount of $27,000.00.
4. Labor and materials bond in the amount of $13,000.00.
The Engineering Division staff reviewed the final map and found it to be substantially the
same as it appeared on the tentative map including any approved alterations. The
tentative map conditionally approved by the Design Review Committee on October 20,
2003.
As a public street, the proposed new street will be included in the street sweeping program,
as well as, the City's Pavement Management Program System for maintenance purposes.
Staff recommends that the City Council:
1. Approve Final Tract Map No. 60959; and
2. Authorize the Mayor to execute the subdivision agreement.
.g. .,
Timothy Blair
Assistant Engineer
S N /TB /cw
ATTACHMENTS
1. Agreement
2. Final Tract Map. No. 60959
THIS AGREEMENT, made and entered into this day of
19_ , by and between the CITY OF BALDWIN PARK, a Municipal Corporation,
(hereinafter "CITY"), in the County of Los Angeles, State of California and
(hereinafter "Subdivider")
WITNESSETH
The parties hereto do agree as follows:
FIRST: That the Subdivider, for and in consideration of approval by City of
Baldwin Park and acceptance of any streets, easements or other property, offered for
dedication pursuant to the approval of said -iv ca � Map, hereby agrees at this
sole cost and expense, to furnish all equipment, material and labor necessary to perform
and complete within twelve (12) months from the date hereof, in a good and workmanlike
manner, the following work and improvements, to wit: r"
(hereinafter "improvements") and to pay for all materials, provisions, or other supplies
used in, upon, for or about the performance of the work contracted to be done, and for
any work and labor done thereon of any kind.
Said improvements shall be accomplished in conformity with applicable provisions
of the Baldwin Park Municipal Code, the plans, profiles, and specifications filed in the
office of the Director of Public Works, under the supervision of, and to the satisfaction of
the Director of Public Works. Said improvements, shall not be deemed complete until
approved and accepted by the City. The estimated cost of said work and improvements
is the sum of $ !±u, u
That Subdivider shall hold City, its officers, employees and agents free
and harmless from any claim, demand or judgement arising out of Subdivider's
performance pursuant to this Agreement.
THIRD: That it is further agreed that said Subdivider will at all times prior to the
acceptance of said improvements by said City, give good and adequate warning to the
traveling public of each and every dangerous condition caused by construction of said
improvements, and will take the steps necessary to protect the traveling public from such
defective or dangerous conditions. That it is understood and agreed that until the
acceptance of all the improvements to be constructed, each of said streets offered for
dedication shall be under the charge of said Subdivider for the purposes of this
Agreement and said Subdivider may close all or a portion of any street whenever it is
necessary to protect the traveling public during the construction of the improvements,
herein agreed to be constructed. The Subdivider hereby agrees to pay all costs for such
inspection of streets as may be established by Resolution of the City Council.
FOURTH: It is further agreed that said Subdivider has filed with the City a cash
deposit, surety bonds, or instruments of credit, in the sum of $ and
$ being respectively 100% of the estimated cost of said improvements,
as a guarantee for faithful performance pursuant to this Agreement and 50% of the
2
estimated cost of said improvements for securing payment to the contractor, his
subcontractors, and to persons furnishing labor, material and/or equipment to them for
the performance of said improvements.
If the Subdivider shall well and truly do and perform all of the covenants and
obligations of this Agreement on his part to be done and performed, at the times and
manner specified herein, then the said faithful performance security shall be released;
otherwise the City shall have the right to move against said security in such manner as
it deems lawful and appropriate and shall cause such covenants and obligations to be
performed using such security.
Any faithful performance security in the form of a cash deposit or instrument of
credit may be released in increments of no less than $1,000 upon partial compliance with
the covenants and obligations of this Agreement as determined by the Director of Public
Works and upon receipt of such a request, in writing, from the Subdivider. The security
payment to the contractor, his subcontractors and to persons furnishing labor, materials
or equipment may, six months after completion and acceptance of work, be reduced to
an amount not less than the total of all claims on which an action has been filed and
notice thereof given in writing, and if no such actions have been filed, the security may
be released in full.
FIFTH: Should the Subdivider default in his obligation to construct such
improvements, he further agrees to reimburse the City for the full and actual cost of such
improvements and the payment of all bills for labor and material, should it exceed the
amount of the security. Should litigation be reasonably necessary to collect such sum,
0
the Subdivider agrees to pay reasonable attorney's fees and court costs thereof. Should
there be an excess of funds from the security after such construction is accomplished,
the same shall be returned to the Subdivider.
SIXTH: It is further agreed by and between the parties hereto, that in the event
it is deemed necessary to extend the time of completion of the work contemplated to be
done under this Agreement, said extension shall be requested in writing and may be
granted by the City, which shall in no way affect the validity of this Agreement.
IN WITNESS WHEREOF, the parties hereto have affixed their names on the date
above first written.
G, � C_ �_L_ C_ By
Namp of Business
By --Q,7
- V_ __
Title k
4
it
the Subdivider agrees to pay reasonable attorney's fees and court costs thereof. Should
there be an excess of funds from the security after such construction is accomplished,
the same shall be returned to the Subdivider.
SIXTH: It is further agreed by and between the parties hereto, that in the event
it is deemed necessary to extend the time of completion of the work contemplated to be
done under this Agreement, said extension shall be requested in writing and may be
granted by the City, which shall in no way affect the validity of this Agreement.
IN WITNESS WHEREOF, the parties hereto have affixed their names on the date
above first written.
G, � C_ �_L_ C_ By
Namp of Business
By --Q,7
- V_ __
Title k
4
Total Area: 0.77 Acres
Number of lots: 1
SHEET 1 OF 2 SHEETS
IN THE CITY OF BALDWIN PARK
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA
BEING A SUBDIVISION OF A PORTION OF LOT 3 OF FRACTION SECTION 18, TOWNSHIP 1
SOUTH, RANGE 10 WEST, SBM, ACCORDING TO THE OFFICIAL PLAT OF SAID LAND
FOR CONDOMINIUM PURPOSES
OWNER'S STATEMENT
I HEREBY STATE THAT I AM THE OWNER OF OR AM INTERESTED IN THE LANDS
INCLUDED WITHIN THE SUBDIVISION SHOWN ON THIS MAP WITHIN THE DISTINCTIVE
BORDER LINES, AND I CONSENT TO THE PREPARATION AND FILING OF SAID MAP
AND SUBDIVISION, AND ALSO DEDICATE TO THE CITY OF BALDWIN PARK THE
EASEMENTS FOR SANITARY SEWERS, WATER, FIRE LANE, AND RELATED PURPOSES
AS DESIGNATED ON SAID MAP AND ALL USES INCIDENT THERETO, INCLUDING THE
RIGHT TO MAKE CONNECTIONS THEREWITH FROM ANY ADJOINING PROPERTIES.
0 k C. L.C., A CALIFORNIA LIMITED LIABILITY COMPANY (OWNER)
WE[ JU CHEN, PRESIDENT, O&C, LLC. OWNER
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
ON THIS BEFORE ME, PERSONALLY APPEARED WEI JU CHEN
PERSONALLY KNOWN TO ME (OR PROVED TO ME ON THE BASIS OF SATISFACTORY EVIDENCE) TO
BE THE PERSON WHOSE NAME IS SUBSCRIBED TO THE WITHIN INSTRUMENT AND ACKNOWLEDGED TO
ME THAT SHE EXECUTED THE SAME IN HER AUTHORIZED CAPACITIES, AND THAT BY HER
SIGNATURE ON THE INSTRUMENT THE PERSON, OR THE ENTITY UPON BEHALF OF WHICH THE
PERSON ACTED, EXECUTED THE INSTRUMENT.
NAME PRINTED _______________________
MY COMMISSION EXPIRES:____________ __
MY PRINCIPAL PLACE OF BUSINESS 1S IN
LOS ANGELES COUNTY.
FIRST COMMERCIAL BANK, BENEFICIARY, UNDER A DEED OF TRUST RECORDED
AUGUST 16, 2DO4 AS INSTRUMENT NO. 04- 2126339 OF OFFICIAL RECORDS,
CHRISTIANA LEE
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
JULIAN UU
ON THIS BEFORE ME. PERSONALLY APPEARED CHISTIANA
LEE AND JJUAN UU. PERSONALLY KNOWN TO ME (OR PROVED TO ME ON THE BASS OF
SAT7ACTORY EVIDENCE) TO BE THE PERSONS WHOSE NAMES ARE SUBSCRIBED TO THE WITHIN
INSTRUMENT AND ACKNOWLEDGED TO ME THAT THEY EXECUTED THE SAME M THEIR AUTHORIZED
CAPACITIES AND THAT BY THEIR SIGNATURES ON THE INSTRUMENT THE PERSONS, OR THE ENTITY
UPON BEHALF OF WHICH THE PERSONS ACTED, EXECUTED THE INSTRUMENT.
NAME PRINTED -----------------------
MY COMMISSION EXPIRES: ______ __ ______
MY PRINCIPAL PLACE OF BUSINESS IS IN
LOS ANGELES COUNTY.
SIGNATURE OMISSION NOTES:
PURSUANT TO THE PROVISION OF SECTION .66436 (0) (3) (A) OF THE SUBDIVISION MAP
ACT, THE FOLLOWING SIGNATURES HAVE BEEN OMITTED,
1. SOUTHERN CALIFORNIA GAS COMPANY OF CALIFORNIA, SUCCESSORS AND ASSIGNS,
EASEMENT HOLDER(S) BY OEEO(S) RECORDED APRIL 4, 1952 AS INSTRUMENT N0,
3130 IN BOOK 38641 PAGE 226 OF OFFICIAL RECORDS.
2. BALOYNN PARK COUNTY WATER DISTRICT, A COUNTY WATER DISTRICT, IT'S
SUCCESSORS AND ASSIGNS. EASEMENT HOUDER(S) BY DEED(S) RECORDED APRIL 18,
1952 AS INSTRUMENT NO. 3667 IN BOOK 38747 PAGE 182 OF OFFICIAL RECORDS.
3. SOUTHERN CALIFORNIA EDISON COMPANY, A CORPORATION, EASEMENT HOLDER(S) BY
DEED(S) RECORDED JUNE 13, 1952 AS INSTRUMENT NO. 2394 IN BOOK 39158, PAGE
424 OF OFFICIAL RECORDS.
BASIS OF BEARINGS NOTES:
THE BEARING NODT)1'2O "W OF THE CENTERLINE OF STEWART AVENUE AS SHOWN ON
TRACT NO. 45818 AS FILED IN BOOK 1125, PAGES 1 -2 OF MAPS, RECORDS OF LOS
ANGELES COUNTY, WAS USED AS THE BASIS OF BEARINGS OF THIS MAP.
SURVEYOR'S STATEMENT
THIS MAP WAS PREPARED BY ME OR UNDER MY DIRECTION AND IS BASED UPON A
FIELD SURVEY IN CONFORMANCE NTH THE REOUIREMENTS OF THE SUBDIVISION MAP
ACT AND LOCAL ORDINANCE AT THE REQUEST OF WEN TU CHEN ON APRIL 15, 2004,
1 HEREBY STATE THAT THIS FINAL MAP SUBSTANTIALLY CONFORMS TO THE
CONDITIONALLY APPROVED TENTATIVE MAP, THAT THE MONUMENTS OF THE
CHARACTER AND LOCATIONS SHOWN HEREON ARE IN PLACE, THAT SAID MONUMENTS
ARE SUFFICIENT TO ENABLE THE SURVEY TO BE RETRACED.
Pw� QµOFESS /pN9(
WILLIAM C. SHEN g'R274� ES: 6 -30 -2005
274 m
Ex(, &30.46/
avid
srgrR of cu.lc°Rac
CITY ENGINEER'S STATEMENT:
I HEREBY STATE THAT I HAVE EXAMINED THIS MAP CONSISTING OF Z SHEETS; THAT THE
SUBDIVISION SHORN HEREON IS SUBSTANTIALLY THE SAME AS IT APPEARED ON THE
TENTATIVE MAP AND ANY APPROVED ALTERATIONS THEREOF, THAT ALL PROVISIONS OF
THE SUBDIVISION MAP ACT AND OF ANY LOCAL ORDINANCES APPLICABLE AT THE TIME OF
APPROVAL OF THE TENTATIVE MAP HAVE BEEN COMPILED WITH,
SHAFIOUE NAIYER R.C.E. 21903 DATED
CITY ENGINEER
EXP. DATE 913012005
CITY TREASURER'S CERTIFICATE
I HEREBY CER77FY THAT ALL SPECIAL ASSESSMENTS LEVIED UNDER THE JURISDICTION OF
THE CITY OF BALDWIN PARK TO WHICH THE LAND INCLUDED IN THE WITHIN SUBDIVISION OR
ANY PART THEREOF IS SUBJECT, AND WHICH MAY BE PAID IN FULL, HAVE BEEN PAID IN
FULL.
DATE MARIA CONTRERAS, CITY OF BALDWIN PARK
CITY TREASURER
CITY CLERK'S CERTIFICATE:
I HEREBY CERTIFY THAT THIS MAP WAS PRESENTED FOR APPROVAL TO THE CITY
COUNCIL OF THE CITY OF BALDWIN PARK AT A REGULAR MEETING THEREOF HELD ON
THE _______DAY OF --------- 2004, AND THAT THEREUPON SAID COUNCIL DID.
BY AN ORDER DULY PASSED AND ENTERED, APPROVE SAID MAP AND DID ACCEPT ON
BEHALF OF THE CITY OF BALDWIN PARK THE EASEMENT FOR SANITARY SEWER AS
DEDICATED HEREON.
DATED THIS -------- DAY OF ----------- 2004
ROSEMARY RAMIREZ
CITY CLERK, CITY OF BALDWIN PARK
CITY PLANNER'S STATEMENT:
I HEREBY STATE THAT I HAVE EXAMINED THIS MAP AND THAT ALL PROVISIONS OF
APPLICABLE ZONING ORDINANCES OF THE CITY OF BALOWIN PARK HAVE BEEN COMPLIED
WITH.
VXT
PRINCIPAL PLANNER
CITY SURVEYOR'S STATEMENT
I HEREBY STATE THAT I HAVE EXAMINED THIS MAP CONSISTING OF __?__ SHEETS AND I
AM SATISFIED THAT SAID MAP IS TECHNICALLY CORRECT AND THAT ALL PROVISIONS OF THE
SUBDIVISION MAP ACT AND OF ANY LOCAL ORDINANCES APPLICABLE AT THE TIME OF
APPROVAL OF THE TENTATIVE MAP HAVE BEEN COMPILED WITH
PETER GAMBINO P.L.S. 7687 DATED
ACTING CITY SURVEYOR
EXP, DATE 72/31106
SCALE: 1 "= 30' SHEET 2 OF 2 SHEETS
Total Area: 0.77 Acres
Number of lots: 1 TRA C T NO. 60959
IN THE CITY OF BALDWIN PARK
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA
58958*40 'E: 161.19' (. & RI)
PALM AVENUE
- — - — - — - — - — - — - — - — - — -- q----
FD BOL r SPK IN LIEU OF C. S.
8 15 FEET WOE EASEMENT TO SALDWN PARK COUNTY
BRASS CAP MON PER R2
WATER DISTRICT FOR PUBLIC U77LI77ES AND INCIDENTAL
ACCEPTED AS C/t INTERSECTION
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
OF STEWART & PALM
38747, PACE 182 OF OFFICIAL RECORDS
R2 = TRACT NO. 16547, M.B. 390122-2J
RJ TRACT NO. 36332, M.B. 94019-10
61'
R4 = TRACT NO. 44123. M.B. 1059184-85
30' j 30'
R5 TRACT NO. 45818, M.B. 1125I1 -2
EDISON COMPANY FOR PUBLIC UTILITIES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
SET L&T
----------------
FD SPK & W RCE 30822 —/ �i�
IN LIEU SPK & W LS 2430
PER R4, ACCEPTED AS CIL INT.
OF PALM AVENUE AND LA RICA
AVENUE i
N`C,T A, ART
OF THIS SUBD�V�'-,AON
SLY LINE OF THE NLY THREE FIFTHS OF THAT
PART OF LOT 3 OF FRACTIONAL SECTION 18, T. IS,
RIOW. S.B.M. , AS DESCRIBED IN INSTRUMENT NO.
790, RECORDED JULY 14, 1950. ESTABLISHED
THROUGH FOUND MONUMENTS
N 89*58'27" E 662.11' (M & R4)
R 4
1�00, O/S N 8956'27" E 25530'
30.00"
FD L& I, RCE 18906 PER R4
376,41'
46.28' 300.13'
I'D 2 1 FLUSH PER
R4 TAG ILLEGABLE
WILY LINE OF THAT PART OF LOT 3
OF FRACTIONAL SECTION 18. T. ?S,
RIOW, S.B.M. , AS DESCRIBED IN
INSTRUMENT NO. 790, RECORDED
JULY 14, 1950. ESTABLISHED
THROUGH FOUND MONUMENTS
A PAi"0r
OF T"W,,,�
I
tt
vT
c�
FD L&T RCE 9070, PER R5 N89*57'40'E 285.70
ACCEPTED AS El PROD. NL Y LINE OF TRACT NO. 45818
z t
OF NL Y PROPERTY LINE OF M81 12511-2 & TRACT NO, M.
[R A N 1 0, 3 8 3 � 2
TRACT NO, 45815, Mg M814126, ESTAB. BY 0
mo < --�o
PROPOR TA 770M PER R5
6b• 112511-2 9 IJ z
30' 30'
0
'r R �1 0, 4 5<',", 'IM 6 1 12 5 2
I 33. R. rH S
rc
rc
o
FDL&r RCE 9070, PER R5 1�
ACCEPTED AS SLY PROD. OF AS jo)
El 1" Y PROPERTY LINE OF TRACT 44'
NO. 45818, MB 112511-2
8
FD NOTHING, SET NOTHING?
ESTAB. PER CITY OFBALDMN
WY PARK q 77E NO. 21
j�5) RAMONA PK
k'Z94.59 r,55,5, 10)
LINE DATA ARIN G LENGTH
11 NOO-01'20"W 3737'
12 N00- 01'20 "W 29.83'
LJ N89-5554"E 23.37'
L4 N89-5554E 2J.37'
FO NOTHING. SET NOTHING EASEMENT NOTES
ESTAB, PER CITY OF BALDMN A 16 FEET WIDE EASEMENT TO SOUTHERN CALIFORNIA GAS
PARK q 17E NO. 175 COMPANY FOR PUBLIC U77LI77ES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
J8641, PAGE 226 OF OFFICIAL RECORDS
8 15 FEET WOE EASEMENT TO SALDWN PARK COUNTY
RECORD DATA:
WATER DISTRICT FOR PUBLIC U77LI77ES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
R1 TRACT NO. 53, M.B. 14126
38747, PACE 182 OF OFFICIAL RECORDS
R2 = TRACT NO. 16547, M.B. 390122-2J
RJ TRACT NO. 36332, M.B. 94019-10
R4 = TRACT NO. 44123. M.B. 1059184-85
C 6 FEET WIDE EASEMENT TO SOUTHERN CALIFORNIA
R5 TRACT NO. 45818, M.B. 1125I1 -2
EDISON COMPANY FOR PUBLIC UTILITIES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
SET L&T
39158. PAGE 424 OF'OFFICIAL RECORDS. INDICATES THE BOUNDARY^ OF THE LAND
BEING SUBDIVIDED BY THIS MAP,
RCE 27460
ON CON CRETE
!2
FOOTING
2�—
N89*55'54"E 182,89'
---
— —
— — — — — — — — — — — — —
— - — 11
ZZZ
3:
DRIVEWAY, FIRE LANE, SEWER
j I
QC
H
AND U7XIY EASEMENT
10-
3
DEDICATED HEREON
-Z
N89*55'54*E 182.89'
p
8.
0
SET IL& T
R CE 27460
m
L4
I TC
ON CONCRETE
FOOTING
N89*57'40'E
255.70'
I'D 2 1 FLUSH PER
R4 TAG ILLEGABLE
WILY LINE OF THAT PART OF LOT 3
OF FRACTIONAL SECTION 18. T. ?S,
RIOW, S.B.M. , AS DESCRIBED IN
INSTRUMENT NO. 790, RECORDED
JULY 14, 1950. ESTABLISHED
THROUGH FOUND MONUMENTS
A PAi"0r
OF T"W,,,�
I
tt
vT
c�
FD L&T RCE 9070, PER R5 N89*57'40'E 285.70
ACCEPTED AS El PROD. NL Y LINE OF TRACT NO. 45818
z t
OF NL Y PROPERTY LINE OF M81 12511-2 & TRACT NO, M.
[R A N 1 0, 3 8 3 � 2
TRACT NO, 45815, Mg M814126, ESTAB. BY 0
mo < --�o
PROPOR TA 770M PER R5
6b• 112511-2 9 IJ z
30' 30'
0
'r R �1 0, 4 5<',", 'IM 6 1 12 5 2
I 33. R. rH S
rc
rc
o
FDL&r RCE 9070, PER R5 1�
ACCEPTED AS SLY PROD. OF AS jo)
El 1" Y PROPERTY LINE OF TRACT 44'
NO. 45818, MB 112511-2
8
FD NOTHING, SET NOTHING?
ESTAB. PER CITY OFBALDMN
WY PARK q 77E NO. 21
j�5) RAMONA PK
k'Z94.59 r,55,5, 10)
LINE DATA ARIN G LENGTH
11 NOO-01'20"W 3737'
12 N00- 01'20 "W 29.83'
LJ N89-5554"E 23.37'
L4 N89-5554E 2J.37'
FO NOTHING. SET NOTHING EASEMENT NOTES
ESTAB, PER CITY OF BALDMN A 16 FEET WIDE EASEMENT TO SOUTHERN CALIFORNIA GAS
PARK q 17E NO. 175 COMPANY FOR PUBLIC U77LI77ES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
J8641, PAGE 226 OF OFFICIAL RECORDS
8 15 FEET WOE EASEMENT TO SALDWN PARK COUNTY
RECORD DATA:
WATER DISTRICT FOR PUBLIC U77LI77ES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
R1 TRACT NO. 53, M.B. 14126
38747, PACE 182 OF OFFICIAL RECORDS
R2 = TRACT NO. 16547, M.B. 390122-2J
RJ TRACT NO. 36332, M.B. 94019-10
R4 = TRACT NO. 44123. M.B. 1059184-85
C 6 FEET WIDE EASEMENT TO SOUTHERN CALIFORNIA
R5 TRACT NO. 45818, M.B. 1125I1 -2
EDISON COMPANY FOR PUBLIC UTILITIES AND INCIDENTAL
PURPOSES AS DISCLOSED BY DEED RECORDED IN BOOK
39158. PAGE 424 OF'OFFICIAL RECORDS. INDICATES THE BOUNDARY^ OF THE LAND
BEING SUBDIVIDED BY THIS MAP,
TO: Honorable Mayor and Members of the City Council
i
FROM: Hennie E. Apodaca, Interim Finance Director
DATE: January 18, 2006
SUBJECT: Franchise and Utility Tax Audit Update
.9
The purpose of this report is to update council on the status of the Franchise and Utility
Tax Audit.
During the budget study sessions, council directed staff to embark on a RFP (Request For
Proposals) for Franchise and Utility User Tax audit services.
During this period of time staff has conducted several surveys to obtain companies that
perform this type of audits and has recently put a list together of five specialized
companies that will be asked to submit their proposals. A staff report is scheduled to be
submitted for the release of the RFP during the second meeting of February of 2006.
Receive and file this report
FRANCHISE AND UUT AUDITS
Vendors List
MORELAND &ASSOCIATES, INC
Michael Moreland
1201 Dove Street, Suite 680
Newport Beach, CA 92660
MBIA MUNISERVICES CO.
Patricia Nunn
605 18 th Street
Huntington Beach, CA 92648
THE STRATEGIC GROUP
Jaime Rojas
1640 North Spring Street
Los Angeles, CA 90012
THE HDL COMPANIES
Nancy Hicks
1340 Valley Vista Drive #200
Diamond Bar, CA 91765
MAS Municipal Auditing Services
Kevin L. Weigant
P.O. Box 2398
Clovis, CA 93613
CITY COUNCIL AGENDA
v
LLLLLL/
•
W
TO: Honorable Mayor and Members of the City Council
FROM: Hennie E. Apodaca, Interim Finance Director
DATE: January 18, 2006
SUBJECT: Business License Audit Update
..6
To inform council on the status of the Business License discovery audit for the first months
of implementation.
[ # T_T A:
Business License Audit Update
January 18, 2006
Page #2
The second mailing of 199 notices was on December 09, 2005. Once the most efficient
process for our city has been established the number and volume of mailing will increase.
Revenue collected to date from the invoices sent to the unlicensed businesses is
$1,128.00, which represents 5 business licenses. There is an outstanding revenue amount
of $4,655 based on number of invoices prepared and mailed by MBIA.
N,tKQT"fhq =[Nffal 11 IQ ,I
Receive and file this report
AAnimm As
Ewe
MBIA MuniServices Company
Local Tax Compliance Division
Client Activity Report
Project to Date
Period Ending December 31, 2005
City of Baldwin Park, CA
Page 2
Activity
Taxpayers Notified First Notice ............................. ............................399
Taxpayers Notified Second Notice ...................... ..............................0
Taxpayers Notified Final Notice .......................... ..............................0
Taxpayers Identified' ............... ............................... ...........................1460
Phone Consultations ............................................. .............................72
Businesses Exempt from Registration ................. ..............................5
Businesses Compliant Prior to Notification ......... ..............................8
Return Mail, No new Location Found ................. ..............................1
Accounts Processed
Total Applications Invoiced ...................... .............................27
Accounts Paid in Full ............................... ..............................5
1/11/2006
Revenue Identified ........................ ............................... ......................$5,783.00
Revenue Collected ........................ ............................... ......................$1,128.00
Revenue Outstanding .................... ............................... ......................$4,655.00
Statistical Information
r
Response Percentage of Those Notified
v
2%1% 7%
Taxpayers Non - Responsive
Applications Received
O Exempt
0 Compliant Prior to Audit
■ Return Mail
' These taxpayers have been identified by MMC, but have not been notified to date. MMC's mailing procedures are in place
to ensure that all taxpayers are notified in a timely manner without causing an undue burden on City staff in additional
processing.
30
25
20
15
10
5
0
Page 3 1/11/2006
Businesses Identified by Total Tax Due
$0 - $500 M $500 - $1,500 OOver $1,500
Mailing Notification History
Type of Mailing
Date
Mailed
Total Notifications Sent
General Business 1St Notice
11/17/2005
200
General Business 1St Notice
12/09/2005
199
Updates
❑ MMC has begun the general notification process with the City of Baldwin Park in regards to
delinquent business license identifications. MMC was requested to wait until mid- November
to begin its test portion of the notifications. There were no issues recognized, and MMC had
moved into the next phase in early December, but delayed any future mailings until after the
first of the year so as to avoid notifying businesses around the holidays.
• MMC will be entering into the full notification process as of the first part of January. The
City should recognize a general increase of all areas of activity and revenue over the next
couple of months.
• To ensure MMC is able to work at full capacity within the City of Baldwin Park, we request
regular monthly updates of the City registry file. MMC utilizes this information to compare
against all internal identification systems to ensure that we are not notifying already
registered businesses.
❑ MMC looks forward to a successful project and relationship with the City of Baldwin Park.
BALDWIN
P - A R - K
10
WRO-M
I
*#= 0-1 ZMA
Honorable Mayor and Council
Amy L. Harbin, City Planner
January 18, 2006
JAN 18 2006
ITE�NO.
SUBJECT: Public Hearing to consider a conditional use permit
modification to allow the secondary use of a financial services
kiosk (Check Cashing/Wire Transfer Facility) inside an existing
fast food (McDonald's) restaurant (Case No.: CP-301
modification; Location: 14008 Ramona Boulevard).
WEU�
This report considers City Council determination of an application for a modification of a
conditional use permit to allow the installation of the secondary use of a financial
services (check cashing/wire transfer) kiosk inside an existing fast food (McDonald's)
restaurant, The CUP was considered and approved by the Planning Commission, but
subsequently called to the City Council for review pursuant to Section 153.689 of the
City's Municipal Code. Under that section, the City Council hears the matter de nova,
i.e., as though no Planning Commission decision had been made, and makes its
determination under the applicable standards established by the Baldwin Park Municipal
Code, which are discussed more fully below.
Staff has determined that this case is exempt from the provisions of the California
Environmental Quality Act (CEQA) under Article 19, Section 15301 (Class 1 — Existing
Facilities) of the CEQA Guidelines. No further analysis is required.
A Notice of Public Hearing was published in the San Gabriel Valley Tribune on January
6, 2006. Public Hearing Notices were mailed to owners of property within 300 feet of
the subject property on January 5, 2006.
The subject property is located at the southeast corner of Ramona Boulevard and
Stewart Avenue and is currently improved with a McDonald's restaurant. The site is
approximately rectangular in shape and contains 33,106 square feet, or 0.76 acres.
The General Plan land use designation for the site is General Commercial. Most of the
CP -301 mod
14008 Ramona Boulevard
January 18, 2006
Page 2
site is zoned C -2 (General Commercial), but the southwest corner of the site, currently
used as a parking lot, is zoned R -G (Residential Garden). This zoning will change to C-
2, General Commercial, when the zoning code update is adopted by the City Council,
which in turn will be consistent with the updated General Plan.
The zoning of the property immediately east of the subject property will also change
when the City Council adopts the zoning code update. Currently, that property is zoned
C -2, General Commercial, but after the update it will be zoned R -G, consistent with the
adopted General Plan designation. As a result, the subject property will be bordered on
both the south and east by residential uses. The table below provides a summary of the
current and future zoning designations and current land uses that surround the subject
property.
TABLE 1
SURROUNDING LAND USES AND ZONING
Atl"acent Property
Current Zoning
Future Zoning
Current PrQperty Property Use
North
C -2
C -2
Retail /Commercial Center
South
R -G
R -G
Multi - Family Residential
East
C -2
R -G
Retail /Commercial
West
C -2
C -2
Vallarta's Market
In 1969, McDonald's obtained a building permit to improve the site with a fast food
restaurant. Since then, the property has had several entitlement hearings before the
Planning Commission. The following table provides a summary of these hearings.
Case Number
Request
Action
ZV -293
A zone variance to allow fewer than the
Approved by the
minimum on -site parking spaces, a solid
Planning Commission
non - illuminated wall logo on both sides of
on July 10, 1974.
the building, a roof overhang to encroach
four feet into the setback area, and partial
screening of the mechanical equipment on
the roof
CP -301
A conditional use permit to allow the
Approved by the
addition of a drive -thru and the creation of
Planning Commission
an adjacent parking lot in a residential zone
on November 12,
1980.
CP -301 mod
14008 Ramona Boulevard
January 18, 2006
Page 3
Case Number
Request
Action
CP -301
A modification of CP -301 to allow the
(modification)
expansion of the existing drive -thru and the
addition of an indoor play area.
Both entitlements were
approved by the
ZV -625
A request for a zone variance to permit less
Planning Commission
than the required number of parking spaces
on November 8, 1995.
as a result of a playland addition and drive -
thru modification.
CP -301
A modification of CP -301 to allow the
Approved by the
(modification)
alteration of the existing drive -thru.
Planning Commission
on December 11,
2002.
AA 02 -04
A request for an administrative adjustment
Approved by the
to allow a 10% decrease in the total
Zoning Administrator
number of parking stalls required as a
on December 12,
result of the proposed drive -thru
2002.
addition /modification.
DISCUSSION
Subject Request
As stated previously, the applicant proposes to construct and operate a financial
services kiosk inside the existing McDonald's restaurant located at 14008 Ramona
Boulevard. The 115 square foot kiosk, entirely contained within the restaurant, will be
constructed between the existing play area and the existing dining area, near the front
door of the restaurant. No dining tables or seats will be removed as a part of this
proposal. Although the kiosk will encompass 115 square feet of floor area, its maximum
occupant load is four (4) individuals. However, there are only two workstations located
within the kiosk, and Exhibit `A' indicates that there is a two - person maximum within the
kiosk. The kiosk will share many structural features with similar check- cashing /wire
transfer establishments throughout the city, such as bullet- resistant glass and security
cameras. The applicant is not proposing any alterations to the exterior of the restaurant
building as part of this project.
The original application package submitted by Frontera International Financial Services
includes a letter by McDonald's USA, LLC to the City, stating that this project is part of a
test program, jointly run by McDonald's and Frontera International Financial Services.
According to their letter (Reference Attachment #3) Frontera International Financial
Services will operate financial services kiosks inside McDonald's restaurants in "un-
banked, low income and most often ethnic - minority communities ". This particular
restaurant location in Baldwin Park is part of an extended test program. Furthermore,
the applicant states that the new use will not result in additional armored truck traffic
because the armored truck services for the two uses will be integrated. The proposed
CP -301 mod
14008 Ramona Boulevard
January 18, 2006
Page 4
hours of operation for the financial services kiosk are 10AM to 6PM, Monday through
Saturday. The kiosk will be closed on Sunday.
Information from Other Existing Locations
Frontera International Financial Services currently operates financial services kiosks in
four (4) other communities. As part of staff's research, staff attempted to make contact
with the following cities.
1) City of Indio; 81 -544 Highway 111. According to Indio's Planning staff,
there are safety and parking concerns. It is unclear whether the use is
operational.
2) City of Oceanside; 137 Canyon Drive. The business license
department staff confirmed that there is a financial kiosk at 137
Canyon Drive. The Planning Division staff was unfamiliar with any
such financial services kiosk within an existing McDonald's in
Oceanside.
3) City of San Marcos; 120 S. Rancho Santa Fe. Staff did not receive a
response.
4) City of San Ysidro; 727 San Ysidro Boulevard. The Development
Services Department stated that they view this use as an accessory
use to the McDonald's Restaurant because it is located entirely within
the confines of the existing restaurant and takes up less than 25% of
the existing floor area. No entitlements were required.
Unfortunately due to time constraints, staff was unable to visit the subject sites and
obtain personal knowledge of the businesses. Nonetheless, Staff was able to obtain
information about the above locations via McDonald's website and found that only two
(2) of the four (4) locations noted by Frontera International Financial Services as having
financial services kiosks also have play areas for children (Indio and San Marcos).
Parking Concerns
A concern of both the Planning Commissioners and staff was the existing parking
located on site. As noted in Table #2, both a zone variance and an administrative
adjustment were obtained by McDonalds to have less than the minimum required
parking on -site. This was to accommodate the expanded indoor playground area and
the reconfiguration of the drive -thru, both of which were completed within the past ten
(10) years. The site therefore presently has the lowest possible number of parking
spaces required for it to be legal.
CP -301 mod
14008 Ramona Boulevard
January 18, 2006
Page 5
Staff researched this issue and determined that although the restaurant is now parked
at its minimum, one (1) additional space would be required for the proposed financial
services kiosk. This parking space could be accommodated in the lushly landscaped
area to the east of the drive -thru queuing lane. However, that landscaping was required
as part of the Exhibit "A" (landscaping plan) that was approved pursuant to the
conditions of approval for the Administrative Adjustment, (AA 02 -04). This landscaping
requirement would be violated should the additional space which is needed be installed;
thus a modification to the landscaping plan would need to be separately approved,
should the review of this conditional use permit be approved.
Findings of Fact
Since staff has had additional time to review, study, and analyze the proposed project in
more detail, staff is of the opinion that the project does not meet three (3) of the four (4)
required findings of fact as required by Section 153.642 of the City's Municipal Code.
The site is not adequate in size for the proposed use.
The interior of the McDonalds Restaurant is adequate to accommodate the financial
services kiosk, but, as discussed above, the site it is located on is not adequate in size
and shape to accommodate the additional parking space required for the additional use
without the removal of landscaping previously required to legalize the current parking
amounts. Although achieved using the legal mechanisms of variances and
administrative adjustments, the site presently contains less parking spaces than are
required by the Municipal Code. One requirement imposed upon that reduction in
parking was landscaping, which would have to be removed to accommodate the parking
required for the proposed financial services kiosk.
The proposed use will have an adverse effect on adjacent uses.
According to McDonald's Corporate website, they advocate responsibility in striving to
do what is right, being a good neighbor in the community and integrating social and
environmental priorities into their restaurants ... (Reference Attachment #4) McDonald's
restaurants are typically synonymous with a safe, family- oriented environment. Families
with small children are encouraged to patronize McDonalds restaurants as evidenced
by not only their menu selections (Happy Meals), but also at most locations a large
children's play area.
A check cashing /wire transfer business does not share the characteristics of a safe,
family- oriented environment and is not compatible with such a use. As recognized by
the applicant itself through its providing the proposed financial services kiosk with bullet -
resistant glass, security alarms, and other physical structures and devices intended to
address the possibility of crime, there is an increased risk associated with the proposed
business which is not inherent in any restaurant business, much less one catering to
children.
CP-301 mod
14008 Ramona Boulevard
January 18, 2006
Paae 6
Check-cashing/wire transfer facilities pose potential security and safety issues not only
to employees and the patrons (including small children) of a restaurant, but also the
surrounding uses. The relatively large amounts of cash obtained by patrons of check
cashing facilities are attractive targets, as are the facilities themselves which are known
to and must maintain large quantities of cash. The potential for this known adverse
impact is exacerbated by the facts that this site is adjacent to existing residential uses
on the south, and that residential uses have been established in the General Plan as
appropriate for the property to the east. Even though the employees inside the check-
cashing kiosk might be protected by bullet-resistant glass, employees and patrons of
the McDonald's restaurant and individuals outside and adjacent to the restaurant would
have no such protection. In addition, check-cashing/wire transfer facilities are lacking in
security measures when compared to charter banks. Moreover, the location of the
proposed kiosk creates a perceived barrier between the children's play area and the
rest of the restaurant and has other characteristics that are incompatible with a
perceived safe, family-oriented restaurant, such as bullet-resistant glass, security
cameras, and flashing lights (in case of an emergency).
The proposed use is not in conformance with the City's General Plan.
The proposed secondary use of a check cashing/wire transfer facility contained within a
fast food restaurant conflicts with the City's General Plan. Goal 2.0 of the General Plan
Land Use Element is: "Accommodate new development that is compatible with and
complements existing conforming land uses." As discussed above, the proposed check
cashing/wire transfer facility does not share the characteristics of a safe, family-oriented
restaurant and is not compatible with the existing McDonalds Restaurant. The
increased potential for patron robbery immediately outside the Restaurant is not
compatible with the adjacent residential uses. In addition, the purported need for a
check-cashing/wire transfer facility in this location is not consistent with the existing
conforming land uses, which include two (2) different financial institutions, both with
ATMs, within 4 blocks of this McDonalds. The placement of kiosk-type check-
cashing/wire transfer businesses in areas where other financial institutions are already
prevalent could undermine the City's efforts to improve the urban design and function of
the area at issue and adjacent downtown area.
CP-301 mod
14008 Ramona Boulevard
January 18, 2006
Page 7
FINDINGS OF FACT
1) That the site is not adequate in size and shape to accommodate the proposed
financial services kiosk in that although no exterior modification or additional,
new floor area is proposed nor requested by the Applicant Frontera International
Financial Services, an additional parking space is required to accommodate the
use, but the site already contains less parking spaces than are otherwise
required by law, obtained through variances and an Administrative Adjustment
which required landscaping which would be adversely affected should a new
parking space need to be created; and
2) The site has sufficient access to streets and highways adequate in width and
pavement to carry the quantity and quality of traffic generated by the proposed
use in that the project has direct access to Ramona Boulevard and Stewart
Avenue which can carry large traffic capacities. The estimated number of trips
based upon conservative estimations for the additional new use would be within
the capacity of the adjacent streets; and
3) The proposed use of the McDonalds Restaurant with a secondary use of a
check-cashing/wire transfer business will have an adverse effect upon adjacent
uses in that the proposed facility does not share the same characteristics of a
safe, family-oriented environment that is synonymous with McDonald's
Restaurants. Furthermore, the employees and patrons of the restaurant as well
as the surrounding properties, including residences, would not have the
protection (e.g. bullet-resistant glass, security cameras and flashing lights (for
emergencies)) that encompass the check-cashing kiosk; and
4) The proposed use of the property is not in conformance with the Baldwin Park
General Plan. Goal 2.0 of the Land Use Element states that new development
should be compatible and complement the existing, conforming land uses. As
stated in Finding #3 above, a check-cashing/wire transfer facility does not share
the same characteristics as a safe, family-oriented restaurant, nor is it consistent
with adjacent residential uses. Furthermore, the use of a kiosk style check-
cashing/wire transfer facility is inconsistent with the existing uses in the area
which include many different financial institutions, thus undermining the City's
efforts to improve the urban design and function of the downtown area.
ATTACHMENTS
*Attachment #1 – Exhibit "A", dated January 18, 2006
*Attachment #2 – Vicinity Map
*Attachment #3 – Letter from Jill Cameron, West Division General Counsel McDonald's
*Attachment #4 – Responsibility at McDonald's—from McDonald's website
*Attachment #5 – Application Forms and Statements
*Attad1hment #6 – Resolution of Denial
w RR t-, mm -b
r" tx �3UUVM SNOAJ JLNENHAOHdVil INVNBJL
o splaunqaw
... .... ...
-- --- -- ------
FZ
Li
al
Ism
... .... ...
-- --- -- ------
FZ
MAM MAIS VH*M SMWt
Bub 39iB
ml AvaRwisk
-------- — —
N3HHVM SNOAJ INB,WgAOVdNl JLNVNill 1-7,
fr
i11
�:
� � J
405
14051
14045
14021
��,OND1� 210
14056 14102
V,042 14046
14032 14038
3350
3355
3346
3@40
,T)36
s
1 3343
N
CASE NO.: CP-301
ADDRESS: 14008 Ramona Blvd.
DATE: January 18, 2006 Not
Sca
To Whom It May Concern
City of Baldwin Park
To Whom It May Concern:
McDonald's Corporation
West Division
11682 El Camino Real, Suite 400
San Diego, CA 92130
Phone: (858) 792 -5370
Fax: (858) 792 -4629
September, 2, 2005
').
OF BALDWIN PARK
PLANNING DIVISION
RE: Request for Permit for Frontera kiosk
Pursuant to your request, this letter shall serve as an assurance to the City of Baldwin
Park that McDonald's USA, LLC ( "McDonald's) has, on September 15, 2003, entered
into an agreement for a test program with Frontera International Financial Services
( "Frontera ") to operate a financial services kiosk in our restaurant(s).
The business targets the un- banked, low income, and most often ethnic minogrii
communities, by providing a low cost and convenient option to cash payroll checks and
wire transfer money. On May 13, 2005, the test program was expanded to 10 additional
locations. McDonald's restaurant location in Baldwin Park is being considered by
McDonald's as part of the extended test program.
Very truly yours,
MCDoNALD'S USA, LLC
Jill A. Cameron
West Division General Counsel
US Legal Department
cc: Steve Evans (West Division)
1 � /
� � � i � � � �
Responsibility & McDonald's Business Plan
Page 2 of 3
http: / /www.mcdonalds.com/usa/ good /report/online /business.html 1/3/2006
Place: In Your Community
"Weat 1w tivAreM, I took ktrndi
phydcal f1ruclu re I fee a, comAwn4ry teader
rwting a eceear srr r with"d empk�yl
p& #k w1v muy w)tfiftd-wri err wrwiar
Iset curt omeriwhw cbMdrmp1qran
who
be e".- a e. tr lard re
-YV kir- am jfd- ifiet mg ky
111M SONIA
.qpna,UAfd,)m4H Mwe Owiti,,s of
Ore w, n and.1S'ow1nmsr Wtar. wgPm
-M
,A-1cDon,a,1d'f in the
Cro'.u.muniy
Xlar�y see their local is cDonalAk as A place
to have a meal or snack at a reasonahk
price- And it bs. , Du r our restauraurs, play a
brea4cr mk in the conwaujildes wserve.
They inv"t monvy in the caramunity
—as emplayers, ta-pa yex s --wd pu rch-Aws
of gooAs And servicaw. 'They spowwr
community progtarvis Andhelpstiplun the
goorl work of RonAd IWOonald I louse
Charitics OM140 and its local CJuptcm
Tfwy alu-) haveftn-virontuental impacu, and
with mare thart a,3,co 0 restauran (3 in the
US, Oar Cumulative, 4(ects am Siptrivw, r.
We ate Ym rking to berr-cru rvierstand these
impacts and how wi manage 4-im more
Offectivcly
E,Ti,z1,,hww,ii,ent,-,d
Stmow,rd-fbip -it, the
Resttzurant Level
T(,)
V IRf-IMAUNTAI it AN AG RM ENT
Our global erivircy.natental policy
estahlislles guiding principles for nur
programs. It
R-anaging
wvlid waste, conscrwing xtul protecting
rp-Atumt re"Urces ind encau'raging
emi roarnrwal a lue-s x-id ffac, Oces in fhe
toc-d carrial"Urdric-s AT serve. in 0'r
as in orhcr countries, tlww prisr-iptim are
translate d into prog
,ran-o responsive to,
local prinritit-sand op1wrtunitics,
R,r,%TAu, R,,vNT,-L, nl-rL
EN-,qR(,')N,MEN"-F.AL PRIORTTIES
A 2%-T)onalfrs mstaurant L; a compacr
stern, that roquires envirortmental,
resources, such xs enerp t tc; M am d
water, to supparr the cooking, lighting,
cooling and heating rftluirvi to serve
up rrt r a uicaU and imtcls per 4aV.
'this rueans that running g", of
satisfaction, but redoce our impacts
cm the en'Amftment and Improve cost
courrols. 1wo key pnorities, frorn botha
ELECTRicAi. Ermw4y Tjsi�
E-1cf-trical energy ronixtrapdon is our
restaurants e most sigoificaut direct
--a-viroarnental impact. In the U-S, Owy
consume, on, avemv, Tap,, 000 kil"arr
h " Ari (kWh per year ac $o,(err us and our
0--A'-Irwrarors, envrgy managen-war
serves two compelling ohjectives,
— prorecring the enviroarnenT and
On the emir omilentAl
side, n1ftftAgMg Our
wn"Wrm cmrp- "prarce-S I
like natural gai and coal,
wtalso re"fucts errksiors
asscRAare4 with, Climate
c,bx W-, Ort the coir side,
w bave found that enerpy
rranawraeat mte ,s
, gies can
reduce carygr expcnrliture-,
by To perhaps ruo re,
Mau=
Page 2 of 3
M�
http://www.mcdonalds.com/usa/good/report/online/place.html 1/3/2006
TYPE OF APPLICATIDN
-General Plan Amendmenl
Zone Change
Code Amendment
DHL_UWIIN FHr-lr\
.Cri BALDWIN PARK
PLANNING iDMSION
14403 E. PACIFIC AVE
BALDWIN PARK, CA 9170T,
(626) 813-5261
Zr,ne Tariance
Conditional Use Permit
AdministmWe Adjustment
RECIFnIED
LJ
J
CRA Conceptual Approval Ofiler 'J"RK
PLANNING 01vizf6h;
APPLICATION INFORMATION
Nam of appk:angs) r> j J
->Lk�]6 o,
Address I T
< -L�
:730
Phone
OWn8r(S) Of 1"COM fn C cr(3 Ff-� L 0*
Owner's Addren f lu'i z., 2c' Oa&i ra c o '�5
3
PR0PEkTY*W`OftMATWN
Locaffork I Li 005 iL b C,
C� cf�_J Ir,-) IL-0,01 AL CXJ'I rNJ
Assesw Parcel Numbeqr,) C" C) '7
Trad and Lot Nu s}
U
Existina General Plan Dm rmdon L iF t� e RA t- em 10 e P,
Exisfing Zonirig for WK6 PgrW - - r- -
U
Code Section to be ammW
Purpose of reqLwst,
_LROPOSt-D Ell
RAIN
F iPlawrinpYR)rM.111,indapp
Fee: Received by.- 08te:
9455 Ridgehaven Court
Suite 200
man Diego, CA 92123 -1649
858.573.8999
858.573.8998 fax
www.lyonswarren.com
CITY Ur- 6ALUVIN PARK
PIANNINO RIVIOPION
1. How the site for this proposed use is adequate in size and shape?
The proposed kiosk will not increase the size and shape of the existing
building and will not alter the F.A.R. of the lot.
Z. How this site has sufficient access to streets and highways adequate in width and
pavement type to carry the quality of traffic generated by the proposed use?
The proposed kiosk was intended to capture only the significant percentage
of McDonald traffic.
3. Why the proposed use will not have an adverse effect upon adjacent properties?
The proposed kiosk did not increase the occupant load of the existing
building therefore the parking ratio has been maintained. Additional
stringent security measures both electronically and continuous monitoring
#. 1r L I 41 '1
11 UY --) U -( U 1j:3 V( ;46pm rruiii—ouriNi Nvimi RaMrL. hMUILr�M LLr f 14919 4 PJ;J U I I —Ij 1 9 r jv(.f,),jv r—;V4 I
Mer rI
de M. embesia
financial = =
services In connection with .ny application fbi, membership with Frontera Internotionfil FimIncial ser-dces
(Frainera), I undersiand Thar --mploym jjt inthillyation n Lay be b•erifkd. This includes, emplcjvrnent nitus, n3ines 13sed &rid diltes, of
current ernploymcnt. I ,iutliorize my arylployer ol- any P.,zly 01 agelle), eoniacwd by r-Tontent andlor ft-5 repi-esenvirives to fiumish the
below- mentioned informadon. En Oon mi -Ai6.ud de metubreskaaon Fromtra, cmindo qtie la dc culpicopuLcieel.
T7610 jrlelu},v 1,1 cQndicion dal Pinplao, nornb•as y -',xhas dd cnipleo actual. Aiitorixo a mi cinpleador (pauori) o a ctialquieragancilu
oilchia coniact.ida para que prop(ircione la informaci6n abajc n7encionada a FronfcR y,ro sus reprnemarite , Fron7ofa is an indrptrLdmi comppily not
ov.-rt,:d ur opaari:d by N,1c.Dt)ftKd'& Carpuiaion or ir, fmilcbi=cep. Fr, 5riieia ra una 2weicdad an6r.ima indL-pc4)dieaE:; de, MuDonu!d's ), sus �j-dilquic!tail
First Name I Nombre Middle Last Name/ Apel[ido F-T-7T]-
Signature / Firmal
Address / Domicilio
Cit Ciudad Stag, Zip i Zona Postal
El Matricula ConSLI[ar❑ Driver's License El US R rm Res El Passport
L1 Voter ID El Other El Visa 0 SSN
Phone / Telefono
DOB I Fecha de Nacimiento
/ = / 17
6 Wr.
City I Ciudad State Zi p 1 7 ona Postal Phone I Telefono
Fax
How did you hear about us? I Como se enterode nosotros?
❑ PromaterlPrornotor ❑ Friend/Arnistad F1 Welk Up 0 Employer/Trabajo 0 Newspaper/Pericidica ❑ TV [I Radio
1 C i 1 "aa &��U, t I—, I
2w�
ARN 7� , 7f�
%
IWO,
P,
C6nlactl-s Position.
--------------
5TATW. ` , AP' P oved,
pproved By�.
11 N ❑ CC OTP nPC Photo Number
Nato / No(o,- Corn,p)e tion of thfs Appfti,,atic n constitutes acceptance of Frootera Membaishjp 16456
Guide roes which are attached hereto. A, completer esta so0citud, usted esta aceptando las
rep)as y conaiciones cle la membresia Frontera anexados a) presenfe,
IVUv ®S.0 °Luuq uL :s4pm r rUffl -DUM NIA 1.)tN RtUrL AUU i LtKR LL,r ( 14.0040:JU I I -1) ( 0 r. uu5 /uu6 r -td4 i
j : irYLerCrl;.tl�on :.ql
tiP'8n�i:�1
We ]dole Qnward to snq"y you as a mctylilc:i of Frousu IntornilC o"I l illwyml Serviecs (Froalter 1 _'otlr meajl
bership benAt•: and con&Iinn ; ap Ii ad bc1o"q lf'you have any Clite-STiOn,, please call our membor,hill depart-
ment at 85S-29-3'565.
Membership
MciliberShil.) iti :ivnd able to all quriiily'in,• nldi,,idu:ds. To LIualllti' L'lYU nitlSt be ;nl cmplt)yOC Ofon establishcd
bus now asst iadon or guvCrrnllt nt cntg.Wft ticlil. I rontom rc crvcs the right to reRve mernbcrship ui mW apph-
t:wn tutu aleinbc]-ship is revocah1c withom etude. NUrnbership is SUbjCCt CO any land all rolcti - adopted by Fmntern,
inuludhig our FAvacy policiys and pl;twkws:.irlci Tese tuks nlav be am:;nded without nCli:lcc.
Verification Authorization
13y sitgllllg the FrClwera International F"'nanci71 $ervlc:e.s nlenlbcr'�hip application, YOU are si.3:a1111g that you unCl,2r-
si.and that infi)rmalion YOU providLxl m1med t11 your personal corft:t.ct lntormation, personal rcl4rmccs and unlploy-
mun awy be varidhd by Fmnetrra. 'r his inay inL' adc f mme tlLjl'lion. f urne. telk 1phone Number, pclstinal rcf,4rortces,
o111Ph ?YMOU SUWA. names liked, and dw s o Current. cmploynle.nt- YOU authoriy.c :my pang or .tgoncy contacted
by Fronlera 11101 or its rt_pri5i:rltati s th hirn_i d1 The inl'onnatton as ri:ydred nn 1110 i-no 1benhip application to
I• romora.
PrNacy POKY
WC respQc:t your right to privacy and OL11- I'riVACy StatctlYcnt onthneti OUT policies a[nul pcttC!tiCe: in de[ujl. i'ieasc
ohtain a copy to anv frontera Loo Trion,
Guarantee
lhre. grlta'a11141 you'll enjoy grral value with y nir NdeniberAdp and il'yotl'r4 ever nest WHO Wh bAg a Mew
ber, wel imrnedi.arely rKS any current urn ual 141Lrnilcr lltla Ice, Ipid.
Mernber'shgp and Photo I.D. Cards and Fees
The. V(e1111)Qr1 :hip is for one tw Ivc month per col Ciorn tho dais cat acceptance:. Youe Membership and. Pho"o I.D.
Card is valid at any Fronam hwadw, Vou tiv.ill be rti.cluircd 10 511DW jAYw rnembendiip 17hwo I.D. cu: -d when ta'�il'jg
Frontera servic ev Repon lost or stolen inen1(- Qrahip phmo LEY cards to Tv ne amst Froniera store or call the
111embel'il14) dcpartmeni 85&1596561 A to "Al. be charged 10 replace ouch Phoio LD, card. 14t 1ltilcrship nlay
be WnnhaWd;al. flonads doc:a-c1i.1, III canN rmmHn Me: pt-clpuny of Frowns and MLaSt be returned upon rc-
Cjuc•t. I POW I.13. Cards are not wansferable.
Renewing
For Nl n'Ybem ill Q91a stiinding„ Ivill be QXLUI1dCd ti }r 4tii iidditulna€ 12 11011th, 1i-clrn }'ottr eypiration
drat: upon. You u•iIl T)(11 r Gei1 z now Unrcis ca 'h ycav
Payment
Customers m ll he chrmd a Sat} wun-vied cllc `.I< t for nny chocks prescnt4Cj 1111C1 re.turneci by the bank without
paytllent. 11'J.11y 1C-,etl a licln is broug'hl. by Frcnteral io collect pay11 mi 011 l chcc:lc, the rn( imbcr Cashin 1.ljo cheelc
tivill be Ii blc Tor ticldirigr137 cictnla es _i, ;tWard:,d b)' rho C OUrt. Pay rric nt can bo trade by oa h, cheep, or crt.I(jit
c:at•ds which are auffiorizud 1-)�, Frontera,
General PoWes
Fronwr:a is a nonsinokin<7 iiicility_
NO pen allowed in building;,
\'Icr.Yhcr00 Puu1WL =Z Q,t).`:
54r]
Ernie Safldwal Sr rpflaea
Pa. IROX 1400
OdlBanisIde. Caffornla 92051
75ot3e7--ji7S
F3x.,
76ai9S7-6a44
lzrojitom fto!=tional Finaacial S�.Mo�s ("Vronteral calered in M agremnent
wkb MoDonald's USA., LLC (",'Mc Donald7s') to operate tat fiu=cial services branc
in San Diego Counly. The busimps-i targots the "un-bartka' 4�dmlc (p4marilY MsPanil
Ll
m1nority cor=unity�
AAMFAMAIM-IX
ION
Me
vagr=y or Ey o r proolems WTVIAIRIO.Mrolffe
vay appq4ita is trua. Good peoplt, good customers,
IUY-P'j -( UUQ U4 ;�4pm rrum-cumm wimi KtUtL RkAUILtKA LLr H44040QUI i-uro r uumo t-W
November 30, ?x)05
Amy Hai-bin
City Plallner
Planning Division
Community Development Departmert
City of Daldwin Park
14403 Last Pacific AvQnue
Baldwhi Park, California 91706
Dear Ms. Harbin,
This is to reiterate my client's offer ruade over a week ago to provide transportation for each and
every sniff and commission member to see all of the McDonald's where we ctuTently have the
check cashing facilities. We can to this as a group or, if you have Brown Art concerns,
individually. We are willing to provide this ',it any time that is col•VenienI for staff and the
cOMMI$Sioners. My client firmly be*.jeves that once you, the other staff and the commissioners
see the facilities first hand you will see that this is not your grandfather's check cashing facility.
Again, Your Oommissionerg wanted time to check into this more, we are sfandilig ready to assist
them in any way possible. Please fel.] ErQe to call me at any time to njake arrangements for staff
and the commissioners to visit all or any of the facltltie�. For your conven"
number is (310) 613-2265. 1 ience, my cell phone
rage 1 of 1
Amy Harbin
From: Guy Sanders [guy @guysanders.com]
Sent: Friday, December 02, 2005 9:59 AM
To: aharbin @baldwinpark.com
Subject: FW: San Ysidro Kiosk
Amy:
Here is a note from the owner in San Ysidro. Again, feel free to call him personally.
Guy
- - - -- Original Message -----
From: Gil Partida [ mailto: gpartida @fronterainvestment.com]
Sent: Friday, December 02, 2005 9:13 AM
To: 'Guy Sanders'
Subject: FW: San Ysidro Kiosk
- - - -- Original Message---- -
From: STEVEN RAMIREZ [ mailto :steveramirez @prodigy.net]
Sent: Friday, December 02, 2005 7:26 AM
To: Gil Partida; gil partida
Subject: San Ysidro Kiosk
December 2, 2005
TO WHOM IT MAY CONCERN:
I am the franchise owner of the McDonald's restaurant located
at 727 East San Ysidro Boulevard in San Ysidro, California. I
have had a Frontera Financial Services Kiosk associated with
my restaurant for nearly two years. I am pleased to report that
not one criminal incident or disturbance has occured related to
the Frontera Kiosk. To the contrary, customers have told us
that the prominent use of sophisticated cameras at the kiosk
keep the "bad element" away and make the area safer for families.
Most of my customers along the border are lower wage earning,
working class people. Many do not have bank accounts. Several
of my customers have thanked me for providing them a safe,
friendly and trustworthy facility where they can transact their
business.
Please feel free to call me at 619- 690 -1577 should you have any
questions or concerns.
Sincerely,
Steven M. Ramirez, Owner /Operator
McDonald's of San Ysidro
12/6/2005
rage 1 01 1
Amy Harbin
Frogs: Guy Sanders [guy @guysanders.com]
Sent: Friday, December 02, 2005 9:59 AM
To: aharbin @baldwinpark.com
Subject: FW: Findings for Frontera Investment Inc. in San Ysidro, CA
Amy:
Here is a report re police check in San Ysidro. Please feel free to call the people involved.
Guy
Dear Mr. Partida,
Attached you will find our findings for the Frontera Investment Inc. Kiosk located at 727 E. San Ysidro Blvd. All information is based
on crime statistics provided by the San Diego Police Department as well as research and interviews that I personally conducted.
The original copy has been mailed to your office.
Thank you for the opportunity to serve your business needs.
Sincerely,
Carrie J. Droptiny
Project Coordinator
LEDFORD ENTERPRISES INC.
