CONTRACT 1888 Other UKIG"'INAL
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OPERATING AGREEMENT
This Operating Agreement ("Agreement") is entered
into as of M"v *. , 1996, by and between the City of
EI Segundo ("City") and the El Segundo Senior Citizens
Housing Corporation ("Corporation") .
RECITALS
This agreement is made with reference to the
following facts and objectives:
A. The City is the owner of certain real property
located at 615 East smllv Avenue. in the City of El
Segundo, and more particularly described on Exhibit a
attached beceto, The city is in the process of constructing
on said real property s senior citizen housing facility
("Facility") for the purpose of providing safe, clean and
economical housing for senior citizens.
B. Upon completion of the construction of the
Facility, the City desires to have the Corporation operate
and manage the Facility for the City,
C. The City and the Corporation have entered into
this Agreement for the purpose of setting forth the terms
and conditions under which the Corporation shall operate and
manage the Facility for the City'
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1.1. In accordance with and subject to the terms and
conditions of this Agreement, the City hereby engages the
Corporation for the purpose of managing and operating the
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Facility. The relationship of the Corporation to the city
in the performance of this Agreement sballbe that o-2 an
independent contractor, and this Agreement shall not be
deemed or construed as creating an employment relation-
ship. By entering into this Agreement, the City does not
delegate to the Corporation any of the governmental powers,
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duties and responsibilities vested by law in the City. The
City, through its city Council, shall at all times have
ultimate control and authority over the Facility, and the
Corporation shall perform the duties and functions described
in this Agreement to be performed by it in accordance with
and subject to the terms and conditions of this Agreement.
2' Professional Mauoqrmeot Standards.
2.1, The Corporation shall employ its best efforts in
performing the duties and functions described in this
Agreement to be performed by it and shall devote such time
to the performance thereof as shall be necessary to perform
the same in a careful, competent, diligent and professional
manner.
3. Proposed eIao of Operation.
].l. Promptly following the execution of this Agreement,
the Corporation shall proceed with the preparation of a
proposed plan for the operation of the Facility ("Proposed
eIau of Operation") . The Proposed Plan of Operation shall
address such matters an shall be necessary and appropriate
to the efficient and effective management and operation of
the Facility and shall include the following:
].z.I. Recommendations as to eligibility standards to
be utilized in selecting tenants of the Facility, and
recommended procedures for aeoociog and selecting
tenants, including methods of advertising, application
procedures and application forms.
3'1'3' Recommendations as, to the form of rental
contracts to be utilized in renting units in the
Facility, including recommendations as to the duration
of such contracts, and recommendations as to rules and
regulations governing the use of units and common areas
within and appurtenant to the Facility.
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3.1.3. Recommendations as to rental rates to be charged
for the use of units in the Facility.
3.1.4. Recommendations regarding methods and standards
for the general maintenance and upkeep of the Facility.
3.1.5. Recommendations regarding insurance coverages
and carriers respecting the Facility.
3.1.6. Recommendations regarding the ongoing management
of the Facility through the retention of a professional
real estate management firm, resident manager or other
appropriate means.
3.1.7. A recommended annual budget with respect to the
operation of the Facility setting forth major operating
objectives, anticipated revenues, expenses, cash flow
and capital expenditures, as well as such other items of
income and expense as are necessary and appropriate for
the efficient and effective management and operation of
the Facility.
3.2. In preparing the Proposed Plan of Operation, the
Corporation shall consult with the City as necessary and
shall keep the City informed as to the Corporation's
progress in the preparation of the Proposed Plan of
Operation. The City shall provide such assistance to the
Corporation as shall be necessary to enable the Corporation
to prepare the Proposed Plan of Operation. The City shall
advance to the Corporation the sum of Ten Thousand Dollars
($10,000) for the purpose of paying the Corporation's
necessary expenses in connection with the preparation of the
Proposed Plan of Operation. The Corporation shall not incur
any expenses in excess of said sum without the express prior
written consent of the City Council of the City, and any
such expenses incurred in the absence of such consent shall
be the sole liability of the Corporation. Upon submission
of the Proposed Plan of Operation as hereinafter provided,
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the Corporation shall provide to the City an accounting of
its expenses and shall remit to the City any unexpended
funds.
3.3. The Proposed Plan of Operation shall be submitted to
the City Council of the City for its approval on or before
September 1, 1986. The Proposed Plan of Operation shall not
be effective until approved by the City Council of the City,
but upon such approval, it shall constitute the Plan of
Operation for the Facility ("Plan of Operation") .
4. Leasing of Property.
4.1. The Corporation agrees to use its best efforts to
obtain tenants for units within the Facility and to promote
the renting of available units in the Facility to tenants in
accordance with the standards and procedures set forth in
the Plan of Operation. All renting shall be accomplished by
rental contracts in form and substance approved by the Board
of Directors of the Corporation.
