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HomeMy WebLinkAboutStaff Report 276-06City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL 5 FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE: SUBJECT: dULY 24, 2006 CMR: 276:06 AMENDED AND RESTATED GROUND LEASE BETWEEN STANFORD UNIVERSITY AND CITY OF PALO ALTO FOR THE QUARRY ROAD SUBSTATION SITE, 281 QUARRY ROAD. RECOMMENDATION This report recommends that Council: 1) adopt the attached Mitigated Negative Declaration and Mitigation Monitoring Program; and 2) approve the attached Amended and Restated Ground Lease between the Board of Trustees of the Leland Stanford Junior University (Stanford) as Lessor and the City of Palo Alto (City) as Lessee for the Quarry Road substation site (Lease Agreement). BACKGROUND On July 1, 1968, the City entered into a 39-year ground lease with Stanford for the Quarry Road substation site. On July 22, 2002, Council approved the selection of Eden Housing, Inc. (Eden) as the developer for an affordable rental housing project on a site to be selected. The Alma Street substation site was included in the Housing Sites Inventory adopted by the City Council on December 22, 2002 as part of the Housing Element of the Palo Alto Comprehensive Plan. In December 2003, Council approved the South of Forest Area Coordinated Area Plan, which rezoned the Alma substation site from PF (Public Facility) to RT 50, a multi-family residential zone. On June 1, 2004, Council approved an amendment to the Fiscal Year 04/05 Capital Improvement Plan (CIP) budget to allocate $500,000 for initial engineering studies to provide for the relocation of the Alma substation. On September 27, 2004, Council held an Affordable Housing Study Session focusing on preliminary work completed by Eden Housing regarding development options for the Alma substation site. On June 5, 2006, Council approved a Request for Bid Proposals (RFBP) for the sale of the City-owned property located at 2460 High Street and directed staff to solicit proposals for sale of the site with the understanding that the net sales proceeds from the sale could be deposited in the Residential Housing Fund, to be used to offset the costs of the proposed development of the Alma Street substation. CMR:276:06 Page 1 of 4 DISCUSSION The current 39-year lease for the Quarry Road Substation will expire on June 30, 2007. The attached proposed Lease Agreement will amend and restate the current lease to extend the term for 51 years and provide for the relocation of the Alma Street substation facility to Quarry Road substation site. The relocation of facilities to one site will provide the same service now provided by two sites and will free up the Alma substation site for development of affordable housing, subject to Council approval. Located at 841 Alma Street, the Alma Street substation site is a 15,681 square feet parcel which, according to the 2002 Housing Sites Inventory, would accommodate a minimum of 10 residential units. The attached Lease Agreement (summarized in Attachment B) is based on the form of lease agreed to between Stanford and the City for the Mayfield playing fields, modified as appropriate to reflect the terms of this transaction and the different use of the property. Major differences between the proposed Lease Agreement and the current lease include the term (51 years versus 39 years) and the rent provision. The current lease provides for a nomina! rent consisting of the City paying all taxes, fees and assessments of any kind levied on the property. The proposed Lease Agreement provides for a basic rent of $1 per year, and additional rent consisting of two components: first, the City shall pay all taxes, fees and assessments levied on the property, as is required in the current lease; and second, the City is to credit Stanford for 94,846 gross square feet to be applied towards the in-lieu housing impact fee payable pursuant to Chapter 16.47 of the Palo Alto Municipal Code (Approval of Projects with Impacts on Housing). Chapter 16.47 requires developers of large commercial and industrial projects to contribute to programs increasing the City’s low and moderate income housing stock by providing either a number of low and moderate income housing units determined by a formula or providing an in-lieu fee. The housing in-lieu fee is currently $16.01 per square foot of proposed development (to be increased by approximately 3 to 3.5% to $16.50 in 2007 when the Lease Agreement commences). Stanford may apply all or a portion of its 94,586 square foot Housing Impact Credit (HIC) to any future Stanford project or projects in Palo Alto. If Stanford uses its full HIC, the monetary rent for the lease remains the basic rent. If however, the HIC camaot be used either because the City cannot grant the credit or Stanford is not permitted to apply the credit, and the City and Stanford are unable to agree upon an alternate City fee to which the credit may apply, the basic rent will increase to the full basic rent multiplied by a fraction, the numerator of which is the unused HIC relinquished by Stanford and the denominator of which is 94,586. Full basic rent is $118,800 for the first lease year and increased in succeeding years by 1.5%. (For an example of the full basic rent calculation, refer to the attached lease summary.) Additional terms of the lease include the requirements that the City is responsible for all utilities, maintenance and repairs and that any replacement improvements costing more than $30,000 shall require Stanford’s prior approval. Because the Quarry Road substation now serves Stanford electric customers only, the existing lease provides for a nominal rent. The relocation of the Alma substation to combine with the Quarry Road substation will result in the site serving users other than Stanford customers, and therefore, the attached Lease Agreement provides for a market value rent. The full basic rent was determined by a professional appraisal which concluded the value of the 0.396-acre property, considering the unimproved property could be developed under Medium Density Multiple Family Residence District (RM-30), to be $1,485,000. At an 8% return, the rent would be $118,800 per year. The 94,586 square feet of HIC, valued at its approximate 2007 value of CMR:276:06 Page 2 of 4 $16.50 per square foot, is equivalent to the estimated.development potential if the substation site were not utilized for electrica! purposes. It should be noted that due to the significant investment on the part of the City in relocating its substation, estimated to be $2,435,000, staff would have preferred an easement rather than a lease; however, an easement would have required an eminent domain action. RESOURCE IMPACT The annual basic rent for the entire lease term ($51.00) is due upon commencement of the Lease. This and any furore monetary cost due to application of the full basic rent will be budgeted as part of the Utilities Department budget. As a result of the HIC, the City’s Housing Fund would not receive the $ ! .56 million from commercial in-lieu fees that would be generated by the 94,586 square feet of commercial development. POLICY IMPLICATIONS The proposed lease does not represent any change to existing City policy. The lease makes possible the relocation of the Alma substation facilities and the reuse of the site for affordable housing, which is in compliance with Comprehensive Plan policies which designates the Alma substation site as suitable for affordable housing and includes the site on the housing sites invento13~ of the Housing Element. TIMELINE Following Council approval of the Lease Agreement, staff will return to Council for approval of the contract. ENVIRONMENTAL REVIEW In accordance with the California Environmental Quality Act (CEQA), staff has prepared the attached draft Mitigated Negative Declaration and Mitigation Monitoring Plan for the lease agreement and bid package for the engineering redesign and rebuild of the Quarry Road substation. The engineering redesign and rebuild will include increasing the capacity of the Quarry Road substation by adding an additional 60kV/12kV switchgear lineup and transformers and four new 69kV circuit breakers to the existing utility equipment on site. New foundations will be constructed to support the new equipment that is to be located within the existing fenced area surrounding the Quarry Road substation. This equipment will be relocated from the existing Alma Street substation and use of the Alma Street site as a substation will be discontinued. New 12kV underground electrical feeders along with new duct lines are to be constructed from new equipment along Quarry Road towards Downtown Palo Alto. The existing 60kV overhead power lines located in the alley behind the Alma Street substation will be relocated when the use of the Alma Street substation is discontinued. The draft Mitigated Negative Declaration was circulated on May 26, 2006 with a 20-day review period in accordance with state law that ended on June 15, 2006. The Final Mitigated Negative Declaration and the Mitigation Monitor Plan are included as Attachment C. CMR:276:06 Page 3 of 4 PREPARED BY: WILLIAM W. FELLMAN Manager, Real Property DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: CARL ~ervices iMILY Assistant City Manager ATTACHMENTS Attachment A: Lease Agreement Attachment B: Summary of Lease Agreement Attachment C: Final Mitigated Negative Declaration and Mitigation Monitoring Plan cc: Stanford CMR:276:06 Page 4 of 4 ATTACHMENT A AMENDED AND RESTATED GROUND LEASE BY AND BETWEEN THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY AS LESSOR AND THE CITY OF PALO ALTO AS LESSEE FOR QUARRY ROAD SUBSTATION SITE AMENDED AND RESTATED GROUND LEASE THIS AMENDED AND RESTATED GROUND LEASE (the "Lease") is made and entered into as of , 2006 (the "Commencement Date"), by and between THE BOARD OF TRUSTEES OF THE LELAN-I) STANFORD JUNIOR UNPv~RSITY, a body having corporate powers under the laws of the State of California ("Lessor"), and THE CITY OF PALO ALTO, a chartered city ("Lessee" or "City"). RECITALS A. Lessor owns that certain real property being a portion of the lands of The Leland Stanford Junior University and located in the City of Palo Alto, County of Santa Clara, State of California, and more particularly described in Exhibit A attached hereto (the "Premises"). The land described in Exhibit A, together with the Improvements (as defined below), is herein referred to as the "Premises". B. Lessee currently leases the Premises from Lessor pursuant to that certain Lease dated July 1, 1968 (the "Existing Lease"). The term of the Existing Lease expires on June 30, 2007. C. Lessor and Lessee desire to amend and restate the Existing Lease on the terms and conditions set forth in this Lease. NOW, THEREFORE, in consideration of the rents to be paid hereunder and of the agreements, covenants and conditions contained herein, the parties hereby agree that the Existing Lease is amended and restated to read as follows: ARTICLE 1. BASIC LEASE INFORNIATION The following is a summary of basic lease information. Each term or item in this Article 1 shall be deemed to incorporate all of the provisions set forth below pertaining to such term or item and to the extent there is any conflict between the provisions of this Article 1 and any more specific provision of this Lease, the more specific provision shall control. Lessor:The Board of Trustees of the Leland Stanford Junior University Address of Lessor:Stanford Management Company 2770 Sand Hill Road Menlo Park, CA 94025-3065 Attn: Director, Property Services C:\My Documents\Quarry Road Lease - CKD July 1 ! redraft 2 Lessee: Address of Lessee: with a copy to: Commencement Date: Term (Article 5): Rent (Article 6): Use (Article 9): The City of Palo Alto City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 City Attorney City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 See Article 5 Fifty-one (51) years from the Commencement Date One Dollar per year, subject to the terms and conditions contained in Article 6. Operation of electric substation ARTICLE 2. DEFINITIONS As used in this Lease, the following terms shall have the following meanings, applicable, as appropriate, to both the singular and plural forms of the terms herein defined: "Added Costs" means the extra, incremental costs to redevelop, repair, maintain, upgrade or construct any Alterations at the Premises, due to the Pre-Existing Environmental Condition, including the presence of residual Hazardous Substances after remediation. Added Costs include, but are not limited to, the costs of any studies or risk assessments required by any government authority with jurisdiction or those that are technically warranted and reasonably requested by Lessor or any tenant or subtenant at the Premises, the costs of any hazardous materia! contractor to perform work at the Premises, the costs for handling and disposal of any contaminated media at the Premises, and the costs of any special requirements to control soil vapors or dewater the Premises. "Additional Rent" is defined in Section 7.1. "Alterations" means any additional improvements, alterations, remodeling, or reconstruction of or to the Improvements on the Premises, including without limitation the Replacement Improvements. "Applicable Laws" means all applicable laws, statutes, codes, ordinances, orders, rules, regulations and requirements, including, without limitation, all Environmental C:\My Documents\Quarry Road Lease - CKD July ! 1 redraft 3 Requirements, of all Federal, state, county, municipal and other governmental authorities and the departments; commissions, boards, bureaus, instrumentalities, and officers thereof, and all orders, rules and regulations of the Pacific Fire Rating Bureau, and the American Insurance Association (formerly the National Board of Fire Underwriters) or any other body exercising similar functions relating to or affecting the Premises, the Improvements now or hereafter located on the Premises or the use, operation or occupancy of the Premises for the purposes permitted hereunder, whether now existing or hereafter enacted. "Appropriation" means any taking by exercise of right of condemnation (direct or inverse) or eminent domain, or requisitioning by military or other public authority for any purpose arising out of a temporary emergency or other temporary circumstance or sale under threat of condemnation. "Appropriated" means having been subject to such taking and "Appropriating" means exercising such taking authority. "Award" means the amount paid by the Appropriating authority as a result of an Appropriation. "Basic Lease Inforn~ation" means the information contained in Article 1. "Basic Rent" is defined in Article 6. "Comtnencement Date" is as stated in the introductory paragraph of this Lease. "Environmental Claims" means all claims, demands, judgments, damages, losses, penalties, fines, actions, proceedings, obligations, liabilities (including strict liability), encumbrances, liens, costs (including, without limitation, costs of investigation and defense of any claim, whether or not such claim is ultimately defeated, and costs of any good faith settlement or judgment), and expenses of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including without limitation reasonable attorneys’ and consultants’ fees and disbursements, any of which are incurred at any time arising out of or related to Environmental Requirements, including, without limitation: (i)Damages for personal injury, or injury to property or natural resources occurring upon or off of the Premises, foreseeable or unforeseeable, including, without limitation, lost profits, consequential damages, the cost of demolition and rebuilding of any improvements on real property, interest and penalties, and claims brought by or on behalf of employees of Lessee, without regard to any immunity to which Lessee may be entitled under any industrial or worker’s compensation laws; (ii) Fees incurred for the services of attorneys, consultants, contractors, experts, laboratories and all other costs incurred in connection with the investigation or remediation of Hazardous Substances or violation of Environmental Requirements, including, but not limited to, preparation of feasibility studies or reports, or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work required by any federal, state or local C:\My Documents\Quarry Road Lease - CKD July 11 redraft 4 governmental agency or political subdivision, or reasonably necessary to make full economic use of the Premises or any other property or otherwise expended in connection with such conditions, and including without limitation any attorneys’ fees, costs and expenses incurred in enforcing this Lease or collecting any sums due hereunder; (iii) Liability to any third person or governmental agency to indemnify such person or agency for costs expended in connection with the items referenced above; (iv) Diminution in the value of the Premises, and damages for the loss of business and restriction on the use of, or adverse impact on the marketing of, rentable or usable space or any amenity of the Premises. "Environmental Requirements" means all applicable present and future statutes, regulations, rules, ordinances, codes, common law, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, and all amendments thereto, of all governmental agencies, departments, commissions, boards, bureaus or instrumentalities of the United States, California, and political subdivisions thereof, and all applicable judicial, administrative and regulatory decrees, judgments, and orders relating to the protection of human health, safety or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and including, without limitation: (i) all requirements pertaining to reporting, licensing, permitting, investigation and remediation of emissions, discharges, releases, or threatened releases of Hazardous Substances, whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Substances, and (ii) all requirements pertaining to the health and safety of employees or the public. "Exacerbation" means any direct, material adverse impact on a Pre-Existing Environmental Condition resulting from the use of, or any Lessee activities on the Premises. Exacerbation includes, without limitation, actions which speed, redirect or enhance the migration of groundwater contamination at the Premises in a fashion that causes a material adverse impact (for example, by causing Hazardous Substances to migrate to deeper aquifers), actions which cause material damage to or impair the function of any existing remediation systems or equipment, and actions which give rise to Environmental Claims. "Existing Lease" is defined in Recital B. "Expiration Date" is the fifty-first anniversary of the Commencement Date. "Event of Default" is defined in Section 23.1. "Full Basic Rent" is defined in Section 6.3. Hazardous Substance" means any substance: C:\My Documents\Quarry Road Lease - CKD July 11 redraft 5 (i) the presence of which requires investigation or remediation under any Environmental Requirement; (ii) which is or becomes listed, regulated or defined as a ’°hazardous waste," "hazardous substance," ’:hazardous material", "toxic substance", °°hazardous air pollutant", "pollutant," or "contaminant" under any Environmental Requirement; (iii) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous to health, reproduction or the environment and is or becomes regulated under any Environmental Requirement; (iv) the presence of which on the Premises causes or threatens to cause a nuisance upon the Premises or to surrounding properties or poses or threatens to pose a hazard to the health or safety of persons on or about the Premises; (v) trespass by Lessee; the presence of which on adjacent properties could constitute a (vi) without limitation of the foregoing, which contains gasoline, diesel fuel or other petroleum hydrocarbons and the additives and constituents thereto; (vii) without limitation of the foregoing, which contains polychlorinated biphenals (PCBs), asbestos or urea formaldehyde foam insulation; or (viii) without limitation of the foregoing, radon gas. "Housing Impact Credit" is defined in Article 6. "Impositions" are defined in Section 7.2. "Improvements" means the Improvements located on the Premises as of the Commencement Date, the Replacement Improvements, and any Alterations subsequently constructed by Lessee. "Interest Rate" means the lesser of (i) the prime rate of interest, as quoted in the Wall Street Journal as of the date any payment due under this lease is delinquent, plus 2%, or (ii) the highest rate permitted under Applicable Laws, calculated from the date such payment is due until the same is paid in full. "Lease Year" means each twelve month period commencing on the Commencement Date and each anniversary of such date. "Lessee Environmental Activity" means (a) any use, treatment, keeping, handling, storage, transport, sale, release, disposal, migration or discharge of any Hazardous Substance originating from the Premises from and after the Original Commencement Date through the Expiration Date, or (b) the Exacerbation of a Pre- Existing Environmental Condition which arises out of, or is the result of the acts or C:\My Documents\Quarry Road Lease - CKD July 11 redraft 6 omissions of Lessee, its employees, agents, contractors and invitees on or about the Premises from and after the Original Commencement Date through the Expiration Date. "Liens" are defined in Section 15. !. "New Reproduction Cost" is defined in Section 19.!. "Original Commencement Date" means July 1, 1968. "Permitted