110 West C Street, Suite 1410
San Diego, CA 92101
Phone: 619.696.1552 / Fax: 619.696.1588
Mobile: 619.210.5532
12/6/2005
Frontera Investment Inc.
Mr. Gilbert Partida
171 Saxony Road
Suite 201
Encinitas, CA 92024
At your direction, Ledford Enterprises Inc. has conducted a thorough investigation in
cooperation with the San Diego Police Department regarding the Frontera
Investment Inc. kiosk located at 727 E. San Ysidro Boulevard in San Ysidro,
California.
9M
> 727 E. San Ysidro Blvd is a 2 story structure located in San Ysidro, California
> There are public facilities that include restrooms and pay phones.
> The above-mentioned address houses 9 different businesses.
1. Mail Box Rentals
2. Cell phone retailer
3. Travel Services
4. Women's Fashion
5. Citibank ATM
6. Cosmetics
7. Accessories Shop (purses, small gifts)
8. McDonalds
9. Frontera Investments Inc.
In reviewing the crime statistics provided by the San Diego Police Department, there
has been no crime found relating to Frontera Investment Inc.
In a verbal interview with Officer Jose Perez, the San Diego Police Department's
Community Resource Officer for San Ysidro, he confirmed that there have been no
incidents at the above stated address that are related to Frontera Investment Inc.
Officer Perez has been
with the San Diego Police Department serving as the San Ysidro Community
Resource Officer for San Ysidro since 2001.
f you have any further questions, please do not hesitate to contact me.
Carrie J. Droptiny
Project Coordinator
Ledford Enterprises Inc.
rage I of i
From: GuySanders [ouy@guysandom.00n]
Sent: Friday, December 02.2U8G3:4OPM .
To: ahadbin@ba|dwinpark.00m
Subject: FW: Security Planl.doc
--- Okigina|Message ---
From: Gi|*PartidahnaiKo:gpartida@fronterainvestment.coml
Sent. Friday, December 82,2O053:38 PM
To: 'Guy Sanders'
Subject: Security Planl.doc
This was given to city planner of Indio ..... don't know if you want to use it as the ficus of the questions seem to relate to customer
\2/d/2OO5
Frontera International Financial Services System, Inc.
Proprietary Check Washing and Security Features for McDonalds Check Cashing
Outlets
Frontera places the safety of both Frontera and McDonald employees at the top and the
physical security of company assets as its secondary goal. Our system is of the highest
level and far exceeds industry standards.
Cash Secu�°itye
Frontera utilizes a propriety Check Cashing software program which interfaces 1) a state
of the art vault/dispenser /recycler, 2) check imager, 3) receipt printer, 4) corporate server.
The Frontera system disburses the exact amount of currency corresponding to the
customer's transaction. The system is like an ATM; however, the dispenser doubles as a
highly secured vault and also accepts deposit of currency which eliminates excess cash
accessable at the location®
Since Frontera is utilizing ID cards for members, the transactions are very simple. The
card is read by a card reader which loads the members profile and the members check is
scanned within the members profile and the cash is disbursed, via the dispenser (less the
fee). Frontera utilizes a cash drawer, typically with less than $1,000 in currency and
coin. Excess cash taken in from wire transfer, money orders or phone card sales are
deposited into the vault via the software interface.
The traditional check cashing competitor has to manually transfer cash from a safe to the
cashier's drawer during operating hours. This transfer could occur multiple times a day
and requires a high level management individual or owner to be present at all times.
Frontera's system provides for the entire cash inventory to be available to the cashier at
all times; however, specific controls are in place, relative to the cashiers ability to
dispense cash. Some of the dispenser controls include limiting the size of the transaction
and total dollars disbursed per cashier shifts. These limits can be approved by the
manager either remotely from home office or locally at the branch store through secured
access through the Company's VPN. The cashier must balance each shift to both
currency disbursed from the dispenser and coin dispensed from the cashiers drawer
adding an additional level of control.
The disbursement system described above not only provides for a very secure and
efficient check cashing environment, but also allows for scalability. Since the
owner /manager is not "tied" to the store and can manage the store remotely, the
owner /manager can oversee multiple locations. This allows for the ability to duplicate
the store model hundreds or thousands of times over.
Physical Security*
Frontera has spared no expense relative to the physical security, as well as the safety of
Frontera's team members. Frontera has consulted with Wackenhut security (a prominent
nationwide security firm) to ensure that all security options have been evaluated as well
as providing security training to Frontera team members. The physical security features
include six recording cameras (recording is done remotely at the Company's Corporate
office), 24/7 alarm monitoring, including motion and panic alarm monitoring, bullet
resistant doors and windows (Level 3), Kevlar wrap around and the highest level lockset
for the kiosk entry. Also, the team members have gone through extensive security
training, specifically to increase their awareness of surroundings, how to react in the case
of a security breach and to increase their familiarity with the security features located at
the branch store.
Cash deliveries are made utilizing Brinks, typically twice a week. Deposits currently
consist of checks only, but by early 2006, checks will be deposited electronically through
its banks Check 21 processing.
• ill •
MI
• • 1i ii
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
BALDWIN PARK ADOPTING THE FINDINGS OF FACT
AND DENYING AN APPLICATION FOR A MODIFICATION
TO AN EXISTING CONDITIONAL USE PERMIT TO
ALLOW A FINANCIAL INSTITUTION AS A SECONDARY
USE WITHIN AN EXISTING FAST FOOD RESTAURANT
(CASE NUMBER: CP-301 MODIFICATION; LOCATION:
14008 RAMONA BOULEVARD)."
WHEREAS, a conditional use permit application seeking a conditional use
permit to allow a financial institution as a secondary use within an existing fast food
restaurant was submitted on behalf of Frontera International Financial Services (the
"Applicant") at 14008 Ramona Boulevard (the "Property"), in the City of Baldwin Park,
described more particularly in the application on file in the Planning Division in the City
of Baldwin Park (the "Application"); and
WHEREAS, on December 14, 2005 the Planning Commission held a duly
noticed public hearing and voted to approve the modification of CP-301 allowing the
installation of a financial services kiosk within an existing fast food restaurant; and
WHEREAS, pursuant to Section 153.689 of the Baldwin Park Municipal
Code, the City Council, on December 21, 2005 voted to bring the item forward for
review by the City Council, rendering the Planning Commission approval a nullity; and
WHEREAS, pursuant to said Section 153.689, a duly noticed, de novo
public hearing was held on the Application by the City Council on January 18, 2006;
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF BALDWIN
PARK DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City Council hereby finds and determines as follows:
a) Each fact set forth in the Staff Report dated January 18, 2006,
from Amy L. Harbin to the Honorable Mayor and Councilmembers is true
and correct.
b) The Applicant has acknowledged that protective devices, e.g.
bullet-resistant glass, security cameras and flashing lights (for
emergencies), are necessary for the safety of its employees, but not such
devices are provided for the patrons within the restaurant nor elsewhere
on the Property.
c) The Property is adjacent to multi-family residences on the
south, and to property which is designated in the General Plan as
Resolution 2006 -005
January 18, 2006
Paqe 2
residential on the east. The presence of such residential uses and
potential residential uses exacerbates the safety concerns raised by the
proposed use.
d) The Property presently has the least number of parking spaces
legally permissible, having obtained variances and an Administrative
Adjustment to decrease the number of spaces provided. Pursuant to City
ordinances, however, an additional parking space is required to
accommodate the proposed use.
e) The Administrative Adjustment to reduce parking on the
Property for the present restaurant use was granted subject to compliance
with a site plan for the Property which includes a landscaping requirement.
The only way to place the additional parking space required for the
financial services kiosk on the Property would be to eliminate part of that
landscaping. Elimination of landscaping is inconsistent with the goals and
objectives of the City.
f) The area near the Property is adequately served by financial
institutions which provide the same services proposed for the financial
services kiosk.
SECTION 2. Based upon the evidence presented, including applicable
staff reports and each member of the City Council being familiar with the property, and
based upon the findings set forth in Section 1, above, the City Council hereby finds and
determines as follows:
a) The site is not adequate in size and shape to accommodate the
proposed financial services kiosk in that although no exterior modification
or additional, new floor area is proposed, an additional parking space is
required to accommodate the proposed financial services kiosk, but the
Property already contains less parking spaces than are otherwise required
by law, having obtained variances and an Administrative Adjustment
which require landscaping which would have to be eliminated to create the
additional parking space needed for this use.
b) The site has sufficient access to streets and highways adequate
in width and pavement to carry the quantity and quality of traffic generated
by the proposed use in that the project has direct access to Ramona
Boulevard and Stewart Avenue which can carry large traffic capacities.
The estimated number of trips based upon conservative estimations for
the additional new use would be within the capacity of the adjacent
streets.
c) The proposed use of the McDonalds Restaurant with a
secondary use of a check - cashing /wire transfer business will have an
Resolution 2006 -005
January 18, 2006
Paqe 3
adverse effect upon adjacent uses in that the proposed facility does not
share the same characteristics of a safe, family- oriented environment that
is synonymous with McDonald's Restaurants. Furthermore, the
employees and patrons (including children) of the restaurant, as well as
the surrounding properties including residences, would not have the
protection (e.g. bullet- resistant glass, security cameras and flashing lights
(for emergencies)) that encompass the check - cashing kiosk and which the
Applicant has determined are necessary for the safety of its employees;
d) The proposed use of the property is not in conformance with the
Baldwin Park General Plan. Goal 2.0 of the Land Use Element states that
new development should be compatible and complement the existing,
conforming land uses. As stated in Finding c) above, a check -
cashing /wire transfer facility does not share the characteristics of a safe,
family- oriented restaurant, nor is it consistent with adjacent residential
uses. Furthermore, the use of a kiosk style check - cashing /wire transfer
facility is inconsistent with the existing uses in the area which include
many different financial institutions, thus undermining the City's efforts to
improve the urban design and function of the downtown area.
SECTION 3. Based upon the findings set forth above, the City Council
hereby finds the Applicant has not met its burden to show that the Application meets
the applicable standards as established by the Baldwin Park Municipal Code and
hereby denies the Application. The City Council specifically finds and determines that
such denial is required by each of the findings set forth in subsections a), c) and d) of
said Section 2, and should any one of such findings be found insufficient to support
denial of the CUP, each of the other such findings shall be deemed independently
sufficient to support such determination.
SECTION 4. That the City Clerk shall certify to the adoption of this
resolution and shall forward a copy hereof to the City Planner and the applicant.
MANUEL LOZANO, MAYOR
Resolution 2006-005
January 18, 2006
Paae 4
ATTEST:
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES SS.
CITY OF BALDWIN PARK I
1, ROSEMARY R. RAMIREZ, Chief Deputy City Clerk of the City of Baldwin Park, do
hereby certify that the foregoing Resolution was duly and regularly approved and
adopted by the City Council of the City of Baldwin Park at a regular meeting thereof,
held on the 18th day of January, 2006 by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ROSEMARY R. RAMIREZ
CHIEF DEPUTY CITY CLERK
ISJMWXOJAF�# # �0_1 MA,
BALDWIN
P A- R- K
TO: Honorable Mayor and Councilmembe
FROM: Amy L. Harbin, City Planner
DATE: January 18, 2006
IAI 1 200,6
alar
SUBJECT: Public Hearing to Consider an Extension of the Existing Urgency
Moratorium on the Creation of Flag Lot Subdivisions
l;III;32!1J_
This report requests City Council adoption of Ordinance 1278 extending the existing
urgency ordinance placing a moratorium on the creation of flag lot subdivisions within the
City of Baldwin Park.
0111IN4
Pursuant to Government Code Section 65090, a Notice of Public Hearing was published in
the San Gabriel Valley Tribune on January 6, 2006.
At City Council meeting on December 21, 2005, staff brought before the City Council an
Ordinance (Ordinance 1277) requesting a moratorium on the creation of flag lot
subdivisions within the City of Baldwin Park. This ordinance was approved by the City
Council for a maximum of 45 days, expiring on February 4, 2006.
Staff believes that the extension of the moratorium is warranted in that the City's current
ordinance regulating flag lot subdivisions was established prior to 1983 and is contrary to
the City's Council's goals and vision for Baldwin Park as established in the General Plan
which was adopted in 2002. Particularly, Policy 2.4 of the Land Use Element of the General
Plan suggests prohibiting future flag lot subdivisions, and striving to achieve single-family
infill projects which complement the surrounding neighborhood setting. Accordingly, the
City's Zoning Code defines a "flag lot" as a lot which is located to the rear of another lot,
except for an extension thereof, not less than 15 feet in width, which is utilized for direct
access to a public street for such flag lot.
Currently, Staff is approximately eighty percent (80%) complete with the comprehensive
zoning code and design guidelines update. This issue is included within the comprehensive
Extension of Urgency Moratorium
January 18, 2006
Page 2
months. In the meantime, adoption of this urgency measure would protect both the City
and the public from any future negative impacts from the creation of flag lot subdivisions
while the adoption process of the zoning code and design guidelines update is in progress.
If adopted by the City Council by a 4/5 vote, this moratorium would continue to prohibit the
creation of flag lot subdivisions within the city limits. Staff is requesting that the duration of
the moratorium be extended for a maximum of 10 months and 15 days.
According to Government Code Section 65858, at least 10 days prior to the expiration of
the moratorium, the City Council is required to issue a written report describing the
measures taken to alleviate the conditions that led to the adoption of the ordinance.
Therefore, staff has included a report that stipulates the measures taken as Attachment #2.
For your information, staff has also included Attachment #3, which identifies the timeline for
the adoption of an amendment to the City's Zoning Code that if approved, will rescind
those portions of the Code that permit flag lot developments. Based upon the timeline, it is
anticipated that an ordinance amending the Code would become effective March 31, 2006.
Staff recommends that following the public hearing the City Council adopt:
1. Attachment #2 entitled "REPORT OF MEASURES TAKEN TO ALLEVIATE THE
CONDITIONS THAT LED TO THE ADOPTION OF ORDINANCE 1277; and
2. Ordinance 1278, "AN INTERIM ORDINANCE OF THE CITY OF BALDWIN PARK
DECLARING A MORATORIUM ON THE CREATION OF FLAG LOT
SUBDIVISIONS WITHIN THE CITY OF BALDWIN PARK."
.:........... .
Attachment #1 - Ordinance 1278
Attachment #2 - Report identifying measures taken
Attachment #3 - Timeline
m a fnel: I ivi I
AN INTERIM ORDINANCE OF THE CITY OF BALDWIN PARK
EXTENDING A MORATORIUM ON THE CREATION OF FLAG
LOT SUBDIVISIONS WITHIN THE CITY OF BALDWIN PARK.
WHEREAS, on December 21, 2005 the City Council of the City of Baldwin Park
adopted an urgency moratorium prohibiting the creation of flag lot subdivisions within the City of
Baldwin Park; and
WHEREAS, the City Council found that the City's minimum guidelines and
standards for the creation of flag lot subdivisions lack sufficient safeguards to protect the public
health, safety and welfare, because of the lack of regulations of these types of uses, and the
absence of an overall implementation plan for the City; and
WHEREAS, following the updating of the General Plan of the City of Baldwin Park
in November of 2002, the City Council directed the Planning Division to review the City's zoning
code and zoning maps to assure that they are consistent with the revised General Plan Land
Use Map and other provisions of the General Plan, as well as internally consistent,
understandable, and in compliance with all applicable federal and state law; and
WHEREAS, the Planning Department has undertaken the preliminary steps
required for such work, including but not limited to the preparation of an Administrative Draft of
the Zoning Code, and is actively proceeding with the studies required to implement the City
Council's direction; and
WHEREAS, as part of said work, the City has been and is studying flag lot
subdivisions and the appropriate mechanisms to regulate such uses, and the City Council
anticipates that zoning proposals relating thereto will be brought forward for hearing by the
Planning Commission and the City Council within a reasonable time.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF BALDWIN PARK
ORDAINS AS FOLLOWS:
SECTION 1. The City of Baldwin Park hereby extends the moratorium on the creation of
flag lot subdivisions in the City enacted by Ordinance No. 1277, for a period of ten (10) months
and fifteen (15) days from the scheduled termination thereof.
SECTION 2. The moratorium established by Section 1 above shall be applicable
throughout the City.
SECTION 3. The City Council hereby finds and determines that the creation of flag lot
subdivisions constitutes a current and immediate threat to public health, safety and welfare in
that such lots impact the privacy of back yards of neighboring properties and are not consistent
with Policy 2.4 of the Land Use Element of the General Plan which prohibits future flag lot
subdivisions and strives to achieve single-family infill projects which complement the surrounding
neighborhood setting.
Moratorium —Flag Lot Subdivisions
January 18, 2006
Page 2
SECTION 4. The City Council further finds and determines that a moratorium on the
creation of flag lots is necessary to preserve and protect the public health, safety, and welfare
that could be compromised if the creation of flag lot subdivisions is permitted to continue during
the period that the zoning proposals discussed above are being completed and appropriate
ordinances considered for adoption.
SECTION 5. If any part or provision of this ordinance or its application to any person or
circumstance is held invalid, the remainder of the ordinance, including the application of such
part or provision to other persons or circumstances, shall not be affected and shall continue in
full force and effect. To this end, the provisions of this ordinance are severable.
SECTION 6. This ordinance is an urgency ordinance enacted by a four -fifth vote of the
City Council. Pursuant to the provisions of Government Code section 65858, this ordinance
shall become effective upon expiration of Ordinance No. 1277 and shall remain in effect for a
period of ten months and fifteen days thereafter.
APPROVED, PASSED AND ADOPTED this 18th day of January 2006.
Manuel Lozano, Mayor
ATTEST:
Rosemary R. Ramirez, CMC
Chief Deputy City Clerk
Moratorium—Flag Lot Subdivisions
January 18, 2006
Page 3
STATE OF CALIFORNIA
COUNTY OF LOS ANGELE ss:
CITY OF BALDWIN PARK j
1, ROSEMARY M. RAMIREZ, CIVIC, Chief Deputy City Clerk of the City of Baldwin Park,
do hereby certify that the foregoing Ordinance No. 1278 was regularly introduced and adopted
at a regular meeting of the City Council on January 18, 2006.
AYES: COUNCILMEMBER:
NOES: COUNCILMEMBER
ABSTAIN: COUNCILMEMBER:
ABSENT: COUNCILMEMBER:
ROSEMARY M. RAMIREZ, CIVIC,
CHIEF DEPUTY CITY CLERK
QUUMMUMEZ
.�. �,
Folk
Since the adoption of Ordinance 1277, which established an urgency moratorium
on the creation of flag lot subdivisions, the City of Baldwin Park has been in the
process of updating its zoning ordinance. Planning Division staff is
approximately eighty percent (80 %) complete with the comprehensive zoning
code and design guidelines update. The zoning code update will eliminate flag
lot subdivisions. However, the update will not be ready for public hearings for a
few months. Additionally, an ordinance has been prepared and a notice of public
hearing has been published in anticipation of Planning Commission consideration
of amending the zoning code to eliminate flag lot subdivisions on January 25,
2006.
TO:
Vijay Singal, Chief Executive Officer
FROM:
Amy Harbin, City Plannejr
t4---
DATE:
December 12, 2005
Pursuant to your request, I have reviewed the calendar and have put together a timeline for the
potential adoption of an ordinance that would eliminate flag lot subdivisions.
1) Tuesday, December 27, 2005—Send Public Hearing Notice to the Tribune for
publication (1/8 th of a page) of the public hearing of the Planning Commission
meeting. Tribune needs a 4-business day lead-time, not including holidays to
publish a notice.
2) Wednesday, January 4, 2006—Tribune publishes public hearing notice for
Planning Commission Meeting. Initial Study needs to be completed. A 21-day
notice is required for those projects determined to require a Negative
Declaration of Environmental Impact based upon the Initial Study.
3) Wednesday, January 25, 2006— Planning Commission holds public hearings
considers amendment to zoning code and makes recommendation to City
Council.
4) Tuesday, January 31, 2006—Send public Hearing Notice to the Tribune for
publication (1/8 th of a page) for the public hearing of the City Council.
5) Friday, February 3, 2006—Tribune publishes public hearing notice for
February 15, 2006 City Council meeting. A ten-day notice is required for the
City Council public hearing.
6) Wednesday, February 15, 2006—
amendment to zoning code eliminating flag lot subdivisions and adopts
ordinance on first reading.
7) Wednesday, March 1, 2006—City Council has 2nd reading of ordinance
eliminating flag lot subdivisions.
8) Friday, March 31, 2006 - ------ •
readin
CAAmy\AMY\W0RD\Memos\M9mos to Vijay\AZC timeline--flag lot subdivisions.doc
no flan lot subdivisions b
JAN I 200j
CITY OF BALDWIN PARK PUBLIC HEARING
IF
BAMWIN
P A, R, K
TO: Honorable Mayor and City Councilmembers
FROM: Mark P. Kling, Chief of Police
Shafique Naiyer, Director of Public Works
DATE: January 18, 2006
SUBJECT: CONDUCT PUBLIC HEARING AND AWARD OF CONTRACT
FOR AUTOMATED ENFORCEMENT SYSTEM (RED LIGHT
CAMERA PROGRAM)
PURPOSE
The purpose of this report is to request that City Council conduct a public hearing
for the proposed installation of an automated enforcement system program,
pursuant to Vehicle Code § 21455.61. At the conclusion of the public hearing,
staff requests City Council approval of awarding a contract for installation of an
automated enforcement system to Redflex Traffic Systems, Inc., ( Redflex).
BACKGROUND
At the December 21, 2005, City Council meeting, staff provided an update on the
proposal for installing a complete automated enforcement system program
throughout the City of Baldwin Park. In addition, police staff requested City
Council consider authorizing the police department to hire two additional police
officers to monitor and fully operate the program. Staff received approval from
the City Council to proceed with the hiring of police personnel, however, to
initially process one officer for the implementation of the red light camera
program. Then, as additional systems are installed and the need for additional
personnel is required, the police chief will process the second officer. Depending
on the productivity of each system will determine if, or when, the second officer
will be hired.
21455.6. (a) A city council or county board of supervisors shall conduct a public hearing on the
proposed use of an automated enforcement system authorized under Section 21455.5 prior to
authorizing the city or county to enter into a contract for the use of the system.
Council also directed staff to proceed with the next step in the implementation of
automated red light cameras, which is to conduct a public hearing, and to award
a contract. However, before the contract can be awarded, per the vehicle code,
the public hearing must occur.
The purpose of the public hearing will enable those for, and or against the
program to address the City Council. Before a decision is made by the Council to
install automated red light enforcement cameras throughout the City, any public
comments shall be considered.
DISCUSSION
The California Vehicle Code specifies that when a City considers installing an
automated enforcement system, pursuant to section 21455.52, the following
conditions be met:
• The system is identified by signs that clearly indicate the system's
presence and are visible to traffic approaching from all directions...
The vendor and public works department will ensure this
requirement is met.
• If the City installs a system at an intersection, it ensures that the system
meets the criteria specified in section 21455.73.
The vendor contracted by the City will work in conjunction with the
public works department to ensure this requirement is met.
• Prior to issuing citations relative to the program, only warning notices will
be issued for a 30 -day period.
The police department will ensure this requirement is met.
• The City of Baldwin Park shall also make a public announcement of the
automated traffic enforcement system at least 30 days prior to the
commencement of the enforcement program. This announcement will be
made by way of a public safety announcement in the local print media.
The police department will handle the announcement requirement.
2 21455.5. (a) The limit line, the intersection, or a place designated in Section 21455, where a
driver is required to stop, may be equipped with an automated enforcement system...
3 21455.7. (a) At an intersection at which there is an automated enforcement system in
operation, the minimum yellow light change interval shall be established in accordance with the
Traffic Manual of the Department of Transportation. (b) For purposes of subdivision (a), the
minimum yellow light change intervals relating to designated approach speeds provided in the
Traffic Manual of the Department of Transportation are mandatory minimum yellow light intervals.
(c) A yellow light change interval may exceed the minimum interval established pursuant to
subdivision (a).
iMMUM
• Only a governmental agency, in cooperation with a law enforcement
agency, may operate an automated enforcement system.
The City and its police department will ensure this occurs.
Since August 2005, the public works and police departments have periodically
met to discuss the benefits of installing red light cameras and to chose a vendor
who can meet the City's needs. As discussed at the December 21, 2005, City
Council meeting, staff has determined that Redflex can meet the City's needs.
Redflex has the most beneficial and effective system available. Staff's
recommendation of Redflex was based on their capability to meet the above
noted criterion, and because they offer the City a cost neutral system. This cost
neutral system would provide systems and maintenance to the City guaranteed
at no cost, under contract terms.
The contract will require Redflex to establish a comprehensive program fully
funded by vendor citations. Under the terms of the contract, Redflex will agree
that the City operate a fully violator funded program that at a minimum would be
cost neutral to the City.
The cost per system will range from $4,995 to $6,000 per month depending on
continuous lane coverage. Lane coverage consists of the number of approaches
that cameras will be utilized within a specific intersection. A typical intersection
configuration ranges from a minimum of 2- lanes, to up to 5 -lanes and the type of
violation movements that will be enforced (i.e. left -turn, double left, straight -
through, and right -on -red).
The City Attorney has approved the contract as to form and content.
PERSONNEL COSTS
As earlier presented to the City Council, police staff has determined, per Vehicle
Code § 21455.54 that only police personnel can review and certify violations from
red camera locations. The personnel selected to complete this duty would also
be responsible for appearing in traffic court to testify on behalf of the City, in the
event a violator chooses to contest a notice to appear. Staff completed a
comprehensive staff study to determine the quantity of staff needed to complete
the process of reviewing and certifying violations.
Staff learned that depending on the number of citations generated, would
determine the number of staff needed to complete the reviews. Staff estimates
that four intersection locations where red light camera systems would be installed
4 21455.5 VC enables a governmental agency to install automated enforcement systems.
Additionally only a governmental agency, in cooperation with a law enforcement agency may
operate an automated enforcement system. Only law enforcement can maintain controls
necessary to assure that only those citations that have been reviewed and approved by a
member of law enforcement are delivered to violators.
will result in the need for one additional police employee. In the event the City
installs additional red light camera locations, additional personnel would be
required. An example would be if the Council decided to place red light cameras
at eight intersections in the City, the police department would require two
additional personnel.
During the December 21, 2005 meeting, the City Council inquired if the officers
hired for this program would be experienced officers. The Chief of Police
informed the Council that although newer officers would be hired, only veteran
officers who are already trained in traffic enforcement would be assigned to the
duties of reviewing and processing red light camera citations. The Chief of Police
also informed the Council that the officer(s) assigned to the red light camera
program would be completely dedicated to traffic bureau duties.
An added benefit of establishing this type of position within the department will
provide the City with an opportunity of utilizing an officer who may have been
injured on duty, but no longer able to perform patrol duties. In the event an
officer meets this criterion, the City could assign the officer to red light camera
program duties, therefore meeting a reasonable accommodation requirement
and limiting the City's liability for future retirement benefits.
Lastly, the Chief of Police informed the City Council that in the unlikely event
revenues from the system could not support the hiring of additional personnel,
the department would absorb the positions through attrition, so there would be no
adverse affect to the City's general fund.
SAFETY ADVANTAGES
The red light camera enforcement program has several public safety advantages.
Intersections with red light camera enforcement become safer once the systems
are installed. This is accomplished through public awareness, public meetings,
signage at the location, 30 days of warnings, and ultimately prosecutions of
drivers who violate the laws. This proxy police presence requires drivers to
adhere to laws regulating red lights absent physical police presence. This allows
traffic officers to concentrate their efforts in other areas that need enforcement
action, such as pedestrian crosswalks and reports of speeding drivers.
Additionally it is problematic to enforce red light violations, as it is necessary for
the officer to view the phasing of the red light. Often times when a driver runs the
red light, so must the officer in order to issue a citation. This system improves
traffic collision investigations at these intersections as the system records all
violations, including those leading up to traffic collisions. In these situations, the
probability of successful prosecutions increases, as independent witnesses are
not required. Lastly, red light camera enforcement create safer intersections for
the motoring and pedestrian public, enforcement safer for law enforcement, and
the community safer overall.
'.• •, `:
ANTICIPATED REVENUES — PER APPROACH
The department, with the assistance of Redflex completed a revenue estimate in
the event the City Council decided to move forward with awarding a contract for
installation of a red light camera program. The revenue estimate is based on the
systems issuing five (5) citations within a 24 -hour period, seven (7) days per
week.
# of Tickets Issued Per Day
5
Collection Percentage %
60%
# of Tickets Paid Per Day
3
# of Tickets Paid Per Month
90
Fine Amount
$140
Gross Monthly Revenue Per System
$12,600
Fixed Monthly Redflex Fee — Per System
$6,000
Net Monthly Revenue Per System
$6,600
Net Yearly Revenue Per System
$79,200
# of Systems
8
Net Yearly Program Revenue
$633,600
FISCAL IMPACT
There will be no negative impact to the general fund. The anticipated annual
revenue, based on the above estimates, from the red light camera program is
estimated at $633,600. The revenues the system produces will offset any
additional police personnel costs. As additional systems are added any
additional police personnel will be paid for by revenue enhancements.
RECOMMENDATION
Staff recommends that City Council (1) conduct the public hearing to consider the
installation of an automated enforcement system (red light cameras), (2) award a
contract to Redflex Traffic Systems, Inc. for installation of a maximum of 10
enforcement camera locations throughout the City, (3) direct staff to proceed with
the installation of the program, including any necessary personnel hiring.
ATTACHMENTS
• Attachment A — Exclusive Agreement Between the City of Baldwin Park
and Redflex Traffic Systems, Inc., for Photo Red Light Enforcement
Program.
COO P17
EXCLUSIVE AGREEMENT BETWEEN THE CITY OF BALDWIN P�1-1
AND REDFLEX TRAFFIC SYSTEMS, INC. FOR
PHOTO RED LIGHT ENFORCEMENT PROGRAM
This Agreement (this "Agreement') is made as of this day of January, 2006 by and
between Redflex Traffic Systems, Inc. with offices at 6047 Bristol Parkway Is' Floor, Culver
City, California 90230 ("Redflex'), and The City of Baldwin Park a municipal corporation, with
offices at 14403 E. Pacific Avenue, Baldwin Park, CA 91706.
RECITALS
WHEREAS, Redflex has exclusive knowledge, possession and ownership of certain equipment,
licenses, applications, and citation processes related to digital photo red light enforcement
systems; and
WHEREAS, the Customer desires to engage the services of Redflex to provide certain
equipment, processes and back office services so that sworn peace officers of the Customer are
able to monitor, identify and enforce red light running violations; and
WHEREAS, it is a mutual objective of both Redflex and the Customer to reduce the incidence of
vehicle collisions at the traffic intersections that will be monitored pursuant to the terms of this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for other
valuable consideration received, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
AGREEMENT
DEFINITIONS. In this Agreement, the words and phrases below shall have the following
meanings:
I.I. "Authorized Officer" means the Police Project Manager or such other individual(s) as
the Customer shall designate to review Potential Violations and to authorize the Issuance
of Citations in respect thereto, and in any event, a sworn peace officer or a qualified
employee of the Police Department.
1.2. "Authorized Violation" means each Potential Violation in the Violation Data for which
authorization to issue a citation in the form of an Electronic Signature is given by the
Authorized Officer by using the Redflex System.
1.3. "Citation" means the notice of a Violation, which is mailed or otherwise delivered by
Redflex to the violator on the appropriate Enforcement Documentation in respect of each
Authorized Violation.
1.4. "Confidential or Private Information" means, with respect to any Person, any
information, matter or thing of a secret, confidential or private nature, whether or not so
labeled, which is connected with such Person's business or methods of operation or
concerning any of such Person's suppliers, licensors, licensees, customers or others with
whom such Person has a business relationship, and which has current or potential value
to such Person or the unauthorized disclosure of which could be detrimental to such
Person, including but not limited to:
1.4. 1. Matters of a business nature, including but not limited to information relating to
development plans, costs, finances, marketing plans, data, procedures, business
opportunities, marketing methods, plans and strategies, the costs of construction,
installation, materials or components, the prices such Person obtains or has obtained
from its clients or customers, or at which such Person sells or has sold its services;
and
1.4.2. Matters of a technical nature, including but not limited to product information,
trade secrets, know -how, formulae, innovations, inventions, devices, discoveries,
techniques, formats, processes, methods, specifications, designs, patterns,
schematics, data, access or security codes, compilations of information, test results
and research and development projects. For purposes of this Agreement, the term
"trade secrets" shall mean the broadest and most inclusive interpretation of trade
secrets.
1.4.3. Notwithstanding the foregoing, Confidential Information will not include
information that: (i) was generally available to the public or otherwise part of the
public domain at the time of its disclosure, (ii) became generally available to the
public or otherwise part of the public domain after its disclosure and other than
through any act or omission by any party hereto in breach of this Agreement,
(iii) was subsequently lawfully disclosed to the disclosing parry by a person other
than a parry hereto, (iv) was required by a court of competent jurisdiction to be
described, or (v) was required by applicable state law to be described.
1.5. "Designated Intersection Approaches" means the Intersection Approaches set forth on
Exhibit A attached hereto, and such additional Intersection Approaches as Redflex and
the Customer shall mutually agree from time to time.
1.6. "Electronic Signature" means the method through which the Authorized Officer
indicates his or her approval of the issuance of a Citation in respect of a Potential
Violation using the Redflex System.
1.7. "Enforcement Documentation" means the necessary and appropriate documentation
related to the Photo Red Light Enforcement Program, including but not limited to
warning letters, citation notices (using the specifications of the Judicial Council and the
City, a numbering sequence for use on all citation notices (in accordance with applicable
court rules), instructions to accompany each issued Citation (including in such
instructions a description of basic court procedures, payment options and information
regarding the viewing of images and data collected by the Redflex System), chain of
custody records, criteria regarding operational policies for processing Citations
(including with respect to coordinating with the Department of Motor Vehicles), and
technical support documentation for applicable court and judicial officers.
1.8. "Equipment" means any and all cameras, sensors, equipment, components, products,
software and other tangible and intangible property relating to the Redflex Photo Red
Light System(s), including but not limited to all camera systems, housings, radar units,
severs and poles.
1.9. "`Fine" means a monetary sum assessed for Citation, including but not limited to bail
forfeitures, but excluding suspended fines.
1.10. "Governmental Authority" means any domestic or foreign government,
governmental authority, court, tribunal, agency or other regulatory, administrative or
judicial agency, commission or organization, and any subdivision, branch or department
of any of the foregoing.
1.11. "Installation Date of the Photo Red Light Program" means the date on which
Redflex completes the construction and installation of at least one (1) Intersection
Approach in accordance with the terms of this Agreement so that such Intersection
Approach is operational for the purposes of functioning with the Redlight Photo
Enforcement Program.
1.12. "Intellectual Prop" means, with respect to any Person, any and all now
known or hereafter known tangible and intangible (a) rights associated with works of
authorship throughout the world, including but not limited to copyrights, moral rights
and mask - works, (b) trademark and trade name rights and similar rights, (c) trade secrets
rights, (d) patents, designs, algorithms and other industrial property rights, (e) all other
intellectual and industrial property rights (of every kind and nature throughout the
universe and however designated), whether arising by operation of law, contract, license,
or otherwise, and (f) all registrations, initial applications, renewals, extensions,
continuations, divisions or reissues hereof now or hereafter in force (including any rights
in any of the foregoing), of such Person.
1.13. "Intersection Approach" means a conduit of travel with up to four (4) contiguous
lanes from the curb (e.g., northbound, southbound, eastbound or westbound) on which at
least one (1) system has been installed by Redflex for the purposes of facilitating
Redlight Photo Enforcement by the Customer.
1.14. "Operational Period" means the period of time during the Term, commencing on
the Installation Date, during which the Photo Red Light Enforcement Program is
functional in order to permit the identification and prosecution of Violations at the
Designated Intersection Approaches by a sworn peace officer of the Customer and the
issuance of Citations for such approved Violations using the Redflex System.
1.15. "Person" means a natural individual, company, Governmental Authority,
partnership, firm, corporation, legal entity or other business association.
1.16. "Police Project Manager" means the project manager appointed by the Customer
in accordance with this Agreement, which shall be a sworn peace officer and shall be
responsible for overseeing the installation of the Intersection Approaches and the
implementation of the Redlight Photo Enforcement Program, and which manager shall
have the power and authority to make management decisions relating to the Customer's
obligations pursuant to this Agreement, including but not limited to change order
authorizations, subject to any limitations set forth in the Customer's charter or other
organizational documents of the Customer or by the City Council or other governing
body of the Customer.
1.17. "Potential Violation" means, with respect to any motor vehicle passing through a
Designated Intersection Approach, the data collected by the Redflex System with respect
to such motor vehicle, which data shall be processed by the Redflex System for the
purposes of allowing the Authorized Officer to review such data and determine whether
a Red Light Violation has occurred.
1.18. "Proprietary Property" means, with respect to any Person, any written or tangible
property owned or used by such Person in connection with such Person's business,
whether or not such property is copyrightable or also qualifies as Confidential
Information, including without limitation products, samples, equipment, files, lists,
books, notebooks, records, documents, memoranda, reports, patterns, schematics,
compilations, designs, drawings, data, test results, contracts, agreements, literature,
correspondence, spread sheets, computer programs and software, computer print outs,
other written and graphic records and the like, whether originals, copies, duplicates or
summaries thereof, affecting or relating to the business of such Person, financial
statements, budgets, projections and invoices.
1.19. "Redflex Marks" means all trademarks registered in the name of Redflex or any
of its affiliates, such other trademarks as are used by Redflex or any of its affiliates on or
in relation to Photo Red Light Enforcement at any time during the Term this Agreement,
service marks, trade names, logos, brands and other marks owned by Redflex, and all
modifications or adaptations of any of the foregoing.
1.20. "Redflex Project Manager" means the project manager appointed by Redflex in
accordance with this Agreement, which project manager shall initially be Seth Fogel or
such person as Redflex shall designate by providing written notice thereof to the
Customer from time to time, who shall be responsible for overseeing the construction
and installation of the Designated Intersection Approaches and the implementation the
Photo Red Light Enforcement Program, and who shall have the power and authority to
make management decisions relating to Redflex's obligations pursuant to this
Agreement, including but not limited to change -order authorizations.
1.21. "Redflex Photo Red Light System" means, collectively, the SmartCamTM System,
the SmartOpsTM System, the Redlight Photo Enforcement Program, and all of the other
equipment, applications, back office processes and digital red light traffic enforcement
cameras, sensors, components, products, software and other tangible and intangible
property relating thereto.
1.22. "Photo Red Light Enforcement Program" means the process by which the
monitoring, identification and enforcement of Violations is facilitated by the use of
certain equipment, applications and back office processes of Redflex, including but not
limited to cameras, flashes, central processing units, signal controller interfaces and
detectors (whether loop, radar or video loop) which, collectively, are capable of
measuring Violations and recording such Violation data in the form of photographic
images of motor vehicles.
1.23. "Photo Redlight Violation Criteria" means the standards and criteria by which
Potential Violations will be evaluated by sworn peace officers of the Customer, which
standards and criteria shall include, but are not limited to, the duration of time that a
traffic light must remain red prior to a Violation being deemed to have occurred, and the
location(s) in an intersection which a motor vehicle must pass during a red light signal
prior to being deemed to have committed a Violation, all of which shall be in
compliance with all applicable laws, rules and regulations of (governmental Authorities.
1.24. "SmartCamTM System" means the proprietary digital redlight photo enforcement
system of Redflex relating to the Photo Red Light Enforcement Program.
1.25. "SmartOysTM System" means the proprietary back -office processes of Redflex
relating to the Photo Red Light Enforcement Program.
1.26. "SmartSceneTM System" means the proprietary digital video camera unit,
hardware and software required for providing supplemental violation data.
1.27. "Traffic Signal Controller Boxes" means the signal controller interface and
detector, including but not limited to the radar or video loop, as the case may be.
1.28. "Violation" means any traffic violation contrary to the terms of the Vehicle Code
or any applicable rule, regulation or law of any other Governmental Authority, including
but not limited to operating a motor vehicle contrary to traffic signals, and operating a
motor vehicle without displaying a valid license plate or registration.
1.29. "Violations Data" means the images and other Violations data gathered by the
Redflex System at the Designated Intersection Approaches.
1.30. "Warning Period" means the period of thirty (30) days after the Installation Date
of the first intersection approach.
2. TERM The term of this Agreement shall commence as of the date hereof and shall continue
for a period of five (5) years after the Installation Date (the "Initial Term "). The Customer
shall have the right, but not the obligation, to extend the term of this Agreement for up to two
(2) additional consecutive and automatic two (2) year periods following the expiration of the
Initial Term (each, a "Renewal Term" and collectively with the Initial Term, the "Term ").
The Customer may exercise the right to extend the term of this Agreement for a Renewal
Term by providing written notice to Redflex not less than thirty (30) days prior to the last day
of the Initial Term or the Renewal Term, as the case may be.
3. SERVICES. Redflex shall provide the Photo Red Light Enforcement Program to the
Customer, in each case in accordance with the terms and provisions set forth in this
Agreement.
3.1. INSTALLATION. With respect to the construction and installation of (1) the Designated
Intersection Approaches and the installation of the Redflex System at such Designated
Intersection Approaches, the Customer and Redflex shall have the respective rights and
obligations set forth. on Exhibit B attached hereto.
3.2. MAINTENANCE. With respect to the maintenance of the Redflex System at the
Designated Intersection Approaches the Customer and Redflex shall have the respective
rights and obligations set forth on Exhibit C attached hereto.
3.3. VIOLATION PROCESSING. During the Operational Period, Violations shall be
processed as follows:
3.3.1. All Violations Data shall be stored on the Redflex System;
3.3.2. The Redflex System shall process Violations Data gathered from the Designated
Intersection Approaches into a format capable of review by the Authorized Officer
via the Redflex System;
3.3.3. The Redflex System shall be accessible by the Authorized Officer through a
virtual private network in encrypted format by use of a confidential password on
any computer equipped with a high -speed internet connection and a web browser;
3.3.4. Redflex shall provide the Authorized Officer with access to the Redflex System
for the purposes of reviewing the pre - processed Violations Data within seven (7)
days of the gathering of the Violation Data from the applicable Designated
Intersection Approaches
3.3.5. The Customer shall cause the Authorized Officer to review the Violations Data
and to determine whether a citation shall be issued with respect to each Potential
Violation captured within such Violation Data, and transmit each such
determination in the form of an Electronic Signature to Redflex using the software
or other applications or procedures provided by Redflex on the Redflex System for
such purpose, and REDFLEX HEREBY ACKNOWLEDGES AND AGREES
THAT THE DECISION TO ISSUE A CITATION SHALL BE THE SOLE,
UNILATERAL AND EXCLUSIVE DECISION OF THE AUTHORIZED
OFFICER AND SHALL BE MADE IN SUCH AUTHORIZED OFFICER'S SOLE
DISCRETION (A "CITATION DECISION"), AND IN NO EVENT SHALL
REDFLEX HAVE THE ABILITY OR AUTHORIZATION TO MAKE A
CITATION DECISION;
3.3.6. With respect to each Authorized Violation, Redflex shall print and mail a Citation
within six (6) days after Redflex's receipt of such authorization; provided, however,
during the Warning Period, warning violation notices shall be issued in respect of all
Authorized Violations;
3.3.7. Redflex shall provide a toll-free telephone number for the purposes of answering
citizen inquiries
3.3.8. Redflex shall permit the Authorized Officer to generate monthly reports using the
Redflex Standard Report System.
3.3.9. Upon Redflex's receipt of a written request from the Customer and in addition to
the Standard Reports, Redflex shall provide, without cost to the Customer, reports
regarding the processing and issuance of Citations, the maintenance and downtime
records of the Designated Intersection Approaches and the functionality of the
Redflex System with respect thereto to the Customer in such format and for such
periods as the Customer may reasonably request; provided, however, Redflex shall
not be obligated to provide in excess of six (6) such reports in any given twelve (12)
month period without cost to the Customer;
3.3.10. Upon the Customer's receipt of a written request from Redflex, the Customer
shall provide, without cost to Redflex, reports regarding the prosecution of Citations
and the collection of fines, fees and other monies in respect thereof in such format
and for such periods as Redflex may reasonably request; provided, however, the
Customer shall not be obligated to provide in excess of six (6) such reports in any
given twelve (12) month period without cost to Redflex;
3.3.11. During the six (6) month period following the Installation Date and/or upon
Redflex's receipt of a written request from the Customer at least fourteen (14)
calendar days in advance of court proceeding, Redflex shall provide expert
witnesses for use by the Customer in prosecuting Violations; provided however, the
Customer shall use reasonable best efforts to seek judicial notice in lieu of requiring
Redflex to provide such expert witnesses; and
3.3.12. During the three (3) month period following the Installation Date, Redflex shall
provide such training to law enforcement personnel as shall be reasonably necessary
in order to allow such personnel to act as expert witnesses on behalf of the
Customer with respect to the Redlight Enforcement Program.
3.4. PROSECUTION AND COLLECTION; COMPENSATION. The Customer shall
diligently prosecute Citations and the collection of all Fines in respect thereof, and
Redflex shall have the right to receive, and the Customer shall be obligated to pay, the
compensation set forth on Exhibit D attached hereto.
3.5. OTHER RIGHTS AND OBLIGATIONS. During the Term, in addition to all of the
other rights and obligations set forth in this Agreement, Redflex and the Customer shall
have the respective rights and obligations set forth on Exhibit E attached hereto.
R
3.6. CHANGE ORDERS. The Customer may from time to time request changes to the work
required to be performed or the addition of products or services to those required
pursuant to the terms of this Agreement by providing written notice thereof to Redflex,
setting forth in reasonable detail the proposed changes (a "Change Order Notice ").
Upon Redflex's receipt of a Change Order Notice, Redflex shall deliver a written
statement describing the effect, if any, the proposed changes would have on the pricing
terms set forth in Exhibit D (the "Change Order Proposal "), which Change Order
Proposal shall include (i) a detailed breakdown of the charge and schedule effects, (ii) a
description of any resulting changes to the specifications and obligations of the parties,
(iii) a schedule for the delivery and other performance obligations, and (iv) any other
information relating to the proposed changes reasonably requested by the Customer.
Following the Customer's receipt of the Change Order Proposal, the parties shall
negotiate in good faith and agree to a plan and schedule for implementation of the
proposed changes, the time, manner and amount of payment or price increases or
decreases, as the case may be, and any other matters relating to the proposed changes;
provided, however, in the event that any proposed change involves only the addition of
equipment or services to the existing Designated Intersection Approaches, or the
addition of Intersection Approaches to be covered by the terms of this Agreement, to the
maximum extent applicable, the pricing terms set forth in Exhibit D shall govern. Any
failure of the parties to reach agreement with respect to any of the foregoing as a result
of any proposed changes shall not be deemed to be a breach of this Agreement, and any
disagreement shall be resolved in accordance with Section 10.
4. License; Reservation of Rights.
4.1. License. Subject to the terms and conditions of this Agreement, Redflex hereby grants
the Customer, and the Customer hereby accepts from Redflex upon the terms and
conditions herein specified, a non - exclusive, non - transferable license during the Term of
this Agreement to: (a) solely within the City of (insert name), access and use the
Redflex System for the sole purpose of reviewing Potential Violations and authorizing
the issuance of Citations pursuant to the terms of this Agreement, and to print copies of
any content posted on the Redflex System in connection therewith, (b) disclose to the
public (including outside of the City of (insert name) that Redflex is providing services
to the Customer in connection with Photo Red Light Enforcement Program pursuant to
the terms of this Agreement, and (c) use and display the Redflex Marks on or in
marketing, public awareness or education, or other publications or materials relating to
the Photo Red Light Enforcement Program, so long as any and all such publications or
materials are approved in advance by Redflex.
4.2. RESERVATION OF RIGHTS. The Customer hereby acknowledges and agrees that: (a)
Redflex is the sole and exclusive owner of the Redflex System, the Redflex Marks, all
Intellectual Property arising from or relating to the Redflex System, and any and all
related Equipment, (b) the Customer neither has nor makes any claim to any right, title
or interest in any of the foregoing, except as specifically granted or authorized under this
Agreement, and (c) by reason of the exercise of any such rights or interests of Customer
pursuant to this Agreement, the Customer shall gain no additional right, title or interest
therein.
4.3. RESTRICTED USE. The Customer hereby covenants and agrees that it shall not (a)
make any modifications to the Redflex System, including but not limited to any
7
Equipment, (b) alter, remove or tamper with any Redflex Marks, (c) use any of the
Redflex Marks in any way which might prejudice their distinctiveness, validity or the
goodwill of Redflex therein, (d) use any trademarks or other marks other than the
Redflex Marks in connection with the Customer's use of the Redflex System pursuant to
the terms of this Agreement without first obtaining the prior consent of Redflex, or (e)
disassemble, de- compile or otherwise perform any type of reverse engineering to the
Redflex System, the Redflex System, including but not limited to any Equipment, or to
any, Intellectual Property or Proprietary Property of Redflex, or cause any other Person .
to do any of the foregoing.
4.4. PROTECTION OF RIGHTS. Redflex shall have the right to take whatever action it
deems necessary or desirable to remedy or prevent the infringement of any Intellectual
Property of Redflex, including without limitation the filing of applications to register as
trademarks in any jurisdiction any of the Redflex Marks, the filing of patent application
for any of the Intellectual Property of Redflex, and making any other applications or
filings with appropriate Governmental Authorities. The Customer shall not take any
action to remedy or prevent such infringing activities, and shall not in its own name
make any registrations or filings with respect to any of the Redflex Marks or the
Intellectual Property of Redflex without the prior written consent of Redflex.
4.5. INFRINGEMENT. The Customer shall use its reasonable best efforts to give Redflex
prompt notice of any activities or threatened activities of any Person of which it becomes
aware that infringes or violates the Redflex Marks or any of Redflex's Intellectual
Property or that constitute a misappropriation of trade secrets or act of unfair
competition that might dilute, damage or destroy any of the Redflex Marks or any other
Intellectual Property of Redflex. Redflex shall have the exclusive right, but not the
obligation, to take action to enforce such rights and to make settlements with respect
thereto. In the event that Redflex commences any enforcement action under this Section
4.5, then the Customer shall render to Redflex such reasonable cooperation and
assistance as is reasonably requested by Redflex, and Redflex shall be entitled to any
damages or other monetary amount that might be awarded after deduction of actual
costs; provided, that Redflex shall reimburse the Customer for any reasonable costs
incurred in providing such cooperation and assistance.
4.6. INFRINGING USE. The Customer shall give Redflex prompt written notice of any
action or claim, whether threatened or pending, against the Customer alleging that the
Redflex Marks, or any other Intellectual Property of Redflex, infringes or violates any
patent, trademark, copyright, trade secret or other Intellectual Property of any other
Person, and the Customer shall render to Redflex such reasonable cooperation and
assistance as is reasonably requested by Redflex in the defense thereof; provided, that
Redflex shall reimburse the Customer for any reasonable costs incurred in providing
such cooperation and assistance. If such a claim is made and Redflex determines, in the
exercise of its sole discretion, that an infringement may exist, Redflex shall have the
right, but not the obligation, to procure for the Customer the right to keep using the
allegedly infringing items, modify them to avoid the alleged infringement or replace
them with non - infringing items.
5. Representations and Warranties.
5.1. Redflex Representations and Warranties.
0
5.1.1. Authority. Redflex hereby warrants and represents that it has all right, power and
authority to execute and deliver this Agreement and perform its obligations
hereunder.
5.1.2. Professional Services. Redflex hereby warrants and represents that any and all
services provided by Redflex pursuant to this Agreement shall be performed in a
professional and workmanlike manner and, with respect to the installation of the
Redflex System, subject to applicable law, in compliance with all specifications
provided to Redflex by the Customer.
5.2. Customer Representations and Warranties.
5.2.1. Authority. The Customer hereby warrants and represents that it has all right,
power and authority to execute and deliver this Agreement and perform its
obligations hereunder.
5.2.2. Professional Services. The Customer hereby warrants and represents that any and
all services provided by the Customer pursuant to this Agreement shall be
performed in a professional and workmanlike manner.
5.3. LIMITED WARRANTIES. EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, REDFLEX MAKES NO WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH
RESPECT TO THE REDFLEX SYSTEM OR ANY RELATED EQUIPMENT OR
WITH RESPECT TO THE RESULTS OF THE CUSTOMER'S USE OF ANY OF THE
FOREGOING NOTWITHSTANDING ANYTHING TO THE CONTRARY SET
FORTH HEREIN, REDFLEX DOES NOT WARRANT THAT ANY OF THE
DESIGNATED INTERSECTION APPROACHES OR THE REDFLEX SYSTEM
WILL OPERATE IN THE WAY THE CUSTOMER SELECTS FOR USE, OR THAT
THE OPERATION OR USE THEREOF WILL BE UNINTERRUPTED. THE
CUSTOMER HEREBY ACKNOWLEDGES THAT THE REDFLEX SYSTEM MAY
MALFUNCTION FROM TIME TO TIME, AND SUBJECT TO THE TERMS OF THIS
AGREEMENT, REDFLEX SHALL DILIGENTLY ENDEAVOR TO CORRECT ANY
SUCH MALFUNCTION IN A TIMELY MANNER.
6. Termination.
6.1. TERMINATION FOR CAUSE: Either parry shall have the right to terminate this
Agreement immediately by written notice to the other if (i) state statutes are amended to
prohibit or substantially change the operation of photo red light enforcement systems;
(ii) any court having jurisdiction over City rules, or state or federal statute declares, that
results from the Redflex System of photo red light enforcement are inadmissible in
evidence; or (iii) the other party commits any material breach of any of the provisions of
this Agreement. In the event of a termination due to Section 6.1(i) or 6.1(ii) above,
Customer shall be relieved of any further obligations for payment to Redflex other than
as specified in Exhibit "D ". Either party shall have the right to remedy the cause for
termination (Sec 6. 1.) within forty -five (45) calendar days (or within such other time
period as the Customer and Redflex shall mutually agree, which agreement shall not be
unreasonably withheld or delayed) after written notice from the non - causing party
setting forth in reasonable detail the events of the cause for termination.
0
6.2. The rights to terminate this Agreement given in this Section 6.1 shall be 'without
prejudice to any other right or remedy of either parry in respect of the breach concerned
(if any) or any other breach of this Agreement.
6.3. PROCEDURES UPON TERMINATION. The termination of this Agreement shall not
relieve either parry of any liability that accrued prior to such termination. Except as set
forth in Section 6.3, upon the termination of this Agreement, all of the provisions of this
Agreement shall terminate and:
6.3.1. Redflex shall (i) immediately cease to provide services, including but not limited
to work in connection with the construction or installation activities and services in
connection with the Photo Red Light Enforcement Program, (ii) promptly deliver to
the Customer any and all Proprietary Property of the Customer provided to Redflex
pursuant to this Agreement, (iii) promptly deliver to the Customer a final report to
the Customer regarding the collection of data and the issuance of Citations in such
format and for such periods as the Customer may reasonably request, and which
final report Redflex shall update or supplement from time to time when and if
additional "data or information becomes available, (iv) promptly deliver to Customer
a final invoice stating all fees and charges properly owed by Customer to Redflex
for work performed and Citations issued by Redflex prior to the termination, and (v)
provide such assistance as the Customer may reasonably request from time to time
in connection with prosecuting and enforcing Citations issued prior to the
termination of this Agreement.
6.3.2. The Customer shall (i) immediately cease using the Photo Red Light Enforcement
Program, accessing the Redflex System and using any other Intellectual Property of
Redflex, (ii) promptly deliver to Redflex any and all Proprietary Property of Redflex
provided to the Customer pursuant to this Agreement, and (iii) promptly pay any
and all fees, charges and amounts properly owed by Customer to Redflex for work
performed and Citations issued by Redflex prior to the termination.
6.3.3. Unless the Customer and Redflex have agreed to enter into a new agreement
relating to the Photo Red Light Enforcement Program or have agreed to extend the
Term of this Agreement, Redflex shall remove any and all Equipment or other
materials of Redflex installed in connection with Redflex's performance of its
obligations under this Agreement, including but not limited to housings, poles and
camera systems, and Redflex shall restore the Designated Intersection Approaches
to substantially the same condition such Designated Intersection Approaches were
in immediately prior to this Agreement.
6.4. SURVIVAL. Notwithstanding the foregoing, the definitions and each of the following
shall survive the termination of this Agreement: (x) Sections 4.2 (Reservation of
Rights), 5.1 (Redflex Representations and Warranties), 5.2 (Customer Representations
and Warranties), 5.3 (Limited Warranty), 7 (Confidentiality), 8 (Indemnification and
Liability), 9 (Notices), 10 (Dispute Resolution), 11.1 (Assignment), 11.17 (Applicable
Law), 11.16 (Injunctive Relief, Specific Performance) and 11.18 (Jurisdiction and
Venue), and (y) those provisions, and the rights and obligations therein, set forth in this
Agreement which either by their terms state, or evidence the intent of the parties, that the
provisions survive the expiration or termination of the Agreement, or must survive to
give effect to the provisions of this Agreement.
In
7
CONFIDENTIALITY'. During the term of this Agreement and for a period of three (3) years
thereafter, neither parry shall disclose to any third person, or use for itself in any way for
pecuniary gain, any Confidential Information learned from the other parry during the course
of the negotiations for this Agreement or during the Term of this Agreement. Upon
termination of this Agreement, each parry shall retain in confidence and not disclose to any
third party any Confidential Information without the other party's express written consent,
except (a) to its employees who are reasonably required to have the Confidential Information,
(b) to its agents, representatives, attorneys and other professional advisors that have a need to
know such Confidential Information, provided that such parties undertake in writing (or are
otherwise bound by rules of professional conduct) to keep such information strictly
confidential, and (c) pursuant to, and to the extent of, a request or order by any Governmental
Authority, including Federal, State, and Local laws relating to public records.
Indemnification and Liabilily.
8.1. Indemnification by Redflex. Subject to Section 8.3, Redflex hereby agrees to defend and
indemnify the Customer and its affiliates, shareholders or other interest holders,
managers, officers, directors, employees, agents, representatives and successors,
permitted assignees and each of their affiliates, and all persons acting by, through, under
or in concert with them, or any of them (individually a "Customer Parry" and
collectively, the "Customer Parties ") against, and to protect, save and keep harmless the
Customer Parties from, and to pay on behalf of or reimburse the Customer Parties as and
when incurred for, any and all liabilities, obligations, losses, damages, penalties,
demands, claims, actions, suits, judgments, settlements, costs, expenses and
disbursements (including reasonable attorneys', accountants' and expert witnesses' fees)
of whatever kind and nature (collectively, "Losses "), which may be imposed on or
incurred by any Customer Party arising out of or related to (a) any material
misrepresentation, inaccuracy or breach of any covenant, warranty or representation of
Redflex contained in this Agreement, or (b) the willful misconduct of Redflex, its
employees or agents which result in death or bodily injury to any natural person
(including third parties) or any damage to any real or tangible personal property
(including the personal property of third parties), except to the extent caused by the
willful misconduct of any Customer Party.
8.2. Indemnification by Customer. Subject to Section 8.3, the Customer hereby agrees to
defend and indemnify Redflex and its affiliates, shareholders or other interest holders,
managers, officers, directors, employees, agents, representatives and successors,
permitted assignees and all persons acting by, through, under or in concert with them, or
any of them (individually a "Redflex Party" and collectively, the "Redflex Parties ")
against, and to protect, save and keep harmless the Redflex Parties from, and to pay on
behalf of or reimburse the Redflex Parties as and when incurred for, any and all Losses
which may be imposed on or incurred by any Redflex Party arising out of or in any way
related to (a) any material misrepresentation , inaccuracy or breach of any covenant,
warranty or representation of the Customer contained in this Agreement, (b) the willful
misconduct of the Customer, its employees, contractors or agents which result in death
or bodily injury to any natural person (including third parties) or any damage to any real
or tangible personal property (including the personal property of third parties), except to
the extent caused by the willful misconduct of any Redflex Party, (c) any claim, action
or demand not caused by Redflex's failure to perform its obligations under this
EK
Agreement, or (d) any claim, action or demand challenging the Customer's use of the
Redflex System or any portion thereof, the validity of the results of the Customer's use
of the Redflex System or any portion thereof, or the validity of the Citations issued,
prosecuted and collected as a result of the Customer's use of the Redflex System or any
portion thereof.