4.2. The Corporation shall maintain businesslike relations
with tenants who place service requests and shall provide
for the disposition of tenant grievances in an efficient and
professional manner. However, the Corporation shall keep
the City Manager informed concerning problems of a serious
nature, including the steps being taken or proposed to be
taken in resolving the same.
5. Operation and Maintenance.
5.1. The Corporation shall provide and be responsible for
the hiring, supervision and discharging of employees,
contractors and other persons necessary to properly maintain
and operate the Facility, including building supervisors,
janitors, groundskeepers and resident managers.
5.2. The Corporation shall cause the Facility to be
maintained in good order and condition and according to
standards consistent with the Plan of Operation, including
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interior and exterior cleaning, painting, decorating,
plumbing, heating and ventilating systems, elevators,
carpentry and such other normal maintenance and repair work
as may be necessary.
5.2.1. In fulfillment of its duties under this Section,
the Corporation shall purchase, or oversee the purchase
of, such supplies, equipment and services as are
necessary for the operation and maintenance of the
Facility; provided, however, that no disbursement not
approved by the City Council of the City in the Plan of
Operation for this purpose shall be made in excess of
One Thousand Dollars ($1,000) unless specifically
authorized by the City Council of the City, except that
emergency repairs, involving potential or actual danger
to life or property, or immediately necessary for the
preservation and safety of the Facility or of its
tenants, or required to avoid the suspension of any
necessary service to the Facility, may be made by the
Corporation irrespective of the foregoing cost
limitation. Notwithstanding this authority as to
emergency repairs, it is understood and agreed that the
Corporation will, if at all possible, confer with the
City regarding every such expenditure before proceeding.
5.3. The Corporation shall oversee, and shall cause to be
furnished to the Facility at competitive rates, all services
and utilities necessary for the efficient operation and
maintenance of the Facility, including water, electricity,
gas, fuel, telephone, cable television service, vermin
extermination, rubbish hauling and window cleaning.
5.4. The Corporation shall manage and operate the Facility
in accordance with all applicable statutes, ordinances,
laws, rules, regulations and orders (collectively "laws") of
all governmental or regulatory bodies having jurisdiction
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respecting the use and operation of the Facility. The
Corporation shall promptly advise the City of all action
necessary to be taken to comply with any such laws affecting
the Facility.
5.5. The Corporation shall cause to be placed and kept in
force all forms of insurance provided for in the Plan of
Operation; provided, that the obtaining of such insurance,
and any changes or modifications thereto, shall be subject
to the prior approval of the City Council of the City. The
Corporation and the City, and their respective officials,
directors, officers, agents and employees, shall be named as
co-insureds in all policies related ,to public liability
insurance.
5.5.1. The Corporation shall promptly investigate and
make a full written report to the City Manager as to all
accidents or claims for damage relating to the
ownership, operation or maintenance of the Facility,
including any damage or destruction to the Facility and
the estimated cost of repair, and shall cooperate and
make any and all reports required by any insurance
company in connection therewith.
5.6. The Corporation shall be responsible for and shall
provide Workers' Compensation Insurance and such other
employment benefits as may be required by law for its
employees.
6. Collection and Disbursement of Revenues.
6.1. The Corporation shall be-responsible for and shall use
its best efforts to collect all rents and revenues from the
Facility. The Corporation shall keep the City Treasurer
fully advised concerning the collection of such rents and
revenues and any difficulties which the Corporation
experiences in connection therewith.
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6.2. The Corporation shall establish and maintain, in a
bank whose deposits are insured by the Federal Deposit
Insurance Corporation, a trust account for the deposit of
the monies collected from the Facility. The Corporation
shall have the authority to draw on this account, subject to
the limitations of this Agreement, for any payments which
the Corporation must make to discharge any liabilities or
obligations incurred pursuant to this Agreement; provided,
that any drawing on the account in an amount in excess of
Five Thousand Dollars ($5,000.00) shall require the
signature of the City Treasurer.
6.2.1. The Corporation, its employees and all persons
who handle or are responsible for the handling of the
monies of the Facility shall be bonded by a fidelity
bond acceptable to the City, indemnifying the City as
obligee against loss, theft, embezzlement or other
fraudulent acts on the part of the Corporation, its
employees and all such persons.
6.3. The Corporation shall cause to be disbursed punctually
the regularly recurring operating expenses of the Facility
as authorized by, and subject to the limitations of, this
Agreement, including, without limitation, expenditures
necessary for the maintenance and repair of the Facility and
expenditures necessary to maintain insurance coverages as
provided in Section 5.5 and Section 6.2.1 of this Agreement.