Exceptions" are defined in Section 3.1. "Pre-Existing Environmental Condition" means the presence, release and/or migration of certain Hazardous Substances at, on, under or from soil, groundwater, surface water, the air or Improvements at, or in the vicinity of, the Premises from and after the Original Commencement Date through the Commencement Date, and including after the Commencement Date the further migration, or degradation or transformation through biological or chemical mechanisms to other compounds, of any such Hazardous Substances. "Premises" is defined in Recital A. "Rent" is defined in Section 7.1. "Replacement Improvetnents" is defined in Section 11.1. "Term" is defined in Section 5.1. "Tetwffnation Date" shall mean the Expiration Date or such earlier date as this Lease is terminated pursuant to any provision hereof. "Transfer" is defined in Article 22. ARTICLE 3. LEASE OF PREMISES; RESERVATION OF RIGHTS Section 3.1 Premises. As of the Commencement Date, Lessor hereby leases and demises the Premises to Lessee, and Lessee hereby hires the Premises from Lessor on the terms and conditions set forth in this Lease. The amendment and restatement of the Existing Lease shall in no way relieve Lessee of liability under the Existing Lease for conditions or occurrences arising prior to the Commencement Date of this Lease, This Lease shall be subject to (a) all zoning and governmental regulations now or hereafter in effect, (b) all liens, encumbrances, restrictions, rights and conditions of law or of record existing as of the Commencement Date, and (c) all matters affecting title to or use of the Premises otheps, ise known to Lessee or ascertainable by inspection or a survey, provided that Stanford warrants and represents that it is the owner of the Premises and that it is fully authorized to enter into a valid and binding lease of the Premises as provided herein. The matters described in the preceding clauses (b) and (c) are collectively referred to as the "Permitted Exceptions". C:\My Documents\Quarry Road Lease - CKD July 11 redraft 7 Section 3.2 Reservation of Rights. (a) Lessor hereby reserves and excepts all rights in and with respect to the Premises not inconsistent with Lessee’s use of the Premises as permitted herein, including, without limitation, (i) the right of Lessor, at all reasonable times and, if reasonably, practicable, following advance notice to Lessee, to enter and to permit the County, of Santa Clara, the Santa Clara Valley, Water District, other governmental bodies, public or private utilities and other persons to enter upon the Premises for the purposes of ¯ installing, using, operating, maintaining, renewing, relocating and replacing such underground wells and water, oil, gas, steam, storm sewer, sanitary sewer and other pipe lines, and telephone, electric, power and other lines, conduits, and facilities, and flood access and maintenance rights of way and equipment, as Lessor may deem desirable in connection with the development or use of the Premises, or any other property in the neighborhood of the Premises, whether owned by Lessor or not, and (ii) the remediation of Hazardous Substances in, on, or under, the Premises, as required under Applicable Law. Except to the extent any of the foregoing wells, pipe lines, lines, conduits, facilities or rights of way are already present on or under the Premises as of the Commencement Date, no such entry,, construction or wells, pipe lines, lines, conduits, facilities or rights of way shall interfere with the use of the Premises or the stability of any, building or improvement on the Premises. (b) Lessor hereby retains the sole and exclusive right to enter upon the Premises and mine or otherwise produce or extract by any means whatsoever, whether by slant drilling or otherwise, oil, gas, hydrocarbons and other minerals (of whatsoever character) in or under or from the Premises, such mining, production or extraction to be for the sole benefit of Lessor without obligation to pay Lessee for any or all of the substances so mined, produced or extracted; provided, however, that none of the operations for such mining, production or extraction shall be conducted from the surface of the land hereby leased, but only at such depth beneath such land surface as not to interfere with Lessee’s use of the Premises or the stability of any building or improvements on the Premises, which the parties agree shall not be less than five hundred (500) feet. No such entry, mining, production or extraction shall interfere with the use of the Premises or the stability of any building or improvement on the Premises. (c) Provided Lessor complies with the limitations of subsections (a) and (b) above, and except to the extent resulting from Lessor’s gross negligence or willful misconduct, Lessee hereby waives any claims for damages for any injury or inconvenience to or interference with Lessee’s use of the Premises, or any other loss occasioned by Lessor’s exercise of its rights under this Section 3.2. (d) Lessor shall be entitled, at all reasonable times and upon reasonable notice to go upon and into the Premises and the Improvements for the purposes of (a) inspecting the performance by Lessee of the terms, covenants, agreements and conditions of this Lease, (b) posting and keeping posted thereon notices of non-responsibility for any construction, alteration or repair thereof, as required or permitted by any law or ordinance, and (c) any other reason permitted under this Lease. C:\My Documents\Quarry Road Lease - CKD July 11 redrait 8 ARTICLE 4.ACCEPTANCE OF THE PREMISES; REZONING AND DEDICATION Section 4.1 Acceptance; As-Is. Lessee is in possession of the Premises pursuant to the Existing Lease. Prior to entering into this Lease, Lessee has made a thorough, independent examination of the Premises and all matters relevant to Lessee’s decision to enter into this Lease. Lessee is thoroughly familiar with all aspects of the Premises and Lessee is satisfied that they are in an acceptable condition and meet Lessee’s needs. Lessee agrees to take the Premises in its existing condition and acknowledges that in entering into this Lease, and except to the extent specifically provided otherwise, Lessee does not rely on, and Lessor does not make, any express or implied representations or warranties as to any matters including, without limitation, the suitability of the soil or subsoil, any characteristics of the Premises, the suitability of the Premises for the intended use, the likelihood of deriving business from or other characteristics of The Leland Stanford Junior University, the economic feasibility of the use Lessee intends to make of the Premises, Hazardous Substances on or in the vicinity of the Premises, or any other matter. Lessee has satisfied itself as to such suitability and other pertinent matters by Lessee’s own inquiries and tests into all matters relevant in determining whether to enter into this Lease. ARTICLE 5. TERM Section 5.1 Term. The term of this Lease (the "Telwt") shall commence on the Commencement Date, and shall expire on the Expiration Date or on such earlier date as this Lease may be terminated as hereinafter provided. Section 5.2 Extension Discussions. Lessor agrees that upon delivery of written request by Lessee delivered at any time during the 40-year of the Term, Lessor’s authorized representatives will meet with Lessee to discuss any proposal Lessee wishes to make for a possible extension of this Lease. Lessee agrees and acknowledges (a) that Lessor’s agreement to meet with Lessee shall not impose any duty (express or implied) upon Lessor to enter into negotiations for an extension of this Lease, (b) that Lessor is not willing to pant to Lessee an option to extend this Lease, and (c) that Lessee is not relying on any promise, express or implied, that this Lease will be extended or renewed. ARTICLE 6. BASIC RENT; HOUSING IMPACT CREDIT; INCREASE OF BASIC RENT TO FULL BASIC RENT Section 6.1 Basic Rent. As consideration for this Lease, Lessee shall pay to Lessor in advance on the Commencement Date and on each anniversary of the Commencement Date during the Term rent in the amount of One Dollar ($1.00) (the "Basic Rent"). Lessor hereby acknowledges that Lessee has prepaid Fifty-One Dollars ($51) towards Basic Rent concurrently with the execution of this Lease. C:\My Documents\Quarry Road Lease - CKD July 11 redraft 9 Section 6.2 Housing Impact Credit. As additional consideration for this Lease, Lessee hereby grants to Lessor a credit equal to 94,586 gross square feet (the "Housing Impact Credit"), to be applied towards the in-lieu housing impact fee payable pursuant to Section 16.47.040 of the City of Palo Alto Municipal Code [Approval of Projects with Impacts on Housing], as subsequently amended, or any successor ordinance or condition of approval governing contributions by developers to programs that increase the City’s low-income and!or moderate-income housing stocks. Lessee agrees that Lessor shall be entitled to apply all or a portion of the Housing Impact Credit to any future development project or projects undertaken by Lessor (or by any tenant of Lessor) in the City. Lessor shall notify City of Lessor’s election to apply all or part of the Housing Impact Credit to a particular project at the time housing impact fees for that project would othelavise be due and payable, and the Housing Impact Credit shall be applied on a gross square footage basis at the then-current rate being assessed by the City. For example, if a 20,000 square foot project of Lessor is subject to a housing impact fee and Lessor elects to apply the Housing Impact Credit to such project, Lessor shall have available 74,586 gross square feet of Housing Impact Credit to apply to Lessor’s future projects. Upon the application of all or part of the Housing Impact Credit to a particular project, the portion of the Housing Impact Credit applied to the particular project shall no longer be available to Lessor for any subsequent project. If the City repeals its low- income or moderate-income housing impact fees, upon written request by Lessor, the parties shall negotiate in good faith to determine the alternate City fee or fees to which the Housing Impact Credit may be applied. Lessee shall undertake any administrative or legislative acts that are necessary from time to time to confirm for the benefit of Lessor the fights granted under this Section. Within thirty (30) days after the end of each Lease Year, or upon written request from Lessor (but not more often than once every calendar quarter), Lessee shall confirm in writing to Lessor how much of the Housing Impact Credit has been applied to other projects of Lessor, and how much of the Housing Impact Credit remains to be applied to other projects. Notwithstanding any provision of this Lease to the contrary, so long as Lessor is not prohibited by Lessee from applying the Housing Impact Credit to projects of Lessor, as provided in this Section 6.2, Lessee’s Basic Rent obligation shall be limited to $51, as provided in Section 6.1, regardless of (a) whether Lessor actually applies any or all of the Housing Impact Credit to any projects of Lessor, or (b) whether Lessor, its tenants and/or affiliates have no need for the Housing Impact Credit due to available exemptions from the obligation to pay housing impact fees. Section 6.3 Increase of Basic Rent to Full Basic Rent. If either: (a) Lessee determines that it cannot legally grant the Housing Impact Credit; or (b) Lessor is not permitted to apply the Housing Impact Credit to future projects; and, in either event, (c) despite the good faith negotiations required pursuant to Section 6.2 Lessor and Lessee are unable to agree upon an alternate City fee or fees to which the Housing Impact Credit may be applied, then Lessor may elect by written notice given to City Lessee within ninety (90) days after such event occurs, to relinquish Lessor’s right to any unused Housing Impact Credit to the City, and upon Lessor giving such notice, Lessee, in its sole discretion, shall have the right, by giving written notice to Lessor, to either (i) terminate this Lease, or (ii) increase the Basic Rent as provided in this Section 6.3. In the event Lessee elects to terminate this Lease, as a condition precedent to doing so Lessee shall C:\My Documents\Quarry Road Lease - CKD July 11 redraft 10 pay to Lessor the increased Basic Rent (calculated as provided below) that would have been due pursuant to this Section 6.3 from the Commencement Date to the date of such termination, plus interest accrued thereon at the Interest Rate. In the event Lessee elects not to terminate this Lease but to increase the Basic Rent, the Basic Rent for each Lease Year under this Lease shall immediately be increased to the Full Basic Rent multiplied by a fraction, the numerator of which is the unused Housing Impact Credit relinquished by Lessor, and the denominator of which is 94,586. "Full Basic Rent" shall mean an annual amount equal to One Hundred Eighteen Thousand Eight Hundred Dollars ($118,800) in the first Lease Year and increased in succeeding Lease Years by 2.5%. The increase in Basic Rent shall be retroactive to the Commencement Date and Lessee shall pay to Lessor the increased Basic Rent for any portion of the Term that has already elapsed within ten (10) business days after Lessor’s written demand. Thereafter, on each anniversary of the Commencement Date during the Term, Lessee shall pay annual Basic Rent at the increased rate. Notwithstanding this Section 6.3, upon the application of the full Housing Impact Credit of 94,586 gross square feet to any projects of Lessor, Lessee’s Basic Rent shall be limited to $51 as provided in Section 6.1. By way of example, if Lessor relinquishes 94,586 square feet of unused Housing Impact Credit to the City at the end of the second Lease Year: (i) the Basic Rent for the first Lease Year shall be $!18,800 ($118,800 x (94,586/94,586)); (ii) 1.025); the Basic Rent for the second Lease Year shall be $121,770 ($118,800 x (iii) Lessee shall pay to Lessor as retroactive Basic Rent, the sum of $240,519 ($118,800 + $121,770 - $51 [the Basic Rent previously paid pursuant to Section 6.1]); and (iv) 1.025). the Basic Rent for the third Lease Year shall be $124,814.25 ($121,770 x Or for example, if Lessor applies a portion of the unused Housing Impact Credit, but subsequently Lessor relinquishes 50,000 square feet of unused Housing Impact Credit to the City at the end of the second Lease Year: (A) the Basic Rent for the first Lease Year shall be $62,800 ($118,800 x (50,000/94,586)); (B) !.025); the Basic Rent for the second Lease Year shall be $64,370 ($62,800 x (C) Lessee shall pay to Lessor as retroactive Basic Rent, the sum of $127,119 ($62,800 + $64,370 - $51); and (D) the Basic Rent for the third Lease Year shall be $65,979.25 ($64,370 x C:\My Documents\Quarry Road Lease - CKD July 11 redraft 1 1 1.025). ARTICLE 7. ADDITIONAL RENT Section 7.1 Net Lease. Each and every sum payable to Lessor pursuant to this Lease (other than the Basic Rent), each and every sum Lessee is obligated to pay to any third party pursuant to this Lease, and each and every sum which Lessor pays to any third party to cure a default of Lessee under this Lease shall be additional rent ("Additional Rent"). Basic Rent and Additional Rent are collectively referred to herein as "Rent." Section 7.2 Impositions. Without limiting the foregoing, Additional Rent shall include, and Lessee agrees to bear, discharge and pay to the relevant authority, or entity, in lawful money of the United States, without offset or deduction, as the same become due, before delinquency, all taxes, assessments, rates, charges, license fees, municipal liens, levies, excises or imposts, whether general or special, or ordinary or extraordinary, of every name, nature and Mnd whatsoever, including all governmental charges of whatsoever name, nature or Mnd that may be levied, assessed, charged or imposed or may be or become a lien or charge upon the Premises or any part thereof; or upon the rent or income of Lessee; or upon the use or occupancy of the Premises; or this transaction or any document creating or transferring an estate or interest in the Premises; upon any, of the buildings or improvements that are or are hereafter placed, built or newly constructed upon the Premises; or upon the leasehold of Lessee or upon the estate hereby created; or upon Lessor by reason of its ownership of the fee underlying this Lease, commencing as of the Commencement Date and continuing throughout the Term. Lessee’s obligations described above include, but are not limited to, the payment of any bonds or charges imposed or required by any governmental agency, or department by, reason of the proposed or actual discharge, cleanup or disposal, or oversight thereof, of Hazardous Substances by Lessee, or any subtenant, tenant or licensee claiming through Lessee; provided, however, that this provision shall not, and shall not be deemed to, permit Lessee to use, treat, store or dispose of any such substances on the Premises. If at any time during the Term, under any Applicable Laws, any tax is levied or assessed against Lessor directly, in substitution in whole or in part for real property taxes, Lessee covenants and agrees to pay and discharge such tax. All of the foregoing taxes, assessments and other charges are herein referred to as "Impositions". Section 7.3 Receipts. Lessee shall obtain and deliver to Lessor, promptly upon payment thereof, receipts or duplicate receipts for all Impositions required to be paid by Lessee. Section 7.4 Right to Contest. Lessee shall have the right to contest, by appropriate proceedings, the amount or validity, in whole or in part, of any Imposition, provided that unless Lessee posts adequate security (in Lessor’s reasonable determination), Lessee shall not postpone or defer payment of such Imposition but shall pay such Imposition in accordance with Section 7.2 notwithstanding such contest. Lessor shall have no obligation to join in any such proceedings, except to the extent Lessor’s consent is required to enable Lessee to have standing to pursue such contest. Lessee shall indemnify and defend Lessor against and save Lessor harmless from and against any and C:\My Documents\Quarry Road Lease. CKD July 11 redraf!12 all claims, demands, losses, costs, liabilities, damages, penalties and expenses, including, without limitation, reasonable attorneys’ fees and expenses, arising from or in connection with any such proceedings. Section 7.5 Proration. Any Imposition relating to a fiscal period of any taxing authority, only a part of which period is included within the Term, shall be prorated as between Lessor and Lessee so that Lessor shall pay the portion thereof attributable to any period outside the Term, and Lessee shall pay the portion thereof attributable to any period within the Term. Lessee, however, shall pay all personal property taxes, without proration, that relate to a fiscal year in which the Term hereof shall commence or terminate. ARTICLE 8. NET LEASE; NO COUNTERCLAIM OR ABATE)LENT Section 8.1 Net Lease. The Basic Rent and Additional Rent due hereunder shall be absolutely net to Lessor and shall be paid without assertion of any counterclaim, setoff, deduction or defense and without abatement, suspension, deferment or reduction. Lessor shall not be expected or required under any circumstances or conditions whatsoever, whether now existing or hereafter arising, and whether now "known or unknown to the parties, to make any payment of any kind whatsoever with respect to the Premises or be under any obligation or liability hereunder except as expressly set forth in this Lease. Section 8.2 No Release. Except as otherwise expressly provided herein, the obligations of Lessee hereunder shall not be released, discharged or otherwise affected by reason of: (a) any damage to or destruction of the Premises or any portion thereof or any Improvements thereon; (b) any restriction or prevention of or interference with any use of the Premises or the Improvements or any part thereof; (c) any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other proceeding relating to Lessor, Lessee or any constituent partner of Lessee or any sublessee, licensee or concessionaire or any action taken with respect to this Lease by an trustee or receiver, or by any court, in any proceeding; (d) any failure on the part of any sublessee, licensee, concessionaire, or other person to perform or comply with any of the terms of any sublease or other agreement between Lessee and any such person; (e) any termination of any sublease, license or concession, whether voluntary or by operation of law; or (f) any other occurrence whatsoever, whether similar or dissimilar to the foregoing, in each case whether or not Lessee shall have notice or -knowledge of any of the foregoing. Section 8.3 Independent Covenants. Lessee’s obligations hereunder shall be separate and independent covenants and agreements. Each agreement of Lessee shall be both a covenant and a condition. Lessee hereby waives, to the full extent permitted by applicable law, all rights now or hereafter conferred by statute, including without limitation the provisions of Civil Code Sections 1932 and 1933, to any abatement, suspension, deferment, diminution or reduction of any rent hereunder. C:\My Documents\Quarry Road Lease - CKD July 11 redraft 13 ARTICLE 9. USE AND OPERATION OF PREMISES Section9.1 Use Restriction. Subject to all provisions and limitations contained herein, the Premises shall at all times be used and operated for the purposes stated in the Basic Lease