8.3. Indemnification Procedures. In the event any claim, action or demand (a "Claim ") in
respect of which any party hereto seeks indemnification from the other, the party seeking
indemnification (the "Indemnified Parry ") shall give the parry from whom
indemnification is sought (the "Indemnifying Parry ") written notice of such Claim
promptly after the Indemnified Party first becomes aware thereof; provided, however,
that failure so to give such notice shall not preclude indemnification with respect to such
Claim except to the extent of any additional or increased Losses or other actual prejudice
directly caused by such failure. The Indemnifying Parry shall have the right to choose
counsel to defend such Claim (subject to the approval of such counsel by the
Indemnified Parry, which approval shall not be unreasonably withheld, conditioned or
delayed), and to control, compromise and settle such Claim, and the Indemnified Parry
shall have the right to participate in the defense at its sole expense; provided, however,
the Indemnified Party shall have the right to take over the control of the defense or
settlement of such Claim at any time if the Indemnified Party irrevocably waives all
rights to indemnification from and by the Indemnifying Party. The Indemnifying Party
and the Indemnified Party shall cooperate in the defense or settlement of any Claim, and
no party shall have the right enter into any settlement agreement that materially affects
the other party's material rights or material interests without such party's prior written
consent, which consent will not be unreasonably withheld or delayed.
8.4. LIMITED LIABILITY. Notwithstanding anything to the contrary in this Agreement,
neither party shall be liable to the other, by reason of any representation or express or
implied warranty, condition or other term or any duty at common or civil law, for any
indirect, incidental, special, lost profits or consequential damages, however caused and
on any theory of liability arising out of or relating to this Agreement.
9. NOTICES Any notices to be given hereunder shall be in writing, and shall be deemed to
have been given (a) upon delivery, if delivered by hand, (b) three (3) days after being mailed
first class, certified mail, return receipt requested, postage and registry fees prepaid, or (c)
one Business Day after being delivered to a reputable overnight courier service, excluding
the U.S. Postal Service, prepaid, marked for next day delivery, if the courier service obtains a
signature acknowledging receipt, in each case addressed or sent to such party as follows:
9.1. Notices to Redflex:
Redflex Traffic Systems, Inc.
15020 North 74h Street
Scottsdale, AZ 85260
Attention: Ms. Karen Finley
Facsimile: (480) 607 -5552
9.2. Notices to the Customer:
City of Baldwin Park
7 '1
Administration Department
14403 East Pacific Avenue
Baldwin Park, CA 91744
Attention: Vijay Singhal, Chief Executive Officer
Office: (626) 813-5204
Facsimile: (626) 337-2965
1 1)
10. DISPUTE RESOLUTION. Upon the occurrence of any dispute or disagreement between
the parties hereto arising out of or in connection with any term or provision of this
Agreement, the subject matter hereof, or the interpretation or enforcement hereof (the
"Dispute "), the parties shall engage in informal, good faith discussions and attempt to resolve
the Dispute. In connection therewith, upon written notice of either party, each of the parties
will appoint a designated officer whose task it shall be to meet for the purpose of attempting
to resolve such Dispute. The designated officers shall meet as often as the parties shall deem
to be reasonably necessary. Such officers will discuss the Dispute. If the parties are unable
to resolve the Dispute in accordance with this Section 10, and in the event that either of the
parties concludes in good faith that amicable resolution through continued negotiation with
respect to the Dispute is not reasonably likely, then the parties may mutually agree to submit
to binding or nonbinding arbitration or mediation.
11. Miscellaneous.
11.1. Assignment. Neither party may assign all or any portion of this Agreement
without the prior written consent of the other, which consent shall not be unreasonably
withheld or delayed; provided, however, The Customer hereby acknowledges and agrees
that the execution (as outlined in Exhibit F), delivery and performance of Redflex's
rights pursuant to this Agreement shall require a significant investment by Redflex, and
that in order to finance such investment, Redflex may be required to enter into certain
agreements or arrangements ( "Financing Transactions ") with equipment lessors, banks,
financial institutions or other similar persons or entities (each, a "Financial Institution"
and collectively, "Financial Institutions "). The Customer hereby agrees that Redflex
shall have the right to assign, pledge, hypothecate or otherwise transfer ( "Transfer ") its
rights, or any of them, under this Agreement to any Financial Institution in connection
with any Financing Transaction between Redflex and any such Financial Institution,
subject to the Customer's prior written approval, which approval shall not be
unreasonably withheld or delayed. The Customer further acknowledges and agrees that
in the event that Redflex provides written notice to the Customer that it intends to
Transfer all or any of Redflex's rights pursuant to this Agreement, and in the event that
the Customer fails to provide such approval or fails to object to such Transfer within
forty -five (45) business days after its receipt of such notice from Redflex, for the
purposes of this Agreement, the Customer shall be deemed to have consented to and
approved such Transfer by Redflex. Notwithstanding the above, this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto, and their respective
successors or assigns.
11.2. RELATIONSHIP BETWEEN REDFLEX AND THE CUSTOMER. Nothing in
this Agreement shall create, or be deemed to create, a partnership, joint venture or the
relationship of principal and agent or employer and employee between the parties. The
relationship between the parties shall be that of independent contractors, and nothing
contained in this Agreement shall create the relationship of principal and agent or otherwise
permit either party to incur any debts or liabilities or obligations on behalf of the other party
(except as specifically provided herein).
11.3. AUDIT RIGHTS. Each of parties hereto shall have the right to audit to audit the
books and records of the other party hereto (the "Audited Party ") solely for the purpose
of verifying the payments, if any, payable pursuant to this Agreement. Any such audit
1 A
shall be conducted upon not less than forty-eight (48) hours' prior notice to the Audited
Party, at mutually convenient times and during the Audited Parry's normal business
hours. Except as otherwise provided in this Agreement, the cost of any such audit shall
be borne by the non - Audited Parry. In the event any such audit establishes any
underpayment of any payment payable by the Audited Party to the non - Audited Parry
pursuant to this Agreement, the Audited Party shall promptly pay the amount of the
shortfall, and in the event that any such audit establishes that the Audited Party has
underpaid any payment by more than twenty five percent (25 %) of the amount of
actually owing, the cost of such audit shall be borne by the Audited Party. In the event
any such audit establishes any overpayment by the Audited Party of any payment made
pursuant to this Agreement, non - Audited Party shall promptly refund to the Audited
Party the amount of the excess.
11.4. FORCE MAJEURE. Neither party will be liable to the other or be deemed to be
in breach of this Agreement for any failure or delay in rendering performance arising out
of causes beyond its reasonable control and without its fault or negligence. Such causes
may include but are not limited to, acts of God or the public enemy, terrorism,
significant fires, floods, earthquakes, epidemics, quarantine restrictions, strikes, freight
embargoes, or Governmental Authorities approval delays which are not caused by any
act or omission by Redflex, and unusually severe weather. The party whose
performance is affected agrees to notify the other promptly of the existence and nature ,of
any delay.
11.5. ENTIRE AGREEMENT. This Agreement represents the entire Agreement
between the parties, and there are no other agreements (other than invoices and purchase
orders), whether written or oral, which affect its terms. This Agreement may be
amended only by a subsequent written agreement signed by both parties.
11.6. SEVERABILITY. If any provision of this Agreement is held by any court or
other competent authority to be void or unenforceable in whole or part, this Agreement
shall continue to be valid as to the other provisions thereof and the remainder of the
affected provision.
11.7. WAIVER. Any waiver by either party of a breach of any provision of this
Agreement shall not be considered as a waiver of any subsequent breach of the same or
any other provision thereof.
11.8. CONSTRUCTION Except as expressly otherwise provided in this Agreement,
this Agreement shall be construed as having been fully and completely negotiated and
neither the Agreement nor any provision thereof shall be construed more strictly against
either party.
11.9. HEADINGS. The headings of the sections contained in this Agreement are
included herein for reference purposes only, solely for the convenience of the parties
hereto, and shall not in any way be deemed to affect the meaning, interpretation or
applicability of this Agreement or any term, condition or provision hereof.
11.10. EXECUTION AND COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute only one instrument.
Any one of such counterparts shall be sufficient for the purpose of proving the existence
and terms of this Agreement and no party shall be required to produce an original or all
of such counterparts in making such proof.
arm
11.11. COVENANT OF FURTHER ASSURANCES. All parties to this Agreement
shall, upon request, perform any and all acts and execute and deliver any and all
certificates, instruments and other documents that may be necessary or appropriate to
carry out any of the terms, conditions and provisions hereof or to carry out the intent of
this Agreement.
1.1.12. REMEDIES CUMULATIVE. Each and all of the several rights and remedies
provided for in this Agreement shall be construed as being cumulative and no one of
them shall be deemed to be exclusive of the others or of any right or remedy allowed by
law or equity, and pursuit of any one remedy shall not be deemed to be an election of
such remedy, or a waiver of any other remedy.
11.13. BINDING EFFECT. This Agreement shall inure to the benefit of and be binding
upon all of the parties hereto and their respective executors, administrators, successors
and permitted assigns.
11.14. COMPLIANCE WITH LAWS. Nothing contained in this Agreement shall be
construed to require the commission of any act contrary to law, and whenever there is a
conflict between any term, condition or provision of this Agreement and any present or
future statute, law, ordinance or regulation contrary to which the parties have no legal
right to contract, the latter shall prevail, but in such event the term, condition or
provision of this Agreement affected shall be curtailed and limited only to the extent
necessary to bring it within the requirement of the law, provided that such construction is
consistent with the intent of the Parties as expressed in this Agreement.
11.15. NO THIRD PARTY BENEFIT. Nothing contained in this Agreement shall be
deemed to confer any right or benefit on any Person who is not a party to this
Agreement.
11.16. INJUNCTIVE RELIEF• SPECIFIC PERFORMANCE. The parties hereby agree
and acknowledge that a breach of Sections 4.1 (License), 4.3 (Restricted Use) or 7
(Confidentiality) of this Agreement would result in severe and irreparable injury to the
other parry, which injury could not be adequately compensated by an award of money
damages, and the parties therefore agree and acknowledge that they shall be entitled to
injunctive relief in the event of any breach of any material term, condition or provision
of this Agreement, or to enjoin or prevent such a breach, including without limitation an
action for specific performance hereof.
11.17. APPLICABLE LAW. This Agreement shall be governed by and construed in all
respects solely in accordance with the laws of the State of California, United States.
11.18. JURISDICTION AND VENUE. Any dispute arising out of or in connection with
this Agreement shall be submitted to the exclusive jurisdiction and venue of the courts
located in the County of Los Angeles and both parties specifically agree to be bound by
the jurisdiction and venue thereof.
(The remainder of this page is left intentionally blank)
1 L
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first set forth above.
"Customer"
"Redflex"
CITY OF BALDWIN PARK REDFLEX TRAFFIC SYSTEMS, INC.,
Mayor
an
ATTEST:
City Clerk/ Deputy
By: A,t
Name: -AAg&u estate
Title: 'v.??
i'
EXHIBIT "A"
Designated Intersection Approaches
The contract is for the implementation of up to 10 intersections. Identification of enforced
intersection will be based on mutual agreement between Redflex and the City as warranted by
community safety and traffic needs. The following six intersections have been initially chosen
from the AAE, Inc. prepared intersection study titled Red Light Cameras An Analysis Performed
for the City of Baldwin Park dated March 7, 2005 and from input from the Police and
Engineering staff. Modification of this list requires written approval by the Director of Public
Works /City Engineer.
• Puente Ave. and Merced Ave.
• Ramona Blvd. and Baldwin Park Blvd.
• Francisquito Ave. and Baldwin Park Blvd.
• Puente Ave. and Francisquito Ave.
• Maine Ave. and Ramona Blvd.
• Puente Ave and Pacific Ave.
10
EXHIIBT "B"
Construction and[1I1nsstallation Obligations
Tmmeframe for Installation: Fixed Photo Red Light System
Redflex will have each specified intersection installed and activated in phases in accordance with
an implementation plan to be mutually agreed to by Redflex Traffic Systems and the
Municipality.
Redflex will use reasonable commercial efforts to install the system in accordance with the
schedule set forth in the implementation plan that will be formalized upon project
commencement.
Redflex will use reasonable commercial efforts to install and activate the first specified
intersection within forty -five (45) to sixty (60) days subsequent to formal project kick -off. The
Municipality agrees that the estimated timeframe for installation and activation are subject to
conditions beyond the control of Redflex and are not guaranteed.
In order to provide the client with timely completion of the photo enforcement project Redflex
Traffic Systems requires that the City assist with providing timely approval of City permit
requests. The City acknowledges the importance of the safety program and undertakes that ,in
order to keep the project on schedule the customer is to provide city engineers review of Redflex
permit requests and all documentation in a timely manner.
1. Redflex Obligations. Redflex shall do or cause to be done each of the following (in each
case, unless otherwise stated below, at Redflex's sole expense):
I.I. Appoint the Redflex Project Manager and a project implementation team consisting of
between one (1) and four (4) people to assist the Redflex Project Manager;
1.2. Request current "as- built" electronic engineering drawings for the Designated
Intersection Approaches (the "Drawings ") from the city traffic engineer;
1.3. Develop and submit to the Customer for approval construction and installation
specifications in reasonable detail for the Designated Intersection Approaches, including
but not limited to specifications for all radar sensors, pavement loops, electrical
connections and traffic controller connections, as required; and
1.4. Seek approval from the relevant Governmental Authorities having authority or
jurisdiction over the construction and installation specifications for the Designated
Intersection Approaches (collectively, the "Approvals "), which will include compliance
with City permit applications.
1.5. Finalize the acquisition of the Approvals;
1.6. Submit to the Customer a public awareness strategy for the Customer's consideration
and approval, which strategy shall include media and educational materials for the
Customer's approval or amendment (the "Awareness Strategy ");
1.7. Develop the Redlight Violation Criteria in consultation with the Customer;
1.8. Develop the Enforcement Documentation for approval by the Customer, which approval
shall not be unreasonably withheld;
7n
1.9. Complete the installation and testing of all necessary Equipment, including hardware
and software, at the Designated Intersection Approaches (under the supervision of the
Customer);
1.10. Cause an electrical sub - contractor to complete all reasonably necessary electrical
work at the Designated Intersection Approaches, including but not limited to the
installation of all related Equipment and other detection sensors, poles, cabling,
telecommunications equipment and wiring, which work shall be performed in
compliance with all applicable local, state and federal laws and regulations;
1.11. Install and test the functionality of the Designated Intersection Approaches with
the Redflex System and establish fully operational Violation processing capability with
the Redflex System;
1.12. Implement the use of the Redflex System at each of the Designated Intersection
Approaches;
1.13. Deliver the Materials to the Customer; and
1.14. Issue citation notices for Authorized Violations;
1.15. Redflex shall provide training (i) for up to fifteen (15) personnel of the Customer,
including but not limited to the persons who Customer shall appoint as Authorized
Officers and other persons involved in the administration of the Redlight Photo
Enforcement Program, (ii) for at least sixteen (16) hours in the aggregate, (iii) regarding
the operation of the Redflex System and the Redlight Photo Enforcement Program,
which training shall include training with respect to the Redflex System and its
operations, strategies for presenting Violations Data in court and judicial proceedings
and a review of the Enforcement Documentation;
1.16. Interact with court and judicial personnel to address issues regarding the
implementation of the Redflex System, the development of a subpoena processing
timeline that will permit the offering of Violations Data in court and judicial
proceedings, and coordination between Redflex, the Customer and juvenile court
personnel; and
1.17. Provide reasonable public relations resources and media materials to the
Customer in the event that the Customer elects to conduct a public launch of the
Redlight Photo Enforcement Program.
1.18. Citation processing and citation re- issuance
2. CUSTOMER OBLIGATIONS. The Customer shall do or cause to be done each of the
following (in each case, unless otherwise stated below, at Customer's sole expense):
2.1.1. Appoint the Project Manager;
2.1.2. Assist Redflex in obtaining the Drawings from the relevant Governmental
Authorities;
2.1.3. Notify Redflex of any specific requirements relating to the construction and
installation of any Intersection Approaches or the implementation of the Redlight
Photo Enforcement Program;
2.1.4. Provide assistance to Redflex in obtaining access to the records data of the
Department of Motor Vehicles in Redflex's capacity as an independent contractor to
the Customer; and
2.1.5. Assist Redflex in seeking the Approvals
nn
2.1.6. Provide reasonable access to the Customer's properties and facilities in order to
permit Redflex to install and test the functionality of the Designated Intersection
Approaches and the Redlight Photo Enforcement Program;
2.1.7. Provide reasonable access to the personnel of the Customer and reasonable
information about the specific operational requirements of such personnel for the
purposes of performing training;
2.1.8. Seek approval or amendment of Awareness Strategy and provide written notice to
Redflex with respect to the quantity of media and program materials (the
"Materials ") that the Customer will require in order to implement the Awareness
Strategy during the period commencing on the date on which Redflex begins the
installation of any of the Designated Intersection Approaches and ending one (1)
month after the Installation Date;
2.1.9. Assist Redflex in developing the Redlight Violation Criteria; and
2.1.10. Seek approval of the Enforcement Documentation.
n 1
EXIEUBIT 66C9
Maintenance
1. All repair and maintenance of Photo Red Light Enforcement systems and related equipment
will be the sole responsibility of Redflex, including but not limited to maintaining the casings
of the cameras included in the Redflex System and all other Equipment in reasonably clean
and graffiti -free condition.
2. Redflex shall not open the Traffic Signal Controller Boxes without a representative of city
Traffic Engineering present.
3. The provision of all necessary communication, broadband and telephone services to the
Designated Intersection Approaches will be the sole responsibility of the Redflex
4. The provision of all necessary electrical services to the Designated Intersection Approaches
will be the sole responsibility of the Customer
5. In the event that images of a quality suitable for the Authorized Officer to identify Violations
cannot be reasonably obtained without the use of flash units, Redflex shall provide and install
such flash units.
6. The Redflex Project Manager (or a reasonable alternate) shall be available to the Police
Project Manager each day, on a reasonable best efforts basis.
Commencing on the expiration of the Warning Period for each Designated Intersection
Approach, Customer shall be obligated to pay Redflex a fixed fee of $6,000 per month for each
Designated Intersection Approach ("Fixed Fee") as full remuneration for performing all of the
services contemplated in this Agreement.
Cost Neutralitv
Cost neutrality is assured to Customer. Cost neutrality is assured to Customer using
this methodology, as Customer will never pga Redflex more than actual cash
received.
The Customer agrees to pay Redflex within thirty (30) days after the invoice is received.
City shall be obligated to pay the cumulative balance invoiced by Redflex, in accordance
with terms set forth above, to the extent of gross cash received by the City from
automated red light violations. In the event that a balance remains unpaid due to a
deficit in gross cash received by the City compared to invoiced amounts, City will
provide to Redflex with each monthly payment, an accounting of such gross receipts
supporting the amount withheld.
I In the event that the contract ends or is terminated and an invoiced balance is still
owed to Redflex, all subsequent receipts from automated red light violations for a
period of 12 months from date of termination will be applied to such balance and
paid to Redflex
2. Payment will only be made by Customer up to the amount of cash received by
Customer from the County through the collection of red light citation up to the
amount currently due.
3. Customer to open special revenue account and payments to Redflex will come only
from the available balance in that account up to the amount currently due, including
any unpaid prior invoiced amounts.
1. Redflex construction will be able to utilize existing conduit for installation where space is
available.
2. Each year the pricing will increase by the CPI. CPI will be derived from the publication of
the U.S. Department of Labor Consumer Price Index for U.S. City average.
'1 A
Exhibit "E"
Additional Rights and Obligations
Redflex and the Customer shall respectively have the additional rights and obligations set forth
below:
1. Redflex shall assist the Customer in public information and education efforts, including but
not limited to the development of artwork for utility bill inserts, press releases and schedules
for any public launch of the Redlight Photo Enforcement Program (actual print and
production costs are the sole responsibility of the Customer).
2. Redflex shall be solely responsible for installing such Signage. The Redflex shall be solely
responsible for the fabrication of any signage, notices or other postings required pursuant to
any law, rule or regulation of any Governmental Authority ( "Si a e "), including but not
limited to the Vehicle Code, and shall assist in determining the placement of such Signage.
3. The Redflex Project Manager and the Police Project Manager shall meet on a weekly basis
during the period commencing as of the date of execution hereof and ending on the
Installation Date, and on a monthly basis for the remainder of the Term, at such times and
places as the Redflex Manager and the Customer Manager shall mutually agree.
4. The Customer shall not access the Redflex System or use the Redlight Photo Enforcement
Program in any manner other than prescribe by law and which restricts or inhibits any other
Person from using the Redflex System or the Redflex ' Photo Enforcement Program with
respect to any Intersection Approaches constructed or maintained by Redflex for such
Person, or which could damage, disable, impair or overburden the Redflex System or the
Redflex Photo Enforcement Program, and the Customer shall not attempt to gain
unauthorized access to (i) any account of any other Person, (ii) any computer systems or
networks connected to the Redflex System, or (iii) any materials or information not
intentionally made available by Redflex to the Customer by means of hacking, password
mining or any other method whatsoever, nor shall the Customer cause any other Person to do
any of the foregoing.
5. The Customer shall maintain the confidentiality of any username, password or other process
or device for accessing the Redflex System or using the Redlight Photo Enforcement
Program.
6. Each of Redflex and the Customer shall advise each other in writing with respect to any
applicable rules or regulations governing the conduct of the other on or with respect to the
property of such other party, including but not limited to rules and regulations relating to the
safeguarding of confidential or proprietary information, and when so advised, each of
Redflex and the Customer shall obey any and all such rules and regulations.
7. The Customer shall promptly reimburse Redflex for the cost of repairing or replacing any
portion of the Redflex System, or any property or equipment related thereto, damaged
directly or indirectly by the Customer, or any of its employees, contractors or agents.
Insurance
1. During the Term, Redflex shall procure and maintain at Redflex's sole cost and expense
the following insurance coverage with respect to claims for injuries to persons or
damages to property which may arise from or in connection with the performance of
work or services pursuant to this Agreement by Redflex, and each of Redflex's
subcontractors, agents, representatives and employees:
2. Commercial General Liability Insurance. Commercial General Liability Insurance with .
coverage of not less than One Million Dollars ($1,000,000) combined single limit per
occurrence for bodily injury and property damage;
3. Commercial Automobile Liability Insurance. Commercial Automobile Liability
Insurance with coverage of not less than One Million Dollars ($1,000,000) combined
single limit per occurrence for bodily injury or property damage, including but not
limited to coverage for all automobiles owned by Redflex, hired by Redflex, and owned
by third parties;
4. Professional Liability (Errors and Omissions) Insurance. Redflex will use its commercial
best efforts to procure and maintain Professional Liability (Errors and Omissions)
Insurance with coverage of not less than One Million Dollars ($1,000,000) per
occurrence and in the aggregate.
5. Workers' Compensation and Employer's Liability Insurance. Workers' Compensation
Insurance with coverage of not less than the limits required by the Labor Code of the
State of (insert name), Employer's Liability Insurance with coverage of not less than One
Million Dollars ($1,000,000) per occurrence.
6. With respect to the insurance described in the foregoing Section of this Exhibit E, any
deductibles or self - insured retentions must be declared to and approved by the Customer,
and any changes to such deductibles or self - insured retentions during the Term must be
approved in advance in writing by the Customer.
7. With respect to the Commercial General Liability Insurance the following additional
provisions shall apply:
a) The Customer Parties shall be covered as additional insureds with respect to any
liability arising from any act or omission of any Redflex Parties on the premises
upon which any such Redflex Parties may perform services pursuant to this
Agreement, and such coverage shall contain no special limitations on the scope of
protection afforded to such additional insureds.
b) The insurance coverage procured by Redflex and described above shall be the
primary insurance with respect to the Customer Parties in connection with this
Agreement, and any insurance or self-insurance maintained by any of the
Customer Parties shall be in excess, and not in contribution to, such insurance.
c) Any failure to comply with the reporting provisions of the various insurance
policies described above shall not affect the coverage provided to the Customer
Parties, and such insurance policies shall state the such insurance coverage shall
apply separately with respect to each additional insured against whom any claim
is made or suit is brought, except with respect to the limits set forth in such
insurance policies.
^Ic
8. With respect to the insurance described in the foregoing Section of this Exhibit E, each
such insurance policy shall be endorsed to state that the coverage provided thereby shall
not be cancelled except after thirty (30) calendar days' prior written notice to the
Customer. If any of the Redflex Parties are notified by any insurer that any insurance
coverage will be cancelled, Redflex shall immediately provide written notice thereof to
the Customer and shall take all necessary actions to correct such cancellation in coverage
limits, and shall provide written notice to the Customer of the date and nature of such
correction. If Redflex, for any reason, fails to maintain the insurance coverage required .
pursuant to this Agreement, such failure shall be deemed a material breach of this
Agreement, and the Customer shall have the right, but not the obligation and exercisable
in its sole discretion, to either (i) terminate this Agreement and seek damages from
Redflex for such breach, or (ii) purchase such required insurance, and without further
notice to Redflex, deduct from any amounts due to Redflex pursuant to this Agreement,
any premium costs advance by the Customer for such insurance. If the premium costs
advanced by the Customer for such insurance exceed any amounts due to Redflex
pursuant to this Agreement, Redflex shall promptly remit such excess amount to the
Customer upon receipt of written notice thereof.
9. Redflex shall provide certificates of insurance evidencing the insurance required pursuant
to the terms of this Agreement, which certificates shall be executed by an authorized
representative of the applicable insurer, and which certificates shall be delivered to the
Customer prior to Redflex commencing any work pursuant to the terms of this
Agreement.
Exhibit
FORM OF 1` 1 1 AND CONSENT
This Acknowledgement and Consent, dated as of January , 2006, is entered into by and
between the City of Baldwin Park (the "City ") and Redflex Traffic Systems, Inc., ( "Redflex "),
with reference to the Agreement between the City of Baldwin Park and Redflex Traffic Systems,
Inc. for Photo red light enforcement program, dated as of , by and
between the City and Redflex (the "Agreement ").
1. Redflex has entered into a Credit Agreement, dated as of August 3, 2003 (the
"Harris- Redflex Credit Agreement "), with Harris Trust and Savings Bank (the "Bank "), pursuant
to which the Bank has provided certain working capital credit facilities to Redflex. Such credit
facilities will provide Redflex the working capital that it needs to perform its obligations to the
City under the Agreement.
2. Pursuant to the Harris- Redflex Credit Agreement, Redflex has granted Harris a
security interest in all of Redflex's personal property as collateral for the payment and
performance of Redflex's obligations to the Bank under the Harris- Redflex Credit Agreement.
Such security interest applies to and covers all of Redflex's contract rights, including, without
limitation, all of Redflex's rights and interests under the Agreement.
3. Redflex will not, by virtue of the Harris- Redflex Credit Agreement, be relieved of
any liability or obligation under the Agreement, and the Bank has not assumed any liability or
obligation of Redflex under the Agreement.
4. The City hereby acknowledges notice of, and consents to, Redflex's grant of such
security interest in favor of the Bank in all of Redflex's rights and interests under the Agreement
pursuant to the Harris- Redflex Credit Agreement.
5. The City further acknowledges and agrees that this Acknowledgement and
Consent shall be binding upon the City and shall inure to the benefit of the successors and
assigns of the Bank and to any replacement lender, which refinances Redflex's obligations to the
Bank under the Harris - Redflex Credit Agreement.
IN WITNESS WHEREOF, the City and Redflex have caused this
Acknowledgement and Consent to be executed by their respective duly authorized and elected
officers as of the date first above written.
The City: Redflex:
City of Baldwin Park REDFLEX TRAFFIC SYSTEMS, INC.,
a Delaware Corporation
By: By:,.
Name: Name: APQD
Title: Title: it_
�p
TO: Honorable Mayor and Members of the City Council
FROM: Shafique Naiyer, Director of Public Works
DATE: January 18, 2006 -1
SUBJECT: Continued Public Hearing For Cragmont Street Improvement
Assessment District 2005-1, CIP 880
P1 IRPOqF
This report requests that the City Council conduct a public hearing, open the ballots,
confirm the tabulation and results of the mailed ballots in favor, or not in favor, of the
proposed assessment and provide direction to staff.
BACKGROUND/DISCUSSION
Last year, staff received a petition signed by 80% of the residents requesting the
improvement of Cragmont Street under an assessment district. Each year, staff
schedules the improvement of one or more private streets under an assessment district.
As a part of the assessment, the property owners grant easement to the City for street
purposes and share the cost of the improvement. These private streets then become
public streets and maintenance is taken over by the City. The same format was followed
in the case of Cragmont Street. On October 19, 2005, the City Council continued the
Public Hearing for Cragmont Street Improvement Assessment District 2005-1, CIP 880, to
January 18, 2006.
Before a private street can become a public street two things must happen:
1. An Assessment District must be created pursuant to the provisions of the
Improvement Act of 1913 and Proposition 218, which was approved by the voters in
November 1996, and affects how taxes, assessment fees, as well as certain kinds of
assessment and charges are imposed on properties.
2. All the property owners must dedicate to the City the right-of-way (a type of easement)
in the property underlying the street.
The City cannot spend public funds and maintain the street if any of the above two
conditions is not met. In the current case neither condition has yet been met.
Cragrnont Street Public Hearing
January 18, 2006
Page 2
On June 2, 2005, the Engineering Division mailed ballots and notices of the Public
Hearing concerning the proposed assessment district to the owners of parcels within the
proposed district. The City has received six ballots. The ballots need to be opened to
determine if there is enough support for the creation of the assessment district to satisfy
the first condition as stated above.
After public testimony, the City Clerk and Engineering Staff will tabulate the results of the
ballots. Based on the ballots received if a majority (more than 50% of the ballots
received, based on the proposed assessment amount) is in favor, then the City can
proceed with the creation of the assessment district. However, if a majority (as described)
is not in favor then the assessment district cannot be formed and the process will end.
If the assessment district is formed the City still must receive dedication of right-of-way
from all property owners to convert the private street to a public street before it can spend
tax dollars. Based on the recommended street design one property owner does not need
to dedicate his portion and all of the other impacted property owners except one have
agreed to dedicate this easement to the City. Staff has made many efforts to contact that
one property owner but has not been successful. Failure of one property owner to
dedicate the street will stop the project.
In summary at this time the chances of the current assessment process going any further
without dedication do not appear likely, even if the ballots determine that the assessment
district may be formed.
There are following additional options available to the City/property owners:
1. Property owners perform the street improvements without City involvement.
2. Authorize staff to initiate condemnation proceedings to acquire the land from the
one property owner. It is estimated that the cost of condemnation proceedings will
be approximately $30,000 to $50,000 and will become part of the assessment
district. However, this additional cost would require the whole assessment process
including the balloting to be done again.
3. Another option available to the City/property owners is to start the process again
and negotiate with the one property owner for a lower assessment based on
proportionate usage in return for the dedication of his property.
If the formation of the Assessment District is confirmed and the City receives the
dedication of the property from all the property owners then the City will contribute Gas
Tax Funds in the amount of $80,000 and property owners under an Assessment District
will pay funds in the amount of $60,954 (plus an additional $30,000 to $50,000 for
condemnation costs) over a period of ten years. There is no impact on the General Fund.
Cragrnont Street Public Hearing
January 18, 2006
Page 3
Staff recommends City Council conduct the public hearing and following the public
hearing open and tabulate the ballots and then select one of the following:
1) Stop the process whether or not the assessment district is approved because the
City cannot proceed with the street improvement without the dedication of street by a
property owner.
2) Based on the input received at the public hearing if the Council wishes to proceed
with the creation of an assessment district again then direct staff to either A.
negotiate with the property owner for the street dedication for a reduced assessment
and initiate the assessment process based on new allocations OR B. begin
condemnation proceedings if the property owner(s) is/are not in agreement, include
the cost of condemnation with the cost of the assessment and initiate the
assessment process.
V
Shafique Naiyer
Encl: Engineer's report
PRELIMINARY ENGINEER'S REPORT
FOR
.1,U4 JEIMTA ':K'
L
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
Manuel Lozano, Mayor
Ricardo Pacheco, Mayor Pro tern
William "Bill" Van Cleave, Councilmember
David Olivas, Councilmember
Marlen Garcia, Councilmember
Shafique Naiyer
Director of Public Works
Preliminary: June 1, 2005
m
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
ENGINEER'S REPORT
ASSESSMENT ---'-------------'----''
DESCRIPTION OF WORK ----------'----
METHOD OF ASSESSXTENT -------'—''—'--'
ENGINEER'S COST ESTWATE SUNQVLARY ----
DESCRIPTION OF LANDS TO BE ACQUIRED --''
ASSESSMENT ROLL -----'--------'---'
NAME AND ADDRESS OF PROPERTY ..
CERTIFICATIONS ------------------'
Plans and Specifications (under separate cover)
-�
/
....................................................
............................................................ 3
............................................................ 4
................................................. 8
.......................................'......'...'...'...''9
.......................................................... 10
........................................................ ll
------------'.-----.l4
CITY OF BALDWIN PARK
i 1w,
` 1' 1
ASSESSMENT
Pursuant to the provisions of the Municipal Improvement Act of 1913 being Division 12 of the
Streets and Highways Code of the State of California, and Section 19 of Article XVI of the
Constitution of the State of California, the City Council of the City of Baldwin Park, California
adopted its Resolution of Preliminary Determination and of Intention No. 99 -79 for construction
of the public improvements more particularly therein described with respect to the project to be
known as Assessment District No. 2005 -1 (Cragmont Street)..
WHEREAS, SAID resolution directed the undersigned to make and file a report presenting a
general description of any works and appliances already installed and any other property
necessary or convenient for the operation of the improvements, plans and specifications for the
proposed construction; estimate of costs, maps and description of lands and easements to be
acquired, and diagram and assessment of and upon the subdivisions of land within the
assessment district, to which resolution reference is hereby made for further particulars.
NOW, THEREFORE, the undersigned, by virtue of the power vested in me under said Act and
the order of the estimated cost of said acquisitions, work and improvements and the costs and
expenses incidental thereto to be paid by the assessment district.
The amount to be paid for said acquisition, work and improvements and the expense incidental
thereto, is as follows:
ENGINEER'S ESTIMATE
(1)
(2)
As
As Finally
Preliminarily
Confirmed and
Approved
Recorded
Cost of Construction
$ 68,145.50
$
Cost of Acquisitions
$ 0.00
$
Contingencies
$ 6,814.55
$
Incidental Expenses
$ 46,000.00
$
TOTAL PROJECT COST
$ 120,960.05
$
City's Contribution
$ 60,005.20
$
TOTAL ASSESSMENT COST
$ 60,954.85
$
BALANCE TO ASSESSMENT
$ 60,954.85
$
And I do hereby assess and apportion said portion of said total amount of the cost and expenses
of said acquisitions, work and improvements upon the several lots, pieces or parcels or portions
of lots or subdivisions of land liable therefore and benefited thereby, and hereinafter numbered to
correspond with the numbers upon the attached diagram, upon each, severally and respectively,
from the acquisitions and improvements, and more particularly set forth in the list hereto
attached and by reference made part hereof.
As required by said Act, a diagram hereto attached showing the assessment district and also the
boundaries and dimensions of the respective subdivision of land within said assessment district
as the same existed at the time of the passage of said Resolution, each of which subdivisions
having been given a separate number upon said diagram.
Said assessment is made upon the several subdivisions of land within said assessment district in
proportion to the estimated benefits to be received by said subdivision, respectively, from said
improvement. The diagram and assessment numbers appearing herein are the diagram number
appearing on said diagram, to which reference is hereby made for a more particular description
of said property.
And because the names of the several owners are unknown to me, I hereby place the "Unknown"
opposite the number of each subdivision of land assessed, the amount assessed thereon and the
number of the assessment. Each subdivision of land assessed is described in the assessment list
by reference to its parcel number as shown in the Assessor's Maps of the County of Los Angeles
for the fiscal year 2001 — 2002 and includes all of such parcels excepting those portions thereof
within existing public roads or rights -of -way to be acquired in these proceedings for public road
purposes. For a more particular description of said property, reference is hereby made to the
deeds and maps on file and of record in the office of the County Recorder of said County.
Dated: , 2005
By: Shafique Naiyer
Title: Director of Public Works
IN
1`1' WIFTWITI
ASSESSMENT DISTRICT NO. 2005-1
1 1, .
Cragmont Street Improvements include reconstruction of private Cragmont Street with 3"
asphalt concrete over aggregate base, unclassified excavation, construction of driveways,
transition of driveways, curb and gutter, cross gutter, sidewalk curb ramp, re -grade area on site,
adjusting manholes, water meters, water valves, gas valve and gas meters, relocate mailboxes
and fences, and all associated work with these items.
3
ASSESSMENT DISTRICT NO. 1
I`
Since the improvements are to be funded by the levying of assessments, the "Municipal
Improvement Act of 1913" and Article XIIII) of the State Constitution require that assessments
must be based on the estimated special benefit for the properties from the work of improvements.
In addition, Article XIIII3, Section 4, of the State Constitution requires that a parcel's assessment
may not exceed the reasonable cost of the proportional special benefit conferred in the a parcel.
It also requires that publicly owned property, (which benefit from the improvements) are to be
assessed. Neither the Act nor the State Constitution specifies the method or formula that should
be used to apportion the costs to properties in any special assessment district proceedings. The
responsibility for recommending an apportionment of the costs to properties which specially
benefit from the improvements rests with the assessment Engineer, who is appointed for the
purpose of making an analysis of the facts and determining the correct apportionment of the
assessment obligation.
In order to apportion the assessment to each parcel in direct proportion with the special and
direct benefit, which it will receive from the improvements, an analysis has been completed and
is used as the basis for apportioning costs to each property within the Assessment District as
follows:
All properties are assessed based on the Engineers Estimate. This estimate includes associated
costs for each property based on improvements along property frontage out to centerline of street
right -of -way.
4
•
•
•
W
w
CIO
0
2
0
It
C.)
LO
N
Nr co
0
CM
CO
CO 0
0
r'.
m
0 W
Ln
co
0
0
'IT
q
C�
cn C�
CD
t--�
a�
ci� tx�
al ,
Nt
cl�
NN
6
q
to
to
O
co
�
r1_ C11
LO
,Zr
I,
La m
co co
co
r�
0
M
cq
m CO rD
m cm
C11
o
0
Z C\j -80
0
CO
N
cm
m
m
N w
co
C\1 m
cq
cri
;
NF
c6 0 -
0 LO m
6F�
6% (a
6%
GS
61 ca
GF) 64
469 cs
ca
64
64 64
Ea
6%
U3.
ta
ca
64
93.
61
64
_j r<
OD
w to
0
Cq
m 01,1colim
0
Lo
colwl;z
0
0
'1
0
co
q
q c!
1":
G� ItT.
C\J. C.)
Of 0
OR
00
0
'T
0
0
.
q
q
q
U)
00
LO
r-
..0..
4
00
of
00
0
w
ci
0 0
0
0
0
<
N.
N
-�r m
0
Of
m
a) co
0
r,
co
oleo
U�
m
C4
F-
a!
loq Ci
r":
C:q
CIR IR
a!
--t
co
tm 1 C4
U3
co
w
0
co
r- C\I
cq
m
It
N
0)
to cn
CV)
co co
cm
m
W
N
Cd
cm
crilod
COIN
r-�
L6
cm
Z Ce)
0
vi
CQ
co
C\1 co
C\j
- .0
0
-
If
(6 "zt
U) LO a)
69�
69
64 &a
I
Ga 611,
69 61
61�
ULI,
m 44
69
69
m
64
to
ER,
G�
69-
6%
Ga�
ta
ca
LU J r
m
WIWI
0
C\11.
. .
"Imi"i
01
'o
W@
m
0
0
M
0
0 0
01
0
Cl)
CO
001C)i
ci
ui
(D
ui
,
r
CD 't
m000.
CQ 0
0 0
cm
C�
CR
q
q
q
0
"t
.
I?
000
q q
0
CO
1
0
<
161
q
0)
I
I
I
C\j
Lrj
CQ
't co
C.
N
co
m wo
r-
co
0 co
C)
LID
C',
III
U,
I"!
a)
mm
C�
CR
0�
cq U�
c�
C�
C4 C4
tf�
q
I
N
rD
N
O
U)
N
r cli
to
-It
r,
a)
LO m
cr)
m m
C\j
m
1"
0
m
N
m 0
w CQ
r-
Lr)
C\I
ID
Z
0
CJ
cli
(0
t2
CO
C'i �o
C\j
It
8-0
'IT
C/j
C/) 0 Lf) CD
69
Q3� 6FJ1
61
64
609 C9
69 Q%
613, 64
6%
603�
69 %
w
61
69
69
Ea
ca 60
64
m
Gq
61
U).
694
W _j
()o
"0 Uj
C)
Cj
. C)
11 a)
co
0
m
000
0
0
0
(n
0
0
0 C�
C) tr)!
CIR
to
r,�
N
0) 'T
c6 0
Cj q
ci 0
q q
0 0
N
0
q
O
CR 1,17
9
q
C:,
9
10
000
0
0 0
(?
0
q
0
R
0
<
C',
'01
cq
-It co
CD
C11
CO
So 'o
0
Ir,
co
C) co
C)
LO
CO
10
to
1"t
co
CY)
(3� O�
Cp
t*-:
O�
CD U)
W.
C,
,t
cq
C\I C'l
to
.
. .
r-:
CO
N
4
O
U)
0
t- CV
CIJ
to
1�r
ON)
121) M
CO
CC')1 CD
06
U)
rl:
0
m
CM
oi (6
m cli
t�
-
L6
Of
ID
Z w
o
M
C\I
cr)
C\I ID
co
C11
-80
CD 1;3'
I
co Ln M
ug.
61 69
C9
I 'nlG,+oj&ajm
C9 'al
64
69
64 v>
Ca
69
m
69
Alw
W1
w
01
, 63]
69
W1
u;,i
W _j r-'
co
co U)
0
N
00
U)
U)
0
c;
0 0)
6 L6
CD
to
q .
co
. .
.
C41
C2
O@
0
a
q
q
0.
C)
9
0
q q
00
q
0
<
T
cli
LO
4
CO to
Cj
0
m m
CD C11
to
0
OD
t- of
0
m
0
cl�
-It
CO
1":
cQ U)
06
CC)
�t
C\I
V
V) I�
cm CQ
cq co
III
"t
to
IR
't
LO
'JI: Iq
m U)
Iq
LO
1'.
�2
m
.1
It
of
O
CD
0
0
q
— U,
�?
cm
cq
co cm
CID
m
0
r--
w a
w CD
co
LO
c!
Ci
0!
z
co
�:
1:
o_
-
C6 C4
6F.�
(a 69
69
Cal
69, 69
fa co
w 69
Ga
m
w, 64
si
0)�
69
Cal
69160161
w
61).
Q91
64
61
w
W
cn
co
cq
oogwT?2
N
CR
U�
C)
0.
co
m �21
c?
C%110
N
q
0
q
U�
01
0
000
00
0
0
0
q
0
9
(n
00
vi
.
0 C:,
0 0101
01-
cri
c.
t-, m .
N
o
0
m
000
0
0
<
C\1
C\j
C\j
�:
C\j
<
0
w
M3
a)
C)
0
0
-
ca
c
cu
ca
Z
0
>
CO
cm
>
N
EL
Ill
U
a)
-25
0
c
m
EL
0
f-- 0
cc
w a:
z
=
=3
0
a-
Eu
a_
f-
C5 LL
0
E
a-
o
'2
<
>
0
<
F-
.6
16
0
(L 2
;�
E
ca
a.
co
Cd
0
CO
ta 0
.
>
Z; ,
P
ILL
Ej
�o
C:
a)
C:
c cn
a E
c
>
cc
co
.0
E
22
a
2
, -
a_
to
0
a:
(-D
-G
(D
XO 0
C,
CL
<
:3
r- i->
�:
LL ti
IL
5
CL
tm
E! CD
9
.
(9
If
0
cc,:
cc
a u'l
E
83
a-
"I
E
c
0
mom
a)
-a
❑
0
E
<
0 a)
2 —E:
;5
%D
>
-L'
(D
0
a)
CM
tM
CD
co: cm
cu
E
a,
Z
a:
to
2:
(D
w
LL
x
w
>
r
F-
F-
V)
z
>
2
a
c
w
w
w
x
w CZ
W
-j
0 W
EL
IT o
- (
0
C:
-0
0
0)
0)
>
a) (D
W W
>
1;
,
:1
C/)
�o <
CID
(D ,
a)
2
T
m'2
2 a
-)
2
a)
3� 47,
(D
U
N
8 E
D
(>
8
CO a
0
(a Co
w
t5
J-
co
Tv
P
Do
OR
,
'65 -5
Z5
.
8
-0
r_
0
E
G)
E
(D
E
(D
E E
(D
z
Mir
-2. 9.
I
c
C:,
.0,02
02
o
0
0
2
it
cc
Ca
tr (L
W
ir ir
C,
a:,(r Y).
<
co
.
01 -00(00
0 CO.
0. a. ,
< in
< m
< 0
C3
0
01
Li b
-
C11 CQ
'IT
u)
'D
-rH
�? ;:
I I
-0
�--rld
C\I
4�1-1
cli
co
Cl
C\I
-1
LO
Of
t z
co
co
O
O
co
q co
0
CD
m
9
0
co
O
U)
2
CD
C11
0.
Lb
A
C-)
U)
ZS
z z
ui z LL,
m � 2
CO cn
U) 0 co)
ui -j ul
M cn
U- <
0 cn
0 >- F-
z
Lu
0,0 m
UJ UJ
IIJ o
jr CC
0 IL
U- !3
F-
LU
LU
it
1�-
cn
F-
0
0
U) co LO
LO
LO 0
LO ID
GF9, 69
03
CQ
0
O
0
ci
m
r-
C�
0
O
O
O
O
110
LO
to
a)
CO N
0
c)
to LO
It CO
I-
CY)
"t
�2
cb
CO
cli
a.
m
C4 —
I�r
W V)
C� N
Iq
Q�
C� Lq
r. :
m
(V
6
o ai
C6
ci
-: L6
0 cli
to
0
.
co
co w
to
C�
0
6
Cd
-It
(n
'IT
CIJ CD
"t
C', Cj
ID �2
C3
03
to
m
co
r-
ZCJ
0-0
C13
N N
uj C4
0
69
6» 6%
ff3
64
GD t
Gq GF).
6q 69
6%
6%
69
&9. W,
U9. cs
6%
69
64 64
64
69
69.
6D
t
ca
WU)
_j
0
0 V
C)
M
G
01 01
CD
0
cmitoi
0
000
0
C,
0
O
U)
>:
CU
C\J CM
'It
Nt
'm o
C4
N 0
CM
1*1:
't
q
qIqI
9
O
O
U
ci
6, c6l
co
61
ci
C\i
CM
<6 0
0 ci
(6
cq
C5
N
LD
N 0
m
10,
0
O
<
;:
CM
�2
0
r,- O
I--
I mmetOmh
CQ
OaO
to
0
'Ir
co
ED
C�
ci
N
Mi
.
9
IT
co
I
I �
I
d
cm
V3
t--: oi
0
Cq
.14,
a)
co
ca
'o
(n
co
Cq
NNE
co w
�,i
cn
Z C'I
0
N
cq
I,-
CD
C\j
-If
4
(6
cn
w
W. Ha
ED
Ga
V3. Cal
wl(a
(a G4
fia
's
(a
to 69
Ea fA
Q-:�
64
6%6%
W-1
69
FA
64
(a
er,
W J r
N
r,
C%I r.
r, 0
CO
N
Cq
La in
0
0
0
0
01
0
CI)
CO
00
�2
M�,
CI
CO
C11 cc
ci 616,
0
ci
to
oil
O
0
q
ci
C� q
CO
Ic?) (q?
0 C�
—
CQ
0
000
0 9
0
C)
<
tf
'
�;Icolo
Zt
tn
00
;r
'o
I
r,
co
co
q
C? —
a]
0 1!
I�t
,
cq
O�
9
w
coo
100
1'- C":,)
ai
So
C6 6
0,
�b CD
co
cm
;4
(D
to
C-1i
co U)
0
cq
(NI
C'i
'm U)
CIO
C11
cm
N r,
C\j
Vi
CJD
()
C6 'IT
U) 0
4%61.164
I
U9.
w
G� V)
(a (a
613, Ea
64
(a
w
0 wleal
(a
fia
ea
(fl f9
69.
V�
69.
co:�
6a
UJ J
h
r, h
m
CD f,
N r.,
P, 0
!�
Z;
09,
0
0
0
CO
fn
q
000
q C4
G�
MODOOOO
C\j co
N q
q 9
0
q
0
9
�21::,
(q
N0
q
C�
CY?
q
000
9
q
0
9
q
<
C3
G,
0
r.-
mm
;;
N
C,
co
to
Of
N
Nt CD
CIO
co
r-
't
cq
rl: 14:
1:
O
U)
C\,
cr)
r- CD
m
C)
co (1)
Cq M
C\j
0)
0)
C\I
;z
w CIO
co
cri
Z
0
C\!
C\j
(V3
U3
4
—
m
C\j
C\I
C\j
1� N
C11
tD
C\j
Cd
0
6q
64 Ga
6%
&131
W� (a
w
w
w
6%
69 (a
to 64
w
6F).
64 W,
ca
W
—rNI
N m
t,
co
r,
N 0
ca
N
to
000
Q
0
co
co
C4 0
q C?
Iq
Oct
00
q
C?
q 0
0
q
0
0
m
tv
0000
-
-
,
co
0 0
C6
000
0
<
01
1�
-,T
Icol
I
I
14
to
(0
co
r� 0
r-
w
PE A
LO
�3
C\j
0
0 W
0
L,)
a�
N
Nt
C4
-i
co
cq
rI.:
0
'IT
CR
rl�
Nt
d
Cj
CO
F, CD
I o
C\j
-T
—
0)
co 0)
c)
cj a)
N to
ci
-4r
ci
co
0i
(m
co m
t, co
CD
cn
�?
�0-
Z
0
C\I
cli
cli
I
-:
't
-80
co
0
�!
8
eq
w 69
19
613,
w 69
6% w
(0). (�q
(a
w
fis
CG%'O" (�a
69 V+
w
69
U9.
ffa
V).
W
r,
rNI 0
F.
co
r,
cj r,
t, o
co
Nq
cl\tj
Lf) co
0 0
0
00101
C3
Cf)
0
q 7
cq
cq
(n
C4 9
q 9
(q
C� q
q 8
7
q
q q
I?
C,
(1)
C;
0
cq
01
,
co
.
0 0
co
000
C,
<
C3
'IT
I'DICTIO
1
:: "It
I
Lo
W
m
O
<
0
CD
a_
2
-j z
>
Ctl
Q)
>
C\j
<
0
J
M
0
IL
-P
0
0
ca
d
0
w a:
z
=3
0
a
CL
ca
0
ca
-61 E
EL
o
m
(D
'2
cc
>
0
o
<
P
0 0)
a.
z
E
ca
'D
(L
co
Co
Z
CL
O'S
w E
L
C:
<
<
ca
0 0
0
E
-Z�:
0 a
a
w w
0
iL w
19
U)
3:
G
>
0
w
3:
2
cr-
L)
a]
mm
S
r
-
x o
cu z
0
<
a_
<
5
0
ca
U- LL
C/5
C>u
a-
6
o =
.0 tu
" Z
w
�5
—
Ev CD
0
W
x
w
'a .,a
.0
-E a-
CL
:S E
a-
Cc)
0 c
a)
.6
o
0
E
0
0
0
0
-t-
R cn
>
0
> °m
a)
(D
a
cp
fa
rn
'Zj
E
tu
ca
.6
tu 6
a
i>
-
0
o
'6
O
tm
a
co
a
C a
0
G
a
(D
J:
3:
2
w
0
2.1
75
Z-
N
t;
'55
.9
U-
LU
>0
>
cio
a)
F-
w
-E -R
;R
5R
'm
CL
2 C11
(L 0
U)
a
r
0
0 w
W
LLI 'E
W .6
W W
WX
3:1
a)
C
CO
M w
COO
cis
>
03
a), a)
I va
[a tu 0
<
Zi
2
a
:3
E
EO
E
E '>'
8 8
E E
co'
a-
0 '��
-.0.
ohm
(D
cr
a)
a) ca
m 'r
0 D
m
.2 .2
w 0)
W Cc
0 a)
r- CC ca
ff
,
:�5 (5
0 0 ca
-8
c) 0 EL
0
0
0
0.
C)
--r)
-0
< m
<
0
0
0
0
0
W Q
r
N C7
V
+j+
1
CM
LZ
1
C%j
0
U) co LO
LO
LO 0
LO ID
GF9, 69
03
CQ
0
O
0
ci
m
r-
C�
0
O
O
O
O
110
LO
to
•
•
■
Z
0
C)
q CD
m CM
LO
LO
0
0
cli
r-
U)
0
0
0
0
0
0
0
0
0 CD
0
0
q
c
010-1
0
C�
o
o
.
a)
.
CD
q
w
9
0
0
0
too
cs
0
11
C,
0
C�
m
m
N
U')
0
cli
t�
to
�2
a) Cl)
0
0
0
co
C
00
I
0
1-:
c'j
f.43-
64 64
61)
61�
(a
U)�
Ea
613�
69
613,
(a
ta
69
G9
I
693,
0
LL
<
F- z
ED
U)
C.0
W
U)
0
ol
C)
C11
ol
0
0 <
N
r,
cli
F-
1w
0
I I
I
I
I
I
I I
I
I
CD
Cf)
00
C,
0
CD
00
000
0
0 0
0
C)
w!
LO
q
LO
CR
to
0
C3
0
0 q
q q
1
0
6
C)
9
W
<
006
23
-4
r�
ONWOOO
co
to
0
0 a
N
'50-
0
't
c"
�2
to
co
V)
-4
�! cr)
m c!
CD
M
(q I:t
't
cq
L'3
0 -j
I -
-
N
C11
-
m
co �?
m
04
LO
Lo
to
0
<
0
12
6%
as Gag.
Q%
E9
69
6% W
6% 69
6%
(a
6%
69 6D
49
va
613.
69
6960
6% W
Ee
ut
64
va
7
0
It,
-i
<
Q
z
_
_1�2
;�
0
C)
M
C)
0
000
0 <
to
LO
LO
cm
C'j
LO
F-
00
0
C�'
0 Lq
0
q
0
000000
C)
0 0
0 0
0
9
C3
q
C�
000
0 C)
00
q
q
0
q
C3
q
0
0
C)
C)
U�
Lo
19
to
q
z
ci
ci -It
0
to
CV
two 000
CD
0
C)
w 0
NO
C.
h00
LO
d
0
co
:D
00
to
cri
r cit
LO
10
m
cq
000
CM0
m 0
�R
LO
Ci
a
co
En co
Cq to
rl
It
0
Cli
0
't
co
000
R
N
q
(It
0 0
(6
cl)
—
cli
.
L'i
C6
(0*
W
2
-3
0
<1
69
(a 69
fio}
69
Ga
(a m
64 64
64
&a
(un.
caa, ca3'
600
(a
(B.
603,
C4
Q96
69 ml
wj
(a
ual
Cal
o6l
Ir
000
0
0
000
C3
000
0
CD
C3
0
000
LO
0
a.
W
0
0 U�
000000
0
61
CO
3
8
0 C?
q
q
q
0
0
.
c -)
ci
00
CD CD
M 0
cli
ci ci
cl 0
cil
col
0
C�
:1 w
t
'R
�R�
0
0
(6010
O
0
z
Lo
m 0
Cl)
lul
�2
LL
EL
O
0
a:
a)
U)
Co
cm
10
w
cq
s
11
CQ
n.
<
W
(D co
U)
cl)
C/)
cn
LL
<
U)
(1)
(D
ai i
0 z C'j r-
-i
-j cn
cl)
-j
W -1
-j
woo
U)
W
(D
U)
W
_j _j
_j
_j
0 CD
Cc
D
1W
U-
* m W
<
F-
.2
3;:
(b
'D
0 <
>
a)
0
ca
a_
(a
ca
-i Z
0
ca
�2
a
iL
W z
0
-
W
3.
-?5
0
c
V
ri)
p
4)
,
0
W,
z
>'
cis
IL
cts
F-
a -
2
0
LL
0
co
16
E
o
<
a)
>
CD
0
0
a
0)
Z
E
co
a_
U)
ca 0
C)
:E
Z'
CL
a)
Co
0
EL 'D
W
<
<
00
C�
c
0
E
0
C.)
c
CO
rn 0
IL
E
ca
C:
> —
ca
U
in
,
C:
I co,
Z
E
(D
<
IL
n
<
0
2:
37
M
LL LL
h
A
=
CD
Z3
0
= .
3
.6
CD
0
0
ui
a
EL
-9
W C,
CL
E
IL
0
a
a
0
0
E
<
0
0
0
(D
C
>
a)
�
CO
Im
>,
cu
C',
>.2
(D
-6 >
(D
a)
ca
co
a
oa
a S
a)
mien
a E
a)
a)
u
0
0
W
0
C:
a
c
C
CD
'ti U-
x
W
4)
(D
-2
a)
r
>
cn
(D
F-
F-
F-
.6
76
A2
2E
A2
-e
'52
0
-R
Z;
-R
CD
a
>
2 co
c
ch
c
0
t;
E x
0 W
x
W
x t
W
x
W
0 W
-J
W 0
W
7o
a3
ir
a n_
<
Co
65
r
15
IL
EL
0
W
76
ca
0
C:
0
(D
CD
Q in,,,
a) ID
>. '�.5
4) (D
li li
W C)
76
cn
-2
tS
a)
a,
0
E
(D
o>
CL
7�
;, �o
=
�ro
'o-
E
E
E
E
I
E o
00
o
-
.2 'u
0
0
CD
r
c
0
rr
a)
cc
a)
a-- rL
a)
ir
a)
ir ct
a: , ir
m Fn
z)
C9
co
C-) -
0 ca
0 a-
C) FL
0
0 7 1
0
C) co
C)
2 W=)
, .
a. <
v >,:6
< m
�S
< 0
0
o
o
o'
Cc)
:E,(j
W
1
—1-1
co
Lo
1-1+1+1
�:j
�21,7�
121
CO
Id
�?
TI
-ri-I
-
cli cm
L--
-
cm
q CD
m CM
LO
LO
0
0
cli
r-
ASSESSMENT DISTRICT NO. 2005-1
CIt 880
CONSTRUCTION ITEMS:
a) Construction Cost $ 68,145.50
b) Contingency (10%) $ 6,814.55
Total Construction Items: $ 74,960.05
INCIDENTALS:
a) Engineering $ 30,000-00
b) Construction Engineering $ 8,000.00
c) Prepare Documentation for Street Dedication $ 8,000.00
Total Incidentals: $ 46,000.00
TOTAL PROJECT COST: $ 120,960.05
CITY CONTRIBUTION: $ 60,005.20
TOTAL ASSESSMENT: $ 60,954.85
0
rou 1--T"KTJJ# YmItc, I "-"IkTj Dej ivj-jvj--L5wjm
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
it 11 i 1111 ! 1, 1 111111, 1 � i i � , , 1, # ' ;1 �
No acquisition of property is needed, except to relocation items within proposed improvement
area.
All property owners directly benefit from these improvements.
ASSESSMENT DISTRICT NO. tl ;
CIP 880
'!
ASSESSMENT
NO.
BOOK
PAGE
PARCEL
NO.
FRONT
FOOTAGE
TOTAL
COST
1
8414
2
17
114.71
$11,274.34
2
8414
2
15
50
$4,914.28
3
8414
2
14
50
$4,914.28
4
8414
2
13
50
$4,914.28
5
8414
2
12
50
$4,015.04
6
8414
2
19
47
$4,619.42
7
8414
2
20
47
$4,619.42
8
8414
2
21
46
$4,521.14
9
8414
2
22
47
$4,619.42
10
8414
2
18
127.62
$12,543.21
Signed:
Title:
Department of Public Works
10
am '- .1 • ' 1
CITY OF BALDWIN PARK
CRAGMONT STREET (NORTH SIDE) IMPROVEMENTS
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
Assessor's Parcel No.