6.4. The Corporation shall maintain and oversee a system of
controls designed to ensure the authenticity of bills paid
and the fairness of the price charged. The Corporation
shall promptly investigate and advise the City Treasurer
concerning any improprieties in connection with such
matters.
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7. Financial Records and Reports.
7.1.. The Corporation agrees to keep accurate, complete and
separate records in accordance with accepted accounting
standards and procedures, showing income and expenditures in
connection with the operation of the Facility, to the end
that any accounts payable, other obligations, cash, accounts
receivable and other assets pertaining thereto can be
identified and the amount determined at all times. The City
shall have the right at all reasonable times, through its
representatives, to inspect any record of the Corporation
which in its opinion may verify the financial or monthly
reports, including, but not limited to, all checks, bills,
vouchers, statements, cash receipts, correspondence and all
other records in connection with the management of the
Facility. The City shall have the further right at all
reasonable times to audit, or to cause an audit to be made
of, all account books and records connected with the
management and operation of the Facility.
7.2. On or before the fifteenth (15th) day of each month,
the Corporation shall submit to the City a statement showing
in detail all receipts and disbursements for the previous
month, itemizing all delinquent accounts and vacant space.
Not later than ninety (90) days following the close of each
fiscal year of the City, the Corporation shall submit to the
City an annual statement summarizing receipts and
disbursements for the previous fiscal year.
8. Revision of Plan of Operation.
8.1. Not later than sixty (60) days prior to the close of
each fiscal year of the City, the Corporation shall submit
to the City a revised Plan of Operation for the Facility for
the ensuing fiscal year. Upon approval of such revised Plan
of Operation by the City Council of the City, such revised
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Plan of Operation shall be the Plan of Operation for the
ensuing fiscal year.
8.2. Notwithstanding the provisions of Section 8.1. , the
Corporation from time to time may submit to the City
proposed revisions to the Plan of Operation. Upon approval
of such revisions by the City Council of the City, such
revisions shall become a part of the Plan of Operation for
the Facility.
8.3 During the period following presentation of a revised
Plan of Operation, and prior to approval of such revised
Plan by the City Council of the City, the Corporation shall
continue to operate the Facility under the provisions of the
Plan of Operation approved for the prior year.
9. Indemnification.
9.1. The City shall protect, indemnify and hold the Corpo-
ration, its directors, officers, agents and employees
harmless from and against any and all liability and expense
of any kind, arising from the management and operation of
the Facility and from injuries or damages to persons or
property in connection with the operation of the Facility,
except to the extent that such liability and expense arises
from (a) the actions of the Corporation, its directors,
officers, agents and employees outside the scope of its
authority under this Agreement, or (b) the willful
misconduct or gross negligence of the Corporation, its
directors, officers, agents and employees in connection with
the management or operation of the Facility, in which case
the Corporation shall protect, indemnify and hold the City
harmless from and against all liability and expenses of any
kind arising therefrom.
10. Term of Agreement.
10.1. This Agreement may be terminated by either the City
or the Corporation at any time upon the giving of at least
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thirty (30) days prior written notice of termination. No
termination of this Agreement shall relieve either party of
any liability arising prior to such termination.
11. Miscellaneous Provisions.
11.1. This Agreement constitutes the entire agreement be-
tween the parties hereto and supersedes any and all prior or
contemporaneous agreements between the parties. This Agree-
ment cannot be changed or modified except by an instrument
in writing executed by both of the parties hereto.
11.2. This Agreement may not be assigned by the Corporation
and any attempted assignment shall be of no force or effect.
11.3. The headings contained herein are for convenience of
reference only, are not intended to define, limit or
describe the scope or intent of any provision of this
Agreement, and shall not be referred to in construing or
interpreting the provisions of this Agreement.
11.4. This Agreement shall be governed by the laws of the
State of California.
11.5. All notices, statements and reports which either
party desires or is required to give to the other under this
Agreement shall be in writing, and shall be delivered by
registered or certified mail, postage prepaid, return
receipt requested, or shall be delivered by personal
delivery, addressed as follows:
If to City: City of E1 Segundo
350 Main Street
El Segundo, CA 90245
Attention: City Manager
If to Corporation: E1 Segundo Senior Citizen
Housing Corporation
Attention:
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Notices auaII be deemed effectively communicated as of the date
of zeoeipt. Either party may change its address for gozpoaeo of
notices under this Agreement by means of written notice given in
accordance with the provisions of this oectioo,
IN wzTmEaa WHEREOF, the parties have executed this
Agreement as of the date first set forth above,
Czzr OF EL SEaomoo
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(SEAL)
MA rj'r
CK E. SIAM
A EST
41S
QPALD ^. ouRz EL SEGomoO SENIOR CITIZEN
(SEAL)
( ByPresident 17
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