Information and for no other purpose. The parties hereby acknowledge and agree that Lessee’s covenant that the Premises shall be used solely for the purposes stated in the Basic Lease Information and for no other purpose is material consideration for Lessor’s agreement to enter into this Lease. The parties further acknowledge and agree that any violation of said covenant shall constitute a material breach of this Lease and entitle Lessor to exercise any and all of its rights and remedies under this Lease or otherwise at law or in equity. Section 9.2 Prohibited Uses. Without limitation of the foregoing, or any other provision of this Lease, the Premises shall not be used by Lessee under any circumstances for any purpose that in any way (a) causes, creates, or results in a nuisance or waste; (b) involves substantial hazard, such as the manufacture or use of explosives, chemicals or products that may explode, or that othe~vise may harm the health or welfare of persons or the physical environment; or (c) involves any discharge of Hazardous Substances on the Premises, including but not limited to the disposing or discharging of such substances into or under the Premises, except as provided in Section 18.5. Section 9.3 Impacts on Lessor’s Other Property. Lessee shall maintain the Premises and manage its operations so as to avoid any material negative impact from its appearance or operations on neighboring properties owned by Lessor. Section 9.4 Use of the Premises During Repairs And Alterations. Lessee covenants that Lessee will continuously and without interruption operate the entire Premises for the uses permitted under Section 9.1, except during any period of construction, restoration, repair, replacement, rebuilding or remodeling undertaken by Lessee pursuant to Articles 11 or 21 of this Lease and during any period of Appropriation, in which case this covenant shall not apply to the portion of the Premises actually affected thereby and for such time as is reasonably required by such restoration, repairs, replacement or rebuilding or condemnation or Alterations, or where othe~,ise prevented by causes beyond Lessee’s control (other than any financial difficulties of Lessee). ARTICLE 10. LIMITATION ON EFFECT OF APPROVALS All approval and inspection rights of Lessor as set forth in this Lease are specifically for the benefit of Lessor and no other party. Except as provided in Article 18, Lessor neither has nor assumes any liability, responsibility or obligation for, in connection with, or with respect to, the design, construction, maintenance or operation of the Premises or any Improvements, or the removal and/or remediation of any Hazardous Substances on, in or from the Premises, and no review, comment, approval or inspection, right or exercise of any right to perform Lessee’s obligations, or similar actions required or permitted by, of, or to Lessor hereunder, or actions or omissions of Lessor’s employees, agents and trustees, or other circumstances shall give or be deemed to give C:\My Documents\Quarry Road Lease - CKD July 11 redraft 14 Lessor any such liability, responsibility or obligation; nor shall any such approval, actions, information or circumstances relieve or be deemed to relieve Lessee of the obligation and responsibility for the maintenance and operation of the Premises and Improvements, the design and construction of any Alterations, and the removal and/or remediation of Hazardous Substances required under this Lease, if any. ARTICLE 11. REPLACEM~ENT IMPROVEMENTS AND ALTERATIONS Section 11.1 Replacement Improvements. Lessee shall have the right to remove the existing Improvements on the Premises and to construct replacement Improvements consisting of the facilities for a new electrical substation (the "Replacement Improvements"); provided that such construction complies with the following provisions of this Article 11, and provided further that prior to undertaking the construction of the Replacement Improvements, Lessee shall first investigate the environmental condition of the Premises and then remediate the Premises from the effects of any Hazardous Substances, and in compliance with the provisions of Section 18.7. Additionally, Lessee shall bring the general condition of the Premises into a clean and sanitary condition. Section 11.2 Alterations. Lessee shall have the right to make Alterations to the Improvements, subject to Lessor’s prior written approval for any Alterations that cost more than $30,000 (increased during the Term by three percent (3%) per Lease Year), which approval shall not be unreasonably withheld, conditioned or delayed. All Alterations shall be at Lessee’s expense, and shall be subject to the terms of this Article 11. Section 11.3 Permits and Approvals. Lessee shall be solely responsible for obtaining, at its expense, the approval of any governmental agencies with jurisdiction over the Premises for any general plan amendment, rezoning, variance, conditional use permit, building, electrical and plumbing permits, environmental impact analysis and mitigations imposed thereby, or other governmental action necessary to permit the development, construction and operation of any Alterations in accordance with this Lease. Notwithstanding the foregoing, Lessee shall apply for and prosecute any required governmental review processes for a general plan amendment, rezoning, variance or use permit only through and in the name of Lessor, and Lessee shall not submit any environmental impact report or other consultant’s report containing information regarding Lessor, Lessor’s lands or Lessor’s tenants to any public agency without Lessor’s prior written approval, which approval shall not be unreasonably withheld, delayed or conditioned. Lessor, at no third party cost or expense to itself, shall cooperate with Lessee to the extent reasonably required to obtain governmental approvals for any proposed Alterations approved by Lessor hereunder. Lessee shall reimburse Lessor for any out-of-pocket expenses reasonably incurred by Lessor in connection with such cooperation, which reimbursement shall be due and payable by Lessee to Lessor upon demand. Nothing contained herein, however, shall permit or be deemed to permit Lessee to use the Premises for any purpose not expressly permitted under Section 9.1. Section 11.4 Design. The following terms and conditions shall apply to all C:\My Documents\Quarry Road Lease - CKD July 1 1 redraft 15 Alterations costing more than $30,000 (increased during the Term by three percent (_, ~c~) per Lease Year). (a) The exterior design of all Alterations, including without limitation, the site plan, landscaping plan and materials, colors, and elevations, shall be subject to the approval of Lessor, which approval shall not be unreasonably withheld, conditioned or delayed. In addition, structural plans for any Alterations shall be subject to Lessor’s approval, which approval shall not be unreasonably withheld, conditioned or delayed. (b) Lessee shall submit to Lessor, for Lessor’s review, the number required by Lessor (but not more than four) of duplicate sets of exterior design drawings for any Alterations, whether or not they are required to commence the application for governmental design approval. The design drawings shall be subject to Lessor’s approval in accordance with Section l l.4(a) above. Lessee shall not apply for any governmental approvals until after obtaining Lessor’s written approval of the design drawings. (c) Lessee acknowledges that prior to approving the exterior design drawings for any Alterations, Lessor may be obligated to meet and consult with certain committees and other persons within Lessor’s organization. Lessee shall provide Lessor with such information and materials as Lessor may request, attend committee and other meetings with Lessor and other persons associated with Lessor, and take such other actions as Lessor deems necessary to satisfy the requirements of such committees and other persons within Lessor’s organization, and to otherwise respond to Lessee’s request for approval of the design drawings for any Alterations. (d) Prior to finalizing any construction documents that differ from any exterior design or other construction documents previously approved by Lessor, Lessee shall submit to Lessor for Lessor’s written approval in accordance with Section 11.4(a) above, the number of duplicate sets of such documents required by Lessor (but not more than four), upon which any changes shall be indicated. (e) If Lessor expresses its disapproval of any item pursuant to this Article 11, Lessee shall make whatever changes are reasonably necessary to address the disapproved item and shall resubmit it for Lessor’s approval. Lessee shall not proceed with the disapproved item, or any item affected by the disapproved item, until Lessor has approved Lessee’s changes. If Lessor and Lessee are unable to agree upon a resolution, Lessor and Lessee shall meet to attempt to resolve the dispute; provided, however, that Lessor’s final determination shall prevail so long as Lessor is in compliance with its obligations under Section 11.4(a) above. (f) Lessor acknowledges that if Lessee undertakes construction of any Alterations, such construction will be regulated by laws governing public works of improvement, and as such the provisions of this subsection (f) may not apply. In the event such construction is undertaken by a successor lessee, assignee or subtenant which is not a public agency, the following shall apply: Prior to entering into a contract with any design architect, landscape architect or general contractor for any Alteration, Lessee shall obtain Lessor’s written approval, which approval shall not be unreasonably withheld, C:\My Documents\Quarry Road Lease - CKD July 11 redraft 16 conditioned or delayed, of the identity of each such design architect, landscape architect or general contractor. Each such contract shall contain provisions acceptable to Lessor that permit such contracts to be assumed by Lessor or its designee, at Lessor’s sole discretion, following a termination of this Lease. Any such assumption shall be on the same terms and conditions (including fees and prices) as set forth in such contracts. Section 11.5 Prerequisites to Commencement of Construction. In addition to all other requirements set forth herein, before commencing the construction of any Alterations and before any building materials have been delivered to the Premises by Lessee or under Lessee’s authority, Lessee shall: (a) Upon Lessor’s request, furnish Lessor with a true copy of Lessee’s contract with the general contractor. (b) Procure or cause to be procured comprehensive liability insurance covering Lessee, Lessor and each construction manager, contractor and subcontractor engaged in any work on the Premises, which insurance may be effected by endorsement, if obtainable, on the policy required to be carried pursuant to Article 19, including insurance for completed operations, elevators, owner’s, construction manager’s and contractor’s protective liability, products completed operations for 3 years after the date of acceptance of the work by Lessee, broad form blanket contractual liability, broad form property damage and full form personal injury (including but not limited to bodily injury), covering the performance of all work at or from the Premises by Lessee, its construction manager, contractors and subcontractors, and in a liability amount not less than the amount at the time carried by prudent owners of comparable construction projects in the Santa Clara Valley, but in any event not less than $5,000:000 combined single limit, which policy shall contain a cross-liability clause or separation of insureds provision, and an endorsement deleting the property damage exclusion as to explosion, underground, and collapse hazards, and an endorsement providing incidental malpractice coverage, and shall include thereunder for the mutual benefit of Lessor and Lessee, bodily injury liability and property damage liability automobile insurance on any non- owned, hired or leased automotive equipment used in the construction of any work. Lessee shall provide Lessor with certified copies of all such insurance or, with the written approval of Lessor, certificates of such insurance in form reasonably satisfactory to Lessor. All such insurance shall comply with the requirements of Articles 11 and 19. Section 11.6 General Construction Requirements. (a) All construction and other work in connection with any Alterations shall be done at Lessee’s expense and in a prudent and first class manner and with first class materials. Lessee shall construct all Alterations in accordance with (i) all Applicable Laws, and (ii) plans and specifications that are in accordance with the provisions of this Article ! 1 and all other applicable provisions of this Lease. (b) Lessee shall give Lessor not less than 60 days notice of any construction or excavation contemplated on any portion of the Premises. Lessee shall pay Lessor’s costs and expenses for an on-site Lessor-designated archaeological consultant (which C:\My Documents\Quarry Road Lease - CKD July ! 1 redraft 17 consultant may be an independent contractor or an employee of Lessor) during any such construction or excavation. When such consultant deems it necessary to investigate the possible presence of, or to protect, archaeological artifacts, such consultant shall have the authority to temporarily halt the construction or excavation work in the area subject to such investigation. Lessee shall comply, at its own expense, with the consultant’s requests and state law regarding the protection, removal or reburial of human remains and archaeological artifacts. Any archaeological artifacts discovered on the Premises shall belong to Lessor. Lessor and its archeological consultant shall not be liable for any damages or other liability that may result from cessation of excavation or construction, or other compliance with the provisions of this Section. (c) Lessee shall construct all Alterations within setbacks required by Applicable Laws and by such rules imposed by Lessor that do not unreasonably interfere with Lessee’s permitted use of the Premises; provided that Lessee shall be allowed to provide parking as a permitted use in the setback area if needed, subject to mutually agreeable landscaping to shield such parking from view. (d) Prior to the commencement of any construction or work of improvement on the Premises that could result in a mechanics’ or materialmens’ lien being imposed on the Premises, Lessor shall have the right to post in a conspicuous location on the Premises, as well as to record with the County of Santa Clara, a Notice of Lessor’s Nonresponsibility pursuant to the California Civil Code. Lessee agrees to give Lessor at least 10 days prior written notice of the commencement of any construction or work of improvement. (e) The provisions of Section 11.4 shall apply to any change in the design elements of the Alterations that are subject to Lessor’s approval and that have been approved by Lessor, and to any material deviations in the actual construction of the Alterations from such approved design elements. During the course of construction of any Alterations, Lessor shall have 5 business days to respond to any request for approval of any change order requiring Lessor’s approval hereunder. If Lessor does not respond to the request within that time, the request shall be deemed approved 5 business days after Lessor receives notice from Lessee that Lessor has failed to respond within the aforesaid 5 business day period. Lessor’s review, comments, recommendations or approvals of the plans and specifications of any other design documents, or of any subsequent alterations or modifications, are not, and shall not be deemed to be, a statement of compliance with the terms of this Lease other than the specific requirement that Lessee procure such review or approval. (f)Lessee shall take all necessary safety precautions during any construction. (g) Lessee shall prepare and maintain (i) on a current basis during construction, annotated plans and specifications showing clearly all changes, revisions and substitutions during construction, and (ii) upon completion of construction, as-built drawings showing clearly all changes, revisions and substitutions during construction, including, without limitation, field changes and the final location of all mechanical C:\My Documents\Quarry Road Lease - CKD July 11 redraft 1 8 equipment, utility lines, ducts, outlets, structural members, walls, partitions and other significant features of any Alteration. These as-built drawings and annotated plans and specifications shall be kept at the City of Palo Alto Public Works Department at City Hall, and Lessee shall update them as often as necessary to keep them current. The as- built drawings and annotated plans and specifications shall be made available for copying and inspection by Lessor at all reasonable times, subject to Lessor paying all copying costs. Section 11.7 Construction Completion Procedures. Promptly upon completion of the construction of any Alterations during the Term, Lessee shall file for recordation, or cause to be filed for recordation, a notice of completion, and shall deliver to Lessor evidence satisfactory to Lessor of payment of all costs, expenses, liabilities and liens arising out of or in any way connected with such construction (except for liens that are contested in the manner provided herein). Section 11.8 On Site Inspection. Lessor shall be entitled, at Lessor’s sole cost and expense, to have on site, at all times during the construction of the Alterations, an inspector or representative who shall be entitled to observe all aspects of the construction. No inspection performed or not performed by Lessor hereunder shall give, or be deemed to give, Lessor any responsibility or liability for, or approval or acceptance of, any aspect of the design or construction of any Alterations, or constitute or be deemed to constitute a waiver of any of Lessee’s obligations hereunder. ARTICLE 12. OWNERSHIP OF IMPROVEMENTS AND ALTERATIONS During the Term, no Improvements shall be conveyed, transferred or assigned, except as permitted under Article 22, and at all such times the holder of the leasehold interest of Lessee under this Lease shall be the owner of such Improvements. Any attempted conveyance, transfer or assignment of all improvements located on the Premises, whether voluntarily or by operation of law or otherwise, to any person, corporation or other entity shall be void and of no effect whatever, except as permitted under Article 22. Notwithstanding the foregoing, Lessee may from time to time replace items of personal property and fixtures. Upon any termination of this Lease, whether by reason of the expiration of the Term hereof, or pursuant to any provision hereof, or by reason of any other cause whatsoever, all of Lessee’s right, title and interest in the Improvements (other than personal property and fixtures) shall cease and terminate and title shall immediately vest in Lessor. Lessee shall surrender the Improvements to Lessor as provided in Article 25. No further deed or other instrument shall be necessary to confirm the vesting in Lessor of title to the Improvements. However, upon any termination of this Lease, Lessee, upon request of Lessor, shall execute, acknowledge and deliver to Lessor a quitclaim deed and quitclaim bill of sale confirming that all of Lessee’s rights, title and interest in the Improvements has expired and that title thereto has vested in Lessor. ARTICLE 13. MAINTENANCE AND REPAIRS; NO WASTE Section 13.1 Maintenance and Repairs. During the Term, Lessee shall, at its C:\My Documents\Quarry Road Lease - CKD July 11 redraft 19 own cost and expense and without any cost or expense to Lessor, keep and maintain the Premises and all Improvements and appurtenant facilities, including without limitation the grounds, sidewalks, par’king and landscaped areas, and all furniture, fixtures and equipment, in good condition and repair and shall allow no nuisances to exist or be maintained thereon. Lessee shall promptly make all repairs, replacements and alterations (whether structural or nonstmctural, or ordinary or extraordinary) necessary to maintain the Premises and the Improvements thereon in good condition and in compliance with all Applicable Laws and to avoid any structural damage or injury to the Premises or the Improvements. Section 13.2 No Obligation Of Lessor To Repair. Lessor shall not be obligated to make to the Premises or the Improvements any repairs, replacements or renewals of any kind, nature or description whatsoever, and Lessee hereby expressly waives any right to make repairs at Lessor’s expense under Sections 1932(1), 1941 and 1942 of the California Civil Code, or any amendments thereof, or any similar law, statute or ordinance now or hereafter in effect. Section 13.3 No Waste. Lessee shall not commit or permit waste upon the Premises. No dirt, earth, rocks, gravel or the like shall be removed from the Premises except as required in connection with the construction of Alterations, or otherwise in accordance with the provisions of this Lease and Applicable Laws, and at Lessee’s expense. ARTICLE 14. UTILITIES AND SERVICES Lessee shall be solely responsible for, shall make all arrangements for, and shall pay for all utilities and services furnished to or used at the Premises, including without limitation, gas, electricity, other power, water, telephone, cable and other communication services, security services, sewage, sewage service fees, trash collection, and