8414 -2 -17
Sanchez, Carlos �
5054 Heintz Street
Baldwin Park, CA 91706
8414 -2 -15
Del Real, Alberto and Amalia
14913 Cragmont Street
Baldwin Park, CA 91706
8414 -2 -14
Gutierrez, Jose L
14919 Cragmont Street
Baldwin Park, CA 91706
8414 -2 -13
Nava, Miguel D. and Maria and Nava, Jose R.
14925 Cragmont Street
Baldwin Park, CA 91706
8414 -2 -12
Cobos, Rodolfo and Maria C.
14931 Cragmont Street
Baldwin Park, CA 91706
11
CITY OF BALDWIN PARK
CRAGMONT STREET (SOUTH SIDE) IMPROVEMENTS
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
Assessor's Parcel No.
8414-2-19
8414-2-20
8414-2-21
H-MMIORM
Molina, Mario and Elena
14928 Cragmont Street
Baldwin Park, CA 91706
Moreno, Santos and Ofelia
14924 Cragmont Street
Baldwin Park, CA 91706
Ortiz, Moises H. and Silvia
14920 Cragmont Street
Baldwin Park, CA 91706
Tejeida, Jose L.
14914 Cragmont Street
Baldwin Park, CA 91706
Alarcon, Manuel S. Co Tr Alarcon
5040 Heintz Street
Baldwin Park, CA 91706
12
CITY OF BALDWIN PARK
CRAGMONT STREET IMPROVEMENTS
ASSESSMENT DISTRICT NO. 2005-1
CIP 880
u! ► ' 1 � lR7:1u
13
., 1171191XV111TEIT-MAI 1 # !1
a' 880
I, The City Clerk of the City of Baldwin Park, hereby certify that the foregoing Assessment, in
the amount set forth in Column (1), with the diagram thereto attached, was filed with me on ,
2005.
Kathryn V. Tizcareno
I have prepared this Engineer's Report and do hereby certify that the amounts set forth in Column
(2) under Engineer's Estimate on page 1 of the Assessment, and the individual amounts in column (2)
under "Assessment" on the foregoing pages of this assessment, have been recomputed in accordance with
the order of the City council if said City, as expressed by its resolution No. , duly adopted
by said Council on 2005; provided, however, that if column (2) is
blank, the figured in column (1) were confirmed without change.
Dated, 2005.
Shafique Naiyer
Director of Public Works
I, The City Clerk of the City of Baldwin Park, California Hereby certify that is Assessment, in the
amounts set forth in column (2), unless column (2), is blank, in which event the amounts in column (1)
apply, with the diagram thereto attached, was approved and confirmed by the City Council of said City
on 2005.
Kathryn V. Tizcareno
I, the Superintendent of Streets of the City of Baldwin Park, County if Los Angeles, California,
hereby certifies that his assessment, together with the diagram attached, was recorded, in my office on
, 2005.
Shafique Naiyer
Superintendent of Streets
Notice of Assessment was recorded and the assessment Diagram was filed in the office of the
County Recorder of the County of Los Angeles, California, on 2005.
Kathryn V. Tizcareno
14
71-
ii
ir
• Muly-T11719
JAN 18 2006
ITEM NO.
TO: Honorable Mayor and Members of the City Council
FROM: Manuel Carrillo, Jr., Director of Recreation & Community Se
DATE: January 18, 2006
SUBJECT: Direction and Approval of Marketing Campaign for Baldwin Park's
50th Anniversary
The purpose of this staff report is to request from City Council direction and approval of a
commemorative logo for the marketing campaign of Baldwin Park's 50th Anniversary.
Baldwin Park will be celebrating its 50th Anniversary this year. In preparation for this
upcoming event, staff has prepared a comprehensive marketing campaign that will assist
in the overall planning and development of this celebration. The diversity of these
methods includes public displays, printed media, promotional items and a commemorative
logo..
In regards to the development of the commemorative logo, Sherri Yu, of Wonder Studios,
has been commissioned to create five different renderings of a 50th Anniversary logo, for
which the City Council will select a final logo. Ms. Yu has previously worked with staff to
create eight different renderings of the Community Development Commission logo, the Fall
2005 Recreation Guide and the award winning Arts and Recreation Center brochure,
On January 4, 2006, the City Council received five potential logos displaying distinct
designs for the 50th Anniversary of Baldwin Park. Of the five potential logos, City Council
narrowed their selection to logo's A and C. However, City Council recommended minor
modifications on the two logos prior to making a final selection.
111 F-.16111*4 MIJ
Based on City Council's direction to modify logos A and C, the following are individual
descriptions of the newly altered logos. Please see attachment of color logos.
Logo A: There are four variations of this logo. All, logos feature a square design signifying
"50" magnificent years, with vibrant variation of colors of purple and teal. In this instance,
two of the A-type logos enclose "Baldwin Park" in the square structure, thus helping to
unify the entire logo. The remaining two logos exclude "Baldwin Park" from the square
structure and allow a clear separation of the "50" and "Baldwin Park" features. Overall, the
square logos provide a clean-cut representation of Baldwin Park's 50th Anniversary. In
addition, all four variations contain different size and color stars, which help represent a
brighter future for the City of Baldwin Park.
Logo C: There are three distinct color variations of logos, which include bright yellow,
purple, and teal backgrounds. Overall, the circular logos utilize "50" in a sparkling and
elegant script font as the centerpiece, with various sizes of stars representing celebration.
The rich color variations (purple and teal) of the circular logo helps accentuate the gold
lining of the "50" font and generate a sense of festivity. However, the gold colored circle
compliments the rich purple lining of "50." In all three illustrations, the stars were
strategically placed above "50" to help draw the eye to the Baldwin Park font as well.
Furthermore, the soft coloring of the font surrounding all three logo's helped unite the
colors and provide a sense of elegance.
The commemorative logo that is selected will be featured in all business correspondence
and will be incorporated into the website as well as any printed and promotional materials
used throughout the year. The kick off for all the special festivities will commence with the
February issue of the Baldwin Park Now and carry throughout the year and finally
culminate in November 2006 with the 50th Annual Celebrate Baldwin Park Anniversary
Parade. All City-sponsored events will reflect the 50th Anniversary theme,
which includes the following:
Promotional materials such as posters for bus shelters, lapel pins, street banners, along
-'1 •1 billboards, facility city displays will be promoted for twelve months,
and Downtown Central Business District. Give away items will be distributed during
special events such as Cinco de Mayo, Fourth of July Spectacular, Concerts in the Park,
and Celebrate Baldwin Park Anniversary Parade. Equally, the Historical Society will b-
-• to be part • these events. Other promotional items will include a window decal for
local businesses displaying the 50th Anniversary logo, Additionally, eight signs will be
placed • the main entrances to the city incorporating the 50th Anniversary logo.
During the Summer Concerts in the Park Series, staff will organize a special Taste of
Baldwin Park event that will highlight the 50th Anniversary. This year due to the Julia
McNeill Senior Center Expansion, the event will take place on the green lawn area
adjacent to the new Veteran's Monument, The new location will provide more space as
well as enhance street visibility. Additionally, the concert hours for this special event will
be extended to 9:30pm for a headliner band performance.
The Baldwin Park NOW will feature short family biographies and pictures of residents that
have lived in Baldwin Park for the last 50 years. In addition, staff will coordinate with local
Baldwin Park schools an art exhibit that will take place during Celebrate Baldwin Park and
promote the upcoming Arts and Recreation Center Grand Opening.
Furthermore, the Baldwin Park Chamber of Commerce will coordinate a street banner
fundraiser campaign, which will incorporate the 50th Anniversary logo into the design of the
banners. The sponsoring business will have an opportunity to display their logo on these
street banners. The banners will be prominently displayed around the City streets,
FISCAL IMPACT
At this time, staff is requesting a total of $20,000 to fund the marketing campaign,
promotional give a ways and the design of the 50th Anniversary logo, Additional monies
may be required in the future to fund promotional items and for events throughout the year.
Staff will submit a formal request of additional funding as deem necessary.
EAMMUM93M
Staff recommends that City Council:
1 Authorize the Interim Finance Director to appropriate $20,000 to account
103.81.5210;
2. Select and approve a logo for the 50th Anniversary; and
1 Commence the advertising campaign.
fill -
I - �JIWA
I
ATTACHMENT A
BALDWIN PARK
50TH ANNIVERSARY
ATTACHMENT F
I
9 5
� IV I \T V, V-
ATTACHMENT G
ATTACHMENT B
BALDWIN PARK
50TH ANNIVERSARY
ATTACHMENT E
1 1 9 5 6 - 2 o o 6
�y
BALDWIN PARK
50TH ANNIVER-SARX
.e� * I IV z,
IV I
G
,-.W I r
v
Y
C
C
�W I IV
. p;
BALDWIN PAR-�F '
tjALDWIN PARK
1 g 5 0- 2 0 D 6
`1 5b- 2ot�¢`
1 g56 -2o06
[mil M
1 � W.Am
Manuel Lozano - Chair
David J. Olivas - Vice Chair
Anthony J. Bejarano -
Member
Marlen Garcia -
Member
Ricardo Pacheco -
Member
PUBLIC COMMENTS
The public is encouraged to address the City
Council or any of its Agencies listed on this
agenda on any matter posted on the agenda or
on any other matter within its jurisdiction. If you
wish to address the City Council or any of its
Agencies, you may do so during the PUBLIC
COMMUNICATIONS period noted on the
agenda. Each person is allowed five (5) minutes
speaking time. A Spanish speaking interpreter is
available for your convenience.
COMENTARIOS DEL PUBLICO
Se invita al publico a dirigirse al Concilio o cualquiera
otra de sus Agencias nombradas en esta agenda,
para hablar sobre cualquier asunto publicado en la
agenda o cualquier tema que este bajo su jurisdiccion.
Si usted desea la oportunidad de dirigirse al Concilio o
alguna de sus Agencias, podra hacerlo durante el
periodo de Comentarios del Publico (Public
Communications) anunciado en la agenda. A cada
persona se le permite hablar por cinco (5) minutos.
Hay un interprete para su conveniencia.
COMMUNITY • PMENT COMMISSION
REGULAR MEETING — 7:00 P.M.
CALL TO ORDER
INVOCATION
PLEDGE OF ALLEGIANCE
ROLL CALL Members: Anthony J. Bejarano, Marlen Garcia, Ricardo Pacheco,
Vice -Chair David J. Olivas and Chair Manuel Lozano
ANNOUNCEMENTS
PUBLIC COMMUNICATIONS
Five (5) minute speaking time limit
Cinco (5) minutos sera el limite para hablar
THIS IS THE TIME SET ASIDE TO ADDRESS THE COMMISSION
No action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or
special circumstances exist. The legislative body or its staff may: 1) Briefly respond to statements made or
questions asked by persons; or 2) Direct staff to investigate and /or schedule matters for consideration at a
future meeting. [Government Code §54954.2]
ESTE ES EL PERIODO DESIGNADO PARA DIRIGIRSE AL COMIS16N
No se podra tomar accion en algun asunto a menos que sea incluido en la agenda, o a menos que exista
algOna emergencia o circunstancia especial. El cuerpo legislativo y su personal podran: 1) Responder
brevemente a declaraciones o preguntas hechas por personas; o 2) Dirigir personal a investigar y/o fijar
asuntos para tomar en consideracidn en juntas proximas. (Codigo de Gobierno §54954.21
CONSENT CALENDAR
All items listed are considered to be routine business by the Commission and will be approved with one motion.
There will be no separate discussion of these items unless a Commissioner so requests, in which case, the item
will be removed from the general order of business and considered in its normal sequence on the agenda.
1. MINUTES
Staff recommends Commission approve the minutes of the January 4, 2006 meeting
(Regular) and the December 21, 2005 meeting (Regular).
2. RIGHT-OF-WAY TITLE SEARCHES — CONSULTANT SERVICES 1 ,
Staff recommends Commission approve a Consultant Services Agreement with
Paragon Partners Ltd. in the amount of $7,800 and authorize the Executive Director to
execute the Agreement.
Community Development Commission Agenda — January 18, 2006
Page 2
CERTIFICATION
I Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park hereby certify under penalty of
perjury under the laws of the State of California, that the foregoing agenda was posted on the City Hall bulletin
board not less than 72 hours prior to the meeting. Dated this 12th day of January, 2006.
le SF
Rosemary M. Ramirez
Chief Deputy City Clerk
PLEASE NOTE: Copies of staff reports and supporting documentation pertaining to each
item on this agenda are available for public viewing and inspection at City Hall, 2nd Floor
Lobby Area or at the Los Angeles County Public Library in the City of Baldwin Park. For
further information regarding agenda items, please contact the office of the City Clerk at
626.960.4011, ext. 108 or 626.960.4011, ext. 466 or via e-mail at rramirez(a-)-baldwinpark.com
or I nieto(a-) ba Idwi n park. com
In compliance with the Americans with Disabilities Act, if you need special assistance to
participate in this meeting, please contact the Public Works Department or Risk Management at
626.960.4011. Notification 48 hours prior to the meeting will enable staff to make reasonable
arrangements to ensure accessibility to this meeting. (28 CFR 34.102.104 ADA TITLE 11)
Community Development Commission Agenda — January 18, 2006
Page 3
CITY OF BALDWIN PARK
Community Development
Commission
W01AVU1111NA IRV-
JAN 1 8 2006
WEDNESDAY, DEQVW,J�
21,2005
COUNCIL CHAMBERS
11403 E. Pacific Avenue
Baldwin Park
Manuel Lozano, Mayor
Ricardo Pacheco, Mayor Pro Tern Marlen Garcia, Councilmember David J. Olivas,
Councilmember Anthony J. Bejarano, Councilmember
Maria Contreras, City Treasurer Susan Rubio, City Clerk
The Community Development Commission of the City of Baldwin Park met in
REGULAR SESSION at the above time and place.
CALL TO ORDER
Present: Anthony J. Bejarano, Marlen Garcia, Ricardo Pacheco, Mayor Pro
Tern David J. Olivas, Mayor Manuel Lozano.
Absent: Roberto Velazquez, Assistant Chief Executive Officer.
Also Present: Vijay Singhal, Chief Executive Officer, Stephanie Scher, City
Attorney, Mark Kling, Chief of Police, Manuel Carrillo, Recreation
and Community Services Director, Shafique Naiyer, Public Works
Director, Hennie Apodaca, Interim Finance Director, Maria A.
Contreras, City Treasurer, Susan Rubio, City Clerk, Rosemary M.
Ramirez, Chief Deputy City Clerk, Laura Nieto, Deputy City Clerk.
To] N , 174 4119
I k! [01 k! I
7,1 1507, 1 N
Member Garcia and Vice Chair Olivas requested that the following items be
removed from the Consent Calendar for separate discussion:
1) 6. EXCLUSIVE NEGOTIATION AGREEMENT WITH STRATUS
PROPERTIES, INC. - RETAIL PROJECT AT FRANCISQUITO AND VINELAND
(Garcia)
2) 7. APPROVAL OF REQUEST FOR QUALIFICATIONS FOR DOWNTOWN
DEVELOPMENT (Olivas)
Motion: A motion was made to approve Consent Calendar Item Nos. 1-5 (with the
exception of Item Nos. 6 & 7) as presented and as follows:
Page 1 of 3
Moved by Marlen Garcia, seconded by Anthony J. Bejarano.
1. WARRANTS AND DEMANDS
Commission received and filed the report.
2. MINUTES
Commission approved the minutes of the December 7, 2005 meeting (Regular).
3. REQUEST TO REDUCE CITY'S FIRST TIME HOMEBUYER LOAN
PROGRAM DOWN PAYMENT AMOUNT (Related Item - 12/21/2005 CC Agenda
Item No. 5)
Commission approved the reduction of the required down payment amount for
the City's First Time Homebuyer Loan Program from 3% to 1.5% and authorized
staff to make the necessary revisions to the Guidelines.
4. STATUS OF JACOBSEN FAMILY HOLDINGS - PROPOSED RETAIL
PROJECT AT DALEWOOD /MERGED
Commission received and filed.
5. HOUSING AND COMMUNITY DEVELOPMENT (HCD) ANNUAL REPORT OF
HOUSING ACTIVITY OF COMMUNITY REDEVELOPMENT AGENCIES FOR
FISCAL YEAR ENDING JUNE 30, 2005
Commission received and filed the report and authorized staff to submit the
HCD report to the State Controller's Office.
CONSENT CALENDAR ITEMS REMOVED FOR SEPARATE DISCUSSION
6. EXCLUSIVE NEGOTIATION AGREEMENT WITH STRATUS PROPERTIES,
INC. - RETAIL PROJECT AT FRANCISQUITO AND VINELAND
Member Bejarano & Member Garcia expressed their concerns about the
vision that the Council has for the City of Baldwin Park and the disconnect
between the City Council /Community Development Commission and the
Planning Commission.
Commission Attorney Scher stated for the record that expressing an opinion
of a proposed project is permitted, when it comes before the Commission, it will
have to be considered according to certain standards and codes.
Motion: A motion was made to not renew the Exclusive Negotiation Agreement
with Stratus Properties, Inc.
Moved by Marlen Garcia, seconded by Ricardo Pacheco.
7. APPROVAL OF REQUEST FOR QUALIFICATIONS FOR DOWNTOWN
DEVELOPMENT
Page 2 of 3
Vice Chair Olivas requested that the 45 -day submittal period to 60 days.
Member Pacheco requested that the Commission receive the background of
the developers' teams & team members and their roles in relation to the project.
Motion: A motion was made to approve the proposed Request for Qualifications
for the Downtown Development, with an amendment to the submittal period,
extending it from 45 days to 60 days and authorized staff to proceed with its
release.
Moved by Mayor Pro Tern David J. Olivas, seconded by Anthony J. Bejarano.
•►,
At the request of Commissioner Bejarano, the City Clerk's Department was
directed to bring back a report to the February 15, 2006 meeting for consideration
of vacating the existing Planning Commission offices and advertise for
recruitment. There were no objections. Commissioner Pacheco suggested that
there be a screening process for the selection of Planning Commissioners.
Chair Lozano directed staff to present a moratorium on check - cashing services to
the second meeting in January.
There being no other matters for discussion, the meeting was adjourned at
10:20 p.m.
Approved as presented by the Commission at their meeting held January 18,
2006.
Laura M. Nieto
Deputy City Clerk
Page 3 of 3
CITY OF BALDWIN PARK
Community Development
Commission
1►iIIkiLi n�'
T1,lT
kv
04,200
.
COUNCIL
11403 E. Pacific
Baldwin Pa
Manuel Lozano, Mayor
Ricardo Pacheco, Mayor Pro Tern Marlen Garcia, Councilmember David J. Olivas,
Councilmember Anthony J. Bejarano, Councilmember
Maria Contreras, City Treasurer Susan Rubio, City Clerk
The Community Development Commission of the City of Baldwin Park met in
REGULAR SESSION at the above time and place.
i i•i
ROLL CALL
Present: Marlen Garcia, Anthony J. Bejarano, David J. Olivas, Mayor Pro -
tem Ricardo Pacheco, Mayor Manuel Lozano.
Absent: Mark Kling, Chief of Police.
Also Present: Vijay Singhal, Chief Executive Officer, Stephanie Scher, City
Attorney, Manuel Carrillo, Recreation and Community Services
Director, Shafique Naiyer, Public Works Director, Hennie
Apodaca, Interim Finance Director, Captain Mike Taylor, Maria A.
Contreras, City Treasurer, Susan Rubio, City Clerk, Rosemary M.
Ramirez, Chief Deputy City Clerk, Laura Nieto, Deputy City Clerk.
r0
1[6 `1
Motion: Approve A motion was made to approve Consent Calendar Item #1, as
presented and as follows:
Moved by Mayor Manuel Lozano, seconded by Marlen Garcia.
1TA�, .,
Commission received and filed the report.
Page 1 of 2
There being no other matters for discussion, the meeting was adjourned at
9:05 p.m.
Approved as presented by the Commission at their meeting held January 18,
2006.
Laura M. Nieto
Deputy City Clerk
Page 2 of 2
SUBJECT: Right-of-Way Title Searches - Consultant Services Agreement with
Paragon Partners Ltd.
The purpose of this staff report is to recommend that the Community Development
Commission ("Commission") approve a Consultant Services Agreement to conduct title
search work within the public Right of Way of Ramona Boulevard from La Rica Avenue to
Downing Avenue.
On November 16, 2005, the Commission authorized staff to proceed with the Request for
Proposals (RFP) process to prepare the necessary title search work along Ramona
Boulevard. A title search will assist in identifying the true underlying ownership of the
parking lots within the public Right of Way along Ramona Boulevard from La Rica Avenue
to Downing Avenue. The Commission is working on the future potential development and
revitalization of the downtown Central Business District. Having full ownership of these
parking lots along Ramona Boulevard to eliminate the use restrictions is considered
beneficial and necessary for the revitalization of the downtown.
The RFP was sent to the following companies 1) Stewart Title; 2) B & E Engineers; 3)
Investors Title; 4) Paragon Partners; 5) Lawyer's Title; 6) First American Title; 7) Chicago
Title; and 8) Consultants Information Network (CIN).
Staff submitted Request for Proposals to eight title companies, • which four submitted
proposals. The following companies submitted proposals and costs:
Firm
Paragon Partners Ltd.
B & E Engineers
Chicago Title Company
LandAmerica Commercial
won
$ 7,800
$69,262
$25,000
$ 650 each preliminary report
k M
Consultant Services Agreement
January 18, 2006
Page 2 of 2
Based on the proposals received, Paragon Partners Ltd. is the lowest, qualified company
to perform the title work services. This title company has over 13 years of experience and
specializes in providing professional land rights consulting services to both public and
private entities.
The title search to be conducted by Paragon Partners Ltd. will be completed within 10-12
working days from the time that a written authorization is provided.
The Commission Counsel has reviewed and approved the attached Consultant Services
Agreement.
There is no impact to the General Fund because the funding source proposed for this
project is from Community Development Commission funds. The consultant fee for this
assignment is $7,800.
Staff recommends that the Community Development Commission approve the attached
Consultant Services Agreement with Paragon Partners Ltd. in the amount of $7,800 and
authorize the Executive Director to execute the Agreement.
Attachment "A" — Consultant Services Agreement
Attachment "B" — Paragon Partners Ltd. Proposal
Attachment "C" — B & E Engineers Proposal
Attachment "D" — Chicago Title Company Proposal
Attachment "E" — Lan•America Commercial Proposal
l 1
THIS AGREEMENT is made and entered into by the Community Development
Commission of the City of Baldwin Park, a public body, corporate and politic,
(hereinafter referred to as the "CDC ") and Paragon Partners Ltd., a California
corporation (hereinafter referred to as "Contractor "), collectively referred to herein as the
Parties.
RECITALS.
This Agreement is made and entered into with respect to the following facts:
a. CDC is desirous of obtaining the services of a qualified consultant to
prepare the necessary title searches required to identify the underlying fee
interests for the public rights of way areas comprised of public parking lots
along Ramona Boulevard from La Rica Avenue to Downing Avenue within
the City of Baldwin Park (the "Right of Way ").
b. Contractor is qualified to provide such services and Contractor has agreed
to perform such services, subject to the terms and conditions set forth in
this Agreement.
The CDC is interested in identifying the underlying fee interests within the Right of Way.
SECTION 2. TERM.
This Agreement shall commence on January 18, 2006 (the "Commencement
Date "), and shall expire upon satisfactory completion of the Scope of Work (as defined
below) (the "Expiration Date "), unless the Parties agree in writing to extend this
Agreement; provided, that the parties anticipate the services being completed within
fifteen (15) working days after the Commencement Date.
SECTION 3. PERFORMANCE.
a. Contractor shall at all times, faithfully, competently and to the best of its
principal's abilities, experience and talents, perform all tasks described in this
Agreement.
b. Contractor shall perform all tasks and responsibilities described in the
Scope of Work (Exhibit "A ").
C. Contractor shall be knowledgeable of and subject to all CDC rules and
regulations, standard operating procedures and the supervisory chain of command.
Contractor hereby agrees all work products produced pursuant to this Agreement
shall be the sole property of CDC and ownership of said work products shall be retained
by CDC. Contractor shall provide those products within ten (10) days after a written
request from CDC and work to date will be paid in accordance with Section 7.
Contractor may retain copies of those work products.
SECTION 5. EXTRA SERVICES..
Contractor shall render no extra services beyond the Scope of Work described
under this Agreement unless such extra services first shall have been duly authorized in
writing by the Executive Director (the "ED ") of CDC, Additional services shall be subject
to terms agreed to in writing by the CDC and Contractor.
The ED or his /her designee shall have the right of general supervision of all work
performed by Contractor. No payment for services rendered under this Agreement shall
be made without the prior approval of the ED or his /her designee.
lA =101Mi!IVM:7 -.VdJr I =U411
a. For satisfactory completion of the services described in Exhibit A, CDC agrees to
pay Contractor a fee not to exceed Seven Thousand Eight Hundred Dollars ($7,800.00),
based on the schedule set forth in Exhibit "B, "y provided, that payment for reasonable
expenses as set forth in Exhibit "B" shall be in addition to the above amount, but no to
exceed Five Hundred Dollars ($500.00); and provided, further, that, (i) mileage to and
from CDC's jurisdictional boundary shall not be reimbursable, (ii) costs for sub -
consultants shall be at Contractor's actual costs, (iii) air travel and lodging shall only be
reimbursed if written pre- approval is issued by the ED and (iv) the "Terms of Payment"
section of Exhibit B shall not apply to this Agreement. Fees for any subsequent
services agreed to by CDC and Contractor shall be in accordance with the hourly rate
schedule provided in Exhibit "B."
b. Contractor shall not be entitled to any additional benefits such as health
insurance, uniform allowance, retirement benefits, sick leave or vacation.
C. Contractor shall provide an itemized bill to CDC by the 10th of each month for
work completed in the previous month. The total amount of fees billed and paid shall
not exceed the maximum set forth in 7.a., above, unless otherwise approved in writing
by the Parties. Payment is due within thirty (30) days after approval of the bill by CDC.
0
d. CDC shall not be required to make any payment until the insurance documents
described in Section 12 have been submitted by Contractor and approved by CDC's
general counsel.
CDC shall have the right to terminate this Agreement, with or without cause, for
any reason, with thirty - days' (30- days') written notice. Termination shall become
effective thirty (30) days after delivery of written notice to Contractor and Contractor
shall be due any and all payments for services up to and including the date of
termination for services satisfactorily performed. In the event CDC does not exercise
the right to terminate as set forth herein, the Agreement shall automatically terminate on
the Expiration Date.
SECTION 9. NON - LIABILITY OF OFFICIALS AND EMPLOYEES OF THE CDC.
No official or employee of CDC shall be personally liable to Contractor in the
event of any default or breach by CDC or for any amount, which may become due to
Contractor.
Contractor is and shall at all times remain, as to CDC, a wholly independent
Contractor. Neither CDC nor any of its officers, employees or agents shall have control
over the conduct of Contractor except as expressly set forth in this Agreement.
Contractor shall not at any time or in any fashion represent Contractor is in any manner
an officer, employee or agent of CDC. No employee benefits shall be available to
Contractor in connection with the performance of this Agreement. Except as provided in
this Agreement, CDC shall not pay salary, wages or other compensation to Contractor
for performance hereunder for CDC. CDC shall not be liable for compensation to
Contractor for injury or sickness arising out of performing services hereunder.
Contractor shall at all times observe and comply with all applicable laws,
ordinances, codes and regulations of the federal, state and local governments including,
but not limited to, the Baldwin Park Municipal Code. CDC and its appointed or elected
officers, employees or agents shall not be liable at law or in equity occasioned by failure
of Contractor to comply with this section.
3
Contractor agrees to and shall defend, indemnify, protect and hold harmless
CDC, the City of Baldwin Park and each of their elected and appointed boards, officers,
officials, employees, agents and volunteers (the "Indemnified Parties") from and against
any and all claims, demands, lawsuits, defense costs, civil penalties, expenses, causes
of action, judgments at law or in equity or liability of any kind or nature ("Claims") which
the Indemnified Parties may sustain or incur or which may be imposed upon them for
injuries or deaths of persons or damage to property arising out of Contractor's
performance related to this Agreement. This section does not apply to liability arising
out of the sole negligence of any of the Indemnified Parties. A copy. of a certificate of
insurance insuring Contractor and an endorsement naming the Indemnified Parties as
additional insureds shall be provided for reasonable approval by CDC's general
counsel.
This Agreement contains the entire understanding between CDC and Contractor
related to the Scope of Work discussed herein and any prior agreements, promises,
negotiations or representations not expressly set forth herein regarding that work are of
no force or effect. Subsequent modifications to this Agreement shall be effective only if
in writing and signed by each party. If any term, condition or covenant of this
Agreement is held by a Court of competent jurisdiction to be invalid, void or
unenforceable, then the remaining provisions of this Agreement shall be valid and
binding.
SECTION 14. WAIVER.
Waiver by any party hereto of any term, condition or covenant of this Agreement
shall not constitute the waiver of any other term, condition or covenant hereof.
This Agreement shall be binding upon and shall inure to the benefit of the
successors of each of the Parties hereto.
This Agreement shall be interpreted and construed according to the laws of the
State of California and venue shall be in the County of Los Angeles, State of California.
If litigation is reasonably required to enforce or interpret the provisions of this
Agreement, then the prevailing party in such litigation shall be entitled to an award of
reasonable attorney's fees in addition to any other relief to which it may be entitled,
4
SECTION 18. NOTICE.
All notices shall be personally delivered or mailed to the addresses listed below:
"CONTRACTOR" Paragon Partners Ltd.
5762 Bolsa Avenue, Suite 201
Huntington Beach, CA 92649
Attn: Michael Elmore, Land Services Manager
"CDC" Baldwin Park Community Development
Commission
Attn: Executive Director
14403 East Pacific Avenue
Baldwin Park, CA 91706
Neither party may assign any right or obligation under this Agreement without the
express written approval of the other party; provided that CDC may assign its rights and
obligations to the City of Baldwin Park,
IN WITNESSETH WHEREOF, the Parties have caused this Agreement to be
executed on the date identified below.
Dated:
F.11 a a 601• 1VI: 4 OVA a Eel •
Commission Counsel
COMMUNITY DEVELOPMENT
COMMISSION OF THE CITY OF
BALDWIN PARK
Vijay Singhal
Executive Director
[Signatures continued on page 6]
JAN. -09' 061MON) 16:44
Dated: 119144
TEL:714 373 1234 P. 007
[Signatures continued from page 5]
PARAGON PARTNERS LTD.
•
Contractor shall conduct the necessary title searches for the Right of Way along
Ramona Boulevard from La Rica Avenue to Downing Avenue within the City of
Baldwin Parke Contractor shall be required to:
Conduct a title search to identify the holders of the underlying fee and
easement interests within the Right of Way along Ramona Boulevard
from La Rica Avenue to Downing Avenue within the City of Baldwin
Park,
V Produce a report using a spreadsheet format, including the preparation
of a map, summarizing and illustrating the title search information that
identifies the holders of the underlying fee and easement interests by
name, parcel location, and applicable assessor's parcel number, and
Provide monthly status reports,
Satisfactorily complete the services within fifteen (15) working days
after the Commencement Date.
E ;,
E s kr.
Sot Whig
g,xx R
TITT
all tx +y
u. I
n,. s �d iA
Eart
j �✓ F
3 '-� � * G
wo
too
qa 'i s
s
a
S � w` S $k .ice i w"� A a i
-4: � � � *��'� � � $ � �" x 'f�, sti. � a` sue' °r .� `�3 ��� � �x .mw ;4�✓
$ w` �B
VAST
a� 4�� tf....... ai..N�{ a'tr,«c
v. tr°"°a x»`�' by r E d s Akin
Pi, x j
Z ..
PH
;bs t Y a 4 9 a k CIA
';�
ms's
e f' t
INN
hq
✓ � a. � i � � ¢ � '� � � v s. . � �'� y' �''`,. -�"f ��a' �f �-v �', a-w-` 3 '� Vii: -� ,
s-
y�r • `� � �{ ' �` � �� � "��'"- � ,�` "" � 'art ,. :� , �� t � s s �� � � � i �, �4�
T ti
r
A
sit a
all,
"Rt �A
4l
all tx +y
u. I
n,. s �d iA
Eart
j �✓ F
3 '-� � * G
wo
too
qa 'i s
s
a
S � w` S $k .ice i w"� A a i
-4: � � � *��'� � � $ � �" x 'f�, sti. � a` sue' °r .� `�3 ��� � �x .mw ;4�✓
$ w` �B
VAST
a� 4�� tf....... ai..N�{ a'tr,«c
v. tr°"°a x»`�' by r E d s Akin
Pi, x j
Z ..
PH
;bs t Y a 4 9 a k CIA
';�
ms's
e f' t
INN
hq
✓ � a. � i � � ¢ � '� � � v s. . � �'� y' �''`,. -�"f ��a' �f �-v �', a-w-` 3 '� Vii: -� ,
s-
y�r • `� � �{ ' �` � �� � "��'"- � ,�` "" � 'art ,. :� , �� t � s s �� � � � i �, �4�
T ti
r
F * 1 ! a
SCHEDULE OF PROFESSIONAL FEES
TURNKEY REAL ESTATE CONSULTING SERVICES
CLASSIFICATION
HOURLY RATES
Principal/Project Director
$135.00
Project Manager
$110.00
Deputy Project Manager
$105.00
Senior Acquisition/Relocation Assistance/Title Specialist
$95.00
Senior Staff Appraiser
$105.00
Acquisition/Relocation Assistance /Title Specialist
$75.00
Acquisition/Relocation Assistance /Title Technician
$65.00
TECHNICAL SUPPORT SERVICES
g Cost
Database Technician
$45.00
Technical Secretary
$40.00
Depositions and Court Testimony
$150.00
DIRECT CHARGES
Copies Xerox
$ 0.15 each
-Pagers/Cellular
Cost
Engineering Copies
g $ 5.00 each
Air Travel & Lodging
Cost
Ex Brian Copies
$ 2.00 each
Mileage
$ 0.485 per mile*
Telephone/Fax
Cost
Sub - Consultants
Cost + 10%
Posta e/FedEx
g Cost
10ther Expenses
Cost + 10%
*Or current IRS allowable.
TERMS OF PAYMENT: Net 30 days - Invoices will be submitted monthly. All rates are
effective as of January 2, 2006. Rates may be revised January 2, 2007 with client concurrence to
reflect current business conditions. Overtime for applicable labor classifications will be charged
at 1.5 times the hourly rate in accordance with California law.
5762 Bolsa Avenue, Suite 201 Huntington Beach, CA 92649 -1172 Phone: (714) 379 -3376 Fax: (714) 373 -1234
info @paragon- partners.com www.paragon- partners.com
ut M,
ZTFVT$T,IM,-� M�s �* 0 �M,
December 5, 2005
Melecio Picazo
Acting Redevelopment Manager
Community Development Commission
City of Baldwin Park
14403 East Pacific Avenue
Baldwin Park, CA 91706
�L r7
P r P'� 2, n E:
4 UU
i
is 1+g
VIA EMAIL & U.S. MAIL
Re: Proposal to Provide Title Research Services for Public Rights of Way Along Ramona
Boulevard from La Rica Avenue to Downing Avenue in the City of Baldwin Park
Dear Mr. Picazo:
Thank you for the opportunity to submit our proposal to provide title research services for the
portion of Ramona Boulevard referenced above. Our understanding of the Project, the scope
of work required, deliverables, assumptions, and cost estimate to provide our services for the
Project are outlined below:
Project Under standing
Paragon will provide title research to prepare a report for the purpose of identifying the
underlying fee interests along Ramona Boulevard. Paragon will utilize available data that is
of record to support their finding.
Scope of Work
The scope of the work involves the following tasks:
1. Research available records at the Tri Piant in Sun Vaiiey.
2. Review documents.
3. Prepare monthly status reports.
4. Prepare and deliver comprehensive report of findings.
5. Prepare a map that supports the report.
Deliverables
1. Monthly Status Reports.
2. Research report listing ownership name and parcel number.
3. Map showing parcel location and ownership name.
5762 Bolsa Avenue Suite 201 Huntington Beach, CA 92649 714 - 379 -3376 Fax 714- 373 -1234
info @paragon- partners.com www.paragon- partners.com
Assumptions
1. There will not be a formalized title report prepared, but instead a spreadsheet
indicating ownership for that portion of Ramona Boulevard previously
identified as part of the project.
Cost Estimate
Paragon's cost to perform the described title research services is $7,800.
Paragon proposes to invoice for its services on a flat fee basis due upon delivery. These costs
will not be exceeded without prior written authorization from the City of Baldwin Park.
Schedule
The schedule for the title research services will take 10 -12 working days from the time that
we receive written authorization to proceed.
Please let me know if you have any questions or need additional information about our
proposal. I can be reached at (714) 379 -3376. We appreciate being asked to submit our
proposal to the City of Baldwin Park Community Development Commission for this Project
and look forward to working with you.
Thank you for your consideration.
Sincerely,
Michael Elmore
Land Services Manager
Attachment ""
ffo
•• .
B & E ENGINEERS
an NJS Company
CIVIL ENGINEERING • SURVEYING • LAND PLANNING
24 W. St. Joseph Street TEL (626) 446 -4449
Arcadia, CA 91007 -2854 FAX (626) 446 -6566
December 7, 2005
Mr. Melecio Picazo
Acting Redevelopment Manager
City of Baldwin Park
Community Development Commission
14403 East Pacific Avenue
Baldwin Park, CA. 91706
B & E Engineers is pleased to submit our proposal for the preparation of the necessary
title searches required to identify the underlying fee interest along Ramona Boulevard
from La Rica Avenue to Downing Avenue.
B & E Engineers maintains a corporate philosophy, which emphasizes a high degree of
involvement by company officers in the research, design, management, staff supervision
and communications with clients for all company projects.
Our experience includes the design and engineering management services for municipal -
public works improvements, researching fee interest owners and coordination with public
agencies. We have complete computer capabilities including Auto CAD 2000 and
Microsoft Project.
Our Project Manger, Felipe A. Cruz, can be contacted by E -Mail at fcruz2beeng.com or
by telephone at: (626) 446 -4449 extension 18. His mailing address is 24 West Saint
Joseph Street, Arcadia, CA. 910007. His fax number is: (626) 446 -6566.
B & E Engineers accepts the terms and conditions stated in the RFP dated November 23,
2005. Likewise, we certify that we are in compliance with the state and federal anti-
discrimination laws.
B & E Engineers affirms that we will not exclude or discriminate on the basis of race,
color, national origin or sex in consideration of contract award opportunities.
We also affirm to consider and utilize sub - consultants, bidders and vendors in a manner
consistent with non - discrimination objectives.
Mr. Melecio Picazo
City of Baldwin Park
Community Development Commission
December 7, 2005
Page 2
B & E Engineers is committed to complete this project on time and is looking forward to
creating a lasting partnership with the City of Baldwin Park Community Development
Commission.
Sincerely,
James T. Emerson
President
In April 2005, B & E Engineers successfully completed the identification of the
underlying fee interest within the public Right of Way area currently used as public
parking on the south side of Ramona Boulevard between Baldwin Park Boulevard, Robin
Way and Sterling Way.
Based on this recent similar experience, our team will be able to expedite the
investigation process. We will research files at Los Angeles County to obtain all the
necessary information to depict the parcels to be identified along Ramona Boulevard as
requested by the Request for Proposal.
Utilizing the As Built Street Plan information from the City of Baldwin Park, Public
Works - Engineering Section, the Team will concurrently create a "base map" depicting
the areas to be researched for the underlying interest.
The created " base map" will be forwarded to a chosen established Title Company who
under our contract, will Team with our personnel assigned to this project to complement
our initial research.
Frequent coordination meetings will be established to maintain the quality and schedule
of this project.
The final product, will be delivered in a graphically and tabulated manner as requested in
the RFP.
W 9 NXII
Project Manager Felipe A. Cruz. He will be responsible for
the coordination and consultation, with the City of Baldwin
Park Community Development Commission.
Mr. Cruz twenty -nine years of experience in all phases of
diversified civil engineering projects will be a benefit to the
management of the project. He will responsible for the
progress of the project as well as the Team coordination,
management and all the engineering aspects of this project.
Project Designer James Lizakowski. He will be responsible for the
preparation of the "base map" mentioned in the Project
Understanding Approach section of this proposal.
His 34 years of experience in legal description and title
work at the County of Los Angeles provide an outstanding
background to be leader of our research team reviewing
existing documents from the County Records.
He will also interchange technical information with the
chosen Title Company.
Project Coordinator Sandra Zundell. Ms. Zundell will assist the Team with
processing, obtaining and identifying documents leading to
the underlying fee interest for the public right of ways areas
to be search. Her 30 years of experience in public agency
coordination to this assignment will be an asset to this
project.
President
Principal in Charge James T. Emerson. As President and Chief Financial
Officer, Mr. Emerson maintains an involvement in all
company's projects through supervision of the Project
Management. His supervision on this project will guarantee
the results that the City of Baldwin Park Community
Development Commission desires.
i� ,
Company P• '
B & E Engineers is a civil engineering, land planning, and surveying firm that has served
Southern California for over twenty -seven years. The firm originally incorporated in 1976
as "Bechtol and Emerson." The name was changed to B & E Engineers in 1983.
In 2003 B & E Engineers became a part of NJS Consultants, a Japanese Consulting firm
that has been in operation for over 40 years. B & E Engineers current corporate officers
are:
James T. Emerson President and Chief Financial Officer
Ramy F. Awad Vice President, Project Management
B & E Engineers provides professional civil engineering services to both private and public
sector clients in all areas relating to land development including:
Preliminary land planning, tentative map processing, land use and feasibility studies.
• ALTA, architectural, boundary and topographical surveys, entitlement analysis, right -
of -way engineering and preparation of legal descriptions.
• Preparation of hydrology studies, drainage concepts, and erosion control plans with
expertise in complex hillside grading design.
• Infrastructure and improvement design for roadway, sewer, water, storm drain and
debris basin facilities.
• CLOMR & LOMR flood insurance processing with FEMA.
• Extensive experience with State and Federal agencies including the Department of
Fish & Game, U.S. Army Corps of Engineers, NPDES & SWPPP compliance for the
State Water Resources Board, California Coastal Commission and CALTRANS.
• Expert witness testimony for condemnation cases involving land title & boundary
disputes, grading and drainage issues and civil engineering related matters.
• Computer capabilities include AutoCAD, Soft -Desk civil engineering software,
numerous programs for hydrology, drainage, retaining walls, earthwork and water -
flow calculations and project scheduling.
B & E Engineers maintains a corporate philosophy, which emphasizes a high degree of
involvement by company officers in the design, management, staff supervision, and client
communications for all company projects. We believe this management approach provides
our clients with the highest level of service available.
B &E Engineers December 2005
Project Profile Page 1
• City of Baldwin Park,
Drainage design and construction staking of 5,350 L.F. of storm drain system along
Baldwin Park Boulevard, Merced Avenue and Frazier Street.
• City of Baldwin Park,
Redesign of Merced Avenue portion between Big Dalton and Puente Avenue. Big
Dalton Avenue CIP 818.
• City of Baldwin Park,
Identification of the underlying fee interest within the public right -of -way area comprised
of public parking lots around the block south of Romona Avenue between Baldwin Park
Boulevard, Robin Way and Sterling Way.
• County of Los Angeles, Final Map Checking Services
Checking of final maps on an as- needed basis in review of conditions verification and
easement requirements. This service has been provided since January, 2002.
• J. Paul Getty Center, City of Los Angeles
Preliminary planning, final engineering and construction staking for a $733 million
regional fine arts center involving 1.5 million cubic yards of earthwork, major roadway
and retaining wall construction, and extensive coordination with numerous contractors
and consultants.
Easterly Industrial Facility, City of Industry
Preliminary and final engineering for the Industry Urban - Development Agency on an
80 -acre heavy industrial complex. This project involves right -of -way coordination with
Southern & Union Pacific Railroad, permit processing with Los Angeles County Flood
Control and Army Corps of Engineers for realignment of South San Jose Creek, a
major storm drain channel and design for all other infrastructure facilities.
Dreamworks,skg Animation Campus, City of Glendale
Site planning and schematic design development for a 495,000 sq.ft. animation studio
located on a 13 -acre site in the City of Glendale. This project involves storm drain
design requiring permit processing with the Los Angeles County Flood Control District
for connection to the Los Angeles River.
• UCLA Student Family Housing, City of Los Angeles
Civil engineering and schematic design development plans for a 908 -unit student family
housing complex with child care and administrative facilities.
SOKA University, Calabasas, Los Angeles County
Preliminary engineering and land planning for development of a 5,000 student campus
located in an environmentally sensitive area.
Engineers •.
Project Profile Page 2
• La Posada /Camarillo State Hospital, Ventura County
Site planning, grading design, and right -of -way engineering for a 33 -bed resident facility
funded by the Area Housing Authority of Ventura County.
• Laural Ave. Public Housing, South Whittier, Los Angeles County
Preliminary and final engineering for the Community Development Commission on a
multi - family affordable housing complex with 41 condominium units, 50 apartment units
and a community center.
• LACFCD— Lorain Drain, City of San Marino
Engineering design for L.A. County Flood Control on a 2,000 L.F. storm drain facility.
• Camp David Gonzalez Sewer Upgrade, Los Angeles County ISD
Civil engineering services to replace sewer lines at Camp David Gonzalez.
• CALTRANS /Santa Monica Blvd., City of Los Angeles
Right -of -way studies and expert witness testimony for major litigation case.
• USC Health Sciences Campus, City of Los Angeles
Civil engineering for on -site improvements of fire access roadways and walkways.
• Hillcrest Park Estates, Castaic, Los Angeles County
Civil engineering for a 371 -acre, master - planned community which included over 1,000
residential units phased into 14 separate subdivision maps, two school sites, 5,000 L.F.
of 4 -lane highway and major debris basin facilities.
• Pepperdine University, Malibu, Los Angeles County
Civil engineering for a 50 -unit faculty housing project on college campus including
design of a domestic pneumatic pump station.
• Pitchess Honor Ranch, Castaic, Los Angeles County
Civil engineering services for the Los Angeles County Internal Services Dept. to
upgrade sewer system at a medium security detention facility. The sewer system
involved 5,000 L.F. of 10 " -27" sewer line system that crossed Interstate Highway 5.
• Ladera Heights, Baldwin Hills, Los Angeles County
Preliminary and final engineering for 110 single - family housing lots which involved
complex grading design for geologic stabilization, relocation and abandonment of
existing oil lines and 1,600 L. F. of roadway with major intersection at La Cienega Blvd.
• Mt. Sac Performing Arts Center, City of Walnut
Civil engineering design for a 67,000 sq.ft. performing arts center, theater and
classroom complex located on college campus site.
1:- - Engineers December
Project Profile Page 3
• Hollywood Highlands, City of Los Angeles
Preliminary engineering for a 30 -unit luxury townhouse project located on hillside above
the Hollywood Bowl. This project involves coordination to deed 22+ acres to the Los
Angeles Philharmonic Association for wildlife preservation.
• Pasadena Historical Society, City of Pasadena
Civil engineering and construction staking for storm drain system to serve expansion of
museum facility.
• Victor Valley Community College, Victorville, San Bernardino County
Grading and infrastructure design for access roadway and parking lot for college
campus site.
• Baal Point Access Road, Castaic, Los Angeles County
Civil engineering design for the Los Angeles County Internal Services Dept. to
realign roadway accessing Castaic Lake Regional Recreation Area which was
damaged by landslides.
• City Ranch, City of Palmdale
Preliminary engineering and land planning for a 5,200 -lot master planned community on
a 1,985 acre site traversed by the California Aqueduct and San Andreas Fault.
Tentative planning involves approximately 7 million cubic yards of earthwork and
several miles of major roadway, sewer line, water line, and creek channeling.
• Compton Affordable Housing, City of Compton
Civil engineering for a 50 -lot single family housing project including final mapping,
surveying and design of street, sewer, water and grading plans.
• Westhaven Estates, Agoura Hills, Los Angeles County
Civil engineering for a 27 -lot single family housing development involving 100,000 c.y.
of grading and design for major rip -rap levee to contain adjacent Triunfo Creek.
• Marigold, Castaic, Los Angeles County
Final engineering for 70 -unit detached single family condominium project which
included unique "Z" concept site plan to maximize side yard areas.
• Trancas II, City of Malibu
Preliminary planning and civil engineering design for a 38 -unit condominium project
located along Pacific Coast Hwy. The project involved special foundation design to
minimize land alterations and maintain scenic qualities of ocean view site.
E &E Engineers December 2005
Project Page
• Lang Ranch, City of Thousand Oaks
Civil engineering for a 400 -acre multi -use land development project that involved
numerous engineering studies and extensive representation at public hearings relative
to approval of environmental impact reports and final master plan.
• Hog Canyon Flood Control, Castaic, Los Angeles County
Engineering services for the Los Angeles County Internal Services Dept. on a major
debris basin facility including design for 2,500 L.F. of storm drain system to serve
Pitchess Honor Rancho, a medium security detention center.
• FDIC —Land Use Study, City of Los Angeles
Land use and feasibility study to determine potential development of property site.
• Lost Hills, City of Calabasas
Final engineering and construction staking for a 500 -acre master planned community
involving 4.5 million cubic yards of grading and major civil engineering infrastructure
including 1,400 L.F. of rip -rap and culvert box channel along Las Virgenes Creek.
• Fairfax Commerce Center, Baldwin Hills, Los Angeles County
Preliminary engineering, site planning and tentative map for industrial park complex.
• The Park at Mulholland, City of Los Angeles
Preliminary and final engineering for a 178 -lot luxury estate development that involved
design for an 8,000 L.F. extension of Reseda Blvd.
• Westlake Boulevard, City of Thousand Oaks
A two -mile extension of 4 -lane highway constructed to serve the Lang Ranch
development that involved Arailroad tie- retaining walls and special design measures to
protect oak trees.
• Brentwood Country Estates, City of Los Angeles
Preliminary & final engineering for a 13 -lot luxury housing project involving 1.7 million
cubic yards of grading, relocation of a major water transmission line, and major debris
basin design.
• Bel -Air Hotel, City of Los Angeles
ALTA survey and design for drainage system at prestigious, historic hotel site.
• California West, City of Los Angeles
Final engineering and construction staking for a 290 -unit townhouse project involving
realignment of intersection with Topanga Cyn. Blvd.
December B&E Engineers 00
Project Profile Page 5
• Broad Beach Sewer, City of Malibu
Final engineering for a force main sewer & pump station designed in connection with 8
luxury beach front residential lots.
• Calabasas View, City of Calabasas
Preliminary and final engineering for a 34 -lot single family housing development
involving complicated hillside grading and drainage design.
• Sylmar Multi - Family Housing, City of Los Angeles
Preliminary planning for 328 -unit condominium project involving land acquisition by the
Los Angeles Metropolitan Transportation Authority for a Metro -Rail Station.
• RTC — Sepulveda Survey, City of Los Angeles
Field survey and preparation of ALTA map for government default property.
• Solomint Junction, City of Santa Clarita
Preliminary and final engineering for a movie theater and commercial shopping center
complex.
• Hughes Market, City of Los Angeles
Street lighting system at major intersection of San Fernando Rd. that involved special
foundation design due to older oil and gas lines located directly below pavement
surface.
• Cal -Tech Student Housing, City of Pasadena
Preparation of grading plans for multi -unit student housing facility.
• Academy Village, City of Los Angeles
ALTA surveys, civil engineering design and construction staking for a 428 -
unitapartment complex developed in coordination with the City of Los Angeles
Community Redevelopment Agency.
• Hollywood Presbyterian Church, City of Los Angeles
Civil engineering for parking lot expansion including storm drain and pumping station.
• Calabasas Park West, City of Calabasas
Preliminary engineering for master - planning of a 500 -lot single family housing project
including preparation of hydrology studies and drainage concept plans.
• Regents Point, City of Irvine, Orange County
Preparation of site development plans for a 4 -acre multi -use medical senior citizen
facility.
Engineers December 2005
Project Profile Page 6
• Paseo Del Mar, City of Ventura
Master land use planning and engineering for a 280 -unit affordable housing project
utilizing solar energy orientation.
• Plantation, City of Industry
Preliminary and civil engineering for a 1.35 million S.F. of industrial buildings in a 73-
acre industrial park in the City of Industry.
• Los Encinos II, Mexico City
Preliminary engineering and land planning design for a 179 -lot residential development
located in Mexico City.
• Calabasas Promenade, City of Calabasas
Civil engineering for a 170,000 sq. ft. commercial complex with retail stores, Home
Depot, Hughes Market and a church site involving 500,000 cubic yards of grading.
• University of California Irvine, Orange County
Civil engineering for a 300 -unit student housing project including peripheral drainage
and street construction.
• Meadows, City of Santa Clarita
Tentative and final engineering for a 183 -unit single family condominium project.
• Elkins Property, City of Monrovia
Preliminary planning and grading plan design for a 40 -lot residential project.
• Giano Channel, City of La Puente
Drainage studies and project concept report regarding a future storm drain for the Los
Angeles County Department of Public Works.
• Shadow Oaks, City of Santa Clarita
Final engineering for 55 -lot residential subdivision involving hillside grading and
drainage facilities.
Engineers December 2005
Private Sector Clients
• American Beauty Homes
• The Anden Group
• Arthur K. Snyder Law Corp.
• The Baldwin Company
• Bank of America
• Beazer Homes
• Bel Air Hotel
• Braemar Country Club
• Braewood Corporation
• Brea Canon Oil Corp.
• Brentwood Circle HOA
• Broad Beach Associates
• Building Industry of America
• Burns - Pacific Construction
• Cabot, Cabot & Forbes
• Cal Mat Company
• California Community Builders
• California Federal Savings & Loan
• Camping World
• California P.E.O. Homes
• Caroline Hunt Trust Estate
• C.B. Commercial Real Estate Group
• Charo Housing Development Corp.
• Charter Pacific Holdings
B &E Engineers
• Chevron Pipeline Corp.
• Community Dynamics
• Continental Lawyers Title Co.
• Currey -Riach Company
• Dale Poe Development Company
• Del Arno Fashion Center
• Dinwiddie Construction Company
• Disney /Onsite, Inc.
• DreamWorks, skg
• Exxon Company, USA
• First Colony Life Insurance
• Federated Development Corp.
• Pacific Bay Homes /FN Development
• Franciscan Missionary Sisters
• Freidman Bros. Investment Co.
• Goldrich & Kest
• Greystone Homes
• Griffin Homes
• Hassett & Rosenblood
• Harlan Lee & Associates
• Hilton Realty
• Home Depot
• Home Savings of America
• Humana. Inc.
Private Sector Clients con't.
• Hughes Research Laboratories
• The Irvine Company
• Capital Pacific Holdings /JM Peters
Co.
• J. Paul Getty Trust
• Jenna Group
• Kaufman & Broad Homes
• Koll Real Estate Group
• K. Young Homes
• Lang Ranch Company
• Larwin Company
• Latham & Watkins
• Lewis Homes Management Corp.
• Lincoln Property Company
• Lomas & Nettleton Financial Corp.
• Los Angeles Athletic Club
• Malibu Jewish Center
• MBK Homes
• M. J. Brock and Sons
• Maier-Dinow Homes
• Nehemiah West Housing Corp.
• Newcrest Development
• Olson Company
• Pacific Bay Homes
• Pardee Construction Company
• Phoenix Property
• Preferred Financial Corporation
• Prestige Homes
• Pulte Homes
• Rossco Holdings
• Roman Catholic Archdiocese
• Ross & Scott
• RWR Companies
• Safco Development Properties
• Shea Homes
• Shearson - Lehman Brothers
• Toll Brothers
• Thomas V. Jones
• Thomas Steers
• The Trust for Public Land
• Valencia Company
• Valley Presbyterian Hospital
• Warmington Homes
• Watt Pacific
• West Venture Homes
• Wilma Pacific
• World Oil Corp.
Architects
• Axcess Architects
• Carde Ten Architects
• CHCG Architects
• Emment Wemple & Associates
• Gensler & Associates
• Goldman Firth Architects
• Gustaf Soderbergh -Van Tilburg
• Hawkins, Lindsey, Wilson & Assoc
• Hildalgo & Hildalgo
• Inslee, Senefeld, Puchlik
• Miralles Associates
• Buss- Shelger Associates
• Craig Peeples, Appraiser
• David E. Moss & Associates
• Don G. Murphy, Inc.
• Hans Giraud & Associates
• Hugh McCormick, Appraiser
• Neptune & Thomas
• Jeffrey M. Kalban & Associates
• JTC Architects
• Kaplan, McLaughlin, Diaz
• Langdon Wilson Architects
• R.G. Wheeler & Associates
• Rachlin & Rachlin
• Richard Meier & Partners
• Spencer Hoskins Associates
• Steven Ehrlich & Associates
• Summit Architects
Consultants
• John Wright, Appraiser
• Linscott, Law & Greenspan
• Karsten Consultants
• Rincon Consultants
• Swinerton & Walberg Co.
• Walquist- Lawrence
• City of Beverly Hills
• CALTRANS
• FDIC — Federal Insurance Deposit Corp.
• Industry Urban Development Agency
• Los Angeles County Community Development
Commission
• Los Angeles County Flood Control District
• Los Angeles County Internal Services Dept.
• Los Angeles County Dept. of Public Works
• Los Angeles County Sanitation District
• Mountains Restoration Trust
• City of Baldwin Park
Jet Propulsion Laboratory
• City of Palmdale
• Pasadena Historical Society
• City of Pasadena
• RTC (Home Fed Bank)
• City of San Dimas
• Santa Clarita Water Co.
• Santa Monica Mountains Conservancy
• City of Thousand Oaks
• Ventura County Area Housing
Authority
Educational Institutions
• California Institute of Technology, Pasadena • SOKA University
• Castaic Union School District • University of California, Irvine
• Conejo Valley Unified School District
• Glendale Community College
• Mt. San Antonio Community College
• Pepperdine University
• California State University, Long
Beach
• University of California, Los Angeles
• University of Southern California
• Victor Valley Community College
Imm _-
We estimate that the time our key personnel included in this proposal will utilize
completing this project is as follows:
• James Lizakowski. Project Designer, 150 hours .................. $ 16,350.00
• Sandra Zundell. Project Coordinator, 40 hour :..................... $ 3,920.00
• James Emerson. Principal in Charge, 16 hours :................... $ 2,752.00
• Felipe A. Cruz Project Manager, 80 hours ........................... $ 10,240.00
• Chicago Title Company ................. ............................... $ 36,000.00
Total $ 69,262.00
No overtime work will be performed without your authorization.
Office work request to be performed at an overtime basis will be billed at rates shown on
at the following Hourly Rate description.
REGULAR OVERTIME
Principal $172.00 $ 215.00
Project Manager $ 128.00 $ 160.00
Designer $ 109.00 $ 136.00
Project Coordinator $ 98.00 $ 122.00
Client shall pay for all reproduction, delivers, overnight mailings, plan checking and
inspections.
Reproduction, deliveries and overnight mailings will be billed at cost plus 15 %.
w 0 0113 11
JAMES T. EMERSON P.E.
President/Principal -in- Charge
Education
B.S. in Civil Engineering from Michigan Technological University, Houghton, Michigan
Continued education in Real Estate, Business Administration and Project Management
Professional Registration Registered Civil Engineer, State of California
Professional Affiliations
• American Society of Civil Engineers
• American Public Works Association
• Consulting Engineers and Land Surveyors of California (CELSOC)
• Building Industry of America
• American Planning Association
• Institute for Advancement of Engineering
• Los Angeles County Dept. Of Public Works —Land Development Advisory Committee
Guest speaker for Land Development Seminars at UCLA, Occidental University & Pasadena
City College.
Professional Experience
Mr. Emerson has 38 years experience managing civil engineering projects throughout
Southern California. Mr. Emerson began his career as Supervising Civil Engineer for the
Subdivision Section at the Los Angeles County Dept. of County Engineer where he was
responsible for subdivision review for up to 15,000 lots per year. In addition, he developed
plans for infrastructure such as major highways and coastal engineering facilities. Since
joining the private sector, Mr. Emerson has managed the civil engineering aspects on
countless land development projects and provided "expert witness" testimony for
condemnation cases involving grading and drainage issues.
Representative Projects
Hillcrest Park Estates, final engineering for a master - planned community located in the
Castaic area of Los Angeles County comprised of 600 single- family housing lots, a
condominium complex and two school sites. Civil engineering design involved 1.8 million
cubic yards of grading, 5,000 L.F. of 4 -lane highway, major storm drain and debris facilities
as well as extensive client representation at agency hearings and neighborhood community
meetings.
B &E Engineers
JAMES T. EMERSON,
Representative Projects (Continued)
Lorrain Drain, design services for the Los Angeles County Flood Control District on
a 250 L.F. storm drain system in the City of San Marino.
CALTRANS /Santa Monica Blvd., right -of -way studies and expert witness testimony for
major litigation case regarding site located in the City of Los Angeles,
Lang Ranch, a 400 -acre master planned community located in the City of Thousand Oaks.
This project included planning services for 2,200 residential units comprised of single family
homes, multi- family apartment and condominium complexes as well as commercial, school
and park sites. Civil engineering design involved a 2 -mile extension of Westlake Blvd., 10
million cubic yards of grading and all major civil engineering infrastructure.
Lost Hills Village, a 500 -acre mixed -land use development project located in Calabasas
that involved commercial, industrial, governmental and residential property. The project
included 1,200 housing units made up of apartments, condominiums, and single family
homes, construction of major storm drain facilities including 1,400 L.F. of rip -rap and box
culvert channel along Las Virgenes Creek, relocation of 30" water and 15" sewer lines, and
45 million cubic yards of grading.
Academy Village, a 428 unit apartment complex in the City of Los Angeles. This project
was developed in coordination with the City of Los Angeles— Community
Redevelopment Agency.
Current Responsibilities
As President and Chief Financial Officer, Mr. Emerson is responsible for the corporate
operations of B & E Engineers. Mr. Emerson also serves as Principal -in- Charge of
Project Management where he maintains involvement in all company projects through
supervision of the Project Management Staff as well as personally managing several of the
firm's more complex projects. Throughout his career, Mr. Emerson has continued an active
involvement in professional organizations which keeps the staff of B & E Engineers
informed on changes in laws and regulations affecting the industry.
.. r
Project Manager
Education
B.S. in Civil Engineering from California State University, Los Angeles
Certificate of Completion in:
Fundamentals of Cost Management sponsored by the A.A.C.E. (American Society of
Cost Estimates)
Intergraph MicroStation— Training Workshop: INROADS.
Professional Affiliations
AMERICAN SOCIETY OF CIVIL ENGINEERS
SOCIETY OF HISPANIC PROFESSIONAL ENGINEERS (SHPE)
Professional Experience
Mr. Cruz has over twenty -nine years of professional experience in all phases of
diversified civil engineering projects, ranging from preliminary studies, design,
engineering and construction of local, out -of -State and overseas projects, and has
worked effectively with all levels of staff and management.
Mr. Cruz's project experience encompasses the management, design, construction
inspection, administration and coordination of engineering projects related to Public
Works, Residential and Commercial Land Development, Retail and Institutional facilities
and, In the Transportation area, Light and Heavy Rail Systems, Bridges and Freeways.
Other areas of experience are the design and management of projects associated with
both Light and Heavy Industrial categories including environmental, commercial and
office buildings.
Representative Projects
Countless Residential and Commercial Land Development Projects including preparing
and coordinating the design of Public Improvement Plans to conform with local
agencies, Public Works, Building & Safety requirements. Also providing technical and
administrative assistance to Managers, Staff and Clients for the approval and clearance
of projects in Los Angeles, Ventura, Orange and Riverside Counties in Southern
California, such as:
Point Mugu /Port Hueneme Navy Facilities. Developed the complete underground
utilities and drainage systems for the construction of a Housing Facility per U.S. Navy
Standards and Ventura County Standards.
St. John's Hospital, Oxnard, CA. Prepared and coordinated the civil design of the on-
site as well as the off -site improvements for the 48 -acre Medical Center Facility,
including drainage and paving, heliport, MRI un- reinforced concrete pad station and
Traffic studies. During construction, processed and coordinated with City Officials and
Inspectors the Change Orders issued, due to the differing underground utility conditions.
B &E Engineers August 2001
FELIPE A. CRUZ Page 2
Utilities Relocation, Los Angeles, Long Beach, CA. Developed plan, design and
criteria for the relocation and rearrangement of underground and aboveground utilities
such as gas, electricity, cables, sanitary sewer and storm drain impacted by the design
and construction of the Electric Trolley Bus Project within the Cities of Los Angeles and
Long Beach. Interfaced with private and public agencies including Los Angeles County
Metropolitan Transit Authority (LACMTA) and CALTRANS to negotiate the relocation of
the existing utilities. Assisted in negotiations and coordinated the rearrangements to
proposed utilities improvements with the LACMTA.
Pre - Construction Survey, Residential /Commercial Facilities, Hollywood Hills, CA.
Inspected, evaluated and documented the existing structural conditions of the
residential and commercial facilities impacted by the construction of the proposed Metro
Rail tunnels extension. Assisted in the supervision management project personnel
reporting and area awareness outreach.
Environmental Compliance, Permitting, Gasoline Service Stations, So. California.
Assessed the existing conditions of the Underground Tanks Monitoring Systems for
Mobil Oil Co. retail service stations. Prepared detailed as -built plans reflecting the
proposed modifications on the underground tank monitoring systems, waste oil tank
removal. Processed the construction permits with jurisdictional agencies, coordinating
the construction activities with the General Contractors and Inspectors. Documented
and monitored all construction activities.
Commercial Improvement— Sherman Oaks Galleria Plaza, Sherman Oaks.
Designed, prepared and coordinated the paving and fine grading improvement plans,
the multi - levels structured parking layout for the commercial development in Sherman
Oaks.
Industrial Residential Development, Tucson, Arizona.
Developed the necessary Civil Plans for the construction of the recreational area and
wastewater facility for the IBM Industrial /Residential Complex.
Current Responsibilities
Management of the design, land development feasibility studies of several residential
land development projects within the City and County of Los Angeles including the
upgrading of institutional facilities.
Provides Construction Management for private residential projects as well as for the
County of Los Angeles rehabilitation systems projects.
B &E Engineers
JAMES LIZAKOWSKI
Survey Mapping Supervisor
Education
East Los Angeles Junior College and UCLA majoring in Surveying, Civil Engineering and
Land Title.
Professional Experience
1956 to 1990 employed by Los Angeles County Engineer and Department of Public Works
engaged in the preparation and /or direction of the following activities:
• Analysis of legal descriptions and preparation of Los Angeles County Assessor's
Maps.
• Reviewed title reports, wrote legal descriptions and prepared documents for the
acquisition of right -of -way for public street, storm drain, sewers and other public
easements.
• As Section Head, directed preparation of County Surveyor's maps, Right -of -Way
maps, Substructure maps, House Numbering maps and Index maps.
• Project Manager of the Department of Public Works (DPW), computer aided
mapping (CAM) unit involved in the development and preparation of the Los
Angeles County digital mapping database.
• Taught in- service legal description writing classes for DPW.
1990 to date employed by B & E Engineers as Survey Mapping Supervisor responsible
for the following activities.
• Research public records for data to perform field surveys to establish boundaries
of land development projects.
• Analyze field survey data and title reports to prepare Tract Maps, Parcel Maps
and Records of Survey for filing with the County of Los Angeles.
• Write legal description and prepare all documents, as required, for land
development projects.
Representative Projects
City of Baldwin Park. Prepared Right of Study of Ramona Boulevard and Baldwin Park
Boulevard to determine "Underlying Fee Ownership" for City of Baldwin Park.
Engineers December //
1
Education
Project Coordinator
AA in Liberal Arts with an emphasis in Geography from Marymount College, Rancho
Palos Verdes, California
Cal State Long Beach majoring in geography and Urban studies Certificate program,
Long Beach, California
Notary Public
Professional Experience
Ms. Zundell has 30 years experience as a Project Coordinator, Assistant Project
Manager and Assistant Forward Planner for several large Southern California home
builders and civil engineering firms. She has been involved with processing projects,
many with a high degree of complexity, throughout Southern California. Ms. Zundell
has mastered the art of guiding plans through extensive government bureaucracy and is
well acquainted with the development permitting. She exhibits a strong but diplomatic
personality that is required to submit and monitor the progress of plans through the
different agencies.
Engineers December 2I l
bn
a
uj
a)
0)
0
m
a)
-0
a)
w
0
co
a)
-0
a)
E2
(D
11
- 0 )
ce) N
ce) 2
'IT E
LO
C)
O C
-
a)
0
0
CO
(D M
-0 Q
E
0
N
0
CL -q:
E (D
� u
0 C
L. 0 � 0 U
LL Cn
U)
a)
(D =3
a) cr
3: a)
co >
m
0 -C
(D =3
4- 0
o
a)
0
-C
4- (n
a) mg
.9-0
ca -C T E: a)
M-0
C) >
o 2
o LO 0
04
@
a)
Rf 0
CL
O 0
to L
40-
O 0 1
-tf C:
0 M
CL.r
(D
a) a)
.r- -a
0
a)
0
CL
0
(n
0
U) r-
a) Z 0
m 0- 0
.E < —0
a)
.c (n
a)
0
0
cn
" 0 -0
a) a)
> U)
O— a)
a)
Z a)
0 0 0
N
a)
a- —
(n
< (n
—6 a)
a)
O a) a)
-�) 0 r-
C: "
200
cv Q,
Z3 C, co
Co Q)
-73 T 1* C� Q
co
(V co
C)
uj cc
ul
ao
KCB
j.
L �,.a.. v:.... �. Commer
cial Services
Melecio Picazo, Acting Redevelopment Manager
City of Baldwin Park
Community Development Commission
14403 E. Pacific Avenue
Baldwin Park, CA 91706
Re: Ramona Boulevard / Parking Lots
Dear Mr. Picazo:
Commonwealth, Lawyers Title, Transnation
1920 Main Street, Suite 1200
Irvine, California 92614
Phone: (949) 930 -9399
December 7, 2005
eft' `IS}'d P
Pr d 8,..'.�ia:f„ P � N r
Thank you for the opportunity to submit our bid to provide preliminary reports to implement the
Ramona Boulevard / Parking Lots project.
LandAmerica Commercial Services through its wholly owned subsidiaries; Commonwealth
Land Title Company and Lawyers Title Company, has been a major presence for title insurance
in Los Angeles County in general and Baldwin Park in particular for many years. With a large
full service production facility located in Sun Valley, we are prepared to conduct searches for the
right of way areas along Ramona Boulevard from La Rica Avenue to Downing Avenue within
the City of Baldwin Park pursuant to the instructions set forth in the Request For Proposals dated
November 23, 2005, a copy of which is attached.
LandAmerica Commercial Services proposes to issue its preliminary reports for a fee of $650.00
each. Upon a request to issue a title insurance policy within 24 months of the issuance of a
preliminary report, we will credit one half (1/2) of the fee toward the title insurance premium.
Title insurance premiums are based on the liability of the policy requested. Our rates are set forth
on Schedule "A" attached. If a litigation guarantee is required, we will issue the guarantee with a
liability of $100,000.00 for an additional fee of $200.00. If additional liability is required, it will
be calculated based on our filed rates which are attached. The above fees only cover the issuance
of reports, guarantees and policies. Should you require additional services, such as; document
copies, plotted easements or additional research, we will be happy to provide additional quotes.
We hope this proposal meets with your approval. We look forward to working with you on this
and future projects. Should you have any questions, please don't hesitate to call me directly at
(949) 930 -9319.
Sincerely
Jo n Marten
hief Title Officer
Asst. Vice President
Email: imarten(i�landam.com.
Schedule "A"
TITLE INSURANCE
The Basic Title Insurance Rate used in determining the charges for policies, binders and
endorsements is as follows:
Up to $40,000
For each $5,000 of insurance or fraction thereof above
Add $22.40 per $5,000 up to and including
Add $13.00 per $5,000 up to and including
Add $11.25 per $5,000 up to and including
Add $8.00 per $5,000 up to and including
Add $4.50 per $5,000 over
LIABILITY
PREMIUM
$375.00
$40,000
$100,000
$643.80
$500,000
$1,683.80
$1,000,000
$2,808.80
$3,000,000
$6,008.80
$3,000,000
1 E i I C i T E D T 0 > E A L E S T A T E T R z N S A C T 1 0
TABLE OF CONTENTS
In millions of dollars, except market price and per share data
�
�
�
2004
00
2002
Revenues
$3,5221
$3'406.0
$2.586.6
Net Income
$ 146.3
$ 182]
$ 1494
Total Assets
$3'290.0
$2'721.6
$1.910.8
Shareholders' Equity
$1.1511
$1.044.5
$ 863.6
Per Common Share Amounts
Net Income
$8.O7
$70.43
$8.1O
Net Income Assuming Dilution
$ 8.01
$70.31
$ 8.04
Shareholders' Equity
$64.09
$55.51
$47.07
Market Price on December 31
$53.93
$52.26
$35.46
52'VVeek Price Range:
High
$57.73
$53.18
$38.30
Lnvv
$35.51
$35.50
$25.25
�
�
�
0
0
m
E
b
c
LandArrierica turined in f"iothegr strong performance for 2004 as our u tax r y e lLm
held steady aitjust over ZS3. 4 billion Highlights r 2004 also include net income
of ' 4663 million, shareholders' equity of S1.15 b0lion, diluted earnings per Share
of ,01, and we n e 1500 company.
Integrity
In addition, in 2004 Fortune magazine recognized LandAmerica on its list of 'Most Admired
Companies, " based on measurements that include innovation, quality of products, services
Respect for the Individual
and management, employee talent, financial soundness, use of corporate assets, long -term
investment and social responsibility. As a company committed to living by our Guiding
L A N DAM E R I C A ' S
Principles (see inset), we are particularly proud of this accomplishment.
GUIDING PRINCIPLES
initiatives designed to broaden our market position and provide the framework for
Frequent and Open Communication
MARKET ENVIRONMENT
Grounded by our Guiding Principles,
Many predicted 2004 would be a much tougher year than the record - breaking year before.
LandAmerica is committed to offering
Interest rates fluctuated throughout 2004 with a general up -tick based on a strengthening
comprehensive, reliable, and respected
economy and the actions of the Federal Reserve, which reduced overall mortgage volumes,
services available to the real estate
offered. We continue to transition from a provider of title insurance and closing services to
Compared to 2003 levels, residential refinance activity declined; however, the buy /sell side
transaction services customer.
of the business remained strong and commercial real estate activity levels increased.
DRIVE FOR EXCELLENCE
We believe that our industry has good long -term dynamics founded on the strength of
Customer Satisfaction
the U.S. real estate market. Strong demographic trends such as household growth, baby
Continuous Improvement
boomers moving into peak income and home buying years, and immigrants pursuing the
Pursuit of Ideas
American dream of homeownership bode well for our residential business, and continued
P E R S O N A L VALUES
strength in the economy will help our commercial activities.
Integrity
Our long -term objective is to enhance our position as a premier provider and manager of
Respect for the Individual
integrated real estate transaction services while maximizing our profitability throughout
MANAGEMENT PRACTICES
the real estate market cycle. To accomplish this objective, we are pursuing various business
Clear Goals and Objectives
initiatives designed to broaden our market position and provide the framework for
Frequent and Open Communication
enhancing growth and maximizing profitability.
Employee Development
MARKET SHARE FOCUS
Teamwork
We seek to increase our share of the market by expanding our array of real estate transaction
Responsible Corporate Citizenship
products and services and increasing the distribution channels through which they are
offered. We continue to transition from a provider of title insurance and closing services to
becoming more of a single- source provider of multiple products and services required in
real estate transactions. We also seek to increase our presence by opening new offices or
acquiring new businesses in markets with the potential for significant transaction volume
and we actively recruit and retain experienced industry professionals who can leverage
strong customer or community relationships in the pursuit of new business.
To better align our company with customer needs as well as enhance opportunities for
improving customer service, in early 2004 we reorganized our company with a focus on
our Residential, Commercial, Agency and Lender Service customers.
In 2004, LandAmerica Residential Services launched a Superior Service Guarantee. Offered
in most Residential Services offices, the Superior Service Guarantee supports our effort to
make the real estate settlement process easy and efficient for customers. It states; If a
customer is not satisfied with our service or any portion of their settlement experience,
we will promptly refund their escrow fee.
For commercial real estate customers, we've continued to expand our portfolio of solutions
and the Commercial Services office network. LandAmerica Commercial Services provides a
single point of contact for a comprehensive array of services beyond title and closing that
includes property appraisal and valuation, building and site assessments and other due
diligence services, survey coordination, construction disbursement, tax - deferred real property
exchanges under Section 1031 of the Internal Revenue Code, and Uniform Commercial
Code products insuring personal property.
In 2004, Agency Services launched AgentXtraS', a program of diverse business and
marketing solutions designed to support the day -to -day operations of our agents
around the country. Lender Services introduced LenderXtras", and its online component,
LenderXtraOrderlm, to provide lender customers the opportunity to create custom packages
of services based on their needs. Lender service packages may include real estate tax
processing, flood zone certifications, consumer mortgage credit reporting, default
management services, and mortgage loan subservicing.
In the last year, LandAmerica has organized all of its Shared Resources to provide
direct support to our customer - focused operations by deploying specialists to the business
management in each of our six geographic regions. We continued the centralization of title
production and process improvement as well as the development and implementation of
an enterprise -wide sales methodology.
Is OEm-am ,.
Strategic acquisitions allow us to achieve greater market penetration and broaden our
real estate transaction services offerings. During 2004, we added 27 new companies
to our family, expanding our core title business in the important California market as
well as in Florida, Michigan, Colorado, Missouri and Virginia. We also deepened our
commitment in the home inspection, commercial assessment, credit services, flood
services and default services businesses, and we expanded into the home warranty
and mortgage subservicing businesses,
W
r
C
CL
y
w
O
O
`.
0
0
N
V
b
a
(left to right) Alpert, Chandler, Foster
Stock repurchases also provide solid returns, and with dividends serve to balance the
overall effective utilization of capital, Since early 1999, we have repurchased 3.8 million
shares at an aggregate cost of $116.5 million or $30.48 per share. Dividends also provide
steady returns to shareholders as the quarterly dividend rate has been increased from
$0.05 per share in 2002 to $0.15 per share today.
In late 2004, the Board of Directors elected to separate the roles of Chairman and Chief
Executive Officer, effective January 1, 2005. To that end, Charlie Foster continues in his role as
Chairman of the Board and Ted Chandler now serves as President and Chief Executive Officer,
During Charlie Foster's 14 -year leadership as CEO, LandAmerica grew dramatically —from
a relatively small title insurance carrier with operating revenues of about $400 million into
what is today an over $3.4 billion, Fortune 500 company,
For 11 of those years, he worked side -by -side with Jan Alpert, as President and then Vice
Chair. This unique executive partnership has been the catalyst for LandAmerica's success
ever since Charlie named Jan President in 1993.
After a 35 -year career, Jan Alpert retired at the end of 2004, Jan began her career with
Lawyers Title in California as a senior clerk typist. By 1978, she had moved to the company
headquarters in Richmond to direct the national division as a vice president. Ten years
later, Jan began a series of "firsts" as she became the company's first female Senior Vice
President in 1988, the first female Executive Vice President in 1989, and the first female
President in 1993. An icon in the industry, we salute Jan's years of service and thank her
for her passion, commitment and expertise, and we look forward to Charlie and Jan's
continued contributions as members of our Board of Directors.
The credit for LandAmerica's overall success goes to our employees, who always do
such an outstanding job serving our customers and assisting our leaders in producing
exceptional results. Since becoming a public company in 1991, LandAmerica's stock has
increased over 650% —and that would not be possible without our dedicated, talented
and conscientious workforce.
LandAmerica remains committed to delivering value to our shareholders. As the demands
of our customers and the real estate industry continually evolve, we have embarked on a
series of strategic changes and initiatives that have required the support of our customers,
agents, shareholders, and employees. We thank you all for contributing to our success
through your continued partnerships and, with Ted as CEO, the new leadership intends to
exert similar drive and energy toward future success,
Charles H. Foster, Jr. l%A Janet A. Alpert Theodore L. Chandler, Jr.
Chairman of the Board Vice -Chair President and Chief Executive Officer
LandAmerica relies on our network more than 10,000 agentsfor the rovi n of
title and closing services to residential n commercial m °s ndA der i 's
agents are located predominantily in the eastern United States, and are primarily
independent itl companies and real estate attorneys. In 2004, agent revenue
represented almost 56.8% of our. Dotal operating revenue.
While we have always provided a wide range of business support and title production
services to our agents, in 2004 LandAmerica Agency Services formalized and enhanced our
commitment to agents by introducing the AgentXtrasm Program. AgentXtras" is a diverse
offering of customized business and marketing solutions to support day -to -day business
operations for our agents.
Programs available through AgentXtraS" range from employee recruiting assistance to
provision of employee benefits, Errors & Omission insurance to multi -state licensing,
escrow reconciliation to co -op marketing. That, combined with the processing efficiency
and strength of more than 30 title production centers located nationwide, means we
provide our agents the tools they need to increase their productivity and profitability.
As part of the AgentXtras" Program, LandAmerica also introduced XtraOrderT", our
electronic order and delivery platform that provides our agents the capability to give
their customers fast and easy access to title commitments, endorsements, recording,
appraisals, credit reports, flood certification, tax services and default services.
r
a
h
t7
N
O
O
T
0
0
N
b
MOVE OEM A A rM M0-
Residential roc ere a nationwide focus on providing residential real estate
transaction services LandArne,Hca residential customers include real estate brokers
and agents, local mortgage lenders and brokers, real estate attorneys and their
clients, builders, developers, and consumers involved in the purchase, sale or
refinancing of peal t- "£e.
With more than 800 locations nationwide, Residential Services offices are primarily
identified with the company's three major title insurance underwriters: Commonwealth,
Lawyers Title and Transnation. Core business in Residential Services focuses on title and
escrow delivered through branch offices on a local basis. While most transactions in
this channel are residential in scope, these offices also manage local commercial
transactions and lender relationships.
In 2004, LandAmerica developed and implemented a Superior Service Guarantee for most
of our Residential Services branch offices. As part of our customer - focused strategy, the Superior
Service Guarantee provides for the refund of the escrow fee when a residential customer
is not satisfied with our service or any portion of the settlement experience. The escrow fee,
also known as a closing fee, is separate and distinct from premiums paid for title insurance
policies, and is refunded to the customer within three days of notification.
Along with our commitment to Superior Service, LandAmerica is also focused on continuing
to provide a wider range of services relevant to the residential customer. In 2004, Residential
Services added Buyers Home Warranty Company, an innovative provider of home service
contracts, and expanded our InspecTech property inspection division through the acquisition
of seven home inspection providers.
LandAmerica Comm l Services is focused on the m l peal estate
transaction Ct t orin r doing business locally, nationally, and outside the o inen l
United States. Commercial customers include attorneys and their clients, bar r
and developers, corporate real estate departnients, real estate investors,
a
a
m
.y
and lenders making commercial loans, w
N
O
O
Along with the core business of title and closing, Commercial Services also provides a broad
range of specialized services that include property appraisals and valuation, building and
site assessments, as well as other due diligence services, survey coordination, construction
disbursement, tax - deferred "1031 " real property exchanges, and Uniform Commercial Code
products insuring personal property.
LandAmerica Commercial Services uses the combined capital position of our three principal
title underwriting subsidiaries — Commonwealth, Lawyers Title, and Transnation —to
underwrite large commercial policies and facilitate the coordination of national, multi -state
transactions. By delivering such a broad portfolio of solutions through a single point of
contact, LandAmerica is involved with its commercial customers earlier, longer and
throughout the transaction cycle,
In 2004, Commercial Services aligned its local commercial offices with its national
commercial offices, and now employs more than 900 commercial transaction
specialists in 45 offices in 27 strategic markets. Future plans for LandAmerica Commercial
Services include increasing the application of web -based technology to facilitate work
flow and collaboration with customers, as well as continuing to expand client services.
CO
0
0
N
:J
CN
L:
Q
td
a
Lender Services is comprised of LandAmerica companies focused on meeting
origination and servicing needs of residential mortgage lenders. Lender Services
customers are prinnarfly national and larger regional lenders seeking a range of
solutions—in many cases,, bundled—related to the purchase; sale or refinancing
of residential real estate.
For mortgage loan origination, LandAmerica provides consumer mortgage credit reporting,
flood zone certification, and coordinated title, closing and escrow services, For mortgage loan
servicing, LandAmerica offers real estate tax payment services, mortgage loan subservicing
and a wide range of default services — including REO management, foreclosure and
bankruptcy services, and lien reconveyance.
In 2004, LandAmerica acquired two companies that will provide added strength to our
Lender Services portfolio— LoanCare Servicing Center, Inc., a large loan subservicing
company, and 3Arch Financial Services Corporation, an addition to our Default Services
group that expands our presence in California and New York.
Also during the year, LandAmerica Lender Services introduced the LenderXtrall Program,
a flexible approach to product bundling that allows national lenders to create customized
service packages, and LenderXtraOrderlv;, the online component of LenderXtra that allows
real -time instant price quotes and order conversion for bundled lender services.
MANAG EMENT'S DISCUSSION ANALYSIS F
F NAN C I L CO N D ITI 0 N AN D RESU LT PF TI ON S
OVERVIEW
The Company's long -term goal is to enhance its position as
one of the largest providers of real estate transaction services.
To accomplish this objective, the Company has expanded
its operations through internal growth and selective strategic:
acquisitions. The Company's business operations are organ-
ized under three primary business segments: Title Insurance,
Lender Services and Financial Services. Other operating
business segments not required to be reported separately are
reported in a category called Corporate and Other. These
groupings of business operations are consistent with the way
the Company's management views its business results and
consistent with Financial Accounting Standards Board
Release No. 131, Disclosures about Segments of an
Enterprise and Related Information.
The Company's dorninant business operation continues
to be its Title .Insurance segment, which accounted for
93.9% and 97.4% of the Company's operating revenues
in 2004 and 2003, respectively.
TITLE INSURANCE
The Company's Title Insurance. segment is influenced by
the level of real estate activity and the cost and availability
of mortgage funds. The dernand for the Company's title
insurance products and services is dependent upon, among
other things, the volume of residential and conrrnercial real
estate transactions, including mortgage refinancing trans-
actions. The volume of these transactions has historically
been influenced by factors such as interest rates and the
state of the overall economy. For example, when interest
rates are increasing or during an econornic downturn or
_recession, real estate activity typically declines and the
Company experiences lower revenues and profitability.
The cyclical nature of the Company's business has caused
fluctuations in revenues and profitability in the past: and
is expected to do so in the future. Prior to 2002, the
Company also experienced seasonality within a particular
year. Due to the historically low interest rates in the last
three years, the Company's results have riot followed
their typical seasonal patterns. The Company anticipates
that its normal seasonality will return in future periods.
See " Cyclical ity and Seasonality" below.
The Company's Title Insurance segment revenues
include title insurance premiums, escrow fees and fees for
other ancillary services. Prerniu nis and fees are determined
both by competition anti by state, regulation. In addition,
Title Insurance segment revenues are affected by the
Company's sales and marketing efforts. Revenue from
Company -owned title operations is recognized at the time
real estate transactions close. There can be a several month
delay between the tirne that a title order is opened and
the real estate transaction closes. Consequently, expenses
may be incurred related to a direct: title order in advance
of revenues being recognized. Operating revenues from
independent agents are recognized when the Company
receives notification from the agent that a policy has
been issued. Agent notification typically occurs later than
the closing of the real estate transaction. The delay in
notification varies frorn year to year, from agent to agent
and between regions of the country. During 2004, the
Company experienced an average delay between closing
and reporting by agents of approxirnately 125 days. The
delay in notification by agents riot only delays revenue
recognition but may also create a significant lag between
changes in general real estate activity and the impact of
such changes on the portion of the Company's Title
Insurance segment revenues attributable to agents.
The Company's profit margins are affected by several
factors, including the volume of real estate and mortgage
refinance activity, title policy type and amount. Volume is
an important determinant of profitability because the
Company, like any other real estate services company, has
a significant level of fixed costs arising from personnel,
occupancy costs and maintenance of title plants. The
Company utilizes title orders opened as a forward - looking
indicator of business volume. Because premiums are
based on the face amount of the policy, larger policies
generate higher premiums, although expenses of issuance
do not necessarily increase in proportion to policy size.
Cancellations affect profitability because costs incurred
both in opening and in processing orders typically are not
offset by fees. The Company's results are also impacted
during times of increasing or decreasing volurnes since
the Company cannot inrmedia.tely match its staffing
requirements to changes irr its business volumes.
The Company's largest expense is commissions paid
to agents. The Company regularly reviews the profitability
of its agents, adjusting commission levels or canceling
certain agents where profitability objectives are not being
met, acrd expanding operations where acceptable levels of
profitability are available. The Company continually rnon-
itors its operating expenses, which are the Burn of salaries
and employee benefits, agency commissions and other
expenses (exclusive of interest, amortization and certain
other items) as a. percentage of operating revenues.
Generally, title insurance claims rates are lower than
other types of insurance because title insurance policies
insure against prior events affecting the quality of real
estate titles rather, than against: unforeseen, and therefore
less predictable, future events. See "Critical Accounting
Estimates - Policy and Contract Clairns" for further
discussion. In addition, the Company may be subject to
claims and litigation other than in the ordinary course
of business. In 2004, the Company settled certain out-
standing litigation resulting in a pre -tax charge to earnings
of approximately $9.2 million in the fourth quarter. In
addition, in 2004, the Company received requests for
79
y
B
h
w
N
0
CD
W
0
information and subpoenas from certain states seeking
information relating to investigations of the business
practices of the Company and the title .insurance industry.
Multiple states are specifically investigating reinsurance.
The Company may receive additional requests for informa-
tion and /or subpoenas in the future. The Company expects
to cooperate with all such requests or subpoenas. State
investigations may pose a significant challenge in 2005.
Operating revenues in 2004 were slightly lower than
in 2003, reflecting reduced residential activity partially
offset: by increased revenue achieved through acquisitions
and increased levels of commercial real estate activity.
Operating revenues in 2003 benefited from record - setting
levels of mortgage and refinancing activities. For fiscal
year 2005, the Company expects interest rates to rise and
growth to continue through acquisitions; however, as
interest rates rise, the volume of residential activity is
expected to continue to decline consistent with the cyclical
nature of the title insurance business. As a result, operating
results for the years ended 2002 through 2004 should not:
be viewed as indicative of results for any future, period.
To counter this trend, the Company has initiated a sales
enhancement process to spur organic: sales growth. The
sales process trains the Company's sales personnel to
effectively market the Company's title insurance and
related products and services to its customers.
The Company continually evaluates its cost structure
to optimize it for anticipated business levels. In response
to declining mortgage volumes, the Company implemented
a cost reduction program begun in the fourth quarter of
2003 aimed at reducing staffing and cost: levels within
existing operations to a level more consistent with antici-
pated transaction volumes. As a result, in the first quarter
of 2004, the Company announced plans to further reduce
its cost structure within existing operations by at least
$70 million on an annualized basis. At June 30, 2004,
the Company had implemented reductions to achieve at
least the targeted cost savings. Although the Company's
staffing and cost levels were reduced as a result of the
aforementioned plans, the Company saw an overall
increase in salaries and employee benefits and general .
and administrative expenses during 2004 primarily clue
to the Company's acquisitions.
In 2005, the Company will continue its evaluation and
integration of acquisitions. The Company completed 10
Title Insurance segment acquisitions during 2004 and will
evaluate potential acquisition opportunities as they arise.
LENDER SERVICES
The Company's Leander Services segment provides services
to regional and national lending institutions which com-
plement those offered in the Company's title; insurance:
business. These services consist primarily of real estate tax
processing and flood certification services, mortgage credit
reporting, default management services, and mortgage
loan subservicing. With the exception of a portion of
default management, the services provided by this segment .
are the result of businesses acquired by the Company
during 2004 and 2003. In December 2004, the Company
purchased I...oanCare Servicing Center, Inc. ( °LoanCare "),
a large rnort.gage loan subservicer. In October 2003, the
Company entered the business of providing flood certifi-
cation and real estate tax services to mortgage lenders by
purchasing LanclArnerica Tax & Flood Services, Inc.
( "LATF "), formerly known as LERETA Corp. , one of the
largest tax and flood service companies in the United States,
The Company initially entered the credit information busi-
ness for the mortgage lending industry through its acquisi-
tion in August 2003 of INFO1 Holding Company, Inc.,
a wholly -owned subsidiary of the Company's subsidiary
I.,andAmerica Credit Services, Inc. ( "L ACS "). During
2004, the Company expanded the national scope of its
businesses in these areas through the purchase of one flood
certification business, four credit reporting businesses and
one default management business.
The Lender Services segment currently realizes
approximately half of its reported revenues through .
service revenues associated with tracking and reporting
of real estate tax payments and flood zone certifications
related to mortgage loans for lending institutions. The
Company's servicing agreements typically call for the
Company to service the mortgage loan until cancellation
or sale. The lenders pay for these services at the time they
add a loan to their servicing portfolio. The Company
defers a significant portion of its revenue received for
these services to account for the life of loan servicing
aspects of the contracts. As a result, revenue reported in
the financial statements represents the amortization of
both current and prior service fees and is not representa-
tive of new contract sales levels. Expenses, on the other
hand, are charged to the income statement as incurred
and are not deferred. Thus, an understanding of the levels
of deferred revenues or new contract cash received in this
area is critical to understanding the relative strength of
underlying business related to tax and flood services. The
estimated life of loans is reviewed regularly to determine if
there have been changes in contract rives and /or changes
in the number or timing of prepayments, and adjusted to
reflect current: trends. The Company is required in certain
instances to reimburse part of the fees should the lender
sell the loan to another parlay. See further discussion in
"Critical Accounting Estimates" below.
Revenues in mortgage credit reporting, default man -
agernerrt services and loan subservicing are recognized
when the report or service is delivered to the customer.
This segment has a substantial opportunity to leverage
the Company's Title Insurance segment business relation-
ships to cross -sell services to other financial institutions.
A significant challenge for these businesses is their inte-
gration into the Company's overall structure without
jeopardizing their current business relationships. During
2004 the Company began offering a bundled product .
solution, primarily to its national lender customers, which
includes products offered by the Title Insurance segment
and businesses included in I..,ender Services. The Company
expects to continue expanding organically and by acquisi-
tion in this segment and by focusing on the realization of
cross - selling opportunities.
FINANCIAL SERVICES
The business reported in this segment includes Orange
Country Bancorp and its wholly -owned subsidiary,
Centennial Bank, a California industrial bank acquisition
the Company made in November 2003 ( "Centennial ").
Centennial's primary business is the origination and
bulk purchase of commercial real estate loans in the
Southern California marketplace and is dependent on the
viability of the commercial real estate market in Southern
California. Deposits are solicited through the internet for
both certificates of deposit and passbook savings accounts.
As an industrial bank, Centennial does not accept
demand deposits, such as checking accounts, that provide
for payment to third parties. Centennial does not offer
banking services such as credit cards or automated teller
machines. The Company utilizes Centennial to hold a.
portion of its escrow deposits. The Company anticipates
expanding its utilization of Centennial to facilitate escrow
balance transactions.
CORPORATE AND OTHER
This group includes businesses that are not significant
enough in size to be reported as separate segments, as
well as the unallocated portion of the corporate expenses
(including unallocated interest expense) related to the
Company's corporate offices in Richmond, Virginia. The
businesses reported in this group provide commercial and
residential inspections, commercial appraisals cued assess -
rnents, and home warranties.
The Company's assessment business is managed by
the Company's LandAmerica Assessment Corporation
subsidiary that was acquired in 2002 and which is head-
quartered in California. This business provides due
diligence services to commercial customers throughout
the United States, Canada, Mexico, the Caribbean and
Europe. Revenue is recognized upon completion of the
services to the customer.
The Company's commercial and residential inspection
services are run by the Company's Inspectech, Inc. subsidiary.
Its business is highly dependent on the real estate industry
acrd the levels of residential home sales and refinancings.
Inspectech, Inc. charges a fiat fee for each transaction
which is generally collected at the time of service.
The Company's commercial appraisal and valuation
operation is run by the Company's subsidiary
1.,andArnerica Valuation Corporation, formerly known
as Land America. Commercial Appraisal Corporation.
Its business is highly dependent on the commercial .
real estate market. A fee is charged based on the type
and complexity of work performed.
h1 September 2004, the Company purchased Buyers
Home Warranty Company ( "BHW "), headquartered in
California, which provides and services home warranty
contracts in California, Texas, Arizona, Colorado,
Nevada, New Mexico and Oklahoma. Fees charged
by this business are deferred upon receipt avid amortized .
over the life of the underlying contract, which i.s generally
one year.
CRITICAL ACCOU NTING
ESTIMATES
This discussion and analysis of the Company's financial
condition and results of operations is based upon the
Company's accompanying Consolidated Financial
Statements which have been prepared in accordance with
accounting principles generally accepted in the United
States. The Company considers the .following accounting
estimates to be critical in preparing and understanding such
statements. Actual results could differ from these estimates.
Significant accounting policies are disclosed in Note 1 to
the accompanying Consolidated Financial Statements.
Policy and Contract Claims - In the Title Insurance
segment, consistent: with the requirements of FAS No. 60,
a provision for estimated future claims payments is
recorded at the time policy revenue is recorded. This esti-
mate is recorded as a percentage of revenue. The payment
experience of the Company and the title insurance industry
extends for more than 20 years after the issuance of a.
policy. Due to the length of time over which claim pay -
rnents are made and regularly occurring changes in
underlying economic conditions, these estimates are sub-
ject to variability. The Company considers factors such as
historical tirning of clairns reported and historical timing of
clairns paid over the period in which policies are effective
against actual experience by year of policy issue to deter-
mine the amount of claims reserves required for each year
for which policies are outstanding. The Company also
considers the impact of current trends in marketplace
activity, such as refinance activity which may shorten the
time period a policy is outstanding, bankruptcies, and
individual large claims attributable to any particular period
in determining the expected liability associated with each
year. Since there is an extended time period for which the
Company is liable, slight changes in current claims expe-
rience can result in a significant impact in the arnount of
liability required for potential Incurred But Not Reported
(IBNR) claims. Loss provision rates are reviewed periodi-
cally and adjusted by management as experience develops
or new information becomes known. The Company's
independent: consulting actuaries review projections of
required reserves as considered necessary during the year
and at year -end. These projections are compared to
recorded reserves to evaluate the adequacy of such
recorded reserves, and any necessary adjustments are
included in current expenses. The impact on pre -tax
income of a 1 percent change in the loss rate for title
operations on current year business volumes is as follows:
Increase in Loss Rate of 1% $ (32.4) million
Decrease in Loss Rate of 1% $ 32.4 million
Purchase Accounting and Goodwill and Long -Lived
Assets Valuations - During the years ended December 31,
2004 and 2003, the Company completed 27 and 19
acquisitions, respectively. These acquisitions were intended
to grow the Company's title operations and expand its
real estate transaction services portfolio. As a result of
these acquisitions, the Company assigned fair values to
the assets and liabilities purchased and increased tare
a
n
ti
0
a
Is
amount of goodwill and other intangibles recorded on
its balance sheet. The Company utilizes the services of
an independent appraisal company to assist it with the
allocation of purchase price to acquired assets (including
goodwill) and liabilities.
Effective January 1, 2002, the Company adopted.
SFAS No. 142, Goodwill and Other Intangibles, which
required that the Company discontinue amortizing good-
will anti begin assessing the recoverability of goodwill for
each of its reporting units. Reporting units are business
components of an operating segment, and goodwill is
assigned to the reporting unit which benefits from the
synergies arising from each business acquisition. The
Company tests for the recoverability of goodwill annually
or sooner if events or changes in circumstances indicate
that the carrying arnount of its reporting units, including
goodwill, may exceed their fair values. The fair value of
the reporting unites is determined using cash flow analysis
which projects the future cash flows produced by the
reporting units and discounts those cash flows to the
present value. The projection of future cash flows is
necessarily dependent upon assumptions on the future
levels of income as well as business trends, prospects and
market and economic conditions. When the fair value is
less than the carrying value for the net assets of the
reporting unit, including goodwill, impairment loss may
be charged to operations. Based on the Company's annual
analysis, no impairment was identified for the year ending
December 31, 2004. See further details in Notre 18 to the
accompanying Consolidated Financial Statements. The
C;ornpany's intangible assets include technology, customer
relations and non - competition arrangements which are all
amortized over their useful lives. Pursuant to SFAS No.
1.42, for intangible assets that are amortizable with defi-
nite lives, tests for impairment must be performed if con -
clitions exist that indicate the carrying value may not be
recoverable. Such conditions may include a loss of
a significant: customer or a change in the assessment
of future operations. Based on our review for the year
ending December 31, 2004, there was no impairment
of intangible assets.
The Company also reviews the status of its title
plants at Least annually. Periodically, the Company deter-
mines that a title plant will no longer be used or has been
abandoned. Irt those instances, the Company takes a
charge to earnings when it determines that the plant has
been abandoned. The Company anticipates that it may
take additional charges in future periods as state and
local courts and municipalities continue to automate their
property records and make therm available through elec-
tronic media. As part: of its process of reviewing long -lived
assets, during 2004 and at December 31, 2003, the
Company identified 17 and 21 title plants, respectively,
in the Tide Insurance segment with aggregate book values
of $5.0 million and $4.9 million, respectively, that will
riot continue to be used or maintained. Accordingly, the
Company recorded impairment losses of $5.0 million and
$4.9 million, respectively, which is reflected in "Write -off
of Title Plants" in the accompanying Consolidated
Financial Statements,
Deferred Tax Assets - Many deductions for tax
return purposes cannot be taken until the expenses are
actually paid, rather than when the expenses are recorded
under Generally Accepted Accounting Principles ( "GAAP ").
In these circumstances, under GAAP, companies accrue
for the tax benefit expected to be received in future years
if, in the judgment of management, it is "more likely than
not" that the Company will receive such benefits. The
most significant factor in this determination is the pro-
jected future timing and amounts of taxable income. If
management determines that it is no longer "more likely
than not" that an asset will be utilized, the Company
would record a valuation allowance which would reduce
net income, in the period recorded. Deferred tax assets
created from tax benefits expected to be realized at
December 31, 2004 and 2003 relate primarily to policy
and contract claims, goodwill, pension liability, deferred
service arrangements, allowance for doubtful accounts
and employee benefit plans offset by deferred tax liabilities
primarily related to other intangibles, unrealized gains on
the Company's investment portfolio, title plants and fixed.
assets. Based upon the Company's historical results of
operations, the existing financial condition of the
Company and management's assessment of all other
available evidence, management believes that these assets
will more likely than not be realized. See Note 10 to the
accompanying Consolidated Financial Statements.
Pension and Other Postredrement Benefits - The
Company has pension and other retirement benefit plans
covering substantially all employees. These plans are
valued annually by air actuary who employs significant
assumptions that are particularly important when deter-
mining our projected liabilities for pension and other
postretirement benefits. Payments related to these benefits
will be made by the Company over a lengthy period and
the projected liability will be impacted by assumptions
regarding inflation, investment returns and market inter-
est rates, changes in the benefit obligations and laws and
regulations covering the benefit obligations.
One significant assumption is the expected long -germ
rate of return on plan assets. A lower expected return on
plan assets increases the amount of pension expense and
the liability decreases as the discount .rate increases. The
use of expected long -term rates of return may result in
recognized returns that are greater or less than actual .
returns in any given year. Over time the expected returns
are used to approximate actual long -term returns which
result in a pattern of expense recognition that more closely
rnat:ches the service lives of typical employees. The Company
uses long -terra and actual historical returns, current and
targeted asset mix and future estimates of long -term
investment returns to develop its long -terra return for plan
assets. The Company's anticipated rate of return was 8.0%
as of the 2004 valuation date. Another significant assurnp-
tion in valuing the pension liability is the discount rate. In
general, the liability increases as the discount rate decreases
and the liability decreases as the discount rate increases.
The discount rate utilized is based on rates on high quality
fixed income debt instruments available at the end of each
valuation period. The Company utilized a discount rate of
6.0% in determining its 2004 benefit obligations.
Changing the discount rate or long -term rate of
return would result in the following impact on the
pension benefit liability:
Projected Benefit Obligation
Increase of 1% in discount rate $(20.3) million
Decrease of 1% in discount rate $ 23.8 million
Additionally, assurned health care cost trend rates
have a significant effect on the amounts reported for the
other postretirement benefits. A one - percentage -point
change in assumed health care cost trend rates would
have the following effects:
Oise- Percentage- One- Percentage-
(in millions) Point Increase Point Decrease
Effect on total of service
and interest cost $0.1 $(0.1)
Effect on postretirement
benefit obligation $1.7 $(1.5)
On October 26, 2004, the Company announced that
effective December 31, 2004 it was ceasing future accruals
to the retirement plan accounts of all plan participants
provided in the Company's Cash Balance Pension Plan
(the "Plan ") other than annual interest credits on account
balances. The changes impacting the Plan most significantly
are fully vesting accrued benefits to participants in the
Plan as of December 31, 2004, and limiting participation
in the Plan to those individuals who were participants in
the Plan as of Decerber 31, 2004. (See further informa-
tion it) Note 12 to the accompanying Consolidated
Financial Statements). As a result of the change, the
Company had to adopt curtailment: accounting for the
Plan as specified under FAS No. 88. The curtailment
resulted in the Company recording a one -time gain of
approximately $4.8 million and increasing the minimum
pension liability by $1.1 million at December 31, 2004.
Deferred Service Arrangements - When the Company
acquired tax and flood and homne warranty companies, all
of their assets and liabilities were adjusted to fair value in
accordance with purchase method accounting. In making
these adjustments, each entity's deferred revenue account,
representing amounts which had been deferred and would
have been amortized over the remaining lives of the
contracts for the provision of real estate tax monitoring,
flood certification services, and 'home warranty services
existing at the acquisition date, was eliminated. The
deferred revenue account was replaced with an account
called deferred service obligations representing the estimated
fair, value of the obligation to provide the required services
over the remaining life. of the subject. contracts. This
account, established as of the acquisition date, is being
amortized over the remaining lives of existing contracts.
As previously noted, real estate tax monitoring, flood
certification fees, and home warranty service fees received
on new contracts entered into since the acquisition dates
are deferred and amortized over the estimated lives of the
contracts to which they relate. The sum of amortization
of the "initial deferred service obligation" and amortiza-
tion related to fees accrued on new contracts represent
the earned fee amount for the period.
The estimated remaining contractual life for real estate
tax monitoring services and flood certification services
can vary depending on a number of factors including, but
riot limited to, type of loan, lender, credit quality of the
borrower, interest, rates and portfolio turnover. The
Company evaluates the portfolio of loans under service
quarterly to determine the appropriate portfolio life for
loans under service. An increase /decrease of six months in
the average service life for all loans serviced would result
in the following approximate changes to revenue recog-
nized for real estate tax and flood monitoring revenues:
-- - Revenue Recognized
Increase of 6 months $(4.5) million
Decrease of 6 months $ 4.5 million
1 �
The title insurance business is closely related to the over-
all level of residential and commercial real estate activity,
which is generally affected by the relative strength or
weakness of the United States economy, In addition, title
insurance volumes fluctuate based on the effect that
changes in interest rates have on the level of real estate
activity. Periods of increasing interest rates usually have
an adverse impact on real estate activity and, therefore,
premium and fee revenues. Due to the historically low
interest rates in the past three years, the Company's
results have riot followed their typical seasonal patterns.
The Company anticipates that its normal seasonality will
return in future periods.
Historically, residential real estate activity has been
generally slower in the winter, when fewer families buy
or sell homes, with increased volumes in the spring and
summer. Residential refinancing activity is generally more
uniform throughout the seasons, but is subject to interest
rate variability. The Company's Title Insurance segment
typically reports its lowest: revenues in the first quarter,
with revenues increasing into the second quarter and
through the third quarter. The fourth quarter customarily
may be as strong as the third quarter, depending on the
level of activity in the commercial real estate market Due
to historically low interest rates in the last three years,
the Company's results have not followed the typical sea-
sonal patterns. In 2004, 2003 and 2002 the Company's
fourth quarter revenues were stronger than the third
quarter primarily clue to increased activity in the corn -
rnercial real estate market each year and as a result of an
increase in norm -title operations in 2004 and an increase
in refinance activity in the residential real estate market
in 2003 and 2002.
The Company's Lender Services segment has similar
seasonal trending. However, dire to the nature of the
s�
a
a
0i
0
IN
revenue deferrals made in this segment, as noted above,
the impact on the Company's results of operations will
differ. In instances where the Company receives cash in
advance for services for real estate tax payment and flood
certification services, the revenue is deferred and amortized.
RESULTS OF OPERATIONS
ratably over the anticipated life of the loan servicing.
This ratable amortization has the impact of reducing the
volatility in revenue related to this segment; however, loss
of a customer may accelerate recognition of revenue in
certain periods, resulting in one -time volatility.
OPERATING REVENUES
A summary of the Company's operating revenues at December 31 is as follows:
(dollars in millions) 2004 %
Title Insurance
Direct Operations $1,397.9 40.6%
Agency Operations 1,8373 53.3%
Lender Services
149.6
4.3%
Financial Services
0.7
0.1%
Corporate and Other
58.6
1,7%
Total
$3,444.5
100.0%
Tittle Insurance - Operating revenues from direct title
operations increased 1.7 percent it) 2004 from 2003. The
increase in 2004 was primarily related to acquisitions of
title agents in the past two years including County Title
Holding Corporation ( "Southland ") in April 2004 and
Gateway Title Company in November 2003 and increaser(
levels of commercial activity partially offset by a reduction
in residential refinancing transactions. All acquisitions by
the Company in this segment: accounted for an increase
in direct operations operating revenues of $1.81.5 million
for 2004 as compared to 2003. The reduction in refi-
narichig transactions resulted in a decrease in the number
of title policies issued by the Company's direct operations
in 2004, as compared to 2003, of 27.5 percent, excluding
acquisitions, that was partially offset by an increase in the
fee: per closed order. The reduction in refinancing trarisac-
tions caused a change in the mix toward fewer refinancing
and more purchase title policies which have more revenue
per policy associated with thern. Orders closed by the
Company's direct: title operations were, excluding acquisi-
tions, 918,000 and 1,11.0,200 during 2004 and 2003,
respectively. The average fee per closed order, which
includes title insurance premiums and other revenue related
to transactions by direct operations, was $1,522 in 2004
versus $1,238 in 2003. The fluctuations rioted in the
number of policies issued and average fees per closed
order were primarily attributable to the .relative changes
in mortgage activity year - over -year, as mentioned above,
as well as an increase in commercial activity. Operating
revenues from agency title operations decreased by 2.5
percent in 2004 compared to 2003. This decrease was
primarily attributable to the changes in refinancing activity
2003 % 2002 %
$1,3743 41.1% $1,095.6 43.2%
1,885.5 56.3% 1,403.9 55,4%
3,259.8 97.4%
2,499.5 98.6%
49.0 1.5%
1.9 0.1%
0.1 -
- -
36.5 1.1%
32.2 1.3%
$3,345.4 100.0% $2,533.6 100.0%
that the Company has experienced. An additional factor
is the timing in the reporting of transactions by agents.
The tinting of policy reporting and, therefore, revenue
reporting by agents varies from year to year, from agent
to agent and between regions of the country.
Operating revenues from direct title operations
increased 25.4 percent for the year ended December 31,
2003 over the year ended December 31, 2002. This
increase was due primarily to residential refinancing activ-
ity, the impact of acquisitions made in 2003 and increases
in commercial real estate activity. The number of title
policies issued by the Company's direct operations
increased for 2003 compared to 2002 by 26.4 percent,
excluding acquisitions, while the average fee per closed
order decreased from $1,253 per policy in 2002 to $1,238
in 2003 due to a change in mix toward more refinancings
which have less revenue per policy associated with them.
Policies issued by the Company's direct title operations were
1,110,200 and 873,800 during 2003 and 2002, respectively.
Revenues from acquisitions in 2003 accounted for an
increase of $1.8.5 million for the year ended December 31,
2003 as compared to 2002. Operating revenues from
agency title operations increased by 34.3 percent in 2003
over 2002. This increase was primarily attributable to the
irnpact of increased residential refinancing activities. As
noted above, the timing of policy reporting and, therefore,
revenue reporting varies by agent.
The Company anticipates that Title Insurance segment
revenue will decrease in 2005 frorn 2004 levels due to
expected :lower refinance and home purchase activity
resulting from anticipated higher interest rates.
Lender Services - As a result of acquisitions, operat-
ing revenues in the Lender Services segment: increased
substantially in 2004 as compared to 2003. This increase
was primarily driven by LATF, purchased in October
2003 and LAC;S, purchased in August 2003. 1...,ATF rev -
enue increased to $74.1 million in 2004 from $22.1 mil-
lion in 2003. LATF, the real estate tax processing and
flood certification business, receives cash in advance for
products that require it to provide service over the life of
the Loan. In 2004, the Company's real estate tax process-
ing and flood certification services revenue was made up
of gross receipts of $100.1 million, reduced by deferred
recognition of revenue for $83.4 million of these receipts
and increased by the recognition into revenue of approxi-
mately $57.2 million of its previously deferred service
arrangements. The deferred service arrangements repre-
sent the amount of revenue that will be recognized over
the anticipated service life of contracts related to LATF.
The service life of the Company's portfolio, which is
reviewed quarterly, has increased by 40.9 percent com-
pared to 2003. The expected service life increases with an
increasing mortgage interest rate environment because
loans tend to be outstanding longer in periods when
interest rates increase. This reduces the amount of
deferred service arrangements that is amortized into rev-
enue for each period on its life of loan products. If inter-
est rates vary from the current expected trend, the esti-
mated service life will increase or decrease inversely to
changes in interest: rages. LACS revenue increased to
$58.4 million in 2004 from $1.6.1. million in 2003 due to
the inclusion of a full year's operating revenue from the
Company's original acquisition in August 2003 and the
acquisitions it made to this business in 2004.
Similarly, operating revenues increased substantially
in Lender Services in 2003 over 2002 due to the above
noted acquisitions. In 2003, the Company's real estate
tax processing and flood certification services businesses
had gross receipts of $26.7 million, decreased by the
deferral of revenue recognition for $21.1 million of these
receipts and increased by $15.4 of revenue recognition of
its total deferred service arrangements. I_,ACS contributed
$16.1 million to Lender Services revenue in 2003. The
Company anticipates higher revenues in 2005 in the
Lender Services segment due primarily to acquisitions.
.Financial Services - The increase in operating rev-
enues between 2003 and 20104 and in 2003 compared to
2002 was caused by the acquisition of Centennial Bank
in November 2003.
Corporate and Other - Operating revenues in
Corporate a:nd Other increased by approximately $22.1.
million, or 60.5 percent, between 2004 and 2003 primarily
due to the recent acquisitions in the Company's residential.
inspection, commercial appraisal and assessment and home
warranty businesses. The increase in revenue in 2003 over
2002 is due to increases in the residential inspection and
commercial appraisal and assessment businesses of $14.8
million as well as an increase of $3.7 million related to an
increase in the equity in unconsolidated subsidiaries, offset
by a reduction in revenues of $13.8 million related to the
residential appraisal business that the Company exited in
2002. The Company anticipates that revenue in Corporate
and Other will continue to increase in 2005 as a result of
the acquisitions made in 2004.
INVESTMENT AND OTHER INCOME
Investment and other income totaled $71.8 million, $52.1
million and $51.7 million in 2004, 2003 and 2002, respec-
tively. The increase of $19.7 million, or 37.8 percent, in
2004 compared to 2003 and the increase: of $0.4 million
from 2002 to 2003 is primarily the result of the acquisition
of Centennial in December 2003 which resulted in increased
interest income of $19.4 million in 2004 and $1.5 million
in 2003, respectively. Partially offsetting the increase in
2003 was a decrease in interest income related to lower
yields on the Company's remaining investment and cash
equivalent portfolio. The Company's investment earnings
are primarily derived from its fixed maturity securities as
well as loans receivable related to Centennial.
The Company anticipates that investment and other
i:ncorne will increase in 2005 over 2004 due to higher
loan balances and due to increased deposits of the
Company's escrow accounts at Centennial.
NET REALIZED INVESTMENT GAINS
Net realized investment gains totaled $5.8 million, $8.5
million and $1.3 million in 2004, 2003 and 2002, respec
lively. The fluctuation in net realized investment gains is
primarily due to the timing of the repositioning of a por-
tion of the Company's investments to fund, in part, the
acquisitions of LATF and LAC:,S.
AGENTS' COMMISSIONS
A summary of agents' commissions and related revenues
in the Title Insurance segment is as follows:
(dollars in millions)
2004
2003
2002
Agents' commissions
$1,471.8
$1,511.6
$1,1162
Agent revenues
1,837.7
1,885.5
1,403.9
% Retained by agents
80.1%
80.2%
79.5%
The commission rate paid to agents varies by geo-
graphic area in which the commission was paid and by
individual agent agreement. In early 2004 and through-
out 2003, the Company experienced increasing commis-
sion rates attributable to increased competition for
agents. During the remainder of 2004, the Company
experienced a moderation of such increases due to its
acquisition of title agencies and expects commission rates
for 2005 to be consistent with levels at the end of 2004.
W
n
w
0
0
W
0
f
SALARIES AND EMPLOYEE BENEFITS
A summary of the Company's salaries and other personnel costs is as follows:
(dollars in millions)
2004
%
Title Insurance
$837.1
86.2%
Lender Services
65.2
6.7%
Financial Services
2.2
01%
Corporate and Other
66.5
6.9%
Tota 1
$971.0
100.0%
Title Insurance - The Company's Title Insurance
segment accounted for approxiruat:ely 86.2% of the
Company's total salaries and other personnel costs in 2004.
The Title Insurance segment, in particular non - agency or
direct operations, is labor intensive and as a result a signifi-
cant variable expense component for this segment is salaries
and other, personnel costs. The Company manages personnel
expenses to reflect changes in the level of activity in the real.
estate market. As a result., the Company's employee base
expands and contracts over time. In order to manage per-
sonnel costs more effectively throughout the real estate cycle,
it uses temporary or part -time employees where appropriate
to staff operations so that it can respond promptly to changes
in real estate activity. Before the impact of title company
acquisitions, if any, the Company anticipates that in 2005
the Title Insurance segment's portion of total personnel costs
will decrease as a percentage of total personnel costs as the
Company continues to diversify its other businesses. The
Company has been monitoring, and will continue to monitor,
personnel levels in connection with changes in real estate
transaction volumes. Depending on the rapidity of the change
in real estate activity, the Company may be unable in the
short run to match decreasing levels of title orders with
staffing levels. As a result, in periods of declining activity,
personnel costs as a percentage of revenue may increase.
Title Insurance salaries and employee benefit costs
increased by $50.3 million, or, 6.4 %, in 2004 from 2003.
The increase in cost is due in large part to increased costs
of $105.8 million related to the addition of personnel as
the result of 2004 and 2003 acquisitions offset by reduced
staffing in other operations due to reduced volume levels.
Additionally, there was a net increase; of $2.6 million
in pension and postretirement benefit expenses. For
additional information regarding the impact of the
Company's pension plans on results of operations, see
Note 12 to the accompanying Consolidated Financial.
Statements. Average Fall Time Equivalent ( °FTE ") counts
were 10,144 in 2004 (including 1,195 associated with
2003 and 2004 acquisitions) versus 1.0,573 in 2003.
The Company anticipates that these costs will decrease
in 2005 as the result of the continuing impact of staff
reductions related to anticipated reduced residential
transaction volume levels as well as a reduction in
pension expense associated with the cash balance plan
of approximately $7.8 million due to the Company's
restructuring of its retirement benefits.
2003 % 2002 %
$786.8
91.6% $643.9 931%
22.6
2.6% 1.4 0.2%
0.2
0.0% - -
49.5
5.8% 46.0 63%
$859.1 100,0% $691.3 100.0%
Title Insurance salaries and employee benefit costs
increased $142.8 million, or 22.2%, in 2003 over 2002
primarily related to compensation increases associated
with the increase in business volumes and increased com-
mission expense for internal sales personnel. The
Company also had an increase in its pension expense of
approximately $3.0 million. Average Full Time
Equivalent (FTE) counts for the year totaled 10,573 in
2003 versus 8,621 in 2002. Additionally, the Company
had increased costs of approximately $8.0 million related
to acquisitions in 2003.