any taxes or impositions thereon. ARTICLE 15. MECHANICS’ AND OTHER LIENS Section15.1 No Liens. Lessee agrees to keep the Premises and all Improvements thereon free and clear of and from any and all mechanics’, material supplier’s and other liens, by payment or posting of a proper bond, for (i) work or labor done, services performed, materials, appliances, or power contributed, used or furnished, or to be used, in or about the Premises for or in connection with any operations of Lessee; (ii) for any Alterations; or (iii) for any work or construction by, for or permitted by Lessee on, in or about the Premises or Improvements (collectively, "Liens"). Lessee, at all times, shall promptly and fully pay and discharge any and all claims upon which any such Lien may or could be based, and keep the Premises and Improvements free and clear of, and save and hold Lessor harmless from, any and all such Liens and claims of Liens, damages, liabilities, costs (including, without limitation, attorneys’ fees and costs), suits or other proceedings pertaining thereto. The foregoing shall not prevent Lessee from exercising its rights under Article 16. C:\My Documents\Quarry Road Lease - CKD July 11 redraft 20 Section 15.2 No Effect on Lessor’s Interests. No mortgages, deeds of trust, or Liens of any character whatsoever created or suffered by Lessee shall in any way, or to any extent, affect the interest, right or title of Lessor in and to the Premises or the Improvements. Section 15.3 Lessor’s Right to Cause Release of Liens. If Lessee does not cause any Lien that Lessee does not contest in accordance with Article 16 to be released of record by payment or posting of a proper bond within 10 days following the imposition of such Lien, Lessor shall have the right, but not the obligation, to cause the Lien to be released by any means Lessor may deem appropriate, and the amount paid by Lessor, together with all expenses Lessor incurs in connection therewith (including, without limitation, reasonable attorneys’ fees and expenses), plus interest at the Interest Rate from the date of payment by Lessor, shall be Additional Rent, immediately due and payable by Lessee to Lessor upon demand. The foregoing shall not prevent Lessee from exercising its rights under Article 16. ARTICLE 16. RIGHT TO CONTEST LIENS Lessee shall have the right to contest, in good faith, the amount or validity of any Lien. However, before doing so, Lessee shall give Lessor written notice of Lessee’s intention to do so within 10 days after the recording of such Lien. If Lessee contests any Lien, Lessee shall, at its expense, defend itself and Lessor against the Lien and shall pay and satisfy any adverse judgment that may be rendered concerning the Lien before that judgment is enforced against the Premises. In addition, at the request of Lessor, Lessee shall procure and record the bond provided for in Section 3143 of the California Civil Code, or in any comparable statute hereafter enacted providing for a bond freeing the Premises from the effect of such Lien or claim or action thereof. Lessee shall pay all reasonable attorneys’ fees, consultants’ fees, travel expenses, and other costs incurred by Lessor in connection with any such contest. ARTICLE 17. COS~PLIANCE WITH LAWS; INSTANCE REQUIREMENTS Section 17.1 Compliance with Applicable Laws. Lessee, at Lessee’s expense, shall comply with all Applicable Laws. Any work or installations made or performed by or on behalf of Lessee or any person or entity claiming through or under Lessee in order to conform the Premises to Applicable Laws shall be subject to and performed in compliance with the provisions of Article 11. Lessee shall give Lessor immediate written notice of any violation of Applicable Laws ~known to Lessee and, at its expense, Lessee shall immediately rectify any such violation. Without in any way limiting the generality of the foregoing obligation of Lessee, Lessee shall be solely responsible for compliance with, and shall make or cause to be made any improvements and alterations to the Premises (including, without limitation, removing barriers and providing alternative services) as shall be required by the Americans with Disabilities Act (42 USC section 12101 et seq.), as the same may be amended from time to time, and any similar or successor laws, and with any rules or regulations promulgated thereunder. Lessee’s liability to so comply shall be primary, and Lessee shall indemnify Lessor in accordance with Article 20 for Lessee’s failure, or alleged failure, to comply, or to cause the C:\My Documents\Quarry Road Lease - CKD July 1 1 redraft 21 Premises to comply, with said laws and rules and regulations. Section 17.2 Compliance with Insurance Requirements. Lessee shall not do anything, or permit anything to be done, in or about the Premises that would: (a) invalidate or be in conflict with the provisions of any fire or other insurance policies covering the Premises or any property located therein, or (b) result in a refusal by insurance companies of good standing to insure the Premises or any such property in amounts required hereunder. Lessee, at Lessee’s expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body that shall hereafter perform the function of such Association. ARTICLE 18. ENVIRONM-ENTAL ISSUES Section 18.1 Pre-Existing Environmental Condition. Lessee represents and acknowledges that it is aware of any and all Pre-Existing Environmental Conditions with respect to the Premises. Lessee further represents and acknowledges that it has sought expert advice from its own attorneys and technical consultants .and has made such investigations, independent inquiries and evaluations as it deems appropriate to ascertain the effects, if any, of the Pre-Existing Environmental Condition on future redevelopment of the Premises and on persons using the Premises. Lessor makes no representation or warranty with regard to any Pre-Existing Environmental Conditions or with regard to any aspect of the environmental condition of the Premises. Lessee, on behalf of itself and its successors and assigns, hereby unconditionally releases and discharges Lessor from any and all Environmental Claims which Lessee may have, claim to have, or which may hereafter accrue against Lessor, arising out of or relating to or in any way connected with any Pre-Existing Environmental Conditions. In connection with the above release, Lessee hereby waives any and all rights conferred upon it by the provisions of Section 1542 of the California Civil Code, which reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. The foregoing provisions of this Section 18.1 shall not be construed to release any third party from liability arising out of the environmental condition of the Premises. Section 18.2 Site Redevelopment/Relocation of Equipment. Lessee and its subtenants, contractors and agents shall be solely responsible for any Added Costs associated with the construction of any Replacement Improvements or subsequent Alterations due to Pre-Existing Environmental Conditions. Lessee and its subtenants, contractors and agents shall also be solely responsible for the relocation of any pipes, wells and remediation equipment on the Premises, unless such relocation is undertaken by the Responsible Parties or Lessor. C:\/vly Documents\Quarry Road Lease - CKD July 11 redraft 22 Section 18.3 No Exacerbation of Pre-Existing Environmental Condition. Lessee and its subtenants, contractors and agents shall not take any affirmative actions which cause Exacerbation of any Pre-Existing Environmental Condition, and Lessee shall be liable for and indemnify Lessor pursuant to Section 18.6 for any costs and expenses associated with such Exacerbation. In its construction of any Alterations, Lessee and its subtenants, contractors and agents shall perform any work in a diligent fashion using qualified contractors acting, as appropriate, under the supervision of experienced and qualified environmental consultants or engineers, with adequate insurance, and in accordance with all Environmental Requirements. Section 18.4 Cooperation. For the mutual benefit of Lessor and Lessee, Lessor also agrees to use commercially reasonable efforts to enforce its rights (if any) against the responsible parties who cause or contribute to the presence, release and/or migration of any Hazardous Substances at, on, under or from soil, groundwater, surface water, the air or Improvements at the Premises. Section 18.5 Future Use of Hazardous Substances. No Hazardous Substance shall be used, treated, kept, stored, transported, handled, sold, released, discharged or disposed of from, at, on, under, from or into the Premises; provided that Lessee may use reasonable quantities of those Hazardous Substances that are necessary to the operation of the Premises as a utility substation, and then only in strict compliance with all Applicable Laws. Notwithstanding the foregoing, Lessee and its subtenants and agents may use small quantities of pesticides, herbicides, fertilizers or cleaning products which are necessary to the permitted use of the Premises, and then only in compliance with all Applicable Laws. Section 18.6 Lessee’s Indemnity for Environmental Claims. Lessee shall indemnify, protect, defend, reimburse, and save and hold harmless Lessor, from and against any and all Environmental Claims to the extent caused by Lessee Environmental Activity. Lessee’s obligations hereunder shall include, but not be limited to, the burden and expense of defending all claims, suits and administrative proceedings, even if such claims, suits or proceedings are groundless, false or fraudulent; conducting all negotiations of an), description; and promptly paying and discharging when due any and all judgments, penalties, fines or other sums due against or from Lessor or the Premises. Prior to retaining counsel to defend such claims, suits or proceedings, Lessee shall obtain Lessor’s written approval of the identity of such counsel, which approval shall not be unreasonably withheld, conditioned or delayed. Section 18.7 Obligation to Remediate. Notwithstanding the obligation of Lessee to indemnify Lessor pursuant to this Lease, Lessee shall, upon demand of Lessor, and at Lessee’s expense, promptly take all actions to remediate the Premises from the effects of any Lessee Environmental Activity. Such actions shall include all those required by any Applicable Laws and in order to comply with the remaining provisions of this Section, including but not limited to, the investigation of the environmental condition of the Premises, the preparation of any feasibility studies, reports or remedial plans, and the performance of any cleanup, remediation, containment, operation, maintenance, monitoring or restoration work, whether on or off of the Premises. Lessee shall take all C:\My Documents\Quarry Road Lease - CKD July 11 redraft 23 actions reasonably necessary to restore the Premises to the condition existing before the Original Commencement Date, except that it shall not be responsible for the elimination of conditions that are not the result of Lessee Environmental Activity. All such work shall be performed by contractors selected by Lessee and approved in advance and in writing by Lessor. Lessee shall proceed continuously and diligently with such investigatory and remedial actions, provided that in all cases such actions shall be in accordance with all Applicable Laws. Any such actions shall be performed in a good, safe and workmanlike manner, and shall have minimum impact on the permitted use being made of the Premises. Lessee shall pay all costs in connection with such investigatory and remedial activities, including but not limited to all power and utility costs, and any and all taxes or fees that may be applicable to such activities. Lessee shall promptly provide to Lessor copies of testing results and reports that are generated in connection with the above activities and any that are submitted to any governmental entity. Promptly upon completion of such investigation and remediation, Lessee shall permanently seal or cap all monitoring wells and test holes to industrial standards in compliance with Applicable Laws, remove all associated equipment, and repair any surface damage, including paving, caused by such investigation or remediation. Section 18.8 Obligation to Notify Lessor. If Lessee shall become aware of or receive notice or other communication concerning any actual, alleged, suspected or threatened violation of Environmental Requirements, or liability for Environmental Claims in connection with the Premises or past or present activities of any person thereon, including but not limited to, notice or other communication concerning any actual or threatened investigation, inquiry, lawsuit, claims, citation, directive, summons, proceeding, complaint, notice, order, writ, or injunction, relating to same, then Lessee shall deliver to Lessor, within ten (10) days of the receipt of such notice or communication by Lessee, a written description of said violation, liability, correcting information, or actual or threatened event or condition, together with copies of any documents evidencing same. Receipt of such notice shall not be deemed to create any obligation on the part of Lessor to defend or otherwise respond to any such notification. Section 18.9 Right to Inspect. Lessor shall have the right, but not the obligation, to enter and conduct an inspection of the Premises, including invasive tests, at any time Lessor has a reasonable basis for belief that Lessee is not complying with the terms of this Lease, including but not limited to the compliance of the Premises and the activities thereon with Environmental Requirements and the existence of Environmental Claims as a result of the condition of the Premises or surrounding properties and activities thereon. Lessor shall deliver prior written notice to Lessee of its intention to conduct such an inspection at least 10 days prior to such inspection and Lessee shall have the opportunity during such 10-day period to provide evidence reasonably acceptable to Lessor (as determined by Lessor) that such an inspection is not warranted. Lessor shall have the right, but not the obligation, to retain at its expense any independent professional consultant to enter the Premises to conduct such an inspection and to review any report prepared by or for Lessee concerning such compliance. Lessee hereby grants to Lessor, and the agents, employees, consultants and contractors of Lessor, the right to enter the Premises and to perform such tests on the Premises as are reasonably necessary in the opinion of Lessor to conduct such review and inspections. Lessor shall restore the C:\My Documents\Quarry Road Lease - CKD July 11 redraft 24 condition of the Premises; and Lessor shall use reasonable efforts to minimize interference with the use of the Premises by Lessee but so long as Lessor is not negligent in its inspection activities, Lessor shall not be liable for any temporary interference with such use caused thereby. Section 18.10 Right to Remediate. Should Lessee fail to perform or observe any of its obligations or agreements under Section 18.7 pertaining to Hazardous Substances or Environmental Requirements, then Lessor shall have the right, but not the obligation, without limitation of any other rights of Lessor hereunder, to enter the Premises personally or through its agents, consultants or contractors and perform the same. Lessee agrees to indemnify Lessor for the costs thereof and liabilities therefrom as set forth above in this Section 18. Lessor shall use commercially reasonable efforts to schedule any work on the Premises so as to minimize interference with the use of the Premises as community athletic fields. Section 18.11 General Provisions. (a) The obligations of Lessee under this Article 18 shall not be affected by any investigation by or on behalf of Lessor, or by any information which Lessor may have or obtain with respect thereto. (b) As used in this Article 18, the term "Lessor" shall include The Board of Trustees of The Leland Stanford Junior University, and all of its affiliated organizations, and their respective trustees, directors, officers, employees, faculty, students, agents, and insurance carriers. (c) Lease. The provisions of this Article 18 shall survive any termination of this (d) The provisions of Article 19 (Insurance) shall not limit in any way the obligations of either part?, under this Article 18. ARTICLE 19. INSURANCE Section 19.1 Required Insurance. At all times during the Term and at its sole cost and expense, Lessee shall obtain and keep in force for the benefit of Lessee and Lessor the following insurance: (a) Property Insurance. All risks, fire, flood and other perils, including extended coverage insurance on all Improvements per the current ISO "special" cause of loss form or its substantial equivalent. The amount of such insurance shall be the New Reproduction Cost. Each such policy shall specify that proceeds shall be payable whether or not any improvements are actually rebuilt. No such policy shall contain any co-insurance provisions. Lessee hereby waives as against Lessor any and all claims and demands, of whatever nature, for damages, loss or injury to the Improvements and to the property of Lessee in, upon or about the Premises caused by or resulting from fire and/or other insured perils. C:\My Documents\Quarry Road Lease - CKD July 11 redraft 25 "New Reproduction Cost" means the amount required to reproduce the Improvements in like kind and materials at one time in accordance with current market prices for materials, labor and manufactured equipment, contractor’s overhead, profit, and fees but without provisions for overtime or bonuses for labor and premiums for materials. (b) Worker’s Compensation and Employer’s Liability Insurance. Worker’s Compensation insurance or self-insurance in the amounts and coverages required under workers’ compensation, disability and similar employee benefit laws. (c) Comprehensive General Liability Insurance. Comprehensive general liability through one or more primary and umbrella liability policies against claims, including but not limited to, bodily injury and property damage occurring on the Premises or the streets, curbs or sidewalks adjoining the Premises, with such limits as may be reasonably required by Lessor from time to time, but in any event not less than $5,000,000, combined single limit and annual aggregate for the Premises, which Lessee shall increase as necessary during the Term to maintain adequate coverage over time that is comparable to the requirements in effect as of the execution of this Lease. Such insurance shall apply to the performance by Lessee of the indemnity agreements contained in this Lease. If any governmental agency or department requires insurance or bonds with respect to any proposed or actual use, storage, treatment or disposal of Hazardous Substances by Lessee or any sublessee, tenant, or licensee of Lessee, Lessee shall be responsible for such insurance and bonds and shall pay all premiums and charges connected therewith; provided, however, that this provision shall not and shall not be deemed to modify the provisions of Article 18. Such insurance shall (i) delete any employee exclusion on personal injury coverage; (ii) apply to Lessee’s employees; (iii) provide blanket contractual coverage, including liability assumed by and the obligations of Lessee under Article 20 for personal injury, death and/or property damage; (iv) provide Products and Completed Operations and Independent Contractors coverage and Broad Form Property Damage liability coverage without exclusions for collapse, explosion, demolition, underground coverage and excavating, including blasting; (v) provide aircraft liability coverage, if applicable; (vi) provide liability coverage on all mobile equipment used by Lessee; and (vii) include a cross liability endorsement (or provision) permitting recovery with respect to claims of one insured against another. Such insurance shall insure against any and all claims for bodily injury, including death resulting therefrom, and damage to or destruction of property of any kind whatsoever and to whomever belonging and arising from Lessee’s operations hereunder and whether such operations are performed by Lessee or any of its contractors, subcontractors, or by any other person. (d) Other. All other insurance that Lessee is required to maintain under Applicable Laws. Section 19.2 Policy Form and General. (a) All of the insurance required under this Lease, including without limitation, under the provisions of Article 11 and this Article 19, and all renewals thereof C:\My Documents\Quarry Road Lease - CKD JuLy 1 1 redraft 26 shall be issued by one or more companies of recognized responsibility, authorized to do business in California with a financial rating of at least a Class A (or its equivalent successor) status, as rated in the most recent edition throughout the Term of Best’s Insurance Reports (or its successor, or, if there is no equivalent successor rating, otherwise reasonably acceptable to Lessor). The proceeds of all property and other policies of insurance provided for in this Article 19 shall be payable to Lessor for application in accordance with this Lease. Any loss adjustment or disposition of insurance proceeds by the insurer shall require the written consent of Lessor for losses in excess of $100,000. All property insurance hereunder shall name Lessor as loss payee and all liability insurance shall name as additional insureds Lessor, and its directors, trustees, officers, agents, and employees, and such other parties as Lessor reasonably may request and Lessee’s insurers shall reasonably approve. Any deductibles or self insurance retention for any of the foregoing insurance must be agreed to in advance in writing by, Lessor, in its reasonable discretion; all deductibles and self insurance retention shall be paid by Lessee. All insurance of Lessee shall be primary coverage. (b) Each policy of property insurance and all other policies of insurance on the Improvements, Premises and!or on personalty in, upon or about the lands of The Leland Stanford Junior University, which shall be obtained by Lessee, whether required by the provisions of this Lease or not, shall be made expressly subject to the provisions of this Article 19 and shall provide that Lessee’s insurers shall waive any right of subrogation against Lessor. All policies provided for herein shall not be canceled, terminated or altered without 30 days’ prior written notice to Lessor. Each policy, or a certificate of the policy evidencing that the required insurance coverage is in full force and effect, shall be deposited with Lessor on or before the Commencement Date, shall be maintained throughout the Term, and shall be renewed, not less than 30 days before the expiration of the term of the policy. No policy shall contain any provisions for exclusions from liability which conflict with any coverage required hereby. In addition, no policy shall contain any exclusion from liability for personal injury or sickness, disease or death or which in any way impairs coverage under the contractual liability coverage described above. (c) No approval by Lessor of any insurer, or the terms or conditions of any policy, or any coverage or amount of insurance, or any deductible amount shall be construed as a representation by Lessor of the solvency of the insurer or the sufficiency of any policy or any coverage or amount of insurance or deductible, and Lessee assumes full risk and responsibility for any inadequacy of insurance coverage or any failure of insurers. Section 19.3 Self-Insurance. Notwithstanding any of the foregoing provisions of this Article, Lessee may self-insure for the insurance coverage specified in Section 19.1; provided that this right shall be personal to the original Lessee under this Lease. If Lessee self-insures as described herein, then any loss or damage that would have been covered by the insurance otherwise required to be carried hereunder shall be deemed covered by and recoverable by Lessee under valid and collectible policies of insurance. Lessee shall provide to Lessor a certificate evidencing any such self-insurance C:\My Documents\Quarry Road Lease * CKD July 11 redraft 27 maintained by Lessee, which certificate shall name Lessor as an additional insured. ARTICLE 20. INDEMNITY AND RELEASE Section 20.1 Indemnity. After the Commencement Date,, except to the extent caused by the negligence or willful misconduct of Lessor, or by Lessor’s breach of this Lease, Lessee shall indemnify, protect, defend and save and hold harmless Lessor and the Premises from and against, and reimburse Lessor for, any and all claims, demands, losses, damages, costs, liabilities, causes of action and expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred in any way in connection with or arising from, in whole or in part, an?, of the following: (a) any default by Lessee in the observance or performance of any of the terms, covenants or conditions of this Lease to be observed or performed by Lessee; (b) the use, occupancy or manner of use or occupancy of the Premises by Lessee or any sublessee, licensee, or any other person or entity; (c) the conduct or management of any work or thing done in or on the Premises by or on behalf of Lessee; (d) the design and construction of any Alterations; (e) the maintenance and condition of all Improvements; (f) the condition of the Premises during the Term; (g) any actual or alleged acts, omissions, or negligence of Lessee or of the sublessees, contractors, agents, servants, employees, visitors or licensees of Lessee, in, on or about the Premises or on other of Lessor’s adjoining lands; and (h) any accident or other occurrence on the Premises from any cause whatsoever. In case any claim, action or proceeding be brought, made or initiated against Lessor relating to any of the above described events, acts, omissions, occurrences, or conditions, Lessee, upon notice from Lessor, shall at its expense, resist or defend such claim, action or proceeding by attorneys approved by Lessor. Notwithstanding the foregoing, Lessor may designate the attorneys who will defend or assist in defending any claim, action or proceeding involving potential liability of $5,000,000 or more, and Lessee shall pay the reasonable fees and disbursements of such attorneys. This section shall not apply to Environmental Claims which are the subject of Lessee’s indemnity in Section 18.6. Section 20.2 Lessee’s Assumption of Risk and Waiver. As a material part of the consideration to Lessor for entering into this Lease, Lessee agrees that Lessor shall not be liable to Lessee for, and Lessee expressly assumes the risk of and waives, releases and discharges Lessor from any and all claims, damages, liabilities, costs and expenses of any Nnd or nature relating in any manner, directly or indirectly, in whole or in part, to the Premises or this Lease, whether resulting from any act or omission of Lessor or from any other cause whatsoever, including without limitation: (a) Premises; the performance of any public or quasi public works on or near the and (b)any loss or theft of, or damage to, any Improvements or personal property; (c) any act or omission of any person accessing the Premises pursuant to an easement or right of entry reserved under this Lease or implied by Applicable Law; provided, however, that this assumption of risk and waiver and release shall not apply to C:\My Documents\Quarry Road Lease - CKD July 11 redraft 28 the gross negligence, willful misconduct or failure by Lessor to comply with any of its express obligations under this Lease. Without limiting the generality of the foregoing provisions of this Section 20.2, and notwithstanding anything to the contrary elsewhere in this Lease, Lessor shall not under any circumstances whatsoever be liable to Lessee for: (i) consequential damages; or (ii) interference with light or other incorporeal hereditaments. The provisions of this Section 20.2 shall survive the expiration or earlier termination of this Lease. Section 20.3 Lessor Defined. As used in this Article 20, the term "Lessor" shall include The Board of Trustees of The Leland Stanford Junior University, and all of its affiliated organizations and their respective trustees, directors, officers, employees, faculty, students, agents, and insurance carriers. The provisions of this Article 20 shall survive any termination of this Lease. The provisions of Article 19 (Insurance) shall not limit in any way Lessee;s obligations under this Article 20. ARTICLE 21. APPROPRIATION, DAMAGE OR DESTRUCTION Section21.1 No Termination, No Effect on Rental Obligation. No Appropriation nor any loss or damage by fire or other cause resulting in either partial or total destruction of the Premises, the Improvements or any other property on the Premises shall, except as otherwise provided herein, operate to terminate this Lease. No such Appropriation, loss or damage shall affect or relieve Lessee from Lessee’s obligation to pay Rent, and in no event shall Lessee be entitled to any proration or refund of Rent paid hereunder. Unless this Lease is terminated pursuant to and in accordance with Section 5.4, no such Appropriation, loss or damage shall relieve or discharge Lessee from the payment of Rent, or from the performance and observance of any of the agreements, covenants and conditions herein contained on the part of Lessee to be performed and observed. Lessee hereby expressly waives the provisions of Sections 1932(2) and 1933(4) of the California Civil Code, or any amendments thereto or any similar law, statute or ordinance now or hereafter in effect. Section 21.2 Evaluation of Effect of Damage or Appropriation. Upon the occurrence of any event of damage or destruction to the Premises or the Improvements or any portion thereof, Lessee shall promptly undertake to determine the extent of the same and the estimated cost and time to repair and restore the Improvements in accordance with the provisions of this Lease. Lessee shall notify Lessor of its estimation of such cost and time not later than sixty (60) days after the occurrence of the damage or destruction. Upon any Appropriation of less than the entire Premises, Lessee shall promptly undertake to determine the effect of such Appropriation on the remaining portion of the Premises and the function of the Premises and, if this Lease is not terminated by Lessee, the cost and time to make any repairs and Alterations to the remaining portion of the Premises necessary in order for the Premises to be restored to an economically viable whole capable of operation in accordance with this Lease. Lessee shall notify Lessor of its estimation of such cost and time not later than 30 days after the occurrence of the Appropriation. C:\My Documents\Quarry Road Lease - CKD July 11 redraft 29 Section 21.3 Partial Appropriation; Amendment; Duty to Restore. If less than the entire Premises is subject to an Appropriation and this Lease is not terminated by Lessee, this Lease shall be deemed terminated as to the part so Appropriated as of the date of Appropriation and shall be deemed amended, effective as of the effective date of such Appropriation, such that the definition of the "Premises" shall include only that portion of the land described in Exhibit A attached hereto that is not subject to such Appropriation. If the Lease is not otherwise terminated by Lessee, Lessee as promptly as practicable and with all due diligence shall cause the repair or reconstruction of or the maMng of Alterations to the Improvements as necessary to restore the Improvements to a fully functioning whole with all facilities necessary to operate the Premises in accordance with this Lease. Section 21.4 Damage or Destruction; Duty to Restore. If the Premises or the Improvements, or any portion thereof, are damaged (other than through ordinary wear and tear) or destroyed at any time during the Term and this Lease is not terminated by Lessee, Lessee, as promptly as practicable and with all due diligence, shall cause the repair, reconstruction and replacement of the Improvements to a condition substantially equal to or better than their condition immediately prior to such damage or destruction and, except as otherwise approved in writing by Lessor, to their same general appearance. Section 21.5 Performance of Repairs, Restoration and Alterations. All repairs, restoration and Alterations shall be performed in accordance with the provisions of Article 11 of this Lease. All insurance proceeds and all Awards received by or payable to any party with respect to such damage or Appropriation (except proceeds of insurance carried by sublessees under Permitted Subleases covering loss or damage of their personal property), less actual costs and expenses incurred in connection with the collection thereof, shall be applied to the costs of repair, restoration and Alterations, as the case may be, of the Premises and the Improvements in accordance with the provisions of this Article 21 and Article 11 hereof. Lessee shall pay any amount by which the Award or insurance proceeds received as a result of such damage or Appropriation, less the costs and expenses incurred in connection with the collection thereof, are insufficient to pay the entire cost of such repair, restoration or Alterations. Without limitation of the foregoing, Lessee shall be responsible for replacing and restoring all furniture, fixtures and equipment and other personal property necessary for the operation of the Premises in accordance with this Lease. Section 21.6 Option to Terminate Upon Appropriation. If during the Term the entire Premises is Appropriated, this Lease shall terminate upon such Appropriation. Section 21.7 Surrender Upon Termination. If Lessee elects to terminate this Lease pursuant to Section 5.4, Lessee shall surrender the Premises to Lessor in accordance with the provisions of Article 25, except to the extent the damage, destruction or Appropriation prevents Lessee from so doing. Lessee’s obligations under this Article 21 shall survive the termination of this Lease. Section 21.8 Determination of Award. The amount of the Award due to Lessor and Lessee as a result of Appropriation shall be determined by the court having C:\My Documents\Quarry Road Lease - CKD July 11 redraft 30 jurisdiction of such proceedings based on the following: (a) Lessor shall be entitled to that portion of the Award attributable to (i) the value of Lessor’s reversionary interest in the fee interest in the Premises (or portion thereof subject to Appropriation, in case of a partial Appropriation), and (ii) the value of Lessor’s reversionary interest in the Improvements (or portion thereof subject to Appropriation, in case of a partial Appropriation), as determined by the court; and (b) Lessee shall be entitled to that portion of the Award attributable to (i) the value of Lessee’s leasehold estate (or portion thereof subject to Appropriation, in case of a partial Appropriation), and (ii) the value of Lessee’s interest in the Improvements (or portion thereof subject to Appropriation, in case of a partial Appropriation). Section 21.9 Excess Proceeds and Awards for Lessee’s Interests. If the total Award made in connection with any Appropriation for Lessee’s interests, and for severance damages to both Lessee’s and Lessor’s interests, exceeds the amount necessary to repair, restore or construct Alterations to the extent required under this Article 21, or if there are proceeds of insurance in excess of that required to repair, restore or demolish the Premises and the Improvements to the extent required under this Article 21 or under Article 25, upon receipt by Lessor of satisfactory evidence that any required work of repair, restoration, or demolition required under this Article 21 has been fully completed and paid for in accordance with the provisions of Article 11 and that the last day for filing any mechanic’s or materialmen’s liens has passed without the filing of any, or if filed, any such lien has been released, any remaining Award or proceeds of insurance shall be retained by Lessee. Section 21.10 Right to Participate in Settlement. Except as otherwise provided in the last sentence of Section 21.8, Lessor and Lessee sha!l both have the right to participate in the settlement or compromise of any insurance proceeds and Awards provided that all such proceeds and Awards shall be paid to Lessor and held by Lessor for application in accordance with the provisions of this Article 21. Section 21.11 Emergency Repairs. If a casualty occurs there is a substantial possibility that immediate emergency repairs will be required to eliminate defective or dangerous conditions and to comply with Applicable Laws pending settlement of insurance claims and prior to procuring bids for performance of restoration work. Notwithstanding any provision of this Article 21 to the contrary, Lessee shall promptly undertake such emergency repair work after a casualty as is necessary or appropriate under the circumstances to eliminate defective or dangerous conditions and to comply with Applicable Laws. Section 21.12 Appropriation by Lessee. The foregoing provisions regarding Appropriation are intended to apply only to an Appropriation by an entity other than Lessee. In the event of an Appropriation of a!l or any portion of the Premises by Lessee, this Lease shall be deemed terminated (or partially terminated, if the Appropriation affects only a portion of the Premises) as of the date that is one day before the valuation date for such Appropriation, Lessee shall surrender the Premises to Lessor in accordance with the provisions of Article 25, and Lessor shall be entitled to the entire Award. C:\My Documents\Quarry Road Lease - CKD July 1 1 redrafl 31 ARTICLE 22. NO ASSIGNMENT OR SL~LETTING Lessor is entering into this Lease in reliance on the particular and unique attributes of Lessee as a tenant. Lessor would not enter into this Lease except for such particular and unique factors. The parties expressly agree that except as otherwise expressly provided in this Lease, Lessee shall not directly or indirectly, voluntarily or by operation of law, sell, assign, sublet, encumber, pledge or otherwise transfer or hypothecate its interest in or rights with respect to the Premises or Lessee’s leasehold estate therein or the Improvements (any of the foregoing being herein referred to as a "Transfer"). Except as specifically provided in this Lease, Lessor shall have the right to withhold consent to a Transfer in Lessor’s sole and unfettered discretion. Notwithstanding the foregoing, Lessee’s consolidation into another public agency shall not be deemed a Transfer for the purposes of this Lease. ARTICLE 23. DEFAULTS AND ~MEDIES Section 23.1 Events of Default by Lessee. The occurrence of any of the following shall be an "Event of Default" on the part of Lessee hereunder: (a) Failure to pay Rent or any other sums of money that Lessee is required to pay hereunder at the times or in the manner herein provided, when such failure shall continue for a period of 45 days after written notice thereof from Lessor to Lessee; any such notice shall be deemed to be the notice required under California Code of Civil Procedure Section 1161. (b) Failure to perform any express or implied nonmonetary provision of this Lease when, except in the case of any provision which by its terms provides for no grace period, such failure shall continue for a period of 45 days, or such other period as is expressly set forth herein, after written notice thereof from Lessor to Lessee; any such notice shall be deemed to be the notice required under California Code of Civil Procedure Section 1161; provided that if the nature of the default is such that more than 45 days are reasonably required for its cure, then an Event of Default shall not be deemed to have occurred if Lessee shall commence such cure within said 45-day period and thereafter diligently and continuously prosecute such cure to completion. (c) The vacation of the Premises for a period of 365 consecutive days or more except in connection with repair, restoration or Alterations undertaken pursuant to and in accordance with Articles 11 or 21 hereof, or the abandonment of the Premises. Section 23.2 Lessor’s Remedies. Upon the occurrence of an Event of Default, Lessor shall have the following rights and remedies: (a) The right to terminate this Lease, in which event Lessee shall immediately surrender possession of the Premises in accordance with Article 25, and pay to Lessor all Rent and other charges and amounts due from Lessee hereunder to the date of termination; and C:\My Documents\Quarry Road Lease - CKD July 11 redraft 32 (b) In the event of any Event of Default that poses an imminent threat to persons or property (including the Premises), the right to enjoin, and any other remedy or right now or hereafter available to a lessor against a defaulting lessee under the laws of the State of California or the equitable powers of its courts, and not otherwise specifically reserved herein. Section23.3 Waiver of Notice and Redemption. Except as otherwise expressly provided in this Article 23, Lessee hereby expressly waives, so far as permitted by law, the service of any notice of intention to enter or re-enter provided for in any statute, or of the institution of legal proceedings to that end, and Lessee, for and on behalf of itself and all persons claiming through or under Lessee, also waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179, or under any other present or future law, if Lessee is evicted or Lessor takes possession of the Premises by reason of any default by Lessee hereunder. Section 23.4 Rights Cumulative. The various rights and remedies reserved to Lessor herein, including those not specifically described herein, shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity and the exercise of the rights or remedies provided for in this Lease or now or hereafter existing at law or in equity shall not preclude the simultaneous or later exercise by Lessor of any or all other rights and remedies. Section 23.5 Lessor’s Default. Lessor shall be in default under this Lease if Lessor fails to cure any breach of its obligations under this Lease within forty-five (45) days after receipt of written notice from Lessee specifying in reasonable detail the nature of Lessor’s breach; provided, however, that if the nature of Lessor’s breach is such that more than forty-five (45) days are required for performance, then Lessor shall not be in default if Lessor commences the cure of such breach within such forty-five (45) day period and thereafter diligently prosecutes the same to completion. Lessee shall be entitled to actual (but not consequential) damages in the event of an uncured default by Landlord Section 23.6 Lessee’s Limited Recourse. In no event shall Lessor’s trustees, officers, directors or employees have any personal liability to Lessee under this Lease, and Lessor’s liability under this Lease for all claims Lessee may have against Lessor (as limited pursuant to Section 23.5) shall not exceed an amount equal to the value of the Lessor’s interest in the Premises. The