Lender Services - I.,ender Services salaries and
employee benefit costs increased $42.6 million, or
1.88.5% in 2004 due to acquisitions made in 2003 and
early 2004. Lender services personnel costs tend to
increase during periods of increased sales volume and
decrease when sales volume is lower. This is the case
because a significant amount of work is required to set
up new accounts. Once accounts are established, moni-
toring and maintenance activities are less labor intensive.
The Company anticipates slightly higher salaries and
employee benefit costs in 2005 due to the acquisitions
made in 2004.
Financial Services - Financial services salaries and
benefit costs increased in 2004 over 2003 and in 2003
over 2002 due to the Company's acquisition of
Centennial Bank in December 2003.
Corporate and Other - Corporate and Other salaries
and employee benefit costs increased $17.0 million, or
34.3 %, in 2004 over 2003. Approximately half of the
increase, or $8.0 million, was related to acquisitions with
the remainder due to increases at the corporate level due
to continued infrastructure growth and the compliance
with the Sarbanes -Oxley Act.
Corporate and Other salaries and benefit costs increased
$3.5 million, or 7.6%, in 2003 over 2002. The increase in
salaries and benefit costs in 2003 over 2002 relate to an
increase in employees at the Company's shared resources
facility required due to growth in the Company's infra-
structure, primarily in the information technology area,
an increase in incentive compensation as a. result of the
Company's financial performance, as well as continued
expansion of the Company's other services (an increase of
$6.4 million), offset by the termination of the business of
Primis, Inc., the Company's web -based provider of real
estate services, of $11.3 million. (See additional informa-
tion under Exit and Termination Costs below).
The Company anticipates that its costs in this group
of businesses will increase in 2005 as the result of acqui-
sitions made in 2004.
PROVISION FOR POLICY
AND CONTRACT CLAIMS
The Company reviews its claims experience quarterly, and
in conjunction with its outside actuaries, evaluates the
adequacy of its claims reserve. The Company considers
factors such as historical timing of claims reported and
historical timing of claims paid over the period in which
policies are effective against actual experience by year of
policy issue to determine the amount of claims liability
required for each year for which policies are outstanding.
The Company also considers the impact of current trends
in marketplace activity, such as refinance activity, which
may shorten the time period a policy is outstanding, bank-
ruptcies, arid individual large claims attributable to any
particular period in determining the expected liability
associated with each year. Throughout 2004 arid during
the latter portion of 2003, claims associated with policies
issued by the Company between 2000 and 2002 appear to
have a trend of being higher than the Company's historical
trends which resulted in the Company increasing its
reserves associated with those policy issue years. This has
been mitigated somewhat by decreased claim activity in
policies issued during the 1.990s where claims made
appear to be below historical rates due, in part, the
Company believes, to refinance activity it recent years
which has resulted in the Company reducing claims
reserves. Since there is an extended time period for which
the Company is liable, slight changes in current claims
experience can result it) a significant impact in the amount
of liability required for potential Incurred But Not
Reported. (" IBNR ") claims. The Company, based on its
review of the underlying claims data and trends therein,
has provided for claims losses using approximately 5.5 %,
5.8% arid 4.2% of title insurance revenue for 2004, 2003
and 2002, respectively. The Company believes that it has
reserved appropriately for all reported and IBNR claims at
December 31, 2004 based on the results of the actuarial
evaluation and evaluation of any known trends.
WRITE -OFF OF TITLE PLANTS
In 2004 and 2003, the Company identified 1.7 and 21. title
plants, respectively, with aggregate book values of $5.0
million and $4.9 million that will not continue to be
used or maintained. The Company took charges to earn-
ings in 2004 and 2003 to reflect the diminution in value
associated with these plants. The Company anticipates
that as the result of automation of property records by
municipalities arid courts, the Company will continue to
record charges related to diminution of value of its title
plants in future periods.
EXIT AND TERMINATION COSTS
The Company incurred exit and termination costs on a
pre -tax basis of $6.5 million, $3 million and $13.4 million
in 2004, 2003 and 2002, respectively. (See also Note 18 to
the accompanying Consolidated Financial Statements).
In the first quarter of 2004, the Company announced
plans to reduce its cost structure by at least $70.0 million on
an annualized basis within existing operations. As a. result
of this initiative, the Company identified 61 offices that it
would consolidate into other offices during 2004. The
Company accrued $5.3 million for the facility downsizing
costs of these offices in 2004 as well as $12 million in
severance payments related to these office consolidations.
In 2003, the Company consolidated certain office
space. The Company incurred charges of approximately
$0.8 million in the fourth quarter of 2003 related to its
decision to consolidate office space in two markets. This
charge was offset by a reduction of $0.5 million related
to the 2002 accrual.
On June 1, 2002, the Company entered into a joint
venture agreement with The First. Arnerican Corporation
to combine its residential real estate valuation operations.
Under the terms of the agreement, the Company con-
tributed its former Prisms residential appraisal production
division to First American's eAppralselT subsidiary. In
connection with the transaction, the Company exited the
residential appraisal production business which had been
unprofitable and recorded a. charge of $13.4 million for
exit, termination and other costs during 2002.
AMORTIZATION
Amortization expense increased by $17.7 million and $6.5
million, respectively, in 2004 and 2003 as compared to
comparable periods in 2003 and 2002. This was the result:
of acquisitions by the Company in 2004 and 2003. During
2004, the Company acquired businesses which added
$82.0 million to amortizable intangible assets. During
2003, the Company acquired businesses which added
$1.59.4 million to amortizable intangible assets. The
Company is amortizing the intangible assets acquired as
part of these businesses over their estimated useful lives.
INTEREST EXPENSE
Interest expense increased by $13.7 million and $0.7 mil-
lion, respectively, in 2004 and 2003 as compared to the
same periods in 2003 and 2002. The increase in 2004
included $7.2 million related to the Company's acquisi-
tion of Centennial in December 2003. The remainder of
the increase in 2004 is related to the Company's issuance
in November 2003 of $115.0 million of its 3.1.25%
Senior Convertible Debentures clue 2033 used to fund
a portion of the acquisitions in 2003 and its issuance
of $125.0 million of its 3.25% Senior Convertible
Debentures due 2034 issued in May 2004 used in part
to repay amounts borrowed to fund the Company's
acquisition of Southland.
Similarly, the increase of $0.7 million in interest
expense in 2003 over 2002 was primarily the result of
the purchase of Centennial in December 2003 and the
issuance of the above - described Convertible Debentures in
November 2003. The Company anticipates that interest
expense will exceed prior year levels in 2005 due to
Increased debt related to the 2004 Senior Convertible
Debt issue and deposits at Centennial.
I
0
0
19
PREMIUM TAXES
Insurers are generally not subject to state income or fran-
chise taxes. They are, however, subject to a "premium tax"
on certain operating revenues, depending on the state. Tax
rates and the amounts that are subject: to tax vary from
state to state. Premium taxes as a percentage of total title
insurance revenues remained relatively constant during the
last three years. This percentage was 1.3 %, 1.2% and
1.4% for 2004, 2003 and 2002, respectively.
GENERAL, ADMINISTRATIVE AND OTHER
A surnmary of general, administrative and other expenses is as follows:
in millions) 2004 %
Title insurance
$428.7
75.8%
Lender Services
69.9
12.3%
Financial Services
1.8
0.3%
Corporate and Other
65.9
11.6%
Total $566.3 100.0%
Title Insurance - Title Insurance general and adminis-
trative expenses increased by $28.4 million or 7.1% in
2004 as compared to 2003. This increase is primarily
related to legal settlements of $9.2 million and a $39.5
million increase related to acquisitions that occurred dur-
ing early 2004 and 2003, partial:ly offset by lower costs
associated with lower business volumes.
Title Insurance general and administrative expenses
increased by $68.8 million or 20.8% in 2003 over 2002.
The increase in 2003 over 2002 is primarily related to
incremental costs associated with servicing increases in
total order volume, particularly in the area of outsourced
services, as well as costs associated with new acquisitions.
Operating expenses during 2003 did not increase as
rapidly as operating revenues, resulting_ in art increase
to operating income.
.Lender Services - Lender Services general and adinin-
istrative expenses increased in 2004 over 2003 and in
2003 over 2002 primarily clue to the purchase of LATF
and LACS in 2003, The Company anticipates that these
costs will increase somewhat: in 2005 as the result of
2004 acquisitions.
Financial Services - Financial Services general and
administrative expenses increased by $1.6 million due to
the acquisition of Centennial in November 2003. The
Company anticipates that future increases to Financial
Services general and administrative expenses will be limited
in amount since future portfolio and business growth do
not require additional administrative resources.
Corporate and Other - Corporate and Other, general
and administrative expenses increased by $5.7 million or
9.5% in 2004 over 2003. The increase in these expenses is
primarily related to the Company's acquisitions. Corporate.
and Other general and administrative expenses increased
by $9.2 million or 1.8.0% in 2003 over 2002. The increase
in these expenses in 2003 over 2002 is primarily related
to the increased support, particularly in the Information
Technology area, required to service the Company's increased
national operations. The Company anticipates a continued
year- over -year increase in Corporate and Other business
expenses for 2005 clue to the Company's 2004 acquisitions.
2003 %
2002 %
$400.3 82.8% $331.5 86,5%
23.3 4.8% 0.7 0.2%
0.2 0.0%
60.2 12.4% 51.0 13.3%
$484.0 100.0% $3812 100.0%
OPERATING INCOME
Title Insurance -The Tittle Insurance segment reported
pretax income of $306.5 million, $371.6 million and
$300.6 million in 2004, 2003 and 2002, respectively. The
Company's operating income in this segment was positively
impacted by its growth through acquisitions during 2004
offset by increases in litigation, personnel and administra-
tive costs. Personnel and administrative costs did not
decrease as rapidly as transaction volurnes decreased due
both to the Company's inability to reduce headcount in
proportion to volume changes and the acquisitions of
agents throughout 2004 and during the latter portion of
2003. Additionally, the Title Insurance segment: reported
reduced income in 2004 frorn its investment portfolio due
primarily to the liquidation of securities in the third quarter
to fund in part the acquisition of I.,ATF.
Lender Services - The Lender Services segment had
pretax income (loss) of $2.0 million, $(0.4) million and
$(0.2) million in 2004, 2003 and 2002, respectively.
Pretax income (loss) in this segment was impacted by the
acquisitions made in the third and fourth quarters of
2003. The Company evaluates the results of the tax and
flood business on the basis of pre -tax income before: net
revenue deferrals and amortization ("PRBDA). The
Company utilizes financial measures that exclude certain
charges and non - recurring items. Adjusted operating
revenues represent operating revenues adjusted for the
impact of net revenue deferrals. PRBDA margin represents
PRBDA divided by adjusted operating revenues. PRBDA,
adjusted operating revenues and PRBDA margin as
defined above may riot be similar to other PRBDA meas-
ures of other companies, are riot measurements under
accounting principles accepted in the United States and
should be considered in addition to, but not as a. substitute
for, the information contained in the Company's statement
of operations. The Company believes that adjusted oper-
ating revenues, PRBDA and PRBDA margins provide useful
information to investors because they are indicators of
the strength and cash flow generating performance of
those businesses where we have life of loan servicing
requirements, and that have been burdened in the short
run with amortization expense related to intangibles
acquired with the businesses. While amortization expense
is considered an operating expense under generally
accepted accounting principles, these expenses represent
the non - current allocation of intangible assets acquired in
prior periods. Additionally, while deferred revenue repre-
sents a reduction of'revenue and profits in the current
period, these reductions represent a non -cash allocation
of revenue to future periods for ongoing monitoring of
certain of the Company's flood and tax servicing prod-
ucts. Reconciliations of these financial measures to the
Company's segment operating results is as follows:
December 31
(dollars in millions) 2004 2003
Operating revenues $149.6 $49.0
Add net revenue deferrals 26.2 5.6
Adjusted operating revenues 175.8 54.6
Pre -tax earnings 2.0 (0.4)
Add net revenue deferrals 26.2 5.6
Add amortization expense
13.4 3.5
PRBDA $ 41.6 $ 8.7
PRBDA to adjusted operating
revenues margin 233% 15.9%
Financial Services - The Financial Services segment
reported a pretax income of $9.7 million and $0.7 mil-
lion in 2004 arid 2003, respectively. Pretax income was
impacted by the purchase of Centennial in November
2003. The $1.3 million in 2004 pretax income over
annualized 2003 pretax income is the result of increased
loan portfolio over 2003 levels.
INCOME TAXES
The Company's effective income tax rate, which includes
a provision for state income and franchise taxes for non-
insurance subsidiaries, was 35.3 %, 35.3 % and 35.0% for
2004, 2003 arid 2002, respectively. The differences in the
effective tax rate were primarily due to changes in the ratio
of permanent differences to income before taxes and state
taxes related to the Company's non - insurance subsidiaries.
The Company reported net income of $146.3 million or
$8.01. per share on a diluted basis for 2004, compared to
a net income of $192.1 million or $10.31 per share on a
diluted basis for 2003 and a net income of $149.4 million
or $8.04 per share on a diluted basis for 2002. All three
years were affected by one -time write -offs of intangibles
and capitalized .software and exit and termination costs.
Exclusive of these items, net income was $ 153.7 million)
or $8.42 per diluted share in 2004, $195.5 million or
$10.49 per diluted share if) 2003 arid $158.0 million or
$8.51 per diluted share in 2002.
LIQUIDITY AND
CAPITAL
ter,
Cash provided by operating activities for 2004, 2003 and
2002, respectively, was $256.6 million, $31.7.7 million
and $236.4 million. The principal non- operating uses of
crash and cash - equivalents for 2004, 2003 and 2002 were
acquisitions, capital expenditures, additions to the invest-
ment portfolio and loans receivable, stock repurchases
and the repayment of debt. The principal non - operating
sources of cast) were the Company's issuance in 2004 of
its $125.0 )pillion 3.25% Senior Convertible Debentures
due 2034, the issuance in 2003 of the Company's $115.0
million 3.125% Convertible Senior Debentures due 2033
(together, the "Convertible Debentures ") and the proceeds
from the sales and maturities of certain investments. The
net of all activities was to increase cash by $20.1 million,
$1.0.5 million and $6.8 million for 2004, 2003 and 2002,
respectively. As of December 31, 2004, the Company held
cash and short -term investments of $349.4 million and
fixed - maturity securities of $1,113.3 million.
As noted above, the Company's operating results and
cash flows are heavily dependent on the real estate market,
particularly in the Title Insurance segment. While the
Company has continued to diversify its products and
services portfolio over the last several years, a significant
downturn in the real. estate market would adversely
impact the Company's cash flows. The Company's business
is labor intensive and changes to the real estate market
are monitored closely and staffing levels are adjusted
accordingly. There is typically a lag between changes in
the real estate market and changes in personnel levels
resulting in higher personnel costs in periods where the
real estate market declines in advance of headcount
reductions. The Lender Services segment: provides real
estate tax payment and flood certification services for the
life of loans for which it receives cash at loan closing.
This revenue related to the long -terra servicing is deferred
and amortized over the life of the loan. As a result, the
Company's cash flows i) the Lender Services segment are
significantly greater than reported earnings. Revenues,
cash receipts and loans in the Company's Financial
Services segment are dependent on the ability of the bank
to attract deposits and qualified commercial custorners.
The Company believes that its product diversification
efforts along with its management of operating expenses
and significant working capital position will aid its
ability to manage cash resources through declines in
the real estate: market.
The Company does not match maturities of its
investments with anticipated claims payments, which
may result in the Company having periods in which cash
flows from operations are positively or negatively impacted
by the difference between the liability for claims being
established and the actual payment stream. As opposed to
insurance companies where claims account for a substantial
portion of premiums, the Company's title insurance
claims typically average approximately 5% to 6% of
gross title insurance revenue. Additionally, the time period
r
v
0
c
d
N
in which the Company is liable for a claim is long, with
potential claims being paid over 20 years after a title policy
is issued. Additionally, the Company makes provision for
claims in its financial statements based on historical patterns
of claims reported and paid, and the timing of these may
vary from period to period. Over the past several years,
exclusive of the Company's operating cash flows, the
Company's investment income returns plus maturities
of' fixed obligation securities have resulted in a maturity
and investment income to claims payment, ratio in excess
of two tirnes.
The Company considers its investment portfolio as
available for sale. The Company reviews the status of
each security quarterly to determine whether an other -
than- temporary impairment (OTTI) has occurred. The
Company's criteria include whether the fair value of the
security has been in an unrealized loss position. All of the
Company's securities that have had an unrealized loss in
excess of 1 year are investment - grade, long -term bonds
that the Company has the ability and intent to hold to
maturity. Consequently, the Company recorded no OTTI
loss in 2004 or 2003.
During 2004, the Company completed acquisitions
with an aggregate purchase price of approximately
$202.1 million. The 2004 purchases were funded through
a mixture of cash, invested cash, investments and utiliza-
tion of the Company's credit facility. The Company will
continue to selectively evaluate additional acquisitions
should attractive candidates be identified.
In 2004 and 2003, the Company issued Convertible
Senior Debentures totaling $125.0 million and $115.0
million, respectively. These Debentures are convertible
only upon the occurrence of certain events, which the
Company currently views as remote. In February 2005,
the Company made an irrevocable election under the terms
of its 2003 Debentures to satisfy in cash 100 percent of
the principal amount of the 2003 Debentures converted
after February 15, 2005. Prior to the election, the
Company had the ability to make payment upon conver-
sion for the principal amount: of the 2003 Debentures in
cash or shares of the Company's common stock.
The Company's debt:, as a percentage of total capital -
ization, was 28.8% as of December 31, 2004 as compared
to 23.9% as of December 31, 2003. This increase is due
to the Company's issuance of the Convertible Debentures
as well as debt acquired primarily from the acquisition
of Centennial. See additional information related to the
Company's debt obligations in Note 14 to the accompa-
nying Consolidated Financial Statements.
The Company announced on October 27, 2004
arnendments to the Company's employee retirement
savings plans and adoption of a new employee stock
purchase plan. The changes to the Company's employee
retirement savings program included:
Amendments to the Company's Cash Balance Plan
effective December 31, 2004 to cease future accruals
to the retirenierrt plan accounts of all plan partici-
pants (other than annual interest credits on account.
balances), to cause the accrued benefits of participants
to be fully vested as of December 31, 2004 and to
limit participation in the plan to those individuals
who were participants in the Plan as of December 31,
2004. There were conforming changes to the
Company's Benefit Restoration Plan.
• Amendments to the Company's Savings and Stock
Ownership Plan effective January 1, 2005 to comply
with the safe harbor provisions of Sections 401(k) (12)
and 401(m)(11) of the Internal Revenue Code of 1986,
as amended. The amendment provided immediate
vesting on all Company matching contributions made
after January 1, 2005, removed the one -year waiting
period for new participants to receive matching con-
tributions and increased the matching contributions
that the Company will make to employee accounts
under the plan.
• Adoption of a new Employee Stock Purchase Plan to
be effective July 1, 2005, subject to shareholder
approval. The plan will replace the Company's current
employee: stock purchase plain and will permit employ-
ees to purchase stock at a discount of 15% of the fair
market value of the Company's common stock. The
plan will initially authorize the purchase of 1,500,000
shares of the Company's Common Stock.
Based on these changes, the Company anticipates a
reduction in company -wide pension expense of approxi-
mately $9.1 million in 2005. The Company anticipates a
contribution between $1.0.0 million and $20.0 million to
this plan in 2005. Additionally, the Company anticipates
that its contribution requirements after 2005 will decline.
The Board of Directors approved one -year authoriza-
tion programs allocating $40.0 million for 2002 and
2003 and $50.0 million for 2004 to repurchase up to
1,250,000 shares or 7% of the Company's existing com-
mon stock over the following twelve months. During the
first three quarters of 2004, the Company repurchased
the entire 1,250,000 authorized shares for 2004. As a
result, in December 2004, the Board of Directors
approved a program expiring February 2006 which
authorizes the Company to repurchase up to 1,000,000
additional shares at a cost not to exceed $60.0 million.
Additionally, the Company maintains an Executive
Voluntary Deferral Plan and an Outside Directors
Deferral Plan. These plans allow executives and directors
to defer eligible compensation into deferred stock units or,
a cash account bearing interest at a fixed rate of return.
The Company funded the purchase of 59,336 shares of
common stock related to these plans in 2004. The shares
are held in a trust to be used for payments to participants
under the plans. The trustee currently holds 204,957
shares at December 31, 2004. Further information on
these plans can be found in Note 7 to the accompanying
Consolidated Financial Statements.
Centennial maintains an allowance for loan losses
related to the Company's loans receivable. During 2004,
the Company did not experience a significant change in the
underlying components of the allowance for loan losses or
the balance in total. There have been no significant
changes in the underlying rationale for management's pro-
vision for loan losses or significant changes in asset quality.
OFF-BALANCE SHEET ARRANGEMENTS
AND CONTRACTUAL OBLIGATIONS
The Company administers escrow and trust deposits as
service Vn its customers. 7be; deposits totaled $2.8 billion
arid $2.0 billion utDecember 31. 2004 nod 2003. rcop:o-
dvvly. Escrow and trust deposits are riot considered assets
of the Company and are not included xz the accompanying
balance sheets. Bovvcvec the Company remains contingently
liable for the disposition of these deposits. The Company
has begun depositing a portion ofthcxc escrow and trust
deposits in Centennial. Of the $2.8 billion in escrow, the
Company has deposited $lOO.O million io Centennial and
those assets and liabilities have beer) reflected outhe
accompanying Consolidated Financial Statements.
Additionally, the Company facilitates tax-deferred
property exchanges for customers pursuant unSection
1031 of the Internal Bovcuuc Code. As u facilitator and
intermediary, the Company holds the proceeds from sales
transactions until u qualified acquisition occurs. Tbrxc
deposits totaled $1.309.7 million and $534.3 million at
December 31, 2004 and 2003. rospoohvckc Similarly, the
Company also facilitates tax-deferred reverse exchanges
pursuant /o Revenue Procedure 3OUO'3? These exchanges
require the Company, using the cuotomer';fnodo. to
acquire qualifying property on behalf of the customer
and take *opora,y title un the cuouoroc,'s property until
aqualifybng acquisition occurs. Reverse property oxchaoges
totaled $470.3 million and $1837 million at Dv,omhnr
31, 2004 and 2003, respectively. Due to the structure uti-
lized to facilitate these transactions, like-kind exchanges
and reverse exd`uoAox are riot considered ano*to of the
Company arid are riot included in the accompanying con-
solidated balance sheets. However, the Company remains
contingently liable for the /,xoorcry of property, disburse-
ment ofproomdx and the return on the proceeds at the
agreed-upon rate.
The Compauy, in the ordinary ;ooryo of business,
nucem into buoiorvo arrangements that fall within the
ncnyc of FIN 0o. 45, Guarantors Accounting and
Disclosure KcguiurocotsIncluding Guarantees of
lndob(rdocsofLJ/hoa. and FIN No. 46. Variable
Interest Entities, both of which the Company adopted iu
2003. There were no arrangements /o these categories
that are reasonably likely to have a material impact on
the Company's current nrfuture operaboom, financial
condition or rrou]/o of operations. Required disclosures
are inNotes 13 and 17 to the accompanying
Consolidated Financial Statements.
A smurnary of the Company's contractual obligations and commercial cornalitnients is as follows
(in millions)
Payment Due by Period
Less than
More than
Contractual Obligations
Tnta|
lYear
1 J0mn 3-5
Years
SYeao
Long-term debt obligations
$ 485.4
$ 163
$ 85�5
u 01]
$292,5
Operating |eoon obligations
181,0
611
80,8
33.6
5.5
Pension obligations m
285.6
29�0
506
540
1511
Other pmstreimmen benefits
42.5
43
8.3
8.4
21 �5
Policy and contract claims w
1023
32.2
46.3
10.5
73
Purchase obligations m
47,8
253
10.5
2,5
01
Total obligations
$1,124,6
$169.5
$301.0
$176.1
$478.0
(1) The Company has f�ozen benefitsmnder its Cash Balance Pension Plan. The amounts included herein represent the Comp��
best. estimate of required payrnentsundothe benefit plan.
(2) As noted previously, the Company estimates its provision for policy and contract claims in the Ddo Insurance business. Bemoxo
the timing of a claim is subject to significant estimation and fluctuation, the Company has included only incurred and reported
duunx in the table for the 77uo Insurance segment. }lomzehv}ro' warranty claims reserves are included m total since the time
from policy writing to claim does not exceed 000yea,
(3) The Company mdudud all purchase obligations m excess of$ID8O00m value irrespective o(their, termination dates. These include
inuually renewable corporate insurance programs, payments required tinder software licensing agreements, vehicle leasing urrange-
wcvts'o,mou/Sopw'credi/uvailahility fi?m and fees mcertaojoin/ venture partners, Purchase obligations not exceeding $I60,00
nerc not material m the Company either individually or- /o the aggregate.
«,
c
I
INTEREST RATE RISK
The following table provides information about the Company's financial instruments that are sensitive to changes in
interest rates. For investment securities and loans receivable, the table presents principal cash flows and related weighted -
average interest rates by expected maturity dates. Actual cash flows could differ from the expected amounts.
Interest Rate Sensitivity
Principal Amount by Expected Maturity - Average Interest Rate
2010
and Fair
(dollars in millions) 2005 2006 2007 2008 2009 after Total Value
Assets:
Taxable available- for -sale securities:
Book value $47.4 $57.9 $59.0 $58.7 $74.3 $357.7 $655.0 $672.9
Average yield 5.3% 4.6% 4.3% 4.4% 5.0% 5.2% 4.9%
Non- taxable available- far -sale securities:
Book value 16.4 13.6 11.5 29.1 20.5 322.7 413.8 433.4
Average yield 41% 41% 4.3% 4.3% 4.0% 4,4% 4.3%
Preferred stock:
Book value - --- - - - 7.0 7.0 7.0
Average yield - - - - - - -
Loans Receivable
Book value 5.9 2.5 1.9 2.0 5.6 330.4 348.3 344.6
Average yield 7.7% 10.4% 9.6% 6.5% 71% 6.2% 6.6%
Average yields for 2003 were 5.0 %, 4.4% and
2.0% for taxable available for sale securities, non - taxable
available for sale securities and preferred stock, respec-
tively. Changes in Maturities and yields from 2003 to
2004 primarily relate to timing of purchases and sales of
any such securities and the impact that the securities sold
or purchased have on the average portfolio yield.
The Company also has long -term debt of $465.4
million bearing interest at an average rate of 4.65% at
December 31, 2004. Additionally, the Company has pass-
book and certificate of deposit liabilities of $373.1 million
bearing interest at an average rate of 2.17% at December,
31, 2004. A 0.25% change in the interest rate for these
items combined would affect: income before income taxes
by approximately $2.1. million annually. The Company's
debt portfolio is primarily fixed rage obligations and not
subject to variability. The Company's deposit liabilities
are subject to change based on short -term United States
interest rates and availability of funds.
FO RWARI - LOOKIN G AN
CAUTIONARY STATEMENTS
Certain information contained in this Managernerit's
Discussion and Analysis of Financial Condition and
Results of Operations includes "forward- looking state -
ments" within the meaning of Section 27A of the
Securities Act of 1.933 and Section 21E of the Securities
Exchange Act of 1934. Among other things, these state-
ments relate to the financial condition, results of operation
and future business plans, operations, opportunities and
Prospects of the Company. In addition, the Company and
its representatives may from time to time make written or
oral forward - looking statements, including statements
contained in other filings with the Securities and
Exchange Commission and in its reports to shareholders.
These forward- looking statements are generally identified
by the use of words such as we "expect," "believe,"
°'anticipate," "estimate" or words of similar import. These
forward- looking statements are based upon management's
current knowledge and assumptions about fixture events
and involve risks and uncertainties that could cause the
Company's actual results, performance or achievements
to be materially different from any anticipated results,
performance or achievements expressed or implied by
such forward- looking statements. Further, any such state-
ment is specifically qualified in its entirety by the caution-
ary statements set forth in the following paragraphs.
Factors that may cause the Company's actual results to
differ materially from those contemplated by such for-
ward- looking statements include the following: (i) the
company's results of operations and financial condition
are susceptible to changes in mortgage interest rates and
general economic conditions; (H) the company's inability
to manage successfully its acquisitions of complementary
businesses could adversely affect the company's business,
operating results, and financial condition; (iii) competi-
tion in the company's industry affects its revenues; (iv)
significant industry changes and new product and service
instructions require timely and cost - effective responses;
(v) the company may not succeed in implementing its
strategy of becoming a major provider of real estate
transaction management services; (vi) the company's
insurance and banking subsidiaries are subject to govern-
ment regulation; and (vii) the company's litigation risks
include substantial claims by large classes of claimants.
For more details on .factors that could affect expectations,
see the company's Annual Report on Form 10 -K for the
year ended December 31, 2004, and other reports from
time to time filed with or furnished to the Securities and
Exchange. Commission.
SELECTED FINANCIAL DATA
High
Price Range
Low
Dividends
Year Ended December 31, 2003
The information set forth in the following table should
be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
and the
accompanying Consolidated
Financial.
Statements
and Notes thereto.
39.40
0.07
Third quarter
50.54
43.55
(dollars in millions, except per share amounts)
Fourth quarter
53.18
44.60
0.10
Year Ended December 31, 2004
For the year ended December 31:
2004
2003
2002
2001
2000
Revenues
$3,5221
$3,406.0
$2,586.6
$2,170.5
$1,802.4
Net income (loss)
146,Y)(2)
192.1«'
149.4l')
60.3")
(80 8)(�)
Net income (loss) per common share
8.07
10.43
810
3.42
(6.60)
Net income (loss) per common share assuming dilution
8.01
10.31
8.04
3.24
(6.60)
Dividends per common share
0.50
034
0.24
0.20
0.20
At December 31:
Total assets
3,290.0
2,717.5
1,910.8
1,707.5
1,619.0
Shareholders' equity
1,151A
1,044.5
863.6
727.5
6441
(1) In the fourth quarter of 2004, the Company recorded $92 million, or, $'5.9 million after taxes, in litigation settlement costs after
taxes. Additionally, the Company amended its pension plan effective December 31, 2004 to cease future accruals resenting in a
curtailment gain of $4.8 million, or $3.1 million after taxes.
(2) In 2004, the Company recorded $6.5 million, or $4.2 million net of taxes, in exit and termination costs. In 2003, the Company
recorded exit and termination costs of $0.3 million, or $0.2 million net of taxes. Additionally, the Company recorded title plant
impairments of $5.0 million ($3.2 net of taxes) and $'4.9 million ($3.2 million net of taxes) in 2004 and 2003, respectively. See
Note 18 to the accompanying Consolidated Financial Statements.
(3) In 2002, the Company recorded exit and termination costs of $13.4 million, or $8.7 million net of taxes.
(4) In the fourth quarter of 2001, the Company reassessed the carrying value of intangibles and capitalized software which resulted
in charges to earnings of $51.4 million, or $32.9 million after taxes.
(5) The net loss reported by the Company for the fiscal year ended December 31, 2000 resulted h °om a change in the Company's
method for assessing the recoverability of goodwill (not associated with impaired assets) during the fourth quarter of 2000 which
resulted in charges of $172.5 million, or $110.4 million after taxes.
w
iv
0
0
High
Price Range
Low
Dividends
Year Ended December 31, 2003
First quarter
$40.10
$35.50
$0.07
Second quarter
48.91
39.40
0.07
Third quarter
50.54
43.55
0.10
Fourth quarter
53.18
44.60
0.10
Year Ended December 31, 2004
First quarter
$57.73
$40.84
$0.10
Second quarter
46.20
35.51
0.10
Third quarter
46.05
36.00
0.15
Fourth quarter
57.57
4530
0.15
w
iv
0
0
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIR
.1 .
We have audited the accompanying consolidated balance
sheets of handAmerica Financial Group, Inc. and sub -
sidiaries as of December 31, 2004 and 2003, and the related
consolidated statements of operations, changes in share-
holders' equity, and cash flows for each of the three years
in the period ended December 31, 2004. These financial
statements are the responsibility of the Company's manage -
rnent. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the
auditing standards of the Public Company Accounting
Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement. presentation.
We believe that our, audits provide a reasonable basis
for our, opinion.
In our opinion, the financial statements referred to
above presernt fairly, in all material respects, the consolidated
financial position of LandAmerica Financial Group, Inc.
and subsidiaries at December 31, 2004 and 2003, and
the consolidated results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2004, in conformity with United States
generally accepted accounting principles.
As explained in Note 1 to the financial statements, in
2002 the Company changed its method of accounting for
goodwill and intangible assets.
We have also audited, in accordance with the stan-
dards of the Public Company Accounting Oversight
Board (United. Stages), the effectiveness of LandAmerica
Financial. Group Inc.'s internal control over financial
reporting as of December 31, 2004, based on criteria
established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated March 9,
2005 expressed an unqualified thereon.
Richmond, Virginia
March 9, 2005
�ME �
REPORT OF MANAGEMENT ON LANKA ERIC
FINANCIAL GROUP, INC.'S INTERNAL CONTROL
OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing
and maintaining adequate internal control oven financial
reporting as defined in Rule 13a -15(f) under the Securities
Exchange Act of 1934. The Company's internal control
over financial reporting is designed to provide reasonable
assurance regarding the reliability of the Company's
financial reporting and the preparation of published
financial statements in accordance with generally accepted
accounting principles.
Because of its inherent: limitations, internal control
over financial reporting may not prevent or detect mis-
statements. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect
to financial statement preparation and presentation. Also,
projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures
may deteriorate.
Management assessed the effectiveness of the Company's
internal control over financial reporting as of December 31,
2004, 04. In making g this assessment, management used the
criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in
Internal Control .- Integrated Framework. Based on our
assessment, we believe that as of December 31, 2004, the
Company's internal control over financial reporting was
effective based on criteria set forth by COSO in Internal
Control --.Integrated Framework.
Management's assessment of the effectiveness of
internal control over financial reporting as of December 31,
2004, has been audited by Ernst & Young LLP, the inde-
pendent registered public accounting firrn who also audited
the Company's consolidated financial staterents. Ernst. &
Young's attestation report on management's assessment of
the Company's internal control over financial reporting
appears hereafter.
March 9. 2005
�p"
Theodore re I..,. Chandler, Jr.
G. Williarns Evans
President and Chief Executive Officer
Chief Financial Officer
kEPORT OF INDEPENDENT RE ISTE EQ PUBLIC
ACCOUNTING FIRM INTERNAL CCU T
O E R F NAN CI AL REPO RTI NG
The Board of Directors and Shareholders
LandAmerica Financial Group, Inc.
We have audited management's assessment, included in
the accompanying Management's Report on Internal
Control Over Financial Reporting, that LandAmerica
Financial Group, Inc. maintained effective internal con-
0-01 over financial reporting as of December 31, 2004,
based on criteria established in Internal Control —
Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission
(the COSO criteria). LandAmerica F'inanc'ial Group's
management is responsible for maintaining effective inter-
nal control over financial reporting and for its assessment
of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effec-
tiveness of the company's internal control over financial
reporting based on our audit.
We. conducted our, audit in accordance with the
standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assur-
ance about whether effective internal control over finan-
cial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal
control over financial reporting, evaluating management's
assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such
other procedures as we considered necessary in the
circumstances, We. believe that our audit provides a
reasonable basis for our opinion.
A company's internal control over financial reporting
is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes
in accordance with generally accepted accounting princi-
ples. A company's internal control over financial reporting
includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and disposi-
tions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance
with generally accepted accounting principles, and that
receipts and expenditures of the company are being made
only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable:
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the com-
pany's assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control
over financial reporting may not prevent or detect mis-
statements. Also, projections of any evaluation of effec-
tiveness to future periods are subject to the risk that con-
trols may become inadequate because of changes in
conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, management's assessment that
LandAmerica Financial Group, Inc. maintained effective
internal control over financial reporting as of December
31, 2004, is fairly stated, in all material respects, based on
the COSO criteria. Also, in our opinion, L.a:ndArnerica
Financial Group, Inc. maintained, in all material respects,
effective internal control over financial reporting as of
December 31, 2004, based on the COSO criteria.
We also have audited, in accordance with the stan-
dards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of
LandAmerica Financial Group, Inc. as of December 31,
2004 and 2003, and the related consolidated statements
of operations, changes in shareholders' equity and cash
flows for each of the three years in the period ended
December 31, 2004 of LandAmerica Financial Group,
Inc. and our report, dated March 9, 2005 expressed an
unqualified opinion thereon.
Richmond, Virginia
March 9, 2005
W
N
v
CD
0
0
�
�
�
�
"
C O N S O L I D A T E D B A L A N C E S H E E T S
LandAmedoo Financial Group, Inc. and Subsidiaries
Years Ended December Jl
(in millions of dollars)
2004
200
ASSETS
INVESTMENTS:
Fixed maturities awai|ab|e'fopmlo--ot fair value
(amortized cost: 2004--$1'07S,8;2O03--%S872)
$1'713.3
$1.0438
Equity usurides--atfair value (mst:2004--$3l.4;2003--$2S,2)
421
33.5
Federal funds sold
4.5
0,5
Short term investments
278.4
177.8
Total Investments
1.436.3
1'255,6
CASH
73J0
52,8
LOANS RECEIVABLE
3448
260.5
ACCRUED INTEREST RECEIVABLE
16.4
14.8
NOTES AND ACCOUNTS RECEIVABLE:
Notes (less allowance for doubtful accounts: 2004--$4.1; 2003--$3.8)
16.5
13.6
Trade accounts receivable (less allowance for doubtful
accounts: 2OO4--$82;20O3--$l2J)
111.3
92.6
Total Notes and Accounts Receivable
127.8
106,2
TAXES RECEIVABLE
122
81
PROPERTY AND EQUIPMENT—at cost (less accumulated depreciation and
amortization: 2OO4--*202J;2O03--$l71,9)
1861
98�6
TITLE PLANTS
93.8
99.5
GOODWILL
56&5
4263
INTANGIBLE ASSETS (less accumulated amortization Z0O4--%J2,5;2003--$7,S)
213.0
1507
DEFERRED INCOME TAXES
149.5
1342
OTHER ASSETS
148.7
108.8
Total Assets
$2.290.0
z2.721.6
C O N S O L I D A T E D B A L A N C E S H E E T S
LandAmehce Financial Group, Inc. and Subsidiaries
Years Ended December 31
(in millions of dollars except for share amounts)
2004 2003
LIABILITIES
POLICY AND CONTRACT CLAIMS
715.5
$ 858�6
DEPOSITS
373.1
204,0
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
3281
276,9
NOTES PAYABLE
465.4
327.4
DEFERRED SERVICE ARRANGEMENTS
202.4
153.5
OTHER
534
45.7
Total Liabilities
2,1389
1,677.1
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock, no par value, 45.O0UOOU shares authorized, shares issued and
outstanding: 2004-17,962,527; 2003-18,814,522 491.5 520.8
Accumulated other comprehensive loss (17.8) (18,5)
Retained earnings 6772 540]
Total Shareholders' Equity 1'1511 1'044.5
Total Liabilities and Shareholders' Equity $3'290/3 $2.721.8
See Notes m Consolidated Financial Statements.
�
�
�
�
�
�
*
C O N S O L I D A T E D S T A T E M E N T S OF O P E R A T I O N S
LandAmehnn Financial Group, Inc. and Subsidiaries
Years Ended December 31
(in nfiffions of dollars, except per common share amounts)
EXPENSES
Agents' commissions
2004
200
2002
REVENUES
871.0
8681
6813
Operating revenues
$3'444.5
$3'346�4
%2.533.6
Net investment and other income
71�8
52.1
513
Net realized investment gains
5.8
83
13
Interest expense
3'522]
3'406.0
2'586�6
EXPENSES
Agents' commissions
1/71.8
1.511 �6
1.11&2
Salaries and employee benefits
871.0
8681
6813
General, administrative and other
6083
404,0
383.2
Provision for policy and contract claims
181�4
18&8
105.8
Premium taxes
42.8
40�6
341
Interest expense
28.8
13.1
12.4
Amortization of intangibles
24.6
8,9
0.4
Write-off u(title plants
5.0
4.9
--
Exit and termination costs
8.5
03
13.4
3.296I)
3.1081
2'356,8
INCOME BEFORE INCOME TAXES
2281
290.8
228.8
INCOME TAX EXPENSE
78.8
104�8
80.4
NET|NCOME
NET INCOME PER COMMON SHARE
* 8.07
$ 18.43
* 8]0
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in thousands)
18'132
18'422
18.438
NET INCOME PER COMMON SHARE ASSUMING DILUTION
$ 8.01
$ 1031
$ 8.04
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
ASSUMING DILUTION (in thousands)
18'264
18.036
18.580
See Notes to Consolidated Financial Statements.
C O N S O L I D A T E D S T A T E M E N T S OF C A S H FLOWS
LandAmehoa Financial Group, Inc. and Subsidiaries
Yeas Ended December 31
(in millions of dollars)
See �Novesm Consolidated Financial Statements.
rl�
�
�
2004
200
2002
Cash flows from operating activities:
Net income
$148.3
$192.1
%149.4
Depreciation and amortization
5M
25.9
lT8
Amortization of bond premium
7.1
SJ
4]
Write-off uftitle plants
5�O
4.9
--
Realized investment gains
V5�8)
(8.5)
(1.3)
Deferred income tax (benefit) expense
(161)
U]
25.8
Change in assets and liabilities, net of businesses acquired:
Accounts and notes receivable
(10.7)
22,4
(10.5)
Income taxes receivable/payable
(8.0
(20.2)
13.9
Accounts payable and accrued expenses
(6.8)
(5])
15,8
Policy and contract claims
65.1
84�5
13,0
Deferred service arrangements
27.7
4,6
1'0
Other
13.1
11.3
7.4
Net cash provided hy operating activities
268�6
317J
236.4
Cash flows from investing activities:
Purchase of property and equipment, net
01lA
(33.6)
(15,8)
Purchase ufbusiness, net o[cash acquired
(188.4)
(3616)
(13.2)
Investments in unconsolidated subsidiaries
(19.8)
(8.8)
(83)
Change in cash surrender value of life insurance
(3.3)
(2.9)
1.6
Change in short term investments
01.5J
612
(50.3)
Cost u[ investments acquired:
Fixed maturities
(4633)
(588,0)
(5232)
Equity securities
(16.6)
(11 �0
(24.6)
Proceeds from investment sales ormaturities:
Fixed maturities
375.4
5512
4471
Equity securities
153
80
12
Net change in federal funds sold
(4.0)
9.4
--
Change in loans receivable
(82�5)
(11.2)
OJ
Net cash used in investing activities
(4793)
(388.3)
(1852)
Cash flows from financing activities:
Net change in deposits
109.2
(4.5)
--
Proceeds from the exercise of options and incentive plans
141
14]
4.0
Sale of stock warrants
22.5
--
--
Purchase of call options
(32.0)
--
--
Cost nfcommon shares repurchased
(493)
(2J)
(163)
Repayment ofCSVloan
--
--
(TO)
Dividends paid
(9.2)
(82)
(4.4)
Proceeds from issuance nf notes payable
1501
ll&l
1.6
Payments un notes payable
(22.2)
(38.6)
(223)
Net cash provided by (used in) financing activities
243.2
81.1
(44A)
Net increase in cash
201
10.5
6.8
Cash at beginning ofyear
529
42.4
35.6
Cash ot end ofyear
$ 710
$ 52.0
$ 42A
See �Novesm Consolidated Financial Statements.
rl�
�
�
Balance- December 31, 2001
Comprehensive income:
Net income
Other comprehensive income (loss)
Net unrealized gains on securities, net of tax $16.0
Minimum pension liability adjustment,
net of tax benefit $(15,0)
Common stock retired
Stock options and incentive plans
Common dividends ($0.24 /share)
Balance- December 31, 2002
Comprehensive income:
Net income
Other comprehensive loss
Net unrealized loss on securities, net of tax benefit $(0.3)
Minimum pension liability adjustment,
net of tax benefit $(9.0)
Common stock retired
Stock options and incentive plans
Common dividends ($0.34 /share)
Balance - December 31, 2003
Comprehensive income:
Net income
Other comprehensive loss
Net unrealized loss on securities, net of tax benefit $(2.1)
Minimum pension liability adjustment, net of tax $1.4
Purchase of call options, net of tax benefit $(11.2)
Sale of common stock warrants
Common stock retired
Stock options and incentive plans
Common dividends ($0.50 /share)
Balance- December 31, 2004
,See Notes to Consolidated Financial Statements.
Accumulated
(62,000)
527,578
-
(2.7) -
14,1 -
- -
Other
175.8
(2.7)
141
(6.3)
Total
Common Stock
Comprehensive
Retained
Shareholders'
Shares
Amounts
Income (Loss)
Earnings
Equity
18,583,937
$521.8
$ (3.6)
$209.3
$ 727.5
-
-
-
149.4
149.4
-
-
293
-
293
-
-
(263)
-
(26.3)
-
(49.3)
398,005
18.2 -
152.8
(507,150)
(16.3)
-
-
(163)
272,157
4.0
-
-
4.0
-
-
-
(4.4)
(4.4)
18,348,944
509.5
(0.2)
354.3
863.6
-
-
-
192.1
192.1
-
-
(0.5)
-
(0.5)
-
-
(15.8)
(15.8)
(62,000)
527,578
-
(2.7) -
14,1 -
- -
-
-
(6,3)
175.8
(2.7)
141
(6.3)
18,814,522
520.9 (16.5)
540.1
1,044.5
-
- -
146,3
146.3
-
- (3.6)
-
(3.6)
-
- 2.5
-
2.5
145.2
-
(20.8) -
_ ---
_- (20.8)
-
22.5 -
-
22.5
(1,250,000)
(49.3) -
-
(49.3)
398,005
18.2 -
-
18.2
-
- -
(9.2)
(9.2)
17,962,527 $491.5 $(17.6) $677.2 $1,151.1
TES TO CONSOLIDATED FINANCIAL STATEMENTS
LandAmerica Financial Group, Inc. and Subsidiaries
Years Ended December 31, 2004, 2003 and 2002
1. Summary of Significant Accounting P0licies
BASIS OF PRESENTATION
The accompanying consolidated financial statements of
LandAmerica. Financial Group, Inc. (the "Company ")
and its wholly owned subsidiaries have been prepared in
conformity with accounting principles generally accepted
in the United States which differ frorn statutory account-
ing practices prescribed or permitted by regulatory
authorities for its insurance company subsidiaries.
ORGANIZATION
The Company is engaged principally in the title insurance
business. Title insurance policies are insured statements
of the condition of title to real property, showing owner-
ship as indicated by public records, as well as outstanding
livens, encumbrances and other matters of record and cer-
tain other matters not of public record. The Company's
business results primarily from resales and refinancings of
residential real estate arid, to a lesser extent, from com-
mercial transactions and the sale of new housing.
The Company, through its principal subsidiaries, is
one of the largest title insurance companies In the United
States. The Company's title insurance underwriters -
Comrnonwealth Land Title Insurance Company, Lawyers
Title Insurance Corporation and Transnation Title
Insurance Company - together provide the majority
of the Company's insurance products in United States,
Mexico, Canada, Europe, the Caribbean and Latin
America. The Company also provides escrow and closing
services, commercial real estate services and other real
estate management services that are included in the Title
Insurance segment.
Additionally, the Company provides other real estate
transaction products and services including tax process-
ing and flood zone certifications, default management
services, mortgage loan subservicing and mortgage credit
reporting to lenders. These businesses are included in the
l.,ender Services segment.
The Company operates a California industrial bank
which rnakes up the Financial Services segment.
The Company also provides inspection services on
commercial and residential real estate, provides horne
warranties to buyers of residential real estate as well as
commercial appraisal and valuation services. These services,
along with the unallocated portion of the corporate expenses
related to the Company's corporate offices in Richmond,
Virginia (including unallocated interest expense) have
been included in the Corporate and Other segment.
See Note 20 for additional informations regarding the
Company's business segments.
USE OF ESTIMATES
The preparations of financial statements in conformity
with generally accepted accounting principles requires
management to snake estimates and assumptions that
affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from
those estimates.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements
include the accounts and operations, after intercompany
eliminations, of the Company and its subsidiaries. The
Company's 'investments in non- majority owned partner-
ships and affiliates that are not variable interest entities
are accounted for on the equity method. The Company
also consolidates any variable interest entity of which it is
the primary beneficiary in accordance with Financial
Accounting Standards Board Interpretation Number
( "FIN ") 46, Variable Interest Entities.
RECLASSIFICATION
Certain 2003 and 2002 amounts have been reclassified to
conform to the 2004 presentation.
INVESTMENTS
The Company records its fixed - maturity and equity security
investments, which are classified as available -for -sale at fair
value, and reports the change in the unrealized appreciation
and depreciation as a separate component of shareholders'
equity. The amortized cost of fixed - maturity investments
classified as available- for -sale is adjusted for amortization of
premiums and accretion of discounts. That amortization or
accretion is included in net investment income.
Realized gains and losses on sales of investments as
well as declines in value of a security considered to be
other than temporary are recognized in operations on the
specific identification basis.
The high investment grade mortgage- backed bond
portion of the fixed - rnaturity securities portfolio is
accounted for on the retrospective method. For the non -
investment grade mortgage - backed bond portion of the
fixed maturity securities portfolio, the prospective
method is used.
LOANS RECEIVABLE
Loans Receivable are carried at face value net of partici-
pations sold, unearned discounts and deferred loan fees
and an allowance for losses. Interest, is accrued daily on
a simple- interest basis, except where reasonable doubt
exists as to the collectibility of the interest, in which
case the accrual of interest is discontinued. Unearned
discounts and deferred loan fees are recognized using the
interest. method.
M
N
0
0
twi
In accordance with Statement of Financial.
Accounting Standards ("SFAS") No. 91, Accounting
for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Dii-ect Costs
of Leases, certain origination fees and direct costs associ-
ated with lending are capitalized and amortized over the
respective lives of the loans receivable as a yield adjust-
ment using the interest method.
LOANS RECEIVABLE ALLOWANCE
The allowance for loans receivable losses is established
through a provision for loan losses. A loan is charged off
against the allowance for loan losses when the Company
believes that collectibility of the principal is unlikely. The
allowance is an amount that management believes is ade-
quate to absorb estimable and probable losses on existing
loans and contracts. The Company takes into considera-
tion changes in the nature and volume of its portfolio,
overall portfolio quality, prior loss experience, review of
specific problem loans and contracts, regulatory guide-
lines and current economic conditions that may affect the
borrower's ability to pay. Additionally, certain regulatory
agencies, as part of their examination process, periodically
review the Company's allowance for loan losses. These
agencies may require adjustments to the allowance based
on their judgment regarding information made available
to there.
Loans receivable are impaired when, based on current
information and events, it is probable that the Company
will be unable to collect all amounts due according to the
contractual terms of' the loan agreement. Impaired loans
receivable are generally measured at the present value of
expected cash flows discounted at the loan's effective
interest rate. In the case of collateral-dependent loans,
impairment is based on the fair value of the collateral.
ACCOUNTS RECEIVABLE
Accounts receivable are carried at face value which approx-
imates fair value. The allowance for doubtful accounts
receivable represents an estimate of amounts considered
uncollectible and is determined based on management's
evaluation of historical collection experience, adverse situa-
tions which may affect an individual custorner's ability to
repay as well as prevailing economic conditions.
PROPERTY AND ED U I PM ENT
Property and equipment., including capitalized software
costs, is recorded at cost less accumulated depreciation
and is depreciated principally on a straight-line basis over
the useful lives of the various assets, which range frorn
three to forty years. Leasehold improvements are depreci-
ated on a straight-line basis over the lesser of the term of
the applicable lease or the estimated useful. lives of such
assets. Capitalized software costs are capitalized from the
time that technological feasibility is established until the
software is ready for rise.
T I T L E P L A N T S
Title plants consist of title records relating to a particular
region and are generally stated at cost. Expenses associated
With Current maintenance, such as salaries and supplies,
are charged to expense in the year incurred. The costs of
acquired title plants and the building of new title plants
prior to the tirne that a plant is put into operation, are
capitalized. Properly maintained title plants are not amor-
tized or depreciated because there is no indication of
diminution in their value.
G 0 0 D W I L L
Effective January 1, 2002, the Company adopted SFAS
No. 1. 42, Goodwill and Other .Intangibles, which required
that the Company discontinue amortizing goodwill and
begin assessing the recoverability of goodwill for each of
its reporting units. Reporting units are business components
of an operating segment, and goodwill is assigned to the
reporting unit which benefits from the synergies arising
from each business acquisition.
The Company tests for the recoverability of goodwill
annually on October 1, or sooner if events or changes in
circumstances indicate that the carrying amount of our
reporting units, including goodwill, may exceed their fair
values. The fair value of the reporting units is determined
using cash flow analysis which projects the future cash
flows produced by the reporting units and discounts
those cash flows to the present value. The projection of
future cash flows is necessarily dependent upon assump-
tions on the future levels of income as well as business
trends, prospects and market and economic conditions.
When the fair value is less than the carrying value for
the net assets of the reporting unit including goodwill,
impairment loss may be charged to operations. Based
on the Company's annual analysis, no impairment was
identified for the years ending December 31, 2004, 2003,
and 2002. See further details in Note 18.
I N T A N G I B L E A S S E T S
Intangible assets primarily include capitalized customer
relationships. Additionally, intangibles include non-com-
petition arrangements and debt offering costs. These assets
were initially recognized and measured in accordance
with SFAS No. 141, Business Combinations, at fair value.
These assets are amortized on a straight-line basis over
three to twenty years. Amortization expense for the next
five years is anticipated to be $29.3 million - 2005,
$28.4 million - 2006, $27.7 million - 2007, $26.5
million - 2008 and $24.5 million - 2009.
IMPAIRMENT OF INTANGIBLE ASSETS
AND LONG-LIVED ASSETS
The Company tests intangible and tong-lived assets for
Impairment whenever there are recognized events or
changes in circumstances that could affect the carrying
value of the long-lived assets. If indicators of impairment
are present, the Company estimates the future cash flows
expected to be generated .from the use of those assets and
their eventual disposal. In 2004 and 2003, the Company
identified certain title plants that were abandoned or sold
in their individual marketplaces. The Company took
charges of $5.0 million and $4.9 million in 2004 and
2003, respectively, associated with these title plants to
adjust the carrying value to appropriate levels. See Note
18 for additional information.
POLICY AND CONTRACT CLAIMS LIABILITY
Liabilities for estimated losses and loss adjustment
expenses represent the estimated ultimate net. cost of all
reported and unreported losses incurred for policies for
which revenue has been recognized through December
31, 2004. Reported claims are reserved based on a review
by the Company as to the estimated amount of the claims
and costs required to settle the claim. The reserves for
unpaid losses and loss adjustment expenses are estimated
rising historical loss and loss development: analyses.
Title insurance reserve estimates are subject to a sig-
nificant degree of inherent variability due to the length of
time over which claim payments are made and the effects
of external factors such as general economic conditions.
Although management believes that the reserve for policy
and contract claims is reasonable, it is possible that the
Company's actual incurred policy and contract claims
will not conform to the assumptions inherent in the
determination of these reserves. Accordingly, the ultimate
settlement of policy and contract claims may vary signiff-
cantly fronh the estimates included in the Company's
financial statements. Management believes that the
reserves for losses and loss adjustment expenses are
adequate. The estimates are continually reviewed and
adjusted as necessary as experience develops or new
information becomes known; such adjustments are
included in current operations.
INCOME TAXES
Deferred income taxes reflect: the tax consequences on
future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts.
Future tax benefits are recognized to the extent that
realization of such benefits are more likely than not..
ESCROW AND TRUST DEPOSITS
As a service to its customers, the Corripany administers
escrow and trust deposits which totaled approximately
$2,823.0 million and $1.,992.2 million at December 31,
2004 and 2003, respectively, representing undisbursed
arnounts received for settlements of mortgage loans, pay-
ments on mortgage loans and indemnities against specific
title risks. At December 31, 2004, $100.0 million of the
$2,€323.0 million of escrow funds were held on deposit at
Centennial. The remaining balance of $2,723.0 million in
escrow funds are not considered assets of the Company
and, therefore, are excluded from the accompanying
consolidated balance sheets.
REVENUE RECOGNITION
Title Insurance - Premiums on title insurance policies
issued by the Company's are recognized as revenue when
the Company is legally or contractually entitled to collect
the premium. Revenues from title policies issued by
independent agents are recognized when the policies are
reported by the agent and are recorded on a "gross"
basis (before the deduction of agent commissions).
Title search and escrow fees are recorded as revenue
when the order is closed.
Lender Services - Revenue is recognized for property
tax information services can a straight -line basis over the
anticipated life of the loan. Flood zone certification ser-
vices are recognized in part upon delivery of the flood
zone certification with the remaining balance (based on
the residual method using vendor - specific evidence) recog-
nized on a straight -line basis over the remaining life of the
certificate. For these services, fees are received in advance
for the entire period that a loan will be serviced. The
amount riot recognized as revenue in the financial state-
ments in the period received is reported in the accompany-
ing balance sheet as deferred service arrangements in
accordance with Staff Accounting Bulletin No. 104,
Revenue .Recognition in Financial Statements. The amorti-
zation period is evaluated quarterly to determine if there
have been changes in the estimated life of the loan and /or
changes in the number and /or timing of prepayments.
Revenue is recognized on other Lender Services
products at the time of delivery, as the Company has no
significant ongoing obligation after delivery.
Financial Services - Interest income is recognized by
the Company's California industrial bank on the out-
standing principal balance using the accrual basis of
accounting. Loan origination fees and related direct loan
costs are deferred and recognized over the :life of the
loan. Loans are typically classified as non - accrual if bor-
rowers rniss three or more contractual payments. Loans
may be returned to accrual status when all principal and
interest amounts contractually due (including arrearages)
are reasonably assured of repayrnent within an acceptable
period of t.irne, in accordance with the contractual inter-
est and principal. payment terms of interest and principal.
While a loan is classified as non - accrual and future
collectibility of the recorded loan balance is doubtful, c01-
lections of interest and principal are generally applied as
a reduction to principal outstanding. When the future
collectibility of the recorded loan balance is expected,
interest, may be recognized on a cash basis.
Corporate and Other - Home warranty revenue is
recognized on a straight -line basis over the terrn of the
contract. Fees are received in advance for the entire peri-
od the contract: is in force. The amount not recognized as
revenue in the financial staterents in the period received
is reported in the accompanying balance sheet as deferred
service arrangements.
Revenue is recognized on other products in this group
cif businesses at the time of delivery, as the Company has
no significant ongoing obligations after delivery.
LIKE KIND EXCHANOES
Through one of its non - insurance subsidiaries the Company
facilitates tax deferred property exchanges for customers
pursuant to Section 1031 of the Internal Revenue Code.
Acting as a qualified intermediary, the Company holds
the proceeds from sales transactions until a qualifying
acquisition occurs, thereby assisting its customers in
deferring the recognition of taxable income. At December
31, 2004 and 2003, the Company was holding $1,399.7
million and $524.3 million, respectively, of such proceeds
w
w
O
O
N
j
which are riot considered assets of the Company and are,
therefore, excluded from the accompanying consolidated
ba:larrce sheets. The Company also .facilitates tax- deferred
property exchanges for customers pursuant to Revenue
Procedure 2002 -37, so- called "reverse exchanges." These
reverse exchanges require the Company to take title to
the customer's property until a qualifying acquisition
occurs. Through these reverse exchanges the Company
acquires property on behalf of custorers using funds
provided by the customers or from non - recourse loans
arranged by the customer. 'The property is triple net
leased to the custorner and the customer fully indemnifies
the Company against all risks associated with ownership
of the property. The Company does not record these
reverse exchanges which amounted to $470.3 million and
$183.7 million at December 31, 2004 and 2003, respec-
tively, on its financial statements.