parties agree that such value is based on the present value of Lessor’ s reversionary fee interest in the Premises. Section 23.7 Lessor’s Limited Recourse. In no event shall Lessee’s elected or appointed officials, officers, directors or employees have any personal liability to Lessor under this Lease. ARTICLE 24. LESSOR’S RIGHT TO CURE DEFAULTS If Lessee shall fail or neglect to do or perform any act or thing herein provided by it to be done or performed and such failure shall not be cured within any applicable grace C:\My Documents\Quarry Road Lease - CKD July 11 redraft_,3"~ period provided in Article 23, then Lessor shall have the right, but shall have no obligation, to pay any amounts payable by Lessee to third parties hereunder, discharge any lien, take out, pay for and maintain any insurance required under Article 19, or do or perform or cause to be done or performed any such other act or thing (entering upon the Premises for such purposes, if Lessor shall so elect), and Lessor shall not be or be he!d liable or in any way responsible for any loss, disturbance, inconvenience, annoyance or damage resulting to Lessee on account thereof, and Lessee shall repay to Lessor upon demand the entire reasonable cost and expense thereof, including, without limitation, compensation to the agents, consultants and contractors of Lessor and reasonable attorneys’ fees and expenses. Lessor may act upon shorter notice or no notice at all if necessary in Lessor’s judgment to meet an emergency situation or governmental or municipal time limitation or otherwise to protect Lessor’s interest in the Premises. Lessor shall not be required to inquire into the correctness of the amount or validity of any payable or lien that may be paid by Lessor, and Lessor shall be duly protected in paying the amount of any such payable or lien claimed, and, in such event, Lessor shall also have the full authority, in Lessor’s sole judgment and discretion and without prior notice to or approval by Lessee, to settle or compromise any such lien or payable. Any act or thing done by Lessor pursuant to the provisions of this Article 24 shall not be or be construed as a waiver of any default by Lessee, or as a waiver of any term, covenant, agreement or condition herein contained or of the performance thereof. All amounts payable by Lessee to Lessor under any of the provisions of this Lease, if not paid when the same become due as in this Lease provided, shall bear interest at the Interest Rate. ARTICLE 25. SURRENDER OF THE PREMISES Section 25.1 Surrender. Upon the termination of this Lease, at the expiration of the Term as stated in Article 5 hereof or within 30 days following the earlier termination of this Lease pursuant to any provision hereof, Lessee shall remediate on, from, or under the Premises any Hazardous Substances to the extent resulting from any Lessee Environmental Activity, and surrender to Lessor the Premises in good order and repair, reasonable wear and tear excepted (except to the extent this Lease is terminated due to damage or destruction or any Appropriation), free and clear of all letting and occupancies, and free and clear of all Liens and encumbrances; provided that Lessee shall be entitled to remove and retain all personal property and fixtures of Lessee within ten (10) business days following termination of this Lease. Section 25.2 Ownership of Improvements; Contracts. Upon any termination of this Lease after the Commencement Date, all Improvements shall automatically and without further act by Lessor or Lessee, become the property of Lessor, free and clear of any claim or interest therein on the part of Lessee or anyone claiming under Lessee, and without payment therefor by Lessor. In the event this Lease terminates due to the damage to or destruction of the Improvements, at Lessor’s request Lessee shall remove any remaining structures from the Premises. Upon or at any time after the Termination Date, if requested by Lessor, Lessee shall, without charge to Lessor, promptly execute, acknowledge and deliver to Lessor a good and sufficient quitclaim deed and bill of sale of all of Lessee’s right, title, and interest in and to the Premises and the Improvements and a good and sufficient assignment to Lessor of Lessee’s interest in any Permitted C:\My Documents\Quarry Road Lease - CKD July ! 1 redraft 34 Subleases which Lessor has elected to recognize after the Termination Date, and in any contracts, as designated by Lessor, relating to the operation, management, maintenance or leasing of the Premises or any part thereof, and shall deliver to Lessor all such other instruments, records and documents relating to the operation, management, maintenance or leasing of the Premises or any part thereof, including but not limited to all leases, lease files, plans and specifications, records, registers, permits, and all other papers and documents which may be necessary or appropriate for the proper operation and management of the Premises. Lessee hereby irrevocably appoints Lessor as its lawful attorney in fact to execute and deliver for, on behalf of and in the name of Lessee, any such deed, bill of sale, assignment or other instrument referred to in this Article 25 or otherwise, required to document the transfer or reversion to Lessor of such interests of Lessee, and Lessee and Lessor agree that such power of attorney shall be a power coupled with an interest. Any contracts, agreements or other obligations of Lessee relating to the Premises not designated by Lessor and assigned by Lessee to Lessor pursuant to this Article 25 shall immediately tern~inate and be of no further force or effect as of the Termination Date. Section 25.3 Personal Property. Any personal property or fixtures of Lessee that remains on the Premises on the 11th day after the TeiTnination Date may, at the option of Lessor, be deemed to have been abandoned by Lessee and may either be retained by Lessor as its property or disposed of, without accountability, in such manner as Lessor may determine in its sole discretion. ARTICLE 26. USE OF NAME Lessor asserts that the names "The Leland Stanford Junior University," "Stanford" and "Stanford University," and all variations thereof, are proprietary to Lessor. Lessee shall not use any such name or any variation thereof or identify Lessor in any promotional advertising or other promotional materials to be disseminated to the public or any portion thereof or use any trademark, service mark, trade name or symbol of Lessor or that is associated with it, without Lessor’s prior written consent, which may be given or withheld in Lessor’s sole discretion. ARTICLE 27. SIGNS So long as Lessee fully complies with all Applicable Laws, Lessee shall have the right in its sole discretion to place any sign, picture, advertisement, name, notice, marquee or awning on the Premises. ARTICLE 28. REPRESENTATIONS AND WARRANTIES OF LESSEE AND LESSOR Lessee and Lessor hereby represent and warrant to each other as follows: (a) Each party has taken all necessary action to authorize the execution, delivery and performance of this Lease and this Lease constitutes the legal, valid, and C:\My Documents\Quarry Road Lease - CKD July 11 redraft 35 binding obligation of the party so representing. (b) Each party has the right, power, legal capacity and authority to enter into and perform its obligations under this Lease and no approvals or consents of any person are required in connection with the execution and performance of this Lease. The execution and performance of this Lease will not result in or constitute any default or event that with notice or the lapse of time or both, would be a default, breach or violation of the organizational instruments governing the representing party or any agreement or any order or decree of any court or other governmental authority to which the representing party is a party or to which it is subject. ARTICLE 29. NO WAIVER BY LESSOR No failure by Lessor to insist upon the strict performance of any term, covenant, agreement, provision, condition or limitation of this Lease or to exercise any right or remedy upon a breach thereof, and no acceptance by Lessor of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such term, covenant, agreement, provision, condition or limitation. No term, covenant, agreement, provision, condition or limitation of this Lease and no breach thereof may be waived, altered or modified except by a written instrument executed by Lessor. No waiver of any breach shall affect or alter this Lease but each and every term, covenant, agreement, provision, condition and limitation of this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach. ARTICLE 30. NO PARTNERSHIP It is expressly understood that neither Lessee nor Lessor is or becomes, in any way or for any purpose, a partner of the other in the conduct of its business, or otherwise, or joint venturer or a member of a joint enterprise with the other, or agent of the other by reason of this Lease or otherwise. Lessee is and shall be an independent contractor with respect to the Lease and Premises. ARTICLE 31. NO DEDICATION This Lease shall not be, nor be deemed or construed to be; a dedication to the public of the Premises, the areas in which the Premises are located or the Improvements, or any portion thereof. ARTICLE 32. NO THIRD PARTY BENEFICIARIES This Lease shall not confer nor be deemed nor construed to confer upon any person or entity, other than the parties hereto, any right or interest, including, without limiting the generality of the foregoing, any third party beneficiary status or any right to enforce any provision of this Lease, except to the extent expressly set forth herein. ARTICLE 33. NOTICES Any notice, consent or other communication required or permitted under this C:\My Documents\Quarry Road Lease - CKD July 1 ! redraft 36 Lease shall be in writing and shall be delivered by hand, sent by air courier, sent by prepaid registered or certified mail with return receipt requested, or sent by facsimile, and shall be deemed to have been given on the earliest of (a) receipt, (b) one business day after delivery to an air courier for overnight expedited delivery service, or (c) 5 business days after the date deposited in the United States mail, registered or certified, with postage prepaid and return receipt requested (provided that such return receipt must indicate receipt at the address specified) or on the day of its transmission by facsimile if transmitted during the business hours of the place of receipt, otherwise on the next business day. All notices shall be addressed as appropriate to the following addresses (or to such other or further addresses as the parties may designate by notice given in accordance with this section): If to Lessor: The Board of Trustees of the Leland Stanford Junior University c/o Stanford Management Company 2770 Sand Hill Road Menlo Park, CA 94025-3065 Attn: Director, Property Services Facsimile Number (650) 854-9268 If toLessee: with a copy to: City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 City Attorney City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 ARTICLE 34. HOLDING OVER This Lease shall terminate upon the Termination Date and any holding over by Lessee after the Termination Date shall not constitute a renewal of this Lease or give Lessee any rights hereunder or in or to the Premises. Any holding over after the Termination Date with the consent of Lessor shall be construed to automatically extend the Term of this Lease on a month-to-month basis at a rent equal to the fair market rental value of the Premises, unless the parties have otherwise agreed to a mutually agreeable rental rate, and shall otherwise be on the terms and conditions herein specified so far as C:\My Documents\Quarry Road Lease - CKD July 11 redraft 37 applicable. Any holding over without Lessor’s consent shall entitle Lessor to exercise any or all of its remedies as provided in Article 23, and Lessee shall indemnify Lessor for all losses, costs and other damage incurred due to Lessee’s failure to vacate the Premises when required to do so. ARTICLE 35. MEMORANDUM This Lease shall not be recorded. However, at the request of either party, the parties hereto shall execute and acknowledge a memorandum hereof in recordable form that Lessor shall file for recording in the Official Records of Santa Clara County. ARTICLE 36. GENERAL PROVISIONS Section 36.1 Broker’s Commissions. Each party agrees to indemnify the other party, and hold it harmless, from and against any real estate brokerage commissions or other such obligations incurred by the indemnifying party in connection with the negotiation or execution of this Lease. Section 36.2 Severability. In case any one or more of the provisions of this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, and this Lease shall be construed as if such invalid, illegal or unenforceable provisions had not been contained herein. Section 36.3 Time of the Essence. Time is hereby expressly declared to be of the essence of this Lease and of each and every term, covenant, agreement, condition and provision hereof. Section 36.4 Headings. Article, Section and subsection headings in this Lease are for convenience only and are not to be construed as a part of this Lease or in any way limiting or amplifying the provisions hereof. Section 36.5 Lease Construed as a Whole. The language in all parts of this Lease shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either Lessor or Lessee. The parties acknowledge that each party and its counsel have reviewed this Lease and participated in its drafting and therefore that the rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed nor applied in the interpretation of this Lease. Section 36.6 Meaning of Terms. Whenever the context so requires, the neuter gender shall include the masculine and the feminine, and the singular shall include the plural, and vice versa. Section 36.7 Attorneys’ Fees. In the event of any action or proceeding at law or in equity between Lessor and Lessee to enforce or interpret any provision of this Lease or to protect or establish any right or remedy of either party hereunder, the party not prevailing in such action or proceeding shall pay to the prevailing party all costs and expenses, including without limitation, reasonable attorneys’ fees and expenses C:\My Documents\Quarry Road Lease - CKD July 11 redraft 38 (including attorneys’ fees and expenses of inhouse attorneys), incurred therein by such prevailing party, and if such prevailing party shall recover judgment in any such action or proceeding, such costs, expenses and attorneys’ fees shall be included in and as a part of such judgment. Section 36.8 California Law; Forum. The laws of the State of California, other than those laws denominated choice of law rules which would require the application of the laws of another forum, shall govern the validity, construction and effect of this Lease. This Lease is made and all obligations hereunder arise and are to be performed in the County of Santa Clara, State of California. Any action which in any way involves rights, duties and obligations of the parties hereto shall be brought in the courts of the State of California located in Santa Clara County or in the United States District Court for the Northern District of California, and the parties hereto hereby submit to the personal jurisdiction of said courts. Section 36.9 Binding Agreement. Subject to the provisions of Article 22, the terms, covenants and agreements contained in this Lease shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. Section 36.10 Entire Agreement. This instrument, together with the exhibits hereto, all of which are incorporated herein by reference, constitutes the entire agreement between Lessor and Lessee with respect to the subject matter hereof and supersedes all prior offers, negotiations, oral and written. This Lease may not be amended or modified in any respect whatsoever except by, an instrument in writing signed by Lessor and Lessee. Section 36.11 Quiet Enjoyment. Lessor agrees that Lessee, upon paying the Rent and all other sums due hereunder and upon keeping and observing all of the covenants, agreement and provisions of this Lease on its part to be observed and kept, shall, subject to the exceptions and reservations referred to in Article 3, lawfully and quietly hold, occupy and enjoy the Premises during the Term without hindrance or molestation by anyone claiming by, through, or under Lessor. Section 36.12 Termination Not Merger. The voluntary sale or other surrender of this Lease by Lessee to Lessor, or a mutual cancellation thereof, or the termination thereof by Lessor pursuant to any provision contained herein, shall not work a merger, but at the option of Lessor shall either terminate any or all existing subleases or subtenancies hereunder, or operate as an assignment to Lessor of any or all of such subleases or subtenancies; provided that this Section shall not be deemed to supersede the provisions of Article 22 above. Section 36.13 Estoppel Certificates. Either party, at any time and from time to time within ten (10) business days after receipt of written notice from the other, shall execute, acknowledge and deliver to the requesting party or to any party designated by the requesting party, a certificate stating: (a) that Lessee has accepted the Premises (if true), (b) the Commencement Date and Expiration Date of this Lease, (c) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that same C:\My Documents\Quarry Road Lease - CKD JuDy 11 redraft 39 is in full force and effect as modified and stating the modifications), (d) whether or not there are then existing any defenses against the enforcement of an?, of the obligations of the reporting party under this Lease (and, if so, specifying same), (e) whether or not there are then existing any defaults by the other party in the performance of its obligations under this Lease (and, if so, specifying same), and (f) any other factual information relating to the rights and obligations under this Lease that may reasonably be required by any of such persons. Failure by either party to execute, acknowledge and deliver such certificate shall be conclusive evidence that this Lease is in full force and effect and has not been modified except as may be represented by the requesting party. IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease by proper persons thereunto duly authorized as of the date first above written. THZE BOARD OF TRUSTEES OF THE LELAN~ STANFORD JUNIOR UNIVERSITY By St~nf.or.@Management Company Print Name: Leonie F. Batkin Title: Director, Property Services ATTEST: City Clerk APPROVED AS TO FORM: City Attorney THE CITY OF PALO ALTO By Print Name: Title: APPROVED: City Manager APPROVED AS TO CONTENT: Director of Planning and Community Environment C:\My Documents\Quarry Road Lease - CKD July 11 redraft 40 EXHIBIT QUARRY ROAD SUBSTATION BEOIN!WING at a point in the centerline of Quarry Road (60 feet wide) distant thereon S. 42°37’ ?V. I012.43 feet from the point of inter- section thereof with the southwesterly line of E1 Camino Real (i00 feet wide); thence leaving said centerline S. 47°23’ %~/. 30.00 feet to the True Point of Beginning (on the southeasterly line of Quarry Road); thence S. 46°56’56’’ E. 77.28 feet; thence S. 5°17’23’’ W. 97.55 feet; thence S. 42° 27’30" V¢. 38. 97 feet, to a point on the southwesterly line of that certain i0. 514 acre parcel of land leased to the City of Palo Alto by the Board of Trustees of the Leland Stanford Junior University on April 30, 1930 and filed in the office of the City Clerk of said City (Agreement No. Z); thence continuing S. 4Z°Z7’30’’ IV. 30. 00 feet; thence N. 47°23’ W. 121. 14 feet to a point on the curved southeasterly line of said Quarry Road; thence north- easterly along said last narned line along the arc of a curve to the right, having a radius of 300 feet, through a central angle of 18°Z9’06’’, for an arc length of 96.77 feet; thence continuing along said southeasterly line of Quarry Road N. 4Z°37’ E. 52. 