FAIR VALUES OF FINANCIAL
INSTRUMENTS
The carrying amounts reported in the balance sheet for
cash, short -term investments, premiums receivable and
certain other assets approximate those assets' fair values.
Fair values for investment securities are based on quoted
market. prices. The fair value of the fixed -rate portion of
the Company's long -term debt is estimated using dis-
counted cash flow analyses, based on the Company's cur-
rent incremental borrowing rates for similar types of bor-
rowing arrangements. The rernaining portion of the
Company's :long -term debt approximates fair value since
the interest rate is variable. The fair value of loans receiv-
able was estimated based on the discounted value of
future cash flows using the current rates offered for loans
with similar terms to borrowers of similar credit quality.
The fair value of deposits was estimated based on the dis-
counted value of future cash flows using a discount rate
approximating current market for similar liabilities. The
Company has no other material financial instruments. See
Notes 3, 5 and 14 for additional information.
A summary of the fair value of the Company's finan-
cial assets and liabilities is as .follows:
(in millions)
2004
2003
Fair
Carrying
Fair
Carrying
Value
Value
Value
Value
Investments
$1,436.3
$1,436.3
$1,255.6
$1,255.6
Loans receivable
345.3
344.6
263.1
260.5
Deposits
372.7
3731
204.4
204.0
Long -term debt
4231
465.4
317.3
327.4
STOCK -BASED COMPENSATION
The Company has granted stock options for a fixed number
of shares to employees with an exercise price equal to the
fair value of the shares at the date of grant. The Company
accounts for stock option grants in accordance with
Accounting Principles Board Opinion No. 25, Accounting
f'or Stock Issued to Employees ( "APB 25 ") otherwise
known as the intrinsic: value method and, accordingly,
recognizes compensation expense as the excess, if any, of
the quoted market price of the stock at the grant date over
the amount an employee must pay to acquire the stock.
Pro forma information regarding net income and
earnings per share has been determined as if the Company
had accounted for its employee stock options under the
fair value method of that statement.. The fair value of
these options was estimated as of the date of grant using
the Black- Scholes option pricing model with the following
weighted- average assumptions for 2002: risk -free interest
rate of 5.31 percent, dividend yield of .62 percent, volatility
factor of the expected market price of the Company's
Common Stock of .475 and a weighted- average expected
life of the options of approximately eight years. There
were no options issued in 2003 or 2004.
The following pro forma information shows the
Company's net income and earnings per basic and diluted
share if compensation expense for the Company's
employee stock options had been determined based
on the fair value method of accounting:
(Dollars in rnillinns,
except _per share amounts) 2004 2003 2002
Net income, as reported $1463 $192.1 $149.4
Deduct: Total stock -based
employee compensation
expense determined under
fair -value based method for
all awards, net of related
tax effects (Q.6) (13) (2.6)
Pro forma net income $145.7 $190.8 $146.8
Earnings per share:
Basic - as reported $ 8.07 $10.43 $ 8.10
Basic - pro forma $ 8.03 $10.36 $ 7.96
Diluted - as reported $ 8.01 $10.31 $ 8.04
Diluted - pro forma $ 7.94 $10.23 $ 7.96
In December 2004, the FASB issued SFAS No. 123R,
Share -Based Payment. SFAS No. 123R is a revision of
SFAS No. 123, Accounting for Stock Based Compensation,
and supersedes APB 25. Among other items, SFAS 123R
eliminates the use of APB 25 and the intrinsic value
method of accounting, and requires companies to recog-
nize the cost of employee services received in exchange
for awards of equity instruments, based on the grant date
fair value of those awards, in the financial statements.
The effective date of SFAS 123R is the first reporting
period beginning after June 15, 2005. Because the
Company has not granted any stock options since 2002
and does not anticipate issuing options in 2005, the
adoption of this statement is not expected to have a
material impact on the results of operations.
EXIT AND TERMINATION COSTS
In January 2003, the Company adopted SFAS No. 146,
Accounting for Costs Associated with Fxit or Disposal
Activities, which was effective for periods after December
31, 2002. The statement requires that a liability for a cost
associated with an exit or disposal activity be recognized
and measured initially at its fair value in the period in
which the liability is incurred. Previously, these liabilities
were required to be accrued at the time management com-
mitted to an activity. Costs required to be accrued include
but are riot: limited to termination benefits provided to
employees that were involuntarily terminated, costs to ter-
minate a contract that was not a capital lease, and costs to
consolidate facilities or relocate employees. The impact of
implementation of this standard was not material.
The amortized cost and estimated fair value of investments
in fixed maturities available for sale at December 31, 2004
and 2003 were as follows:
(in millions) 2004
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury
securities and
obligations of
U.S. Government
corporations
and agencies $
84.1
$ 1.8
$(0.3) $
85,6
Obligations of states
and political
subdivisions
416.0
201
(0.6)
435.5
Fixed maturities
issued by foreign
governments
43
01
-
4.8
Public utilities
11.3
0.9
-
12.2
Corporate securities
419.0
14.7
(11)
432.6
Mortgage- backed
securities
1333
2.2
(0.3)
135.6
Preferred stock
7.0
-
-
7.0
Fixed maturities
available- for -sale $1,075.8
$39.8
$(23) $1,113.3
(ill millions) 2003
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury
securities and
obligations of
U.S. Government
corporations
and agencies
$ 88.9
$ 31
$(0.1)
$ 91.9
Obligations of states
and political
subdivisions
417.9
23.5
(0.3)
4411
Fixed maturities
issued by foreign
governments
1.5
-
-
1.5
Public utilities
210
1.5
-
24.5
Corporate securities
344.3
17.7
(0.8)
361.2
Mortgage- backed
securities
1161
2.1
(0.2)
118.0
Preferred stock
5.5
0.1
-
5.6
Fixed maturities
available- for -sale
$997.2
$48.0
$(1.4)
$1,043.8
The amortized cost and estimated fair value of
fixed - maturity securities at December 31, 2004 by
contractual maturity for available -for -sale securities are
shown below. Actual maturities will differ frorn contractual
maturities because borrowers may have the right to call
or prepay obligations.
Amortized Estimated
(in millions) Cost Fair Value
Due in one year or less $ 63.8 $ 64.6
Due after one year through five years 371.0 382.0
Due after five years through ten years 355.9 3751
Due after ten years 151.4 156.0
Mortgage - backed securities 133.7 135.6
$1,075.8 $1,113.3
Realized and unrealized gains (losses) representing
the change in difference between fair value and cost
(principally amortized cost for fixed maturities) on fixed
maturities and equity securities for the three years ended
December 31 are summarized below:
(ill millions) 2004 2003 2002
Net realized gains (losses):
Fixed maturities $ 1.6 $ 7.7 $ 1.4
Equity securities 4,2 0.8 (0.1)
$ 5.8 $ 8.5 $ 1.3
Change in unrealized:
Fixed maturities $(9.1) $(7.7) $45.4
Equity securities 3.4 6.9 03
$(5.7) $(0.8) $45.7
G
1>
G
G
Gross unrealized gains and (:fosses) relating to invest-
ments in equity securities were $10.8 million and $ (0.1)
million at December 31, 2004.
A total of 480 securities had unrealized losses at
Decerrber 31, 2004, and the duration of these securities
range from one year to thirty years. All but 24 of the securi-
ties with unrealized losses were investrnent -grade fixed -
maturity securities acquired by the Company during 2004,
and accordingly, each security has been in air unrealized
loss position for less than twelve months. The 24 securities
with unrealized losses in excess of twelve months were
investment -grade long -term bonds and notes which rnan-
agement has the intent and the ability to hold to maturity
and had an aggregate unrealized loss of $0.3 million.
Management has concluded that none of the available -
for -sale securities with unrealized losses at December 31,
2004 has experienced an other than temporary impairment.
This conclusion was based on a number of factors including:
(1) there were no securities with fair values less than 80
percent of amortized cost at December 31, 2004, (2) there
were no securities rated below investment- grade, and (3)
there were no securities for which fair value had been
significantly below amortized cost for a. period of six
months or longer.
The proceeds from sale of investments, net of calls or
maturities and gross realized gains (losses) during the years
ended December 31, 2004, 2003 avid 2002 were as follows:
(in millions)
2004
2003
2002
Fixed maturities:
(33)
Deferred loan fees 0.9
1.6
Proceeds
$3333
$463.0
$339.2
Gross realized gains
3.2
8.7
53
Gross realized losses
(1.)
(0.8)
(4.0)
Equity securities:
Current year
213.7
147.3
Proceeds
$ 115.6
$ 9.0
$ 1.2
Gross realized gains
43
1.0
-
Gross realized losses
(0.1)
(0.2)
(0.1)
At December 31, 2004, no industry group comprised
more than 10 percent of our investment, portfolio. This
portfolio is widely diversified among various geographic
regions in the United States, and is not dependent on the
economic stability of one particular region.
At December 31, 2004, we did riot hold any fixed
maturity securities in any single issuer, other than securi-
ties issued or, guaranteed by the U.S. government, which
exceeded 10 percent of shareholders' equity.
Loans receivable at Decernber 31, 2004 and December 31,
2003 are summarized as follows:
2004 2003
Loans - interest bearing $346.8 $257.6
Conditional sales and other contracts 1.5 5.3
348.3
262.9
Unearned income on loans (0.5)
(03)
Allowance for loan losses (41)
(33)
Deferred loan fees 0.9
1.6
$344.6 $260.5
The average yield on the Company's loan portfolio
was 6.76 percent for the year ended Decernber 31, 2004.
Average yields are affected by amortization of discounts on
loans, prepayment penalties recorded as income, loan fees
amortized to income and market interest rate changes.
The activity in the allowance for loan losses for the
years ended December 31, 2004, and December 31,
2003, is as follows:
(in millions)
2004
2003
Beginning of year
$ 3.3
$0.1
Add: Provision for loan losses
0.9
0.7
Balance acquired
-
2.5
Less: Charge -offs
(0.1)
-
Balance at end of year
$ 4.1
$3.3
There were no 'investments in loans for which an
impairment has been recognized. The amount of loans in
non - accrual status was riot material at December 31, 2004.
The allowance for loan losses is maintained at a level
that is considered appropriate by management to provide
for risks in the portfolio.
Activity in the liability for unpaid claims and claim
adjustment expenses is surnrnarized
as follows:
(in millions)
2004
2003
2002
Balance at January 1
$659.6
$574.5
$561.5
Acquired
0.8
-
-
Incurred related to:
Current year
213.7
147.3
136.5
Prior years
(32.3)
41.3
(30.7)
Total incurred
181.4
188.6
105.8
Paid related to:
Current year
19.2
8.5
10.5
Prior years
107.1
95.0
82.3
Total paid
126.3
1015
92.8
Balance at December 31
$715.5
$659.6
$574,5
The Company calculates the ultimate loss reserve for
tittle insurance claims by analyzing the dollar amount of
claims paid and reported each year accumulated by policy
issue year in each subsequent year. The Company considers
factors such as historical t ruing of claims reported and
historical timing of claims paid over the period in which
policies are effective against actual experience by year of
policy issue to determine the arnount of claims reserves
required for each year for which policies are outstanding.
The Company's increase in 2004 estimated losses
related primarily to several large claims for policy year,
2004. Reserves for policy years 1999 and prior developed
favorably in both 2004 and 2003. The adverse development
on prior year loss reserves during 2003 was attributable to
the emergence of a few large claims for policy years 2001
and 2002. The favorable development on loss reserves
during 2002 was attributable to lower than expected pay-
ment levels on recent: issue years which included a high
proportion of refinance business. The Company will con-
tinue to evaluate its title insurance reserves quarterly and
adjust its reserves when circumstances dictate that recent
trends have moderated significantly.
Passbook and investment certificate accounts at December 31,
2004 and December 31. 2003 are summarized as follows:
(dollars in millions)
2004
2003
Passbook accounts
$1761
$ 80.4
Certificate accounts:
Less than one year
138.1
108.2
One to two years
253
10.7
Two to three years
3.8
2.0
Three to four years
2.7
0.8
Four to five years
27.1
1.9
$373,1
$204.0
Annualized average interest rates:
Passbook accounts 1.31% 2.03%
Certificate accounts 2.95% 2.79%
. Facultative Reinsurance
The Company cedes and assumes title policy risks to and
from other insurance companies in order to limit and diver-
sify its risk. The Company cedes insurance on risks in
excess of certain underwriting limits, which provides for
recovery of a portion of losses. The Company remains con-
tingently liable to the extent that reinsuring companies can-
not meet their obligations under reinsurance agreements.
Due to statutory limitations, the Company is restricted
to purchasing reinsurance from other title companies.
Consequently, the Company purchases significantly all its
title reinsurance from two other title companies. These title
companies have an AM Best rating of A or better, indicating
excellent or superior- ability to meet their obligations.
The amount of paid and recovered reinsured losses
during the three years ended December 31, 2004 is
immaterial to operations. The total amount of premiums
for assumed and ceded risks was less than 1 percent of
title premiums in each of the last three years.
7. Shareholders' Equity
RIGHTS AGREEMENT
The Company has issued one preferred share purchase
right (a "Right ") for each outstanding share of Common
Stock. Each Right entitles the holder to purchase, upon
certain triggering events, shares of the Company's Series
A Junior Participating Preferred Stock ( "Junior Preferred
Stock ") or Common Stock or other securities, as set
forth in the Rights Agreement, as amended, between the
Company and State Street Bank and Trust Company,
the parent company of the Company's transfer agent.
Generally, the Rights will become exercisable if a person
or group acquires or announces a tender offer for 20 per-
cent or more of the outstanding shares of Common Stock.
Under certain circurstances, the Board of Directors may
reduce this threshold percentage to not less than 10 percent.
If a person or group acquires the threshold percent-
age of Common Stock described above, each Right will
entitle the holder, other than such acquiring person or
group, to purchase one one- hundredth of a share, of
Junior Preferred Stock at an exercise price of $85, subject
to certain adjustments. As an alternative to purchasing
shares of Junior Preferred Stock, if a person or group
acquires the threshold percentage of Common Stock,
each Right will entitle the holder, other than such acquir-
ing person or, group, to buy, at the then current exercise
price of the Right, shares of Common Stock having a
total market value of twice the exercise price. If the
Company is acquired in a merger or other business com-
bination, each Right: will entitle the holder', other than
such acquiring person or group, to purchase, at the then
current exercise price of the Right, securities of the sur-
viving company having a total market value equal to
twice the exercise price of the Rights. Following the
acquisition by any person of more than the threshold per-
centage of the outstanding shares of the Company's
Cornrnon Stock but less than 50 percent of such shares,
the Company may exchange one share of Common Stock
for each Right (other than Rights field by such person).
The Rights will expire on August 20, 2007 and may
be redeemed by the Company at a price of one cent: per
Right at any tirne before they becorne exercisable. Until
the Rights become exercisable, they are evidenced by the
Common Stock certificates and are transferred with and
only with such certificates.
w
n
0
0
w
CD
CD
CD
STOCK OPTIONS AND AWARD PLANS
As of December 31, 2004, the Company had three stock
compensation plans which have been approved by the
shareholders. Under the 2000 Stock Incentive Plan, as
amended (the °2000 Plan "), the Company may
grant/award Comrnon Stock, restricted stock, stock
options, stock appreciation rights and phantom stock to
officers, directors, ernployees, agents, consultants and
advisors of the Company and its subsidiaries, as deter -
mined in the discretion of the Executive Compensation
Committee of the Board of Directors. Grants or awards
covering 1,509,480 shares of Common Stock were rnade
pursuant to the 1.991 and 1992 stock plans. All future
grants of stock compensation will be granted through the
2000 Plan. As of December 31, 2004, the Company had
made awards of 310,554 shares of restricted stock, 100
shares of Common Stock, grants of 58,602 shares of
phantom stock designated as cash units and payable sole-
ly in cash; and grants covering 748,430 shares, each net
of adjustments for forfeitures pursuant to the 2000 Plan.
The maximum number of shares of Cornrnon Stock
authorized for 'issuance under the 2000 Plan is 3,600,000
subject to adjustrrlent as described in the 2000 Plan. As
of December 31, 2004, there were 2,482,314 shares
available for future grant under the 2000 Plan.
STOCK OPTIONS
All stock options have been granted with an exercise
price equal to the fair market value of a share of Common
Stock at the date of grant. All options granted to directors
vest ratably over four years and expire ten years from the
date of grant; all other options generally vest ratably over
four years and expire seven years from the date of grant.
The following schedule summarizes stock option activity
for the three years ended December 2004:
Weighted Weighted
Number Average Average
of Shares Exercise Price Fair Value
Options outstanding,
2004
December 31, 2001
Weighted
(421,145 exercisable)
1,493,901
$29
Granted
16,000
32 $17.92
Exercised
151,757
19
Forfeited
71,502
32
Options outstanding,
Exercisable
Exercise
December 31, 2002
Prices
at 12/31/04
_._. -- - - -�
(616,630 exercisable)
1,286,642
$30
Granted
-
-
Exercised
358,398
29
Forfeited
12,000
44
Options outstanding,
201,250
3.95
December 31, 2003
140,250
26.50
(532,738 exercisable)
916,244
$30
Granted
-
-
Exercised
380,031
30
Forfeited
7,000
38
Options outstanding,
36.80
43.60-
_____m.
December 31, 2004
26,000
- - - - --
2.06
-
(408,213 exercisable)
529,213
$30
The following table surnmarizes information about stock options outstanding at December 31, 2004:
RESTRICTED STOCK
Restricted stock and related cash units may be granted pursuant to the 2000 Plan and vest ratably over four years
2004
Weighted
Weighted
Weighted
Cash
Range of
Number
Average
Average
Number
Average
Stock
Exercise
Outstanding
Remaining
Exercise
Exercisable
Exercise
Prices
at 12/31/04
_._. -- - - -�
Life
Price
at 12/31/04
Price
$14.31
- $20.06-
81,963
2.58
$18.59
81,963
$18.59
26.50-
26.50
201,250
3.95
26.50
140,250
26.50
27,70-
32.04
42,000
6.20
29.67
42,000
29.67
36.80
- 36.80
178,000
3.13
36.80
118,000
36.80
43.60-
_____m.
54.04
-- -
26,000
- - - - --
2.06
-
48.57
26,000
48.57
529,213
3.55
$30.08
408,213
$29.62
RESTRICTED STOCK
Restricted stock and related cash units may be granted pursuant to the 2000 Plan and vest ratably over four years
2004
2003
2002
Restricted
Cash
Restricted
Cash
Restricted Cash
Stack
Units
Stock
Units
Stock Units
Outstanding grants
at start of year
257,005
71,820
120,400
-
-
New shares granted
26,168
13,158
169,180
71,820
120,400 -
Shares forfeited
(5,194)
(1,480)
-
-
- -
Shares vested
(88,901)
(24,896)
(32,575)
-
- -
Outstanding grants
at end of year
189,078
58,602
257,005
71,820
120,400 -
SAVINGS AND STOCK OWNERSHIP PLAN
The Company has registered 3,100,000 shares of Common
Stock for use in connection with the LandAmerica
Financial Group, Inc. Savings and Stock Ownership
Plan. Substantially all of the employees of the Company
are eligible to participate in the Plan.
Prior to July 1, 2002, the Company provided the
Plan Trustee with funds to purchase shares on the open .
market to use in matching employee contributions. After
that date, the Company has matched employee contribu-
tions in cash. The level of contributions to the Plan is dis-
cretionary and set by the Board of Directors annually.
The total number of shares purchased and allocated to
employees, including both company match and employee
contributions in 2004, 2003 and 2002 were 1.21,456,
107,547 and 184,656, respectively, at a cost of $5.4 rnil-
lion, $4.8 million and $5.5 million, respectively. Arnounts
charged to income by the Company for its matching con-
tributions were $12.8 million, $1.1.9 million and $1.0.3
million for 2004, 2003 and 2002, respectively.
Effective January 1, 2005, the Company's Savings
and Stock Ownership Plan was amended to comply with
the safe harbor, provisions of" Sections 401(k) (12) and
401 (in) (11) of the Internal Revenue Code of 1986, as
amended. The amendment: provides immediate vesting on
all Company snatching contributions made after January
1, 2005, removes the one -year waiting period for new
participants to receive matching contributions and
increases the matching contributions that the Company
will make to employee accounts under the plan.
DEFER R AL PLANS
Pursuant to the Company's Executive Voluntary Deferral
Plan and Outside Directors Deferral Plan, executives and
directors can defer eligible compensation into deferred
stock units or a cash account: bearing interest: at a fixed
rate of return. Under the terms of the original plans,
deferred stock units were settled by a cash payment to
the plan participant. Effective April 24, 2002, the
Company amended the deferral plans to provide for the
settlement of deferred stock units in the Common Stock
of the Company. Effective January 1, 2004, the Executive
Voluntary Deferral Plan and the Outside Directors
Deferral Plan were amended to provide a maximum of
800,000 and 100,000, respectively, of Common Stock
that can be issued under the plans. A trust has been
established to hold the shares of Common Stock to be
used to fund payments to executives and directors. The
Company provides the trustee of the Plans with the funds
to purchase shares of Cornmon Stock on the open market:
to match the number of deferred stock units credited to
participants' accounts under the deferral plans. The
aggregate number of shares purchased by the trustee of
the plans in 2004 was 59,336 at a cost of $2.7 million,
CONVERTIBLE DEBT
In November and December 2003, the Company issued
$115.0 million of the Company's 3.125 percent Convertible
Senior Debentures due 2033 (the "2003 debentures ")
through a private placement. The 2003 debentures are
convertible into shares of the Company's Common Stock
at the current conversion rate of 14.9478 shares per,
$1,000 principal amount of the debentures, which is
equivalent to a conversion price of $66.90 per share of
Common Stock. The conversion rate is subject to adjust-
ment upon the occurrence of certain specified events.
Upon conversion, the Company will deliver cash or
Common Stock equal to the lesser of the aggregate prin-
cipal amount of the 2003 debentures to be converted or
the Company's total conversion obligation and crash or
Common Stock in respect of the remainder, if any, of' the
Company's conversion obligation. (See Note 21 for addi-
tional information) The Company may redeem some or
all of the 2003 debentures at any time on or after
November 2010. The holders may also require the
Company to repurchase the 2003 debentures for cash or
Common Stock at five designated repurchase dates as
defined in the indenture. Holders may convert the 2003
debentures into cash and shares, if any, of the Company's
Common Stock prior to stated maturity, under the fol-
lowing circumstances: (1) during any calendar quarter
(and only during such calendar quarter) commencing
after December 31, 2003, and before December 31,
2028, if the last reported sale price of the Company's
Common Stock is greater than or equal to 125 percent of
the conversion price for at least 20 trading days in the
period of 30 consecutive trading days ending on the last
trading day of the preceding calendar quarter; (2) at any
time on or after January 1, 2029, if the last reported sale
price of the Company's Common Stock on any date on
or after December 31, 2028, is greater than or equal to
1.25 percent of the conversion price; (3) subject to certain
limitations, during the five business day period after any
five consecutive trading day period in which the trading
price per 2003 debenture for each day of that period was
less than 98 percent of the product of the conversion rate
and the last reported sale price of the Company's
Common Stock; (4) if the Company calls the 2003 deben-
tures for redemption; (5) upon the occurrence of certain
corporate transactions; or (6) if the Company obtains
credit ratings for the 2003 debentures, at any time when
the credit ratings assigned to the 2003 debentures are
below the specified levels in the indenture. At December
31, 2004 none of the 2003 debentures had been convert-
ed or redeemed.
In May 2004, the Company issued approximately
$125.0 million principal amount: of the Company's 3.25
percent Convertible Senior Debentures due 2034 (the
"2004 debentures ") through a private placement.
The 2004 debentures are convertible into shares of the
Company's Common Stock at current conversion rate of
18.4153 shares per $1,000 principal amount of the 2004
debentures, which is equivalent to a conversion price of
approximately $54.30 per share: of Common Stock. The
conversion rate is subject to adjustment upon the Occur-
rence of certain specified events. Upon conversion, the
Company will deliver cash equal to the lesser of the
aggregate principal amount. of 2004 debentures to be
converted and the Company's total conversion obligation
and Common Stock in respect of the remainder, if any, of
G
n
0
a
ca
the Company's conversion obligation. Holders may con-
vert the 2004 debentures into cash and shares, if any, of
the Company's Common Stock prior to stated maturity,
under the following circumstances: (1) during any calen-
dar quarter (and only during such calendar quarter) corn-
mencina after June 30, 2004, and before June 30 2029,
If the last reported sale price of the Company's Common
Stock is greater than or equal to 125 percent of the con-
version price for at least 20 trading days in the period of
30 consecutive trading days ending on the last trading
day of the preceding calendar quarter; (2) at any time on
or after July 1, 2029 if the last reported sale price of the
Company's Common Stock on any date on or after June
30, 2029 is greater than or equal to 125 percent of the
conversion price; (3) subject to certain limitations, during
the five business day period after any five consecutive
trading day period in which the trading price per 2004
debenture for each day of that period was less than 98
percent of the product of the conversion rate and the last
reported sale price of the Company's Common Stock- (4)
if the Cornparry calls the 2004 debentures for reclernp-
tion; (5) upon the occurrence of certain corporate trans-
actions; or (6) if the Company obtains credit ratings for
the 2004 debentures, at any time when the credit ratings
assigned to the 2004 debentures are below the specified
levels in the indenture. As of December 31, 2004, none of
the debentures had been converted or redeemed.
Concurrently with the sale of the 2004 debentures,
the Company entered into a bond hedge transaction
designed to mitigate the potential dilution frorn the con-
version of the 2004 debentures. Under the ten year term
of the bond hedge transaction, the Company may exer-
cise an option to require a counterparty to deliver to the
Company shares of Company Corrinion Stock based at a.
price approximately equal to the conversion price of the
2004 debentures.
The cost of the bond hedge transaction was partially
offset by the Company's sale to a counterparly of war-
rants to acquire tip to 2,301,894 shares of the Company's
Cornnron Stock. The warrants are initially exercisable at
a price of approximately $63.98 per share, subject to
adjustment. The warrants inay be settled through a net
share settlement based on the amount by which the then
current market price of the Company's Common Stock
exceeds the exercise price.
COMPREHENSIVE INCOME
The Company has elected to display comprehensive
income in the staternents of shareholders' equity, net of
reclassification adjustments. Reclassification adjustments
are made to avoid double counting in comprehensive
income items that are displayed as part of net incorne for
a period that also had been displayed as part of other
comprehensive income in that period or earlier periods.
A summary of unrealized gains (losses) and reclassifi-
cation adjustments, net of tax, of available-for-sale securi-
ties for the years ended December 31, 2004, 2003 and
2002 follows:
(in millions) 2004 2003 2002
Unrealized holding (losses)
gains arising during the period $(5.5) $(5.6) $30.3
Reclassification adjustment for
gains (losses) previously included
in other comprehensive income
(net of tax expense (benefit) of
$1.1 million — 2004; $2.8 million —
2003 and $0.4 million — 2002) 1.9 5.1 (0.6)
Net unrealized holding (losses) gains
arising during the period $(3.6) $(0.5) $29.7
Net unrealized gains totaled $48.2 million and $53.9
million at December 31, 2004 and December 31, 2003,
respectively.
The accompanying consolidated financial statements have
been prepared in conformity with accounting principles
generally accepted in the United States which differ in
some respects from statutory accounting practices pre-
scribed or permitted in the preparation of financial state-
ments for submission to insurance regulatory authorities.
Combined statutory equity of the Company's insurance
Subsidiaries was $478.8 million and $460.1 million at
December 31, 2004 and 2003, respectively. The differ-
ence between statutory equity and equity determined on
the basis of accounting principles generally accepted in
the United States is primarily due to differences between
the provision for policy and contract claims included in
the accompanying financial statements and the statutory
unearned premium reserve, which is calculated in accor-
dance with statutory requirements, and statutory regula-
tions that preclude the recognition of certain assets and
limit the recognition of goodwill and deferred income Lax
assets, Statutory net income for the Company's insurance
subsidiaries was $109.9 million, $163.1 million and
$128.9 million in 2004, 2003 and 2002, respectively,
The Company's statutory-basis financial statements
are prepared in accordance with accounting practices pre-
scribed or permitted by insurance regulatory authorities.
These regulatory authorities recognize only statutory
accounting practices prescribed or permitted by their
individual state for determining and reporting the finan-
cial condition and results of operations of an insurance
company and for determining their solvency. The
National Association of Insurance Commissioners'
(" NAIC ") Accounting Practices and Procedures manual
( °NAIC SAP ") has been adopted as a component of pre-
scribed or permitted practices by each of the states that
the Company is regulated in, Each of the states have
adopted a material prescribed accounting practice that
differs from that found in NAIC SAP. Specifically, arnounts
added to the Statutory Premium Reserve are released
more rapidly in the first three years of the twenty year
release period under NAIC SAP than is allowed by state
statute. Additionally, there are differences between NAIC
SAP and state statute for allowable assets in the areas of
deferred taxes, goodwill and EDP equipment.
A reconciliation of the Company's insurance sub-
sidiaries' net statutory surplus between NAIC SAP and
practices prescribed and permitted by these states at
December 31 is shown below:
(in millions)
2004
2003
2002
Statutory surplus
$478.8
$460.1
$497.9
State prescribed practices:
2.4
2.0
0.4
Release of statutory
2.8
2.6
22
premium reserve
893
40.9
17.9
Deferred taxes
1.8
1.6
1.9
EDP equipment
21
2.1
1.4
Goodwill
2,8
4.5
1.2
Total adjustments
96.4
49.1
22.4
Statutory surplus, NAIC SAP
$575.2
$509.2
$5203
In a number of states, the Company's insurance sub-
sidiaries are Subject to regulations which require ininimum
amounts of statutory equity and which require that the
payment of any extraordinary dividends receive prior
approval of the Insurance Commissioners of these states.
An extraordinary dividend is generally defined by various
statutes in the state of domicile of the subsidiary insurer.
Under such statutory regulations, net assets of consolidated
insurance subsidiaries aggregating $83.0 million is available
for dividends, loans or advances to the Company during
the year 2005.
In addition, the credit agreement with SunTrust Bank
(See Note 14) contains certain covenants which would lirnit
future dividend payments by the Company. Management
does not believe, however, that these restrictions will, in the
foreseeable future, adversely affect the Company's ability to
pay cash dividends at the current: dividend rage.
At December 31, 2004, the Corripany's insurance and
industrial bank subsidiaries had $24.8 million on deposit
with various state regulatory agencies that are shown pri-
marily as investments on the consolidated balance sheet.
Earnings on investments and net realized gains for the
three years ended December 31 follow:
(In millions)
2004
2003
2002
Fixed maturities available -for -sale
$47.9
$47.9
$50.5
Equity securities
2.4
2.0
0.4
Short -term investments
2.8
2.6
22
Loans receivable
20.0
1.6
0.1
Other investment income
0.8
0.1
-
Net realized gains
5.8
8.5
13
Total investment income
79.7
62.7
54.5
Investment expenses
(2.1)
(2.1)
(1.5)
Net investment income
$77.6
$60.6
$53,0
10. Income Taxes
The Company and its majority -owned subsidiaries file a
consolidated federal income tax return. Significant com-
ponents of the Company's deferred tax assets arid liabilities
at December 31, 2004 arid 2003 were as follows:
(in millions) 2004 2003
Deferred tax assets:
255.9
224.1
Deferred income
$ 81.0
$ 65,0
Policy and contract claims
68.0
62.6
Employee benefit plans
32.0
28.7
Goodwill
30.0
393
Pension liability
16.5
17.8
Tax and flood claims
9.6
-
Convertible debt
9.2
-
Allowanee for bad debts
4.9
6.3
Other
4.7
4.0
Total deferred tax assets
255.9
224.1
Deferred tax liabilities:
Other intangibles
66.5
48.1
Unrealized gains
16.7
18.9
Fixed assets
10.0
8.6
Title plants
9.0
8.9
Capitalized system development costs
1.4
1,4
Other
2.8
4.0
Total deferred tax liabilities
106.4
89.9
Net deferred tax asset
$149.5
$134.2
A valuation allowance would be established for any
portion of a deferred tax asset that management believes
may not be realized. At December 31, 2004 and 2003, no
valuation allowance was provided.
10
a
a
n
0
0
E
The breakout of the Company's income tax expense
between current and deferred is as follows:
(if] millions)_
2004
2003
2002
Current:
Federal
$ 87.0
$100.0
$52.5
State
8,9
4.9
2.1
Total
95.9
104.9
54.6
Deferred:
(0a5)
(0.4)
(0.6)
Federal
(11.6)
(01)
24.9
State
(4.5)
-
0.9
Total
(16.1)
(0.1)
25.8
Net tax expense
$ 79.8
$104.8
$80.4
The provision for income tax differs from the amount
of incorne tax determined by applying the U.S. statutory
income tax rate (35 percent) to pre -tax income as a result
of the following:
(in millions)
2004
2003
2002
Tax expense at federal
statutory rate
$791
$103.9
$80.4
Federal tax credits
(13)
(1.3)
(0.7)
Nontaxable interest
(5.0)
(5.1)
(4.9)
Dividend deductions
(0a5)
(0.4)
(0.6)
Company -owned life insurance
(1.1)
(0.6)
(0.2)
Meals and entertainment
5.2
4.9
10
State income taxes,
net of federal benefit
2.9
3.2
2.0
Other, net
0.9
0.2
1.4
Income tax expense
$79.8
$104.8
$80.4
Taxes paid were $103.5 million in 2004, $120.3 million
in 2003 and $35.3 million in 2002.
1 . Earnings Per Share
The following table sets forth the computation of basic: and
diluted earnings per share for the years ended December 31:
(in millions except per
common share airrounts)
2004
2003
2002
Numerator:
Net income - numerator for
diluted earnings per share
$146.3
$192.1
$149.4
Numerator for basic
earnings per share
$146.3
$192.1
$149.4
Denominator:
Weighted average shares -
denominator for basic
earnings per share
181
18.4
18.4
Effect of dilutive securities:
Employee stock options
0.2
0.2
02
Denominator for diluted
earnings per share
18.3
18.6
18.6
Basic earnings per common share
$ 8.07
$10.43
$8.10
Diluted earnings per common share
$ 8.01
$10.31
$8.04
rr '
The Company has pension and other retirement benefit
plans covering substantially all employees. On December
31, 2004, the Company froze the accumulation of bene-
fits available under its principal defined benefit pension
plan. Effective December 31, 2004 the Company ceased
future accruals to the retirement plan accounts of all plan
participants (other than annual interest credits on
account balances), caused the accrued benefits of partici-
pants to be fully vested as of December 31, 2004 and
limited participation in the plan to those individuals who
were participants in the plan as of December 31, 2004.
Until December 31, 2004, the Company's principal
pension plan was a non - contributory, qualified, defined
benefit pension plan that provided benefits based on a
cash balance formula.. Each participant's account was
credited annually with an amount equal to 2 -5 percent of
the participant's annual compensation based on the par-
ticipant's age and years of credited service. Additionally,
each participant's account balance will be credited with
interest based on the 10 -year treasury bond rate published
in November preceding the applicable plan year. Prior to
January 1, 1999, the Company maintained two separate
non- contributory defined benefit plans, which were merged
into the current plan. Participants prior to January 1, 1999,
who rnet the requirements for early retirement on that
date, may elect to receive their retirement benefits under
the applicable prior plan or formula. The Company's
policy was to fund all accrued pension costs.
Additionally the Company sponsors a postretirement
benefit plan that provides for postretirement health care
and life insurance benefits to employees hired by the
Company prior to January 1, 2000. The Company also
sponsors non - qualified, unfunded supplemental benefit
plans covering key management personnel.
Obligations, funded status and net amount recogniodatDecemher3lnre as follows:
Pension Benefits Other Benefits
(om4umns) 1004 2003 2004 2083
Change in benefit obligation:
Benefit obligation mL beginning nJyear
Service cost
Interest cost
Plan participants' contributions
Effect of Medicare Act
Actuarial loss (goin)
Curtailments
Benefits paid
Benefit obligation et end cfyear
Change in plan assets:
Fair value nJ plan assets ui beginning ofyear
Actual return on plan assets
Refund uf plan assets
Company contributions
Plan participants' contributions
Benefits paid
Fair value uf plan assets ut end ufyear
Funded status ofthe plan (underfunded)
Unrecognized net actuarial loss
Unrecognized transition obligation
Unrecognized prior service cost
Contribution made between measurement date and year end
Minimum pension liability adjustment in
accumulated comprehensive income
Accrued benefit cost
Accumulated other comprehensive income
Net amount ne000nized
The accumulated benefit obligation for all defined
benefit pension plans was $258.g million and $2OI.5 odl-
lioua, December %1. 2004 arid 2003. u,opectmrh'
The projected benefit obligation, accumulated benefit
obbgaboo, and fair value of plan assets for the pension
Components of net periodic pension cost:
Service cost
Interest cost
Expected return on plan assets
Amortization o(unrecognized
transition (aszeUobligation
Prior service cost recognized
Gain due tosettlement or curtailment
Recognized gain
Netnoriudic benefit cost
$2073
$231 �O
$00.3
$61.0
12.5
9.3
0�8
0.7
15/0
14.5
3.1
3.8
--
--
1.8
0.8
-
-
(4.7)
-
4�4
31.6
(2.9)
(1.7)
U3.D
-
-
-
$2589
$267.7
$Gi3
$5K3
$187.8
$1832
$ --
* --
18.3
213
--
--
28.0
10�2
--
--
$217,2
$197.9
$ --
$ --
$(42.7)
$(68.8)
$(53.3)
$(603)
76.8
92.4
1.4
0.5
--
--
9�4
10.8
--
(6.4)
12
1.6
--
7H
--
--
(42.7)
(47.6)
(41.3)
(3&6)
78.8
80J
--
--
$341
$33]
$(41.3)
$(38.6)
plans with xo accumulated benefit obligation in excess of
plan assets were $25A.0million, $25Q.Q million and
$217.2 mi[boo, raoyectively, as of December 31. 2004.
and $287.7 million, $261.6 million and $107.0 nuilDov.
,operh,e[x unof December 3l. 2003,
Pension Benefits
2004 2003 2002
$12.5 $ 9.2 $ 8]
75.0 14.5 14.9
(17.3) (17.4) (181)
Other Benefits
2004 2003 2002
$8.8 m]J $IS
31 18 3.4
-- -- -- 12 12 l]
(1.G) (1.8) (1.7) 0.5 8.4 KS
(4.0 - - - - -
51 1.3 -- -- 0.3 --
$ 9.0 $ 6,8 $ 13 $5.8 $6.4 $5,0
�
�
�
Component of Comprehensive Income:
Pension Benefits Other Benefits
(�n millions) 2004 2003 2004 2003
(Decrease) increase
in minimum liability
included inother
comprehensive income $(3.9) $24.8
A3SHMPT|UNS
Weiybted-uvcrogr assumptions used un determine benefit
obligations at December 31:
Pension Benefits Other Benefits
2004 2003 2004 2003
Discount rate 6.00% 6.00% 6.00% 6.75%
Rate ofcompensation
increase 4�6396 4.83% 4.0396 4.03%
assumptions used to determine net
cost for years ended December 31:
Assumed health care cost trend rates at December 31
Pension Benefits
2004 2003
Other Benefits
2804 2003
Discount rate
6.00&
636%
6.00&
8.00Y6
Expected return on
Rate that the cost trend rate
2004 2003
Equity securities 550%
gradually declines to
plan assets
8.00Y6
8.50%
0/A
N/A
Rate ofcompensation
25.8
42
io remain at
2011
increase
4,839&
4,63%
4,63%
4.63%
Assumed health care cost trend rates at December 31
Assumed health care cost trend rates has esignificant
effect no the amounts reported for the health care plans.
A ouc- percentage- [Doi utchange iu assumed health care
cost trend rates would have the following effects:
One-Percentage- One-Percentage-
(in millions) Point Increase Point Decrease
Effect on total of service
and interest cos $O] $(a])
Effect onpustredremen
benefit obligation $1.7 $(1.5)
The Company's pension plan asset allocation at
2004
00
Health care cost trend
payments, which reflect
Target
rate assumed for next year
11,00%
12,00%
Rate that the cost trend rate
2004 2003
Equity securities 550%
gradually declines to
5.50%
5,509&
Year that the rate reaches
9.5% 9196
Total 100,096
the rate i\isassumed
25.8
42
io remain at
2011
2811
Assumed health care cost trend rates has esignificant
effect no the amounts reported for the health care plans.
A ouc- percentage- [Doi utchange iu assumed health care
cost trend rates would have the following effects:
One-Percentage- One-Percentage-
(in millions) Point Increase Point Decrease
Effect on total of service
and interest cos $O] $(a])
Effect onpustredremen
benefit obligation $1.7 $(1.5)
The Company's pension plan asset allocation at
December 31, 2004 and 2003 and target
allocation for
2003 hy asset category are axfollows:
payments, which reflect
Target
Percentage of
Allocation
Plan Assets
2005
2004 2003
Equity securities 550%
56.0% 503Y6
Debt securities 35,0%
34.5% 40�2Y6
Other 10.0Y6
9.5% 9196
Total 100,096
100.8% 100.0%
The Company anticipates that its weighted average
long-term rate ofreturn will boODpercent. This was devel-
oped hasmdoutbnCompaoy'saualyxisnfdhem^dcipated
returns for the assets based un the Company's targeted asset
allocation. The Company's investment strategy /s to provide
average market returns through the strategic rise ofequity
arid fixed-income and alternative investments u`ensure
both liquidity arid stability of the portfolio. Itisanticipated
that the current mix of investments will enable the plan /o
meet its expected rate of return while maintaining principal
throughout a variety of market conditions.
CASH FLOWS
Employer contributions to the Company's defined benefit
plan were $2G.O million and $28.2 million iu20O4and
2003, respectively. The Company anticipates making con-
tributions of between $10 million and $20 million in
20O5. The Company did riot contribute to other benefit
plans iu2O04 arid 2003 riot, does it anticipate contribut-
ing aounvomm2O05.
Contributions by participants to the other benefit plans
were approximately $1.0 million and $0.8 million for the
years ending December 2OO4 arid 3003.respectively.
ESTIMATED
FUTURE BENEFIT
PAYMENTS
The following benefit
payments, which reflect
expected
future service, xu
appropriate, are expected
tohopaid:
(in Inillions)
Pension Benefits
Other Benefi
2005
$ 29.9
$ 43
2008
24,8
41
2007
25.8
42
2008
27.0
42
2009
27.8
4.2
Years 2010-2014
151.1
21.5
The measurement date for both the pension and post-
retirement benefit valuations was September 30. 2004.
13. Commitments and Contingencies
LEASE CD&8M|TMENT6
The Company conducts umaJor portion of its Operations
from leased office facilities under operating leases that
grocrnDy expire over the next lO years but are renewable.
Additionally, the Company leases data processing and
other equipment under operating leases, which for the
most part are renewable, that generally expire over the
next five years.
Following is a schedule of future minimum rental
payments required under operating leases that have initial
or remaining non - cancelable lease terms in excess of one
year as of December 31, 2004.
(in millions)
2005
$ 611
2006
46.7
2007
34.1
2008
23.0
2009
10.6
Thereafter
5.5
7.45% senior notes, due 2008
$181.0
Rent expense was $87.3 million, $75.1 million and
$63.1 million for the years ended December 31, 2004,
2003 and 2002, respectively.
In 2000 and 2001, the Company entered into sale -
leaseback transactions whereby the Company sold and
leased back assets classified as furniture and equipment.
These assets were ]eased back frorn the purchaser over
periods of 5 and 7 years. The resulting leases are being
accounted for as operating leases and the resulting gain
is being amortized over the life of the lease. The leases
require the Company to pay customary operating and
repair expenses and to observe certain covenants. These
leases contain a renewal option at lease termination and a
purchase option at an amount approximating fair market
value at lease termination.
Future scheduled mininncmt lease payments under
non - cancelable operating leases entered into in connection
with the sale - leaseback transactions as of December 31,
2004 are as follows:
(in rillions)
2005
$6.5
2006
5.8
2007
4.5
2008
1.1
Total minimum lease payments $17.9
OTHER COMMITMENTS AND GUARANTEES
In November 2002, FASB issued Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements
Including Guarantees of Indebtedness of Others ( "FIN 45 ").
The provisions for initial recognition and measurement
are effective on a prospective basis for guarantees that
are issued or modified after December 15, 2002. Adoption
of this standard did not have a material impact on the
Company's financial position or results of operations.
The Company had guarantees of indebtedness of others
of approximately $4.4 million at December 31, 2004,
and $6.1 million at December 31, 2001
The Company's bank subsidiary regularly commits to
fund loans. The amount of such commitments was not
material as of December 31. 2004.
CONCENTRATIONS OF CREDIT RISK
AND SIGNIFICANT CUSTOMERS
The Company's banking subsidiary loan portfolio is col-
lateralized primarily by commercial and residential real
estate properties throughout Southern California. As a
result, the loan portfolio consists of similar property
types in the same region. Although the Company has a
diversified portfolio, a substantial portion of its debtors'
ability to honor their contracts is dependent on the econ-
omy of Southern California.
The Company's tax and flood business acquired in
October 2003 had two customers that represented
approximately 40 percent and 59 percent of total fees
received for the years ended 2004 and 2003, respectively.
Although the Company conducts its business on a
national basis through a network of branch and agency
offices, approximately 49 percent and 47 percent of con-
solidated title revenues for the year ended December 31,
2004 and 2003, respectively, were generated in the states
of California, Texas, Florida, New York and Pennsylvania.
OTHER CONTINGENCIES
The Company is and has been periodically subject to
information requests and subpoenas from the states
relating to investigations of the business practices of the
Company and the title insurance industry. Multiple states
are specifically investigating captive reinsurance. Since the
inception of the reinsurance programs in 1997 through.
2004, reinsurance premiums paid by the Company to the
reinsurers have totaled approximately $12 million. The
revenues from these programs were not material to the
results of operations. Based on information known to
managernent, the Company cannot predict the outcome
of these investigations.
A surnmary of the Company's debt and credit: arrangements
are as follows:
(in millions) 2004 2003
3.125% senior convertible debentures,
due November 2033
$115.0
$115.0
3.25% senior convertible debentures,
due May 2034
125.0
—
7.16% senior notes, due 2006
50.0
50.0
7.45% senior notes, due 2008
50.0
50.0
7.88% senior notes, due 2011
50.0
50.0
Senior Credit Facility,
due November 6, 2008
--
—
Borrowings from Federal Home
Loan Bank Board
51.1
43.6
Other notes with maturities through 2008,
average rate approximately 5.4%
24.3
18.8
$465.4 $327.4
On November 6, 2003, the Company entered into a
new credit arrangement with SunTrust Bank, individually
and as administrative agent for a syndicate of other banks,
pursuant to which a credit facility, in the aggregate principal
n
N
0
0
a
U
amount. of up to $200.0 million, was established. This
line of credit replaced the Company's prior six-year credit:
facility with Bank of Arnerica that expired in November
2003. The credit facility is a five -year senior unsecured
revolving credit facility, which will terminate: with all
amounts being due and payable on November 6, 2008,
unless extended as provided in tare credit agreement. In
March, April and October 2004, the Company amended its
credit: facility with SunTrust Bank. The material terms of
the amendments revise certain restrictive covenants to
increase the Company's flexibility to incur, other indebted-
ness; make loans to agents; declare or pay cash dividends to
its shareholders and purchase, redeem or otherwise acquire
shares of its capital stock or warrants, rights or options to
acquire any such shares for cash; use a Rabbi Trust to pur-
chase, redeem or otherwise acquire shares of its Common
Stock; and guaranty indebtedness of its subsidiaries, affiliates
or agents of its subsidiaries. The facility contains certain
restrictive covenants, including a minimum debt to capital-
ization ratio, a debt service coverage ratio and maintenance
of statutory surplus. The Company was in compliance with
all such covenants at December 31, 2004.
Interest accrues on the outstanding principal balance
of the loans, at the Company's option, based on (i) LIBO
(reserve adiusted) for 30, 60, 90 or 180 days with respect
to any Eurodollar Borrowing plus a margin determined
by the Company's leverage ratio or (ii) SunTrust's Base
Rate as defined in the credit agreement. In the event of
any default, interest on the outstanding principal balance
of the loans will accrue at a rate equal to SunTrust's Base
Rate plus 2.0 percent per' annum.
In May 2004 the Company issued $1.25.0 initlion
principal amount of its 3.25 percent Convertible Senior
Debentures dire, 2034 through a private placement. The
2004 debentures are convertible into common shares
of the Company at an equivalent price of $54.30 per
share. See additional information in Notes 7 and 21. The
Company may redeem some or all of the senior convertible
debentures at any time on or after May 2014. The holders
may also require the Company to repurchase the deben-
tures for cash at four designated repurchase dates as
defined in the indenture.
On November 26, 2003 the Company issued $115.0
million of its 3.125% Convertible Senior Debentures due
2033 through a private placernent. The debentures are
convertible into common shares of the Company at $66.90
per share (see additional information in Notes 7 and 21).
The Company may redeem some or all of the senior con -
vertible debentures at any time on or after November 15,
2010. The holders may also require the Company to repur-
chase the debentures for cash at five designated repurchase
dates as defined in the indenture. Additionally, tyre Company
may be required to pay contingent interest during interest
periods beginning in 2010, depending on the trading price
of the debentures, as defined in the indenture.
The Company's banking subsidiary has a line of credit
with the Federal Home Loan Bank Board of San Francisco
( "FHLB ") in the amount. of $51.1 million at Decerriber 31,
2004. All advances under this line of credit were collater-
alized with loans receivable and FHLB stock. These bor-
rowings, which included fixed term, fixed and variable
rate advances maturing 2005 through 2009, bear or carry
interest rates ranging from 1.9 percent to 3.94 percent.
The aggregate annual maturities for notes and con-
tracts payable in each of the five years after December 31,
2004, are as follows:
fill Inilliolls)
2005
$16.3
2006
76.2
2007
19.3
2008
57.5
2009
3.6
Interest paid was $23.1 million, $1.2.8 million and
$12.2 million in 2004, 2003 and 2002, respectively.
GENERAL
The Company and its subsidiaries are involved in certain
litigation arising in the ordinary course of their businesses.
Although the ult:irnate outcome of these matters cannot
be ascertained at this time, and the results of legal pro-
ceedings cannot be predicted with certainty, the Company
believes, based on current knowledge, that the resolution
of these matters will not have a material adverse effect on
the Company's financial position or results of operations.
COURSE OF BUSINESS
On September 5, 2002, Thomas Branick and Ardra
Campbell filed a representative suit on behalf of the
general public: against Southland Title Corporation
( "Southland "), a subsidiary of the Company, in the Los
Angeles Superior Court (Case No. BC 280961). The
Complaint, as amended, pleads causes of action for
unfair competition (California. Business and Professions
Code §§ 17200, et. se . and unfair business practices
(California Business and Professions Code §§ 17500, et,
sew,) and generally alleges that Southland improperly
charged its customers for recording documents incident
to real estate transactions and overcharged its customers
for administrative fees. Plaintiffs seek injunctive relief and
restitution. On September 3, 2004, the trial court granted
Southland's Motion for Judgment on the Pleadings and
on September 16, 2004 entered a firial judgment dismissing
this case. On November 15, 2004, Plaintiffs filed a Notice
o'f Appeal of the judgment and tine matter is currently
pending in the Second District of the California Court of
Appeal. Southland intends to vigorously defend the
appeal.. The parties are exploring opportunities for poterr-
dat settlement and have agreed to participate in noribind-
ing Court of Appeal sponsored mediation scheduled for
April 4, 2005. Based on the fact that the suit is still in its
initial stages, at this tune no estimate of the arnount or
range of loss that could result from an unfavorable out-
come can be made.
On May 9, 2000, Romeo Jergess filed a putative
class action suit (tile "Jergess Suit ") in the United States
District Court for the Eastern District of Michigan,
Southern Division (Case No. 00- 721.24) against
Transnation Title Insurance Company ( "Transnation "),
a subsidiary of the Company. The suit alleges that
Transnation's rate for art owner's title insurance policy,
charged in accordance with rates for new construction
filed with the hnsurance Bureau of the State of Michigan,
are less than the rate paid by the lender for a simultane-
ously issued lender's title insurance policy, and that the
lower rate paid by the builder /developer for the owner's
policy involves art illegal kickback for a referral. and an
illegal splitting of fees in violation of the Real Estate
Settlement Procedures Act ( "RESPA "). On April 27,
2001, a similar suit was filed by Elaine Miller (the
"Miller Suit ") in the same court (Case No. 01- 71647)
against Lawyers Title Insurance Corporation ( "Lawyers
Title "), a subsidiary of the Company. The plaintiffs in
both suits seek an unspecified amount of damages equal
to three times the amount of the charge for each simulta-
neously issued lender's title insurance policy in connec-
tion with a new home purchase cornmencing with the
period one year before the filing of each complaint, plus
costs, interest and attorneys' fees. Transnation and
Lawyers Title have engaged a. forensic accountant to
review plaintiffs' estimate that the charges collected for
such policies by Transnation and I..,awyers Title from the
class as originally defined is approximately $15 million.
The Jergess Suit and the Miller Suit were consolidated on
July 18, 2002 with cases pending against First American
Title Insurance Company and Chicago Title Insurance
Company. (.)n December 5, 2002, the court certified a
class defined as all individuals who, during the period
commencing prior to one year of the filing of the applica-
ble suit and ending on October 30, 2002, purchased a
newly constructed one -to four - family dwelling or condo-
minium and were charged for a lender's title insurance
policy allegedly in violation of RESPA. On February 12,
2003, the United States Court of Appeals for the Sixth
Circuit denied Transnation's and Lawyers Tittle's petitions
for an interlocutory appeal of the class certification order.
On October 30, 2003, the judge ordered that individuals
otherwise tweeting the class definition, but who closed
transactions involving relevant policies between October 31,
2002 through October 30, 2003 would not be subject to
a statute of limitations defense raised by Transnation
Title or Lawyers Title between October 30, 2003 and
October 31, 2004. On October 28, 2004, Transnation
and Lawyers Title stipulated to an order that individuals
otherwise meeting the class definition, but who closed
transactions involving relevant policies between October
31, 2002 through October 30, 2004, would not be subject
to a statute of limitations defense raised by Transnation or
I.,awyers Tittle between October 30, 2004 and October 31,
2005. The court currently has tinder consideration a
motion to proceed to trial with the certified class as origi-
nally defined. On January 13, 2005, the court denied
Transnation's and Lawyers Title's motion to dismiss the
case for lack of standing. On February 7, 2005, the court
dismissed without prejudice Transnation's and Lawyers
Title's Motion for Partial Summary Judgment with respect
to those tnernbers of the class covered by the affiliated
business exception Linder RESPA with the court indicating
that the parties could resubmit: the motion with additional
Information, The court has riot yet ruled on the parties'
cross Motions for Summary Judgment on Count II of
plaintiff's' complaint alleging art illegal splitting of fees under
RESPA. The parties have agreed to participate in nonbind-
ing mediation scheduled for May 3 -4, 2005. A trial date
has been set for July 18, 2005. Transnation and Lawyers
Title intend to vigorously defend the consolidated suits.
On June 22, 2004, Gateway Title Company Inc.,
Cointnonwealt.h Land Title Company, Inc. and
LandAmerica Financial. Group, Inc. ("Plaintiffs") filed a
Complaint, subsequently amended by a First Amended
Complaint filed June 25, 2004, in the Superior Court of
California, County of Los Angeles, Central District,
against the Mercury Company and its affiliates Financial
Title, Alliance Title, Investors Title and various individu-
als including Joseph DiChiacchio, a former manager of
LandAmerica (Case No. BC 317441) (collectively, the
"Defendants"), The lawsuit claims substantial monetary
and punitive damages for unfair competitive business
practices in conjunction with Plaintiffs' loss of over 200
employees in California, most of which appears to have
occurred within an approximately twelve month period.
On August 12, 2004, the court granted a Temporary
Restraining Order, followed by a request for a
Preliminary Injunction, which was granted September 27,
2004 against the Defendants based upon a showing of
significant likelihood of Plaintiffs prevailing on the merits
combined with irreparable harm to .Plaintiffs if injunctive
relief did not: issue. The injunctive relief generally prohib-
ited the solicitation of Plaintiffs' Employees. Tire prelimi-
nary injunctive relief has now expired and discovery and
the calculation of darnages are underway. On December
13, 2004, Alliance Title Company, Inc., Financial Title
Company, Inc., .Roberto Olivera and Ray Arias filed a
Cross- Complaint for unfair competitive business practices.
On December 13, 2004, Mr. DiChiacchio also filed a.
Cross - Complaint alleging similar claims, including back
wages and additional bonus payments. Plaintiffs, are
disputing and intend to vigorously defend the Cross -
Complaints. A trial elate has been set for October 3,
2005. Management believes that damages caused to
Plaintiffs by Defendants far exceed any clairn of offset
raised in the Cross - Complaints.
BUSINESS COMBINATIONS
During the years ended December 31, 2004 and 2003,
the Company completed 27 and 1.9 acquisitions, respec-
tively. These acquisitions were intended to grow the
Company's title operations and expand its real estate
transaction services portfolio. The acquisitions have been
accounted for using the purchase method of accounting
and each acquisition's results have been included in the
consolidated financial statements since the acquisition date.
The useful Life of all assets recorded in purchase account-
ing is based on market conditions, contractual terms and
other appropriate factors.
0
a
co
w
The following acquisition was considered material
and is included in the Lender Services segment:
On October 1, 2003, the Cornpany purchased 100
percent of the issued and outstanding stock of
LandAmerica. Tax & Flood ( "L.ATF ") formerly known
as LERETA for approximately $221.1 million in cash.
In connection with the closing of the acquisition the
Company entered into a stock purchase agreement, non-
competition agreements with certain shareholders, a
non - solicitation agreement with certain shareholders
and employment agreements with certain employees. The
non- competition agreements prohibit certain shareholders
from engaging in activities related to the business of
L,ATF for a period of three years following the date of
specified events. The non - solicitation agreement prevents
shareholders from employing any employee of the
Company for a period of one year after closing and the
employee has ceased employment: with the Company.
The fair value of assets acquired and liabilities
assumed in the I.ATF acquisition were as follows:
(in mifflons)
Tangible assets acquired
$ 118.2
Intangible assets:
Corporate
Customer relationships
86.8
Capitalized software
14.8
Goodwill
188.0
Liabilities assumed
(186.7)
Total purchase price
$ 221.1
Selected unaudited pro forma combined results of
operations for the years ended December 31, 2003 and 2002,
assuring the acquisition had occurred as of January 1,
2002, and using actual general and administrative expenses
prior to the acquisition, are set .forth below:
(dollars in rnillions, except per snare amounts) 2003 2002
Total revenue $3,501.0 $2,672.0
Net earnings $ 204.0 $ 143.1
Basic earnings per share $ 11.07 $ 7.76
Diluted earnings per share $ 10.94 $ 7.70
The Company also acquired businesses that were
not material, individually or in the aggregate in 2004 as
follows: 10 in the Title Insurance segment, 7 in the Lender
Services segment and 10 the Corporate and Other segment.
Total cost and goodwill recognized in all acquisitions made
by the Company were $202.1 million and $120.4 million
in 2004, $363.1 million and $222.2 million in 2003, $13.2
n illion and $11.0 million in 2002. There was $6.4 million,
$46.3 million and $73 million of tax deductible goodwill
associated with these acquisitions in 2004, 2003 and 2002,
respectively. The Company is currently finalizing the
results of its purchase price allocations since several
acquisitions were completed at the end of 2004.
Substantially all of the acquisitions in 2004 have
escrow agreements where a portion of the consideration
has been placed in escrow until predetermined criteria have
been met. Additionally, in certain instances, the Company
has entered into purchase agreements which contain provi-
sions for additional payments should the acquired company
meet certain operating results. Neither the escrow agreements
nor the contingent consideration are material to the financial
staternents or operations of the Company.
Goodwill balances by segment are as follows for 2004 and 2003, respectively.
(in millions) Consolidated
Balance as of December 31, 2003 $ 4263
Goodwill acquired 141.8
Balance as of December 31, 2004 $568.5
17. Variable Interest Entities
In January 2003, FASB issued Interpretation No. 46
( "FIN 46 "), Consolidation of Variable Interest Entities,
an Interpretation of Accounting Research Bulletin No. 51
(the "Interpretation "). The Interpretation requires the
consolidation of entities in which an enterprise absorbs a
majority of the entity's expected losses, receives a majority
of the entity's expected residual returns, or both, as a
result of ownership, contractual or other financial interests
in the entity. Previously, entities were generally consoli-
dated by an enterprise when it has a controlling financial
interest through ownership of a majority voting interest in
the entity. Consistent with FASB Stab' Position, FIN 46 -6,
Effective Date of'FASB Interpretation No. 46, Consolidation
of Variable Interest Entities, the Company implemented
FIN 46 in the fourth quarter of 2003 related to its owner-
Title
Lender
Financial
Corporate
Insurance
Services
Services
and Other
$220.8
$189.8
$5.3
$10.8
86.0
44.6
0.7
10.5
$306.8
$234.4
$6,0
$21.3
ship interests in entities entered into prior to February 1,
2003, and in the second quarter of 2003 for entities entered
into subsequent to February 1, 2003. The impact of
implementation was not material to the Company.
'The Company, in the course of its normal day -to -day
business, enters into joint ventures and partnerships related
to its title operations and title plants. These entities are
immaterial to its financial position and results of operations
individually and in the aggregate. At December 31, 2004,
the Company had no material exposure to loss associated
with Variable Interest Entities to which it is a party.
18. Impairment and Exit and Termination Charges
As part of its review process of reviewing long -lived assets,
during 2004 and at December 31, 2003 the Company
identified 17 and 21 title plants, respectively, in the Title
Insurance segment with an aggregate book value of $5.0
million and $4.9 mullion, respectively, that will not continue
to be used or maintained. Accordingly, the Company
recorded impairment losses of $5.0 million and $4.9 million,
respectively, which is reflected in "Write -off of title plants"
in the Consolidated Statements of Operations.
During 2004, the Company announced a facility con-
solidation and rationalization plan to reduce expenses as a
result of a change in the business environment. As a result,
the Company closed 61 facilities. In connection with these
programs, the Company incurred $6.5 million of exit
costs, net of a $0.2 reduction in the fourth quarter, of
which $0.04 million was related to Credit Services with the
remaining balance attributable to Title Operations. These
costs were comprised of $4.9 million related to lease termi-
nation, $1.2 million of severance and $0.4 million of other
miscellaneous exit costs. Of the $6.5 million in accruals,
$5.0 million had been paid prior to year end leaving $1,5
million to be substantially paid prior to 2007.
In the fourth quarter of 2003, the Company identi-
fied two opportunities to rationalize and consolidate
facilities in the Title Insurance segment. In connection
with these programs, the Company incurred $0.8 million
of exit costs. These costs were comprised of $0.7 million
related to lease termination and $0.1 million of other
miscellaneous exit costs. Of the $0.8 million in original
accruals, all was paid in 2004.
19. Unaudited Quarterly Financial Data
Selected quarterly financial information follows
In the first quarter of 2002, the Company recorded
$3.2 million of exit and termination costs related to the
closing of certain offices and reduction in workforce of
its real estate appraisal operations. On June 1, 2002, the
Company entered into a joint venture agreement with
The First American Corporation to combine real estate
appraisal operations. Under the terms of the agreement,
the Company contributed its former Primis residential
appraisal production division, which it acquired in 2000,
to First American's eApprai.seIT subsidiary. In connection
with the transaction, the Company exited the residential
appraisal production business, which had been unprofitable,
and recorded a second quarter charge of $14.1 million
for exit, termination and other costs. This amount was
comprised of $4.6 million related to lease termination
costs, $2.2 related to employee severance costs and $7.3
million related to the write down to estimated net realiz-
able value of assets determined not to be redeployable
and other miscellaneous exit costs. The original amount
accrued was reduced $4.0 million in the fourth quarter
of 2002 and $0.5 million during 2003. These reductions
were a result: of the favorable settlement of real estate,
rental and other obligations. Of the remaining accrual,
$11.5 million had been paid as of December 31, 2004,
leaving $1.3 million, which the Company expects to be
substantially paid by December 31, 2006.
Operating revenue $759.9 $903.8 $858.2 $922.6
Net investment income 19.6 18.2 18.4 21A
Income before income taxes 32.4 94.7 52.3 463
Net income 20.9 61.5 315 30.41"
Net income per common share $ 1.12 $ 3.35 $ 1.90 $ 1.72
Net income per common share - assuming dilution $ 1.11 $ 3.32 $ 1.88 $ 1.70
2003
Operating revenue $ 696.4 $ 8343 $ 890.3 $ 924.4
Net investment income 15.6 14.0 16.5 14.5
Income before income taxes 64.6 961 98.0 38.2
Net income 42.0 62.0 63.4 24.711'
Net income per common share $ 2.30 $ 3.38 $ 3.44 $ 1.33
Net income per common share - assuming dilution $ 2.28 $ 333 $ 140 $ 1.32
(1) In 2004, the Company incurred $5.0 million, or $33 million net of taxes, in title plant impairments and $6.5 million, or $4.3 million
net of taxes, related to office, rationalization. In 2003, the Company recorded exit and termination costs of $0.3 million, or, $02
million not of taxes, related to facility rationalization programs with an office related to reduction in the Primis accruals established
in 2002 and $4.9 million, or $3.2 million net of taxes, in title plant impairments.
v
0
0
First S
Second T
Third F
Fourth
(dollars in millions, except per share amounts) Q
Quarter Q
Quarter Q
Quarter Q
Quarter
2004
(1) In 2004, the Company incurred $5.0 million, or $33 million net of taxes, in title plant impairments and $6.5 million, or $4.3 million
net of taxes, related to office, rationalization. In 2003, the Company recorded exit and termination costs of $0.3 million, or, $02
million not of taxes, related to facility rationalization programs with an office related to reduction in the Primis accruals established
in 2002 and $4.9 million, or $3.2 million net of taxes, in title plant impairments.
v
0
0
0
0
2 . Segment Information
The Company, through its subsidiaries, is engaged in the
business of providing title insurance as well as a broad
array of real estate transaction - related services. The
Company has three reporting segments that fall within
three primary business segments, Title Insurance, Lender
Services and Financial Services. The remaining immaterial
reportable segments have been combined into a group
called Corporate and Other.
Title Insurance includes residential and commercial title
insurance policies, escrow and closing services, commercial
real estate services, and other real estate transaction man-
agement: services.
Lender Services provides services consisting primarily
of real estate tax processing, flood zone certifications,
mortgage Loan subservicing, consurner mortgage credit
reporting and default management: services.
Financial Services includes Orange County Bancorp
and its wholly -owned subsidiary, Centennial Bank
( ° Centennial "), a. California industrial bank that the
Company acquired in November 2003. This business
was included in Corporate and Other in 2003; prior
year amounts have been restated to conform to current
year presentation.
Corporate and Other includes Buyers Home
Warranty, a residential home warranty company acquired
in August 2004, residential inspection and commercial
appraisals and assessments, as well as the unallocated
portion of the corporate expenses related to the
Company's corporate offices in Richmond, Virginia and
unallocated interest expense.
The Company provides its title services through
direct operations and agents throughout the United
States. It also offers title insurance in Mexico, Europe,
Canada, the Caribbean and Latin America. The interna-
tional operations account for less than l percent of the
Company's income before incorne taxes. Tax - related
services are offered nationwide. Appraisal services are
provided in 40 states.
Selected financial information about the Company's operations by segment for each of the three past years is as follows
(In nilllionsl
Title
Insurance
Lender
Services
Financial
Services
Corporate
and Other
Total
2004
786.8
22.6
0.2
-
859.1
Operating revenues
$3,235.6
$149.6
$ 0.7
$ 58.6
$3,444.5
Personnel cost
8371
65.2
2.2
66.5
971.0
Depreciation
183
3.4
0.1
33
25.9
Amortization
8.4
13.4
0.2
2,6
24.6
Income before taxes
306.5
2.0
9.7
(92.1)
226.1
Assets
2,111.9
5003
476.1
201.3
3,290.0
Investment in affiliates
23.7
03
--
183
43.1
Capital expenditures
23.6
43
0.1
2.6
31.0
2003
Operating revenues
$ 3,259.8
$ 49.0
$ 0.1
$ 36.5
$ 3,345.4
Personnel cost
786.8
22.6
0.2
49.5
859.1
Depreciation
14.6
1.3
-
3.0
18.9
Amortization
5.4
3.5
-
(2.0)
6.9
Income before taxes
371.6
(0.4)
0.7
(75.0)
296.9
Assets
1,881.0
443.5
288.5
108.6
2,721.6
Investment in affiliates
11.5
1.0
-
10.9
23.4
Capital expenditures
30.5
11
-
2.0
33.6
2002
Operating revenues
$ 2,499.5
$ 1.9 $ -
$ 322
$ 2,533.6
Personnel cost
643.9
1.4 -
46.0
6913
Depreciation
13.1
01 -
4.2
17.4
Amortization
0.7
- -
(0.3)
0.4
Income before taxes
300.6
(0.2) -
(70.6)
229.8
Assets
1,744.7
0.3 -
165.8
1,910.8
Investment in affiliates
8.5
0.1 -
5.9
14.5
Capital expenditures
13.7
- -
2.1
15.8
21, Subsequent Events
On February 15, 2005, the Company made an irrevocable
election to satisfy in cash 1.00 percent of the principal .
amount of the 2003 debentures converted after that date.
(See also Notes 7 and 14).
LAN DAM ERICA SE N I OR OFFICERS
SHARED RESOURCES
Theodore L. Chandler, Jr.
President and Chief Executive Officer
G. William Evans
Chief financial Officer
Michelle H. Gluck
Executive Vice President —
General Counsel and Corporate Secretary
Paul M. Bedell
Executive Vice President — Sales
Ross W. Dornernan
Executive Vice President Human Resources
Melissa A. Hill
Executive Vice President — Production Resources
William C. Thornton, Jr.
Executive Vice President — Marketing Resources
Jeffrey D. Vaughan
Executive Vice President - Market Development
Donald C. Weigel, Jr.
Executive Vice President — Strategy Integration
Win. Chadwick Perrine
Senior Vice President- -
Chief Ethics Officer and Assistant Secretary
Ronald B. Ramos
Senior Vice President Treasurer
Robert W. Sullivan *
Senior Vice President
Investor Relations and Capital Markets
Christine R. Vlahcevic
Senior Vice President — Corporate Controller
David L. Walsh
Senior Vice President General Auditor
Holly H. Wenger
Senior Vice President — Associate General Counsel
TRANSACTION SERVICES - CHANNELS
Kenneth Astheimer
Executive Vice President --
Agency Services
Glyn J. Nelson
.Executive Vice President
— Direct Set-vices
Jeffrey C. Selby
Executive Vice President
— Commercial Services
Albert V. Will*
Executive Vice President
Lender Services
TRANSACTION SERVICES - REGIONS
Lloyd R. Draper
Executive Vice President —
Southwest Regional Leader
Margaret M. Foster
Executive Vice President
West Regional Leader
David W. Koshork
Executive Vice President —
Northwest Regional Leader
John M. Obzud
Executive Vice President
- Southeast Regional Leader
Gary L. Opper
Executive Vice President —
Midwest Regional Leader
James E. Sindord
Executive Vice President —
Northeast Regional Leader
,* Newly Appointed
3
CORPORATE [ NFORMATIO
CORPORATE OFFICE
LandAmerica Financial Group, Inc.
101 Gateway Centre Parkway
Richmond, Virginia 23235
804 -267 -8703
WEB SITE
http: / /www.landain.com
INDEPENOFNT AUDITORS
Ernst & Young LLP
901 East Cary Street
Richmond, Virginia 2321.9
TRANSFER AGENT
EquiServe. Trust Company, N.A.
P. O. Box 43010
Providence. Rhode Island 02940 -3010
800 -633 -4236
COUNSEL
Williams Mullen
a
N Two James Center
1.021. East Cary Street
Richmond, Virginia 23219
m
SHAREHOLDER INFORMATION
Investor Contact
Robert W SuIlivan, Senior Vice President
- -- Investor Relations and Capital Markets
NEW YORK STOCK EXCHANGE
SYMBOL: LEG
THE ANNUAL SHAREHOLDERS' MEETING
L,andArnerica 2005 annual shareholders' meeting will be
held at 9:00 a.m., Tuesday, May 17, at The Commonwealth
Club, 401. West Franklin Street, Richrruond, Virginia 23219.
CORPORATE GOVERNANCE
The Company has filed the certifications of its Chief
Executive, Officer and Chief Financial. Officer required by
Section 302 of the Sarbanes -Oxley Act of 2002 with the
Securities and Exchange Commission as exhibits to its
Form 10 -K for the fiscal year ended December 31, 2004. In
addition, the Company's Chief Executive Officer annually
certifies to the New York Stock Exchange that he is not
aware of any violation by the Company of the New York.
Stock Exchange's corporate governance, listing standards.
This certification was submitted, without qualification, as
required after the 2004 annual meeting of the shareholders.
ADDITIONAL INFORMATION
Additional copies of this annual report and copies
of the Form 10 -K filed with the Securities and
Exchange Commission are available from LandAmerica.
Investor Relations.
Center row, left to right: Charles H Foster, Jr., Janet A. Alpert, Theodore L. Chandler, Jr.
Front row, left to right: Thomas G. Snead, Jr.. Marshall B. Wishnack, Eugene P Trani, Robert T Skunda
Back row, left to right: Michael Dinkins, Robert F. Norfleet, Jr., John P. McCann, .lulious P. Smith, Jr
Janet A. Alpert''' John P. McCann " °'z Thomas G. Snead, Jr. " "3
Vice -Chair Executive Director President
LandArrierica Financial Group, Inc. New Town Associates, LLC Anthem Blue Cross and Blue Shield Southeast Division
Theodore L. Chandler, Jr. ")
President and Chief Executive Officer
LandArnerica Financial Group, Inc.
Michael Dinkins "l')',2
Vice President and Chief Financial Officer
Worldwide Customer Services Operation
NCR Corporation
Robert F Norfleet, Jr (F5" '
Retired Executivr. Vice President and
Senior Credit Officer
Crestar Bank (now Sunlrust)
Robert T. Skunda o") 1 °i
President and Chief Executive Officer
Virginia Bio- Technology Research Park
Eugene P. Trani `15" a
President
Virginia Commonwealth University
Marshall B. Wishnack "5'23
Retired Chairman and Chief Executive Officer
Wheat First Union (now Wachovia Securities)
Committees:
Charles H. Foster, Jr "1' Julious P. Smith, Jr, r62) 2 I Audit
Chairman Chainnan and Chief Executive Officer 2 Finance
LandAmerica Financial Group, Inc. Williams Mullen 3 Corporate Governance
L.andAmenca
Rich"avcmd, Viminia, 23?"315
vv�,,,,olllkl,
%w:»<
11/29/2005 09:18 6268445325
�J
6 A L D W I N P A R K
November 23, 2005
Arlene Daddio
Lawyer's Title
251 S. Lake Avenue, 4th Floor
Pasadena, CA 91101
Dear Ms. Daddio:
UNIT 61? PAGE 02/09
commanity devalopment c6nrminsion
14403 EaSt Pacific Avenue
Baldwin Park, Callfornlo 91706
www. bsldwlnpArk, cote
T 626 / 613.5253
F 626 ! 337.2,965
The Community Development Commission of the City of Baldwin Park ( "CDC ") is
interested in identifying the underlying fee interests within the public Right of Way area
comprised of public parking lots along Ramona Boulevard from La Rica) Avenue to
Downing Avenue.
We are interested in receiving a proposal from your firm for the preparation oVthe
necessary title searches required to identify the underlying fee interests for the public
right of way area along Ramona Boulevard from La Rica Avenue to Downing Avenue.
The proposals must be received by noon, Thursday, December 8, 2005 with the
submittal address as follows:
Melecio Picazo, Acting Redevelopment Manager
City of Baldwin Park
Community Development Commission
14403 E. Pacific Avenue
Baldwin Park, CA 91706
If you have any questions, please contact me at (626) 960 -4011 exte
Si e ly,
Melecio Picazo
Acting Redevelopment Manager
Enclosure
11/29/2005 09:18 6268445325 UNIT 61? PAGE 03/09
FPW— ;-Im
, it �-q
y
REQUEST FOR PROPOSALS ("RFP")
RIGHT OF WAY TITLE SEARCH ALONG RAMONA BOULEVARD
November 23, 2006
Introduction
The Community Development Commission of the City of Baldwin Park ("CDC' is
interested in identifying the underlying fee interests within the public Right of Way
area comprised of public parking lots along Ramona Boulevard from * La Rica
Avenue to Downing Avenue, within the City of Baldwin Park.
Therefore, we are interested in receiving proposais from firms that are qualified
to prepare the necessary title searches required to identify the underlying fee
interests for the public Right of Way area along Ramona Boulevard from La Rica
Avenue to Downing Avenue.
City of Baldwin Park
Located in the San Gabriel Valley, the City of Baldwin Park was founded in 1887
and was incorporated in 1956. The City has grown to an estimated population of
78,367 within a boundary of 6.7 square miles. The housing stock is primarily
single-family with a complement of neighborhood and community parks including
a premier Community Center with full services. The City Council has established
a high priority for physical community enhancement and is proactively attracting
businesses that Will solidify the economic base of the City to meet the needs of
the community.
Baldwin Park is a General Law City governed by a five member Council, with the
Mayor and Council Members being elected at large. Council Members also
serve as members of the City's Community Development Commission, Housing
Authority and Public Financing Authority. On July 21, 2004 ., the City Council
approved a second reading of an ordinance to transfer general redevelopment
activities to a newly created CDC. This ordinance will become effective on
11/29/2005 09:18 6268445325 UNIT 61? PAGE 04/09
August 20, 2004. The CDCs Board is comprised of the City's electdd Mayor and
Council Members. In addition, the City has several advisory commissions and
encourages public involvement in City activities, The annual general fund budget
is approAmately $20 million. The total budget including all funds is
approximately $41 million. The City has approximately 198 full time employees.
Community Development Commission
The Baldwin Park Redevelopment Agency was established on November 27,
1974 in accordance with redevelopment law. As of August 20, 2004, all rights,
powers and duties of the Agency now reside in the CDC. The purpose of the
CDC is to prepare and carry out plans for the improvement, revitalization,
rehabilitation and redevelopment of blighted areas within the City. The CDC
currently has six redevelopment project areas (see map attachment). This
proposal relates to properties and streets with the Central Business District
Project Area.
Scope of Work
The selected consultant will be expected to conduct the necessary title searches
for the Right of Way areas along Ramona Boulevard from La Rica Avenue to
Downing Avenue within the City of Baldwin Park. The consultant will be required
to;
Conduct a title search to identify the underlying fee interests within the
public Right of Way area along Ramona Boulevard from La Rica
Avenue to Downing Avenue with the City of Baldwin Park.
✓ Provide monthly status reports
✓ Produce a report using a spreadsheet format, including the preparation
of a map, summarizing the title search information that identifies the
underlying fee interests by ownership name, parcel location, and
assessor's parcel number
Provide the services as soon as possible.
General Terms
This RFP does not commit the CDC to enter into any form of contract with
respondents, nor to reimburse any expenses,. which might be incurred in
preparing a response. The CDC, in their sole discretion, reserves the right to
accept or reject any proposals received, to negotiate and contract with a
respondent of their choosing or to cancel, in whole or in part, this RFP. The CDC
reserves the right to request or obtain additional information about any and all
proposals. All responses will become the property of the CDC.
Respondents must identify all proposed key personnel. The CDC reserves the
right to approve all key personnel for work on this contract, The CDC must
approve replacement staff before a substitute person is assigned to the project.
Page 2 of 5
11/29/2005 09:18 6268445325 UNIT 61? PAGE 05/09
The CDC reserves the right to request that the proposer replace d staff person
assigned to the contract, should the CDC consider such a replacement to be for
the good of the project. Replacement staff would be subject to CDC approval
prior to as-tignment to the team.
Your response must be signed by an authorized representative of the firm and, If
a different individual will be the assigned contact, please provide that individual's
name and direct telephone number.
Proposals will be ranked in accordance with the evaluation criteria stated in this
RFP. Contract negotiations will occur subsequent to firm selection. Should the
CDC be unable to successfully negotiate a contract with the highest qualified
proposer, the CDC shall enter into negotiations with the next highest qualified
proposer (and so on) until an agreement is reached. Any award of contract may
be subject to the formal approval of the CDC.
In compliance with state and federal anti-discrimination laws, proposers shall
affirm that they will not exclude or discriminate on the basis of race, color,
national origin, or sex in consideration of contract award opportunities. Further,
proposers shall affirm that they will consider and utilize sub - consultants, bidders,
and vendors in a manner consistent with non-discrimination objecfives. This
affirmation should be included in the cover letter of the proposal.
Content and Format for Proposal
The proposal should be on 8.5" x 11" pages with one-inch ' margins. Font size
shall be not smaller than 12 point for text and a minimum of 8 point for graphics.
The proposal should Include the following sections:
COVER LETTER
The cover letter shall be limited to two (2) pages maximum. The cover
letter shall include a summary of the proposal including a brief
description of the proposed firm and key staff. It shall make a
commitment to accept the terms and conditions in the RFP and
acknowledge receipt of all amendments and /or addenda to the RFP.
PROJECT UNDERSTANDING AND APPROACH
This section should demonstrate an understanding of the scope of
work. It should describe the general approach, organization, and
staffing needed to provide all required services. The firm should
include a matrix/summary identifying key personnel responsible for
accomplishing all services to be provided.
ftgc 3 of 5
11/29/2005 09:18 6268445325 MIT 61? PAGE 06/09
FIRM EXPERIENCE
Relevant experience of the firm should be identified. include
client/project descriptions and the status of the relationship /project.
The focus should be on experience with similar projects. Recent
projects, preferably projects completed in the past five years, where
key proposed staff had a significant role should be included in this
section. The firm should demonstrate its financial stability and
capability to provide the services and meet the expectations of the
CDC as described above. The firm should demonstrate financial
stability and capability in the following manner:
« Firm history;
• Years in existence;
• Size of firm; and
• Other documentation as deemed relevant.
FEES
The proposal should estimate the number of hours by position and the
total project cost. An hourly rate schedule for the proposed staff
should be included in this section. Firm rates for clerical, reproduction,
and any proposed reimbursables should also be included.
APPENDICES
Full resumes of proposed staff should be included in this section.
Relevant firm project information may also be included in this section.
However, other than staff resumes, firm information and general
marketing materials will not be considered in the ranking of the firms
submitting proposals. There is no page limit in this section.
Evaluafion Process and Criteria
The CDC may appoint a committee to evaluate all proposals received. Each
member of the committee will evaluate each proposal using a 100 -point scale
and the evaluation criteria listed below to calculate a "proposal score" for each
firm
initial Short List Scoring Criteria
1. The firm's related experience (25 points);
2. Qualifications of the proposed staff and their performance on
similar projects (25 points);
3. The time estimated for the firm to complete the work (25
points); and
4. Cost effectiveness (25 points).
Wage 4 0f 5
11/29/2005 09:18 6268445325 UNIT 61? PAGE 07/09
Each member will then rank the firms by their respective "proposal score."
Notwithstanding the scoring, the CDC will determine what is in the best interest
of the community using its sole discretion when awarding a contract for the
subject sefvices, if any.
Proposal Submission
Ten (10) copies (one unbound) of the proposal, including one copy containing an
original signature, must be provided no later than 12:00 Noon on Thursday,
December 8, 2005. Proposals received after this time will not be accepted. No
emailed or faxed proposals will be accepted, All proposals should be clearly
marked with the submittal address as follows:
Mr. Melecio Picazo
Acting Redevelopment Manager
City of Baldwin Park
Community Development Commission
14403 E. Pacific Ave.
Baldwin Park, CA 91706
Telephone: (626) 960 -4011, extension 495
FAX: (626) 3372965
Email: MPicazo@baidwinpark.com
Office hours: Monday through Thursday, from 7:30 a.m. to 6A0 p.m.
W-7-21 w
Area Map
Redevelopment Project Area Map
Page 5 of 5
F y 9i�r tit C
F'►�r: ^��
I . »t � � , aH. /. \tt tr + � D '\ w F � •:. 4' r ^.t f
.f tt rt, r? �[ t /.t f +'♦,+ y +4
Z. \ r` / �s•'�. '' •r * 'rr r . ♦ r t .�
r f { �.j 6 n ^._�{,� 1J' 1' r •� ! ,.`�•1 /,IJ�
v %Nr;rr yr. ` .r�ljf• >u.`�a",•a A
{ [ n' a r . r �' h �1Sar'• 1•{ r �Sa.. r ,� fr: 'M• `7 ,;# �"''1.
•rr t 7. Y r•iyj' ~ _ } ••'y a a \t •. " "� "^'"N +'fir r•ti �,.t � ��rrr,t i d,�\.a4�' '
�t4 S b ^t �}S f IFS �' 1 "''J !qtr rtpo ai 4• r q ai+e.�+:',• r n 1 ♦ � "• � fat '" \�rfn��r/ �
Filri .:�r7n1r 1+ F ���vr' a.-3 a' ti •�y g/ \�' !. D e✓"*A
/'r + /'.``C� ^.+
tf t 't�° ,y \ !�, \ » -
3 1+ t to t; r n x nrrt r c'S ♦ 1 +� L . �V a °1.. �.P h[•^7' a r, i�t' r - CL co r rrr
1 I � �� art. !I �• :1 tG i•� II i, i k ; j y � ,\ A M � f at R ^� \ {''.�� ''+:, � :/
c3 tr} 1 a� "i t (,'t it�tl r�t} r c -1! \' ? na y• r y 'v ` ac ! >r.
' , a ♦ ,fL;.- t,... -+• ...... .., ,r"i•w. a .. \ \. >: \ t r e a , f'`+7ww � t,� / :. .a \ r
r r' `� ,� j'Z"1 ilki I'($' °a + yii\ J� \ •f'h, r 1 •,. r2; •F.
! i.' 1r �lll�ir�nr r a • Si ! 1 a h ti ti t �'�, \qty o,f i rrr I *_ t• t
i{P �i ♦.h 1 t '♦ s a "T' t YL , * • a r Y r.
; is ", <A tF J n + i �1� ♦ �. "`* \ c r� 1*, rte i a .. t9 • �,
r i ral t Ir r t �r^ ari •i' 'n ��° tx_Bil. ad
..`x.>� 1 ,r. r'1(. r � ;t�� aaa . ♦t' ,4 +`a a%T>� �.a ° .:'t�; �•. a -" r✓ rr :tt� t. ar
t j ,
io k. i {r �'V .•'�!. 1 r�
H�'tc -'.t.N yr, +�' a ::r t:'?• ♦• : ^•r.• � ,� ar� 1�
M t1 •r'"N1�
ray +t Y ♦ .�.r.,�.f - 1 It t �r i r , "Vay 1. t `,\ x a ♦ i ti{
Ir Tf1f CT t a 1 t el f its! a'\ s• a ti .'tea �� '� ^ ,l 'r•, t•' /�y ,y ✓rr r' /�.a• ('C43 \1 rF�' Jr lrl.yQ ai s
V C
`tt'•�? t °`.s t ,. '. " 1C , :'tt i � 1 r >S1 alr. ��tr, ,a'G�r r � L�\.. 4 �\ `•,tip �•�+ rf'�»� t'Cr,,r#r" r ,,�a?
�f. � Iir.+'i. FI � + {it P' >.,J'rSY['�."F1 Y ,1r. I t � 1' r Sri. .\•'.♦ a • '�' ,
IG� i''^� t 1 s r. Lea •�1 l ` f V s
('i(�C �i r'n�rf, y.�l 1 III �tl1U 1�(un�t, ti� E '� ���.. �a �)�✓�i•r�� ��,:,.
te;•�l ettta ( �i� t; , :•�,! , 9w'• qp .,...n. r.t,C1� S%14 ll }� yr 1,•. � „� ,. ',•• 1 r. ,� ,`r��ir ,r 7�
:� t,'� r, rt � T. Y i � }r! ♦ N �f\ rw^, �f1! /, 1:^' .t� �. r �rFp �af�i� 9�.w
...+^•r,. �\ -.� 1 t v` ti •+•-t ;°"'11 r7 ��..�•�f \T � ��• r � c.. dry^' �
/ /,.y
t. � . ,i.. ° .:,. � { - � rta ��w,`♦ (! r% � it F ail tr5,#^••7+? ; � [, �'n 'r. . 1 /,[�-', ,,�`•� • n � .r./„G .�" '
ttt II At ' •rr?C t t !1 �k t 1 ��.. t► r ':•.I'� S '%�'. i 'A.. - , . ,R `Ar : -., r."' //r •' j+�1 "\ 1,✓ r�
1•} 1 I V I. ^ a t ++ Ifat� f A ✓' A n' i 4? ! ,•tf+ l 1 \ %. \ O
.• as 1 c y \..+ ��,yr a s •. �.r r ?, ♦ '�,,.,e a'(� a f 4f . +r , t, r h !s r� ♦r
�P,>' A•� \. /, f "' irb
( oa r r
1 1 fit. MiT�t A•wr. N :i ... �l'• 5 S .n� A� -0" M }'ltm* f t J r(f
',
Stn T•) y 1 I i al f,:}t ,.T f1a �. 'c..•Lnj • o:
�
�tt�+"!r}� a;li � {t I "�LI'1 , a �'yr �I 1 •, y SY7c 5. r.. s 1 �.r,?,w'rl�:: ! ��
•,�,itI
I 4 .i[1h9° " I...s. a b arty T t"''� n ! r r!1 ,1"r�i r r .P.y� ♦r a.''L u! f F' ,i ' 4 �'�S .�
s�i'+'ti•'�w"M*! i / r7 r li• '. Gr.•j ` r ti i !f o �iR '. r
a*G': -" Ip° x'1 • , r ., 1_y 21��r� t d � r .+\ i • '�ji� .� �` Tk+'C9" r [�.fA<�^✓ti � 17tH .:. !ya �� � .F".\ r� ''1
ri a? Fsj [!r c � � � � 11 •'r'tr,•� ,♦/'a , '�'
r�s,.r. !,r {•t;� rI" t r�.s tt'C '�� 1. r ,�'F:Ft i ,ti; ,Iti yy• . r fa' ♦ : r,ej � 3 F .... °!,� r r \rf^ "♦� ✓t
if �qo ry+3" x'�r rte , 1,,^✓'rr ••jrF""
W i i /Gµ tl R rw i. at .. L y s .rY '. ,,po•
snli! 7 ft 1 ! rt. J �! L •, t s t r, 4 r.. �r 4 .Kirtl / r �/t ;,.� `i'
rt:' v* ✓v y'f; M j1 nil •. Yr,l •. . T , ,? r }• . I J,,a. .•. + ori{�7 eA .rr /of�5 C' d'8a y'• +M1' /�
? 'r. , ✓� l JrJT aU C s o, ' a
a I ri to n •+i f7• ',n 4. 1
rt r rFJ X' i ' :,'T ;"�, ♦!tJ'' vi.
,, r /,�y'a "\fr• ,qy? ,j• e + �/� 1.
y!,r , a ! [a na--f nr w• . e7t'r r tr r a: ^.. / �'( \�! /.i?, ra rLJi+ d t r .f' n a D �•^+ %r� �.
�/••N {
i ,,t•. - r'"�,a+ �f Ir �' •'r `+ i ,r '`4•.i !• i 7Jr'3 y •A,rk d .,M .(r '7i
I a r t�fb H a T' r iit ! f.S , f [ a n s 14t , {y, a� hr•,.
!Td.' !rr•h• t " 4.,t i 'h t a �. / Ir M n 1 i 1 try w a ♦ �r i r'1 }!,a , tta� lr , y, _!!a P �^'r �,
1 t" t•�n i r`t' a ,,,,..qty r 'a'• 1'�•'�{ t t ., , . N `•a �` /t ' v'� �f if !!.� A•
�» � � ._�� I.rr i 1 �. "1 � r ,y I �"�j , �i t'� Y a 1 '.f n a % ♦k'`f ;a `" 7 r
rrrra - �ir "' '� y < r 2♦ nri t ` M� A }
+ r 4 U. dt ° i't{ r t-! 7 b,�•t t - ♦ t �'l Tt. ' s .• ' 'Y^,a a .r• f!•i Y� . �j. ✓ �'.n
lipF,t�lr b Fil. 1 c ; �•�, 1!„6v t t r r, a �'� ! �< !rn �i.'i ` e +1;.�
t ltlCf�f1! �r ji,,,�l� ''°R .f+' �' ,•° yam" t y..
.,r^• -r 4 i [ } .1 ), �:�' rtir.� ly �', '. ` �; <! S't� `tin - r•.♦ ^'r /
n f
.rang ^• I.tu 1 ;" r ^J. ( -t � +� i S h ;ir p t/
f4i f ���- *ter ljN� t� s o1 a l' —T ,i•, /�t•�+1 � ,� } Y,1', , I.,.w.- ilq^ rr •� A y'•t ^o^ �� t�>tl ,
7• t 9 i t t a Z w t
•nar...•�. t J i. .. .�. .. -• w •�
-�• > -•'c 7T r"'•;.�.'•e;r.+� r^- +-- •IT'�1'1,�r+• ? ••:: `n► .rr....s_. "a tilt.' ./',i'r -. r.ti l'�/ /.'ihif, Z.ra y ;J
OF
FF
��. (ri� l`: '%+J �r4rry r f „t t. '►� e, ltn tl v'
i Iii,�t�J JJr4 it a �irJ t Y l%�fry+ yei i �fLw+ : r Isa '� ��v;t•.. d,= r ! 's •N''1
wy A Y I• r • Flll t F �,,•,;.,f µ"'JA a1 a a. r i t ` .• f ��tt"�, t ,
dsN ni
�7 F1^' .: r �Te1a �, M + '' ,(, •1rl �I rt •L YX�� N ��t;Ay ' ° r� }�R"iM i•'.nr -Y c , *'.�'1,,,\ •'',� ! fa
r r i/ ' t ) C { r r; •. a ' t r ° r ' t 1'" s S It i att� • .. ,' ��•::. ,/! , x. J
jj' l; r „�, .r,+1t t n
Y r y � t,a,S..Y fii tr " ±: v sa w•'". - �, r+A'♦"r rtv
»F� .} *, 94 t�+ r+ �,l� ✓t
:.r° rt7 {. t r ^.. , I .r ' t rl ( T N ' 't a'' r" �:✓ '?'.. � .• o
('. �.L �''a /,jC�, rl i�F,'y. �tr' r,,. t +'Nir ` ^, �� C +nit �i �) I �, rt+ :ti et� ✓''!r S•y"r+j t��` u 1 / ". +r ] �. 9.t „t, �,
i�r 1 �1ivi. � r 1 F jl1 t t ,•. N t I �, rVf �r �i�7 1 J 1 n /•� rt It �. t '1 • • +° f
,',f'ty'�\. earl � i•r 1� pr M � S , n) �GCI F rtr ys1�+t•�a . t � r �,._ I►a r 6 . w •.
r t rS4r :� a i 15l . • 3L ♦ u
•rr ..' r ! �' + s SY.I �1 jj!! R °` ! f.l � J +r !, h+ 'rtry t f • tEar.. ly �,ti
f ' � 11G'alt�4x,�`�.. �{ F iy^t1 1".r`.� .�r �' tit ✓ . °, ;' ua+�f'A >,t r� 1 ..:�
t...�
•.Yr rw .. t s,."7'r • r. rrr i ..- y4r I�y.i'•. t °t � ±•LA� t �. r ,�, 1
r .ryr, t 1 11•�•r[• r is � r• y •.;o r +r t R,.rlrl rri y tQ• 1 ° !A ♦ r
i- n: '" • }', d n.•E ,Cs ai} r r�r ?'pE� C G �'t"�, } J k` ° FI i P1! • i ' "` ` a' ",. rrr' 1
1n x3�, n• t.iM"
1 • rf 1 i tY Ia1
14!
. — yam
1 .j ^! r n' : 1S�irw 1 1. Ott. li ( c •`^r1,{. �'i o ''t ; ..••..t
bVl r ltt:�a ti^t n +, +{r�:�. f re• r,'fl 'i"'!
? .. A r.•t e t �t r�
'��1r a{ "'l.. d� � rt', ' 1 .1p--r M � �t r �1 _ e` ,.. ♦ s t ♦ ♦r" Y� 'i ,�, r'`
z • M I-ni ! t t ( rt, I a ,i,l^,a.4 t.,�G �.{ j f i+G.tttrVO... g M1 r?t... i AV. ' `S,'�•'.•[ .� •; 1 iur �ii t�f n� ��'Y� a .,
�r9 J 1 ,�•"''r� ,....t�r�pr �r X } i +"{ 1,r.'Jl, i •r, ��,,�� -.• a t r
k•r <.^ -,:i 9" ,1 tt ,i �l S
'Jam- •i 'i y.j74'•y�a �A4:T[ � �'!y. raru(j.:. "i is r ♦t a5 7 �Rt�'•� :,w1•r• ,. nM° 't"r �� r
't•'•' ' �,J�, -, �... a Ja ys C. t r b a +'� ?.:.o , � .�r�•. ,yr .« ♦ 1 .
1 r' r f O r+ �'+w 'kw rt. : Z b 1 } 1 i,r( •.+' �..r . • a rN 1
'-- ••.....?Mi%r'. t° . .s. a.:... -4! �'A.+. �.?. -t* �' �,.::,.I,r't,•�•Ia•:. � 7Ptt�lFl�i 1.9.a�. ' ?..��: a -y`� FN.'^:� s /i�'r. �_, rfS mss:., .r�' ` ia.:
11/29/2005 09:18 6268445325 UNIT 61? PAGE 09/09
A 1 r
COUNCIL CHAMBER
11
BALDWIN
P A R K
Manuel Lozano
- Chair
David J. Olivas
- Vice Chair
Anthony J. Bejarano
- Member
Marlen Garcia -
Member
Ricardo Pacheco -
Member
PLEASE TURN OFF CELL PHONES AND PAGERS WHILE MEETING IS IN PROCESS
POR FAVOR DE APAGAR SUS TELEFONOS CELULARES Y BEEPERS DURANTE LA JUNTA
PUBLIC COMMENTS COMENTARIOS DEL PUBLICO
The public is encouraged to address the City Se invita al publico a dirigirse al Concilio o cualquiera
Council or any of its Agencies listed on this otra de sus Agencias nombradas en esta agenda,
agenda on any matter posted on the agenda or para hablar sobre cualquier asunto publicado en la
on any other matter within its jurisdiction. If you agenda o cualquier terra que este bajo su jurisdiccidn.
wish to address the City Council or any of its Si usted desea la oportunidad de dirigirse al Concilio o
Agencies, you may do so during the PUBLIC alguna de sus Agencias, podra hacerlo durante el
COMMUNICATIONS period noted on the periodo de Comentarios del Publico (Public
agenda. Each person is allowed five (5) minutes Communications) anunciado en la agenda. A cada
speaking time. A Spanish speaking interpreter is persona se le permite hablar por cinco (5) minutos.
available for your convenience. Hay un interprete Para su conveniencia
FINANCE AUTHORITY
REGULAR MEETING — 7:00 P.M.
INVOCATION
PLEDGE OF ALLEGIANCE
ROLL CALL: Members: Anthony J. Bejarano, Marlen Garcia, Ricardo Pacheco,
Vice -Chair David J. Olivas and Chair Manuel Lozano
ANNOUNCEMENTS
PUBLIC COMMUNICATIONS
Five (5) minute speaking time limit
Cinco (5) minutos sera el limite para hablar
THIS IS THE TIME SET ASIDE TO ADDRESS THE COMMISSION
No action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or special
circumstances exist. The legislative body or its staff may. 1) Briefly respond to statements made or questions
asked by persons; or 2) Direct staff to investigate and /or schedule matters for consideration at a future meeting.
[Government Code §54954.2]
ESTE ES EL PERIODO DESIGNADO PARA DIRIGIRSE AL COMISION
No se podra tomar accion en algun asunto a menos que sea incluido en la agenda, o a menos que exista
a/guna emergencia o circunstancia especial. El cuerpo legislativo y su personal podran: 1) Responder
brevemente a declaraciones o preguntas hechas por personas; o 2) Dingir personal a investigar y/o fijar
asuntos para tomar en consideracidn en juntas proximas. (Codigo de Gobierno §54954.21
CONSENT CALENDAR
All items listed are considered to be routine business by the Commission and will be approved with one motion.
There will be no separate discussion of these items unless a Commissioner so requests, in which case, the item
will be removed from the general order of business and considered in its normal sequence on the agenda.
1. MINUTES
Staff recommends Authority approve minutes of the December 21, 2005 meeting
(Regular).
Finance Authority Agenda — January 18, 2006
2
CERTIFICATION
I, Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park hereby certify
under penalty of perjury under the laws of the State of California, that the foregoing agenda
was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated
this 12th day of January 2006.
Rosemary M. Ramirez
Chief Deputy City Clerk
PLEASE NOTE: Copies of staff reports and supporting documentation pertaining to each
item on this agenda are available for public viewing and inspection at City Hall, 2nd Floor
Lobby Area or at the Los Angeles County Public Library in the City of Baldwin Park. For
further information regarding agenda items, please contact the office of the City Clerk at
626.960.4011, ext. 108 or 466 or via e -mail at rramirezCq).ba/dwinpark.com or
Inieto(a-)-baldwinpark.com
In compliance with the Americans with Disabilities Act, if you need special assistance to
participate in this meeting, please contact the Public Works Department or Risk Management
at 626.960.4011. Notification 48 hours prior to the meeting will enable staff to make
reasonable arrangements to ensure accessibility to this meeting. (28 CFR 34.102.104 ADA
TITLE II)
Finance Authority Agenda — January 18, 2006
3
CITY OF BALDWIN PARK
Finance Authority
MINUTES
AGENDA
Manuel Lozano, Mayor
Ricardo Pacheco, Mayor Pro Tern Marlen Garcia, Councilmember David J. Olivas,
Councilmember Anthony J. Bejarano, Councilmember
Maria Contreras, City Treasurer Susan Rubio, City Clerk
The Finance Authority of the City of Baldwin Park met in REGULAR SESSION at
the above time and place.
ROLL CALL
Present: Anthony J. Bejarano, Marlen Garcia, David J. Olivas, Mayor Pro-
tein Ricardo Pacheco, Mayor Manuel Lozano.
Absent: Roberto Velasquez, Assistant Chief Executive Officer.
Also Present: Vijay Singhal, Chief Executive Officer, Stephanie Scher, City
Attorney, Mark Kling, Chief of Police, Manuel Carrillo, Recreation
and Community Services Director, Shafique Naiyer, Public Works
Director, Hennie Apodaca, Interim Finance Director, Maria A.
Contreras, City Treasurer, Susan Rubio, City Clerk, Rosemary M.
Ramirez, Chief Deputy City Clerk, Laura Nieto, Deputy City Clerk.
ANNOUNCEMENTS
*► rN;
Motion: A motion was made to approve Consent Calendar Item No. 1, as
presented and as follows:
Moved by Mayor Manuel Lozano, seconded by Marlen Garcia.
1. MINUTES
Authority approved the minutes of the November 16, 2005 meeting (Regular).
Page 1 of 2
There being no other matters for discussion, the meeting was adjourned at
10:22 p.m.
Approved as presented by the Authority at their meeting held January 18,
2006.
Laura M. Nieto
Deputy City Clerk
Page 2 of 2
i , 1
1 =T_1 q 11T I I I, 1 J11 N/
REGULAR MEETINJ
COUNCIL CHAMBER
00 P.M.
Manuel Lozano - Chair
David J. Olivas - Vice Chair
Anthony J. Bejarano
- Member
Marlen Garcia -
Member
Ricardo Pacheco -
Member
PUBLIC COMMENTS
The public is encouraged to address the City
Council or any of its Agencies listed on this
agenda on any matter posted on the agenda or
on any other matter within its jurisdiction. If you
wish to address the City Council or any of its
Agencies, you may do so during the PUBLIC
COMMUNICATIONS period noted on the
agenda. Each person is allowed five (5) minutes
speakinq time. A Spanish speakinq interpreter is
COMENTARIOS DEL PUBLICO
Se invita al publico a dirigirse al Concilio o cualquiera
otra de sus Agencias nombradas en esta agenda,
para hablar sobre cualquier asunto publicado en la
agenda o cualquier tema que este bajo su jurisdiccion.
Si usted desea la oportunidad de dirigirse al Concilio o
alguna de sus Agencies, podra hacerlo durante el
periodo de Comentarios del Publico (Public
Communications) anunciado en la agenda. A cada
persona se le permite hablar por cinco (5) minutos.
available for your convenience. Hay un interprete para su conveniencia.
Housing Authority Agenda — January 18, 2006
HOUSING AUTHORITY
REGULAR MEETING – 7:00 P.M.
9 i-j
INVOCATION
PLEDGE OF ALLEGIANCE
ROLL CALL Members: Anthony J. Bejarano, Marlen Garcia, Ricardo Pacheco,
Vice -Chair David J. Olivas and Chair Manuel Lozano
ANNOUNCEMENTS
PUBLIC COMMUNICATIONS
Five (5) minute speaking time limit
Cinco (5) minutos sera el limite para hablar
THIS IS THE TIME SET ASIDE TO ADDRESS THE COMMISSION
No action may be taken on a matter unless it is listed on the agenda, or unless certain emergency or
special circumstances exist. The legislative body or its staff may. 1) Briefly respond to statements made or
questions asked by persons; or 2) Direct staff to investigate and /or schedule matters for consideration at a
future meeting. [Government Code §54954.21
ESTE ES EL PERIODO DESIGNADO PARA DIRIGIRSE AL COMIS16N
No se podra tomar accion en a1g6n asunto a menos que sea incluido en la agenda, o a menos que exista
alg6na emergencia o circunstancia especial. El cuerpo legislativo y su personal podran: 1) Responder
brevemente a declaraciones o preguntas hechas por personas; o 2) Dirigir personal a investigar y/o fijar
asuntos para tomar en consideracion en juntas proximas. [Codigo de Gobierno §54954.2]
CONSENT CALENDAR
All items listed are considered to be routine business by the Commission and will be approved with one motion.
There will be no separate discussion of these items unless a Commissioner so requests, in which case, the item
will be removed from the general order of business and considered in its normal sequence on the agenda.
1. MINUTES
Staff recommends Authority approve minutes of the December 21, 2005 meeting
(Regular).
2. HOUSING DEPARTMENT STATUS REPORT – DECEMBER 2005
Staff recommends Authority receive and file.
Housing Authority Agenda — January 18, 2006
3
I, Rosemary M. Ramirez, Chief Deputy City Clerk of the City of Baldwin Park hereby certify
under penalty of perjury under the laws of the State of California, that the foregoing agenda
was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated
this 12th day of January 2006.
Rosemary M. Ramirez
Chief Deputy City Clerk
PLEASE NOTE: Copies of staff reports and supporting documentation pertaining to each item on
this agenda are available for public viewing and inspection at City Hall, 2"d Floor Lobby Area or at
the Los Angeles County Public Library in the City of Baldwin Park. For further information
regarding agenda items, please contact the office of the City Clerk at 626.960.4011, ext. 108 or
via e-mail at rramirez _baldwinpark.corn orinieto(c baldwinpark.com .
In compliance with the Americans with Disabilities Act, if you need special assistance to
participate in this meeting, please contact the Public Works Department or Risk Management at
626.960.4011. Notification 48 hours prior to the meeting will enable staff to make reasonable
arrangements to ensure accessibility to this meeting. (28 CFR 34.102.104 ADA TITLE II)
Housing Authority Agenda — January 18, 2006
rd
1 014 •
MINUTES
Manuel Lozano, Mayor
Ricardo Pacheco, Mayor Pro Tem Marlen Garcia, Councilmember David J. Olivas,
Councilmember Anthony J. Bejarano, Councilmember
Maria Contreras, City Treasurer Susan Rubio, City Clerk
The Housing Authority of the City of Baldwin Park met in REGULAR SESSION at
the above time and place.
• �_'
Present: Anthony J. Bejarano, Marlen Garcia, Ricardo Pacheco, Mayor Pro
Tern David J. Olivas, Mayor Manuel Lozano.
Absent: Roberto Velasquez, Assistant Chief Executive Officer.
Also Present: Vijay Singhal, Chief Executive Officer, Stephanie Scher, City
Attorney, Mark Kling, Chief of Police, Manuel Carrillo, Recreation
and Community Services Director, Shafique Naiyer, Public Works
Director, Hennie Apodaca, Interim Finance Director, Maria A.
Contreras, City Treasurer, Susan Rubio, City Clerk, Rosemary M.
Ramirez, Chief Deputy City Clerk, Laura Nieto, Deputy City Clerk.
ANNOUNCEMENTS
►TC•7,1T
Motion: A motion was made to approve Consent Calendar Item Nos. 1 & 2, as
presented and as follows:
Moved by Mayor Manuel Lozano, seconded by Mayor Pro Tern David J. Olivas.
1. MINUTES
Authority approved the minutes of the November 16, 2005 meeting (Regular).
2. HOUSING DEPARTMENT STATUS REPORT - NOVEMBER 2005
Authority received and filed.
Page 1 of 2
71 reyk F �
There being no other matters for discussion, the meeting adjourned at 10:23
p.m.
Approved as presented by the Authority at their meeting held January 18,
2006.
Laura M. Nieto
Deputy City Clerk
Page 2 of 2
r0
�1
is l
iry v:MEW.
G !
CITY OF BALDWIN PARK STAFftfV"-RT
Housing Authority
TO: Honorable Chairman and Members of the Housing Board
FROM: Melecio Picazo, Acting Redevelopment Manager
DATE: January 18, 2006
SUBJECT: Housing Division Status Report for the Month of December 2005
PURPOSE
To provide a status report on the Housing Department's:
• Community Development Block Grant (CDBG) and HOME program activities and
• Housing Authority's Section 8 and Public Housing Operations.
DISCUSSION
The following is a brief description of CDBG /HOME Housing Division activities and
accomplishments for the month of December 2005:
1. Proposed FY 2006 -2007 CDBG and HOME Budget — Although the official FY 06/07
allocations have not yet been announced, staff received notification from HUD to
anticipated a 10% reduction in CDBG allocations for all entitlement cities. The reduction
is partly due to the increase in eligible participating cities causing the total CDBG
allocation to be spread out more thinly than previous years.
2. FY 2006 -2007 CDBG and HOME Annual Action Plan — The process for preparing the
FY 06/07 Annual Action Plan began on December 8, 2005 with a Public Notice informing
the residents that applications for funding for Public Service Agencies are being accepted
until January 12, 2006.
The first Joint Commission meeting was held on January 5, 2006. To ensure citizen
participation during the CDBG Annual Action Plan process as required by HUD, the Joint
Parks and Recreation Commission and Housing Commission serve as the CDBG
Advisory Committee to make funding recommendations to the City Council for public
service agencies.
As requested by the Commission /Committee to provide them more opportunity to review
and discuss the applications, the draft schedule previously submitted to the City Council
has been changed to allow for an additional Commission /Committee meeting. Attached
is the revised tentative schedule for the FY 06/07 Annual Action Plan process.
Monthly Status Report
January 18, 2006
Page 2 of 2
3. Personnel — The Community Development Department is pleased to welcome Maribel
Enriquez, the new Rehabilitation Housing Specialist. Maribel comes to us from the Cities
of Lakewood and Santa Ana where she assisted in administering their rehabilitation
programs. Welcome to Baldwin Park Maribel!
4. Residential Rehabilitation Programs —There are approximately 20 files pending
approval for either a loan or grant. The program is on its way to reaching the goal of
assisting 20 households in FY 05/06. To date, 10 rehabilitation projects have been
approved.
Staff's goal during the month of December was to close out and complete ongoing
rehabilitation projects. Therefore, there were no new projects approved during the month
of December. The following represents the Rehabilitation Program activities for the
month of December 2005:
RRP / LEAD PROGRAMS ACTIVITIES FOR THE MONTH OF DECEMBER 2005
Project Description
Qty
Comment
Est. Date of Completion
Substantial
18
14 Approved Loans in FY 04/05
Rehabilitation Loans
■ 3 Under Construction
End of January
■ 11 Completed
N/A
4 Approved Loans in FY 05/06
■ 1 Under Construction
End of January
■ 1 Client Requested an extension
End of January
■ 2 Completed
NIA
Rehabilitation Grants
5
5 Approved Grants in FY 05/06
■ 2 Complete
N/A
■ 3 Under Construction
End of December
Rehabilitation Loan
15
15 Application Phase for FY 05/06
Applications
■ 2 Ready for Loan Committee
Beginning of January
■ 2 Pending Work Write
End of January
■ 9 Pending Initial Inspection
End of January
■ 1 Denied — Over income
December
■ 1 Cancelled - Owners request
December
Inquires
45
Walk -in inquires & Appointment from homeowners
N/A
Loan Repaid
2
$27,916
Total Monthly Activity
85
$27,916
Monthly Status Report
January 18, 2006
Page 3 of 3
The following table represents the FY 05/06 budget for the Residential Rehabilitation Programs:
Project Description
Approved
Approved'
Amount
Balance
4
Budget
Projects
Committed'
35
Rehabilitation Loans
FY 05/06
FY 05/06
FY 05/06
FY 05/06
HOME Funds (Low Income)
$353,243
3
$90,000
$263,243
20% Housing Set -aside RDA
(Moderate Income)
$100,000
1
$35,000
$65,000
Rehabilitation Grants
CDBG (Very Low /Low
Income)
$70,000
6
$55,990
$14,010
Lead Testing - Clearance CDBG
$20,000
5
$1,625
$18,375
Lead Testing — Clearance 20%
$325 as needed
1
$325
as needed
set aside
$25,000
0
$0
$25,000
Lead Abatement — CDBG
as needed
0
$0
as needed
Lead Abatement — 20% set aside
TOTALS
1 $568,568
16
$182,9401
$385,628
4. First Time Homebuyers Program (FTHB) — At their regular meeting on December 21,
2005, the City Council approved a reduction in the amount of down payment required
from 3% to 1.5 %. The reduction of the down payment is in response to the increase in
home sales prices and an effort to ease the burden of the amount of funds needed for
the initial purchase of a home for low- income households.
In the month of December, two FTHB loan applications were received and are in process
for submittal to the loan committee. The following represents the FTHB activities for the
month of December 2005:
FTHB PROGRESS REPORT FOR DECEMBER 2005
Project Description
Qty
Comment
Program Income Generated
First Time Homebu er Loans
4
4 A roved in FY 05/06
Inquires
35
Telephone and walk -in inquires from
lenders and potential homebu ers.
N/A
Loan Repaid
1
$20,000
Total Monthly Activity
40
$20,000
Monthly Status Report
January 18, 2006
Page 4 of 4
ThP fnllnwinn rPnrPSPnts the tntal FY n5 /nB hudaet for the First Time Homebuver Proaram:
Project
Approved Budget
Approved
Amount
Balance
Description
New Admissions
Projects
Committed
Annual Reexamination
86
FY 05/06
FY 05/06
FY 05/06
FY 05/06
FTHB HOME
$805,000
3
$344,000
$461,000
Funds
Port -out update
2
Changes made to the outgoing billable portables.
End of Participation
(Low Income)
Participants that are no longer receiving Section 8.
Other (Change of Unit
2
Current participants moving from one unit to another.
FTHB 20% Set-
$300,000
1
$100,000
$200,000
aside RDA
Total activity
156
(Moderate Income)
TOTALS
$1,105,000 1
4
$444,0001
$661,000
The following is a brief description of Housing Authority (HA) activities and accomplishments:
1. Personnel — Congratulations to Patricia Guzman who has been promoted to Housing
Programs Coordinator effective December 26, 2005 within the Housing Authority.
The Housing Authority welcomes Rocio Rivera who has accepted the Housing Quality
Standards (HQS) Inspector position. Her first day at work was January 9, 2006.
2. The following tables provided a quantifiable number of accomplishments by the Housing
Authority staff for the month of December 2005:
HOUSING CHOICE VOUCHER PROGRAM
Activity Name
Quantity
Description
Incoming portables
6
Active Section 8 families initially from other Housing
Authorities throughout the USA porting in to BPHA.
New Admissions
0
New admissions either from the waiting list or incoming
portables.
Annual Reexamination
86
Annual reviews of participants' income and family
composition.
Interim Reexamination
38
Changes made to participants' income /rent increases /change
of ownership, etc.
Portability Move -in
5
Participants who transferred their assistance to BPHA and
leased a unit.
Portability Move -out
1
Participant who transferred outside agency's jurisdiction and
a HAP Contract was executed.
Port -out update
2
Changes made to the outgoing billable portables.
End of Participation
2
Participants that are no longer receiving Section 8.
Other (Change of Unit
2
Current participants moving from one unit to another.
Vouchers issued
14
Participants who were issued vouchers (excludes families
selected from waiting list with issued vouchers.)
Vouchers expired
0
Applicants from the waiting list with expired vouchers.
Total activity
156
Monthly Status Report
January 18, 2006
Page 5 of 5
INSPECTIONS
Activity Name
Quantity
Description
Annual Inspections
2
Annual inspections conducted on assisted units on an annual basis
Annual certifications completed
194
to ensure they meet Housing Quality Standards (HQS)
Follow -ups
0
2" inspection performed to ensure that all deficiencies were
Total Activit
10
corrected.
Initial Inspections
616
Inspection performed prior to the execution of a new Housing
12
Assistance Payment Contract.
Special Inspections
1
Inspections conducted at the request of the owner or tenant.
Quality Control
0
Supervisory inspections required to be conducted for the purpose of
the SEMAP reporting to HUD.
Abatement
0
Landlord's who are in breach of the HAP Contract for failure to
correct HQS deficiencies and Housing Assistance payments are
suspended.
Total activity
217
PUBLIC HOUSING
Activit'. Name
Ouantitv ;
Description
Non - emergency work orders
2
Minor required repairs reported by the Public Housing tenants at
McNeill Manor Senior Apartments.
Annual certifications completed
0
Annual review of the Public Housing tenant's income and family
composition.
Emergency work order
0
Work orders requiring immediate repair within 24- hours.
Total Activit
2
(Last months count: 77)
PROGRAM INFORMATION
PROGRAM INFORMATION
Quantity
Comments
Total number of active applicants in the
3,309
Applicants listed in the Section 8 waiting list.
Section 8 waiting list
(Last month's count 3,310)
Total number of active applicants in the
75
Applicants listed in the Public Housing Waiting List.
Public Housing waiting list
(Last months count: 77)
Unit Month Report
616
Total active Housing Assistance Payments
(HAP) Contracts as of December 31, 2005.
(Last month's count was 623)
CUSTOMER SERVICE
ACTIVITY NAME
Quantity
Comments
Walk -in's for December 2005
243
The total number of persons coming into the office to inquire
about housing issues. (Last month was 265)
It is recommended that the City Council receive and file this report.
Tentative SCHEDULE
CDBG/HOME Budget and One-Year Action Plan
ESTIMATE DATE!
12/08/0587
Publish Funding Availability Notice 12/22/0,CL�
Mail Public Service Agency (PSA) Application - Apps available at
Distribute In-House Fund request to Departments
1st Joint Housing/Parks Commission meeting - Overview of
Process
Proposals due from PSA's and In-House
-A
Staff Reviews Proposals
—0 1 /16 - 19106-1
i
Deliver PSA Proposals to Commissions
01/23/06
2 nd Jo • • S 7
int Husing/Parks Cmmission meeting - PSA Presentation
02/02/1E,:l
3 Joint Housing/Parks Commission meeting Funding
Recommendations (requested by Commission)
Publish Public Notice • 1s' Public Hearing
E1st
Public Hearing for City Council - PSA Presentations and
Approval • Funding
0 T 07 1
Meet with Department Heads for Funding Request
03/06-09
Continue 2n, Public Hearing for City Council - PSA Presentations
and Approval of Funding (if needed)
03/15/06
h Public Notice of Draft Plan - Begin 30 day comment period
04/03/06
Deliver Proposed Budget to City Council
04/05/06
nd
2 Public Hearing
05/03/06
Staff - Finalize Annual Plan
05/08/06
Deliver Plan to HUD
05/15/06