01 feet to the True Point of Beginning, containing 0.396 acres, more or less. ATTACHMENT B LEASE SUMMARY FOR QUARRY ROAD ELECTRICAL SUBSTATION Lessor:The Board of Trustees of the Leland Stanford Junior University Lessee:The City of Palo Alto Premises:Electrical Substation on Quarry Rd. 0.396 Acres Term:51 years Rent:51 Dollars and Housing Impact Credit unless a) Lessee determines that it cannot legally grant the HIC, b) Lessor is not permitted to apply the HIC to future projects and Lessor and Lessee can not agree on the fee or fees that the HIC may be applied, then Lessor may charge full basic Rent $118,000 in the first year. Repair and Maintenance Lessee shall be responsible for all repairs, maintenance. Alterations Alterations that cost more than $30,000 will require Lessor’s prior written approval. Environmenta!Lessee unconditionally releases and discharges Lessor from any and all Environmental Claims. Assignment And Subletting No assignment or subletting ATTACHMENT C City of Palo Alto Department of Planning and Community Environment California Enviromnental Quality Act MITIGA TED NE GA TIVE DECLARATION I.DESCRIPTION OF PROJECT Date:May 17, 2006 Application Nos.:N/A Address of Project:28! Quarry Road, Palo Alto, CA 94304 Applicant Property Owner: City of Palo Alto - Utilities 250 Hamilton Avenue Palo Alto, CA 94301 The Board of Trustees of the Leland Stanford Junior University c/o The Stanford Management Company 2770 Sand Hill Road, Menlo Park, CA 94025 Project Description and Location: Th, e Quarry Road substation is located at 281Quarry Road on land that the City of Palo Alto leases from Stanford University. This substation was constructed in 1955. The City of PaIo Alto Department of Utilities has leased the site since 1968. The lease will expire in 2007. The project will increase the capacity of the Quarry Road substation by adding an additional 60kV/12kV switchgear lineup and transformers and four new 60kV circuit breakers to the existing utility equipment on site. New foundations will be constructed to support the new equipment that is to be located within the existing fenced area surrounding the Quarry Road substation. This equipment wi!l be relocated from the existing Alma Street substation. The use of the Alma Street substation will be discontinued. New 12kV underground electrical feeders along with new duct lines are to be constructed from new equipment along Quarry Road towards Downtown Palo Alto. The existing 60kV overhead power lines located in the alley (Lane 8 West) behind the Alma Street substation will be relocated when the use of the Alma Street substation is discontinued, There are two placement options for the relocated 60kV overhead lines Option I - A new 75 ft. wood pole would be installed at the corner of Channing and Alma in front of Palo Alto Hardware. An additional pole would be installed directly across Alma Street and would serve as a guy pole to provide proper support tension with a guy wire crossing Alma Street. The 60kV line would be re-installed starting at existing pole #5713 (behind 900 High on the sidewalk on Channing). This pole will be replaced with a self-supporting steel pole. The line would run along Channing to the new pole by PA Hardware and turn north and run along Alma to meet up with the existing 60kV line in front of the Alma substation. The line along Alma and Channing will be in a vertical geometry on the street side of the poles and will hang out over the Alma gutter apron. Option 2 - A new steel pole would be installed on the west side of Alma at Channing in the right-of-way adjacent to the Cal Train ROW. There is a main water line running parallel to Alma at this location. This would likely pose a conflict that could be costly to resolve. Another new wood pole wouId be installed north of that pole opposite the Alma substation in the same right-of-way (ROW). The 60kV line would be re-installed starting at the existing pole #5713 (behind 900 High on the side~valk on Channing). This pole would be replaced with a self-supporting steel pole. The line will run along Channing and cross Alma to the new pole in the right-of-way adjacent to the Cal Train ROW. The line will turn north and run parallel to Alma on the west side and meet up with the existing line that now crosses Alma at Homer. A new pole will be required near the Homer Under-crossing to handle the jog needed in the line route. The existing line crossing Alma at Homer will be removed from that point back to the Alma substation so that there will not be any 60kV line on the east side of Alma Street between Homer and Channing. It is likely that existing trees along the Cal Train ROW would need to be trimmed or removed to accommodate the new 60kV line, This would be the more expensive of the two options because 1) the new pole installed on Alma Street near Channing would need to be a steel pole and 2) there would be associated costs of tree trimming/removal and the need to remove the 60kV line along the east side of Alma. H.DETERMINATION In accordance with the City of Palo Alto’s procedures for compliance with the California Environmental Quality Act (CEQA), the City has conducted an Initial Study to determine whether the proposed project located at 1805 El Camino Real could have a significant effect on the environment. On the basis of that study, the City makes the following determination: The proposed project COULD NOT have a significant effect on the ¯ environment, and a NEGATIVE DECLARATION is hereby adopted. .X Although the project, as proposed, could have a significant effect on the environment, there will not be a significant effect on the environment in this case because mitigation measures for traffic impacts have been added to the project and, therefore, a MITIGATED NEGATIVE DECLARATION is hereby adopted. The attached initial study incorporates all relevant information regarding the potential environmental effects of the project and confirms the determination that an EIR is not required for the project. In addition, the following mitigation measures have been incorporated into the project: Mitigation Measure #1: A Tree Protection and Preservation Plan for both demolition and construction (since some fencing will be expanded) shall be prepared by an ISA Certified Arborist and submitted for review and approval by the Planning Arborist. The plan shall be consistent with the City Tree Technical Manual, Section 2.00. All specific recommendations from the approved plan shall be implemented and maintained throughout construction. A Tree Protection Zone (TPZ) for each tree to be retained in which no soil disturbance is permitted shall be established and be clearly designated on all improvement plans as a bold dashed line, including grading, utility and irrigation, and show that no conflict occurs with the trees. The plan shall specify, but not be limited to, monthly arborist inspections, and pruning, protective fencing, grading limitations and any other measures necessary to insure survival of the trees. Key elements of this plan shall be printed on a Tree Protection Instructions sheet with the Project Arborist contact number. Any break in the vegetated hedge row along Alma .Street, for the purposes of overhead lines or access for other activity, will be evaluated as to the potential impact to aesthetic visual erosion, and long term effects of the changes. Adequate mitigation will be implemented by the project if this relocation option is selected. Mitigation Measure #2: An oi! containment pit is to be constructed that would contain 100 percent of the oil volume of the transformers in the event of a leak. A transformer "low oil alarm" shall be installed to alert Palo Alt Utilities personnel of any oil tank leak. Utility personnel shall have spill prevention and spill countermeasures in place at the site at all times. CITY OF PALO ALTO QUARRY ROAD SUBSTATION CAPACITY INCREASE MITIGATION MONITORING PLAN AND REPORTING .PLAN Mitigation Measures Mitigation and Monitoring Action Schedule A Tree Protection and Preservation Plan for both demolition and construction (since some fencing will be expanded) shall be prepared by an ISA Certified Arborist and submitted for review and approval by the Planning Arborist. The plan shall be consistent with the City Tree Technical Manual, Section 2.00. All specific recommendations from the approved plan shall be implemented and maintained throughout construction. A Tree Protection Zone (TPZ) for each tree to be retained in which no soil disturbance is permitted shall be established and be clearly designated on all improvement plans as a bold dashed line, including grading, utility and irrigation, and show that no conflict occurs with the trees. The plan shall specify, but not be limited to, monthly arborist inspections, and pruning, protective fencing, grading limitations and any other measures necessary to insure survival oft.he trees. Key elements of this plan shall be printed on a Tree Protection Instructions sheet with the Project Arborist contact number. Any break in the vegetated hedge row along Alma Street, for the purposes of overhead lines or access for other activity, will be evaluated as to the potential impact to aesthetic visual erosion, and long term effects of the changes. Adequate mitigation will be implemented by the project if this relocation option is selected. An oil containment pit is to be constructed that would contain 100 percent of the oil volume of the transformers in the event of a leak. A transformer "low oil alarm" shall be installed to alert Palo Alto Utilities personnel of any oil tank leak. Utility personnel shall have spill prevention and spill countermeasures in place at the site at all times. Monitoring Responsibility,, City of Palo Aito Public Works Arborist City of Pato Alto Building Department and Utilities Department For all Regulated Trees to be retained, verify that plan submittals and building permit documents include all construction tree protection measures Verify than plan submittals and building permit documents include the required oil containment pit Prior to approval of project plans and building permits. Inspections: During construction of the project Prior to approval of project plans and building permits. Inspections: Periodically to ensure spill prevention and spill countermeasures are in place - 4. 5. 6. t 9. 10. ENVIRONMENTAL CHECKLIST FORM City of Palo Alto Dfp..artment of Planning and Community Environment Proj ect Title:Quarry Road Substation Capacity Increase Lead Agency Name and Address:City of Palo Alto - Planning Division 250 Hamilton Avenue, Palo Alto, CA 94301 Contact Person and Phone Number:Christopher A. Riordan, AICP 650/329-2149 Project Location:281 Quarry Road, Pa!o Alto, CA 94304 Application Number(s): Project Sponsor Name and Address:City of Palo Alto - Utilities 250 Hamilton Avenue Palo Alto, CA 94301 Property Owner:The Board of Trustees of the Leland Stanford Junior University c/o The Stanford Management Company 2770 Sand Hill Road, Menlo Park, CA 94025 General Plan Designation:Regional Community Commercial Zoning:Public Facility Project Description: The Quarry Road substation is located at 281Quarry Road on land that the City of Palo Alto leases from Stanford University. This substation was constructed in 1955. The City of Palo Alto Department of Utilities has leased the site since 1968. The lease will expire in 2007. The project will increase the capacity of the Quarry Road substation by adding an additional 60kV/12kV switchgear lineup and transformers and four new 60kV circuit breakers to the existing utility equipment on site. New foundations will be constructed to support the new equipment that is to be located within the existing fenced area surrounding the Quarry Road substation, This equipment will be relocated from the existing Alma Street substation, The use &the Alma Street substation will be discontinued. New 12kV underground electrical feeders along with new duct lines are to be constructed from new equipment along Quarry Road towards Downtown Palo Alto. The existing 60kV overhead power lines located in the alley (Lane 8 west) behind the Alma Street substation will be relocated when the use of the Alma Street substation is discontinued. There are two placement options for the relocated 60kV overhead lines Option 1 - A new 75 it. wood pole would be installed at the comer of Channing and Alma in front of Palo Alto Hardware. An additional pole would be installed directly across Alma Street and would serve as a guy pole to provide proper support tension with a guy wire crossing Alma Street. The 60kV line would be re-installed starting at existing pole #5713 (behind 900 High on the sidewalk on Channing). This pole will be replaced with a self-supporting steel pole. The line would run along Channing to the new pole by PA Hardware and turn north and run along Alma to meet 11. 12. up with the existing 60kV line in front of the Alma substation. The line along Alma and Channing will be in a vertical geometry on the street side of the poles and will hang out over the Alma gutter apron. Option 2 - A new steel pole would be installed on the west side of Atma at Channing in the fight-of-way adjacent to the Cal Train ROW. There is a main water line running paralM to Alma at this location. This would likelypose a conflict that could be costly to resolve. Another new wood pole would be installed north of that pole opposite the Alma substation in the same right-of-way ~OW). The 60kV line would be re-installed starting at the existing pole #5713 (behind 900 High on the sidewalk on Channing). This pole would be replaced with a self-supporting steel pole. The line will run along Channing and cross Alma to the new pole in the right-of-way adjacent to the Cal Train ROW. The line will turn north and run parallel to Alma on the west side and meet up with the existing line that now crosses Alma at Homer. A new pole will be required near the Homer Under-crossing to handle the jog needed in the line route. The existing line crossing Alma at Homer will be removed from that point back to the Alma substation so that there will not be any 60kV line on the east side of Alma Street between Homer and Channing. It is likely that existing trees along the Cal Train ROW would need to be trimmed or removed to accommodate the new 60kV line. This would bethe more expensive of the two options because I) the new po!e installed on Alma Street near Charming would need to be a steel pole and 2) there would be associated costs of tree trimming/removal and the need to remove the 60kV line along the east side of Alma. Surrounding Land Uses and Setting: The pr6ject site consists of a PF (Public Facility) zoned parcel on the west side of Quarry Road at the intersection with Sweet Olive Way. The site is bounded to the North by Quarry Road and the Stanford Shopping Center beyond (CC zoned), to the west by the Hoover Pavilion (PF zoned), to the south by a parking lot, and to the west by Quarry Road and the Stanford Shopping Center beyond (zoned CC). Other public and private agencies whose approval is required: County of Santa Clara, Office of the County Clerk-Recorder Stanford Management Company Date Prepared: May 15, 2006 Public Review Period: TBD X ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED: The environmental factors checked below would be potentially affected by this project as indicated by the checklist on the following pages. Aesthetics Agriculture Resources Air Quality Biological Resources Cultural Resources Geology/Soils Hydrology/Water Quality Land Use/Planning Mineral Resources Noise Population/Housing Public Services Transportation/Traffic Utilities/Service Systems Mandatory Findings of Significance X Hazards & Hazardous Materials Recreation 2 DETERMINATION: On the basis of this initial evaluation, I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because revisions in the project have been made by or agreed to by the project proponent. A MITIGATED NEGATIVE DECLARATION will be prepared. I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a "potentially significant impact" or "potentially significant unless mitigated" impact on the environment, but at least one effect: 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a) have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. Christopher Riordan /Steve Ems~’e~~ ’ Director of Planning & Community Environment EVALUATION OF ENVIRONMENTAL IMPACTS: Date Datd X 1)A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e. g. the project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on project-specific factors as well as general standards (e.g. the project will not expose sensitive receptors to pollutants, based on a project-specific screening analysis). 2)All answers must take account of the whole action involved, including off-site as well as on-site, cumulative as well as project-level, indirect as well as direct, and construction as well as operational impacts. 3)Once the lead agency has determined that a particular physical impact may occur, then the checklist answers must indicate whether the impact is potentially significant, less than significant with mitigation, or less than significant. "Potentially Significant Impact" is appropriate if there is substantial evidence that an effect may be significant. If there are one or more "Potentially Significant Impact" entries when the determination is made, an EIR is required. 4)"Negative Declaration: Less Than Significant With Mitigation Incorporated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than significant level (mitigation measures from Section 17, "Earlier Analysis," may be cross-referenced). 5)Earlier analysis may be used where, pursuant to the tiering, program E!R, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration (Section 15063(e) (3) (D)). In this case, a brief discussion should identify the following: a) Earlier Analysis Used. Identify and state where they are available for review. b) Impacts Adequately Addressed. Identify which effects from the above checklist were within the scope of and adequately analyzed in an earlier document pursuant to applicable legal standards, and state ~vhether such effects were addressed by mitigation measures based on the earlier analysis. c) Mitigation Measures. For effects that are "Less than Significant with Mitigation Measures Incorporated," describe the mitigation measures, which were incorporated or refined from the earlier document and the extent to which they address site-specific conditions for the project. Lead agencies are encouraged to incorporate into the checklist references to information sources for potential impacts (e.g. general plans, zoning ordinances). Reference to a previously prepared or outside document should, where appropriate, include a reference to the page or pages where the statement is substantiated. 7)Supporting Information Sources: A source list should be attached, and other sources used or individuals contacted should be cited in the discussion. 8) This is only a suggested form, and lead agencies are free to use ~lifferent formats; however, lead agencies ¯ .~hould-normally a~idre~’s the questions from this checklist that are relevan~ to a project’s environmental effects in whatever format is selected. 9) The explanation of each issue should identify: a) The significance criteria or threshold, if any, used to evaluate each question; and b) The mitigation measure identified, if any, to reduce the impact to less than significance Sources Potentially Potentially Less Than No Issues and Supporting Information Sources Significant SIgn!flcant Significant Impact Issues Unless Impact Mitigated L AESTHETICS. Would the project: a)Have a substantial adverse affect on a scenic vista?1 X b)Substantially damage scenic resources, including, but not 1, 6 X limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? c)Substantially degrade the existing visual character or 1 quality of the site and its surroundings?X d)Create a new source of substantial light or glare, which 1, 4 X would adversely affect day or nighttime views in the area? IL AGRICULTURE RESOURCES. In determining whether impacts to agricultural resources are significant environmental 1) effects, lead agencies may refer to the California Agricultural Laud Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Would the project: Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? 1 1,6 1 X 2)Conflict with existing zoning for agricultural use, or a X Williamson Act contract? 3) ’ Involve other changes in the existing environment, which,X due to their location or nature, could result in, conversion of Farmland, to non-agricultural use? III. AIR QUALITY. Where available, the significance criteria established by the applicable air quality management or air pollution control district may be relied upon to make the following determinations. Would the project: a)Conflict with or obstruct implementation of the applicable 1 X air quality plan? b) Violate any air quality standard or contribute substantially 1 to an existing or projected air quality violation?X c)1,4 X d) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non- attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? Expose sensitive receptors (residential, school) to substantial pollutant concentrations? 1,4 X Source~Potentially Potentially Less Than NoIssues and Supporting Information Sources Significant Significant Significant Impact Issues Unless Impact Mitigated e)Create objectionable odors affecting a substantial number 1, 4 Xof people? IV. BIOLOGICAL RESOURCES. Would the project: a)XHave a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, and regulations or by the California Department of Fish and Game or US Fish and Wildlife Service? Have a substantial adverse effect on federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or ordinance? Conflict with the provisions of an adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional or state conservation plan? V. CULTURAL RESOURCES. Would the project: a) b) Cause a substantial adverse change in the significance of an historical resource pursuant to 15064.5? Cause a substantial adverse change in the significance of an archaeological resource pursuant to 15064.5? c)Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? 1,6 (N-I) 1,6 (N-l) 1,6 (N-l) 1,6 (L-7) 1,6 (L-S) 1,6 X X X X X X X X Sources Potentially Potentially Less Than NoIssues and Supporting Information Sources Significant Significant Significant Impact Issues Unless Impact Mitigated d) Disturb any human remains, including those interred outside - 1, 6 X of formal cemeteries?(L-8) VL GEOLOGY AND SOILS. Would the project: a)Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) XRupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42. it) Strong seismic ground shaking? iii) Seismic-related ground failure, including liquefaction? 6 (N-s), 12 6 (N-5, N-10), 12 6 (N-5, N-8, N- 10), 12 X X iv) Landslides?1,6 (N- 5), 12 X b) Result in substantial soil erosion or the loss of topsoil? o 1 X c)x e) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off- site landslide, lateral spreading, subsidence, liquefaction or collapse? 6 12 6 12 n/a Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994), creating substantial risks to life or property? Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of wastewater? VII. HAZARDS AND HAZARDOUS MATERIALS. Would the project: a) Create a significant hazard to the public or the environment through the routing transport, use, or disposal of hazardous materials? 1,4 X X X Issues and Supporting Information Sources Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile (1,320’) of an existing or proposed school? d)Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? f) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working the project area? g) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? Expose people, or structures to a significant risk of loss, injury, or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? 1,4 n/a 1, 6(N- 7), 10 Potentially Significant Issues Potentially Significant Unless Mitigated X Less Than Significant Impact No Impact X X X X X X VIII. HYDROLOGY AND WATER QUALITY. Would the project: a) Violate any water quality standards or waste discharge 1 X requirements? b)XSubstantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? 1,6c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on- or off-site? X Issnes and Supporting Information Sources d) Substantially alter the existing drainage pattern of the site or 1,6 Potentially Significant area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoffln a manner which would result in flooding on- or off-site? Potentially Significant Unless Mitigated L~s Than Significant Impact No Impact X e)Create or contribute runoff water which would exceed the 1, 6 X capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff?. f) Otherwise substantially degrade water quality?1, 6 X g) Place housing within a 100-year flood hazard area as mapped n!a X on a federal Flood Hazard Boundary or Flood Insurance Rate NIap or other flood hazard delineation map? h) Place within a 100-year flood hazard area structures which 1, 6 X would impede or redirect flood flows?(N-6) i) Expose people or structures to a significant risk of loss, injury 1, 6 X or death involve flooding, including flooding as a result of the (N-8) failure of a levee or dam? j) Inundation by seiche, tsunami, or mudflow?1 X IX. LAND USE AND PLANNING. Would the project: a) Physically divide an established community?1 X b)1, 7 XConflict with any applicable land use plan, policy, or. regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? c)Conflict with any applicable habitat conservation plan or 1, 6 .,X natural community conservation plan? X. MINERAL RESOURCES. Would the project: a) Result in the loss of availability of a known mineral resource 6 X that ~vould be of value to the region and the residents of the state? 9 Issues and Supporting Information Sources Result in the loss of availability of a locally important mineral resource recovery site delineated on a local general plan, specific plan or other land use plau? Potcntlally Significant Issues Potentially Significant Unless Mitigated XL NOISE. Would the project result in: L~s Than Significant Impact a)Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? Exposure of persons to or generation of excessive ground borne vibration or. ground borne noise levels? A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? For a project located within an airport land use plan or, where such a plan has not been adopted, would the project expose people residing or working in the project area to excessive noise levels? For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? XIL POPULATION AND HOUSING. Would the project: a)Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? 1, 2, 4 1, 2, 4 1, 2, 4 n/a X X n/a No Impact X X X X X X X c) Displace substantial numbers of people, necessitating the n/a X construction of replacement housing elsewhere? 10 Sources Potentially Potentially Less Than No Issues and Supporting Information Sources Significant Significant Significant Impact Issues Unless Impact Mitigated XIIL PUBLIC SERVICES. a)Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services: Fire Protection? Police protection? Schools? Parks? Other Public facilities? 11 11 1,6 1,6 x X X X a)Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? n/a XV. TRA_NSPORTATION/TRAFFIC. Would tile project: Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? c) Result in change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? 1, 6(T- 7, T-8), 11 na X X X X X 11 Issues and Supporting Information Sources d)Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? e) Result in inadequate emergency access? f) Result in inadequate parking capacity? g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., bus turnouts, bicycle racks)? XVL UTILITIES AND SERVICE SYSTEMS. Would the project: 1,4 1,4 ¯ 1, 4 1 Potentially Significant Issues Potentlally Significant Unless MlIlgated a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? ¯ b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? Require or result in the construction of new storm water drainage facilities or expansion of existing facilities~ the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? Result in a determination by the wastewater treatment provider which serves or may serve the project that it has adequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments? 1,4 1,4 Less Than Significant Impact "No Impact X X X x X X X X X f) Be served by a landfill.with sufficient permitted capacity to 1 X accommodate the project’s solid waste disposal needs? g) Comply with federal, state, and local statutes and regulations 1 X related to solid waste? 12 XVII.MANDATORY F~DINGS OF SIGNIFICANCE. 1-12 XDoes the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause.a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? b) Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? 1-12 1-12 X X SOURCE REFERENCES: 1.Project Planner’s h~owledge of the site and the proposed project 2.Feasibility Studies 3.Various Technical Reports on project 4.Project Plans, description 5.Hazardous Materials Studies/Phase I Assessments 6.Palo Alto Comprehensive Plan, 1998-2010 7.Palo Alto Municipal Code, Title 18 - Zoning Ordinance 8.Palo Alto Tree Technical Manual, Municipal Code Chapter 8.10.030, June 2001 9.Required compliance with the Uniform Building Code (UBC) Standards for Seismic Safety and Windload 10.Alquist-Priolo Earthquake Fault Zoning Map 11.Departmental communication/memos such as Fire, Utilities, Public Works, Police, Plarming Arborist, Real Estate, Community Services. 12. Geotechnical Engineering Investigation, Quarry Road Substation, City of Palo Alto. Report prepared by Parikh Consultants Inc., dated April 2006. ATTACHMENTS: A.Site Location Map B.Geotechnical Engineering Investigation, Quarry Road Substation, City of Palo Alto. Report prepared by Parikh Consultants Inc., dated April 2006. 13 EXPLANATION FOR CHECKLIST RESPONSES: I. Aesthetics The new Quarry Road substation will be designed with a lower profile than the existing substation equipment. The station will have four additional 60kV circuit breakers which will feature a greater compact design than traditional high voltage circuit breakers. All new construction will be within the existing fenced area of the Quarry Road Substation. The new equipment will not change the existing visual appearance of the site as an electrical substation and will have less than a significant visual impact. Mitigation Measure: None Residual Impact: None II. Agriculture Resources The site is not located in a Prime Farmland, Unique Farmland, or Farmland of Statewide Importance area, as shown on the maps prepared for the Farmtand Mapping and Monitoring Program of the California Resources Agency. The site is not zoned for agricultural uses. The Williamson Act does not regulate the site. Mitigation Measures:None Residual Impact:None III. Air Quality The construction of new concrete foundations to support the new electrical equipment wilt result in the creation of a minimal amount of dust and limited to the construction phase of the project. There will be no affects on air quality when the project is complete. Mitigation Measures: Residual Impact: None required None IV. Biological Resources No endangered, threatened, or rare animals, insects and plant species have been identified at the Quarry Road substation. The project would include relocating the existing 60kV overhead power lines located in the alley (Lane 8 West) behind the Alma Street substation. There are two placement options for the relocated 60kV overhead lines. The first option would relocate the line along Channing to a new pole by PA Hardware and turn north and run along Alma to meet up with the existing 60kV line in front of the Alma substation. This option would have no adverse affects on existing street trees. The second option would install a new wood pole north of that pole opposite the Alma Street substation in the same right- of-way (ROW). The 60kV line would be re-installed starting at the existing pole #5713 (behind 900 High on the sidewalk on Channing), This pole would be replaced with a self-supporting steel pole. The line will run along Channing and cross Alma to the new pole in the right-of-way adjacent to the Cal Train ROW. The line will turn north and run paralM to Alma on the west side and meet up with the existing line that now crosses Alma at Homer. A new pole will be required near the Homer Under-crossing to handle the jog needed in the line route. The existing line crossing Alma at Homer will be removed from that point back to the Alma Street substation so that there will not be any 60kV line on the east side of Alma Street between Homer and Channing. It is likely that existing trees along the Cal Train ROW would need to be trimmed or removed to accommodate the new 60kV line. 14 The City of Palo Alto Comprehensive Plan contains the Natural Environment Element to address the City’s policies and goals toward preserving the natural environment including the urban forest. Actions under the Comprehensive Plan’s urban forest discussion include requiring development projects to provide street trees and preserve existing protected and other Significant trees. The Project may introduce new visual features into the existing conditions and thoroughfare. Along Alma Street’s western border exists a dense vegetative edge of trees and shrubs of native and non-native origin, between Alma Street and the Caltrain right-of-way. The hedge row is a complement to the existing flow of traffic from a visual and safety standpoint. The vegetative border functions as an important, if not irreplaceable component of the visual separation between the lower single story Alma frontage and the fast moving trains on the raised track area overshadowed by the new Palo Alto Medical Foundation parking garage and building currently under construction. Most of the vegetation and trees have grown together here as ’volunteers’ for decades and, if sections had to be topped or removed entirely to facilitate equipment or pole construction, survival of any replacement or mitigation trees may be futile unless irrigated. There is no irrigation currently available in the narrow land between the street and the tracks. Preservation ratings consider the tree’s physiological health, structural integrity, location, size and specie type. Trees of moderate preservation are considered worthy of preservation, but may have health or structural deficiencies. Minor structura! deficiencies may not be significant enough to warrant removal if retention and reasonable care would provide long-term overall benefits for the project and the community. Each tree shall be rated for suitability for preservation as a high, moderate or low category. Trees shall be evaluated to for health, stability and structure of the trunk and branching. The project arborist shall evaluate all trees and determine, with adequate protection, if it will survive the construction of the proposed project. Construction activity, such as the presence of heavy equipment, grading activities and excavation has the ¯ potentialto significantly impact, predominantly the trees on-site, but also the adjacent trees. Trees can be damaged or killed by mechanical injury such as having a piece of heavy equipment run into a tree and out through the bark into the interior of the trunk, by over or under-watering, and by having the soi! around the roots compacted by heavy equipment that drives or is stored undemeath their drip line. In order to protect street trees and other trees from construction damage, the City of Palo Alto includes in its Tree Technical Manual, procedures to fence offtrees so that construction equipment cannot operate close enough to cause them damage. Mitigation Measures:A Tree Protection and Preservation Plan for both demolition and construction (since some fencing will be expanded) shall be prepared by an ISA Certified Arborist and submitted for review and approval by the Planning Arborist. The plan shall be consistent with the City Tree Technical Manual, Section 2.00. All specific recommendations from the approved plan shall be implemented and maintained throughout construction. A Tree Protection Zone (TPZ) for each tree to be retained in which no soil disturbance is permitted shall be established and be clearly designated on all improvement plans as a bold dashed line, including grading, Utility and irrigation, and show that no conflict occurs with the trees. The plan shall specify, but not be limited to, monthly arborist inspections, and pruning, protective fencing, grading limitations and any other measures necessary to insure survival of the trees. Key elements of this plan shall be printed on a Tree Protection Instructions sheet with the Project Arborist contact number. Any break in the vegetated hedge row along Alma Street, for the purposes of overhead lines or access for other activity, will be evaluated as to the potential impact to aesthetic visual erosion, and long term effects of the changes. Adequate mitigation will be implemented by the project if this relocation option is selected. Residual Impact:None 15 V. Cultural Resources The project site is located in an area of extreme sensitivity, as indicated in the City of Palo Alto Comprehensive Plan, 1998- 20 t 0. However, the site has been disturbed bypast and current development. Site preparation would not include digging to a significant depth and it is unlikely that any cultural resources would be encountered during the construction. Mitigation Measures: Residual Impact: None required None VI. Geology and Soils The entire state of California is in a seismically active area and the site is located in a seismic risk area, subject to strong ground shaking in the event of an earthquake. Seismic ground failure is possible but not likely to cause any problems with the electrical substation. No known faults cross the project site. A geoteehnical investigation of the site was prepared by Parikh Consultants, dated April 2006. The purpose of the investigation was to evaluate the general site conditions and to obtain recommendations for equipment support foundations. The report concluded that since active faults pass through the site the potential for fault rupture and liquefaction is relatively low. The report includes recommendation for the structural design of the cast-in-drill-hole concrete piles for the substation dead- end structures and for the substation equipment to be installed slab on grade. Incorporating the reports recommendations as a project condition of approval will reduce the geologic impacts to a less than significant level. Mitigation Measures: Residual Impact: None required None VH. Hazards and Hazardous Materials The project site is not designated as a high fire hazard within the City and is not designated as a wild land. Power transformers contain electrical oil for the purpose of providing insulation between the transformer windings and also for heat dissipation. The transformers and oil containing devices are primarily welded seam steel tanks that are painted, inspected, and maintained on a regular basis. This maintenance schedule would reduce the likelihood that the electrical oil would leak out of the transformers. Mitigation Measures:An oil containment pit is to be constructed that would contain 100 percent of the oil volume of the transformers in the event of a leak. A transformer "low oil alarm" shall be installed to alert Palo Alt Utilities personnel of any oil tank leak. Utility personnel shall have spill prevention and spill countermeasures in place at the site at all times. Residual Impact:None VIII. Hydrology and Water Quality The site is in Flood Zone X, which is not a special flood hazard zone. It is in an areaof moderate flooding, outside the 100- year flood zone, but inside the 500-year flood zone. The project will not include substantial grading that could affect the site existing drainage patterns and it is not anticipated that the project will have any affects on hydrology or water quality. Mitigation Measures: Residual Impact: None required None 16 IX. Land Use and Planning The Comprehensive Plan designation for the site is Major Institution/Public Facilities and the zoning designation is Public Facilities. The project site consists of PF (Public Facility) zoned parcel on the west side of QuarryRoad at the intersection with Sweet Olive Way. The site is bounded to the North by Quarry Road and the Stanford Shopping Center beyond(CC zoned), to the west by the Hoover Pavilion (PF zoned), to the south by a parking lot, and to the west by Quarry Road and the Stanford Shopping Center beyond (zoned CC). The project would be in conformance with the Comprehensive Plan and the Zoning Ordinance. Mitigation Measures: Residual Impact: None required None X. Mineral Resources The Califomia Department of Conservation (DOC), Division of Mines and Geology (DMG), has classified the City of Palo Alto as a Mineral Resource Zone 1 (MRZ-1). This designation signifies that there are no aggregate resources in the area. The DMG has not classified the City for other resources. There is no indication in the 2010 Comprehensive Plan that there are locally or regionally valuable mineral resources within the City of Palo Alto. Mitigation Measures: Residual Impact: None required None XI. Noise Power Transformers (ultimately a total of 4 at Quarry Road substation with this proj ect) will produce a humming sound. All of these transformers are tested and built with noise levels that are within acceptable limits adopted by Utilities throughout California. The humming sound of the transformer includes inherent vibration sound and the noise generated by the operation of the transformer’s radiator cooling fans. Each of the transformers at Quarry substation has an average noise level of 7 l d!3A at 1 ft with cooling fans running. There are two (2) existing transformer on the site. The project would add two (2) additional transformers. The aggregate noise level of all transformers at their worst operating condition (transformer cooling fans running), .calculated at the center of the substation, is approximately 47 dBA. Projecting this sound level to a distance of 100 ft and to a distance of 200 ft from the center of the substation, the noise level is approximately 37 dBA at ! 00 ft and 31 dBA at 200 ft. In comparison, the average noise level of a high density urban street (like Quarry Road) is 70 dBA. The substation is located near commercial and office buildings, none of them closer than 200 ft. The project site is not located within any public or private airport zone. The project would not cause anoticeable increase in noise on the immediate surroundings. However, the construction of the project would temporarily increase current noise levels in the vicinity of the site. A!I development of the site shal! comply with the Palo Alto Noise Ordinance, Chapter 9.10 PAMC. Policy N-39 of the Palo Alto Comprehensive Plan encourages the location of land uses in areas with compatible noise environments. The Quarry substation Capacity increase will have no significant contribution to the increase of the noise level of the surrounding area and there is no residence within 1 mile of the project site. Mitigation Measures: Residual Impact: None required None 17 XII. Population and Housing The project is limited to the installation of new electrical equipment. population growth in the area. Mitigation Measures:None required Residual Impact:None This new equipment would not contribute to XIII. Public Services Fir__~e The proposed project would not impact fire service to the area. The site is not located in a high fire hazard area. Police The site is located within the jurisdiction of the Palo Alto Police Department. The project would not byitselfresult in the need for additional police officers, equipment, or facilities. Mitigation Measures:None required Residual Impact:None XIV. Recreation The project would not generate any increase in population and therefore, would have no impact on existing or proposed recreational facilities Mitigation Measures: Residual Impact: None required None XV. Transportation/Traffic Primary vehicular access to the site is provider by Quarry Road. Access to the site is limited to employees of the City of Palo Alto Utilities Department, The current vehicle trips associated with the site are limited to infrequent maintenance visits for the existing electrical equipment. The new equipment would require increased maintenance. The increase in maintenance visits would have an infrequent periodicity and would be an imperceptible increase to the current number of vehicle trips. Mitigation Measures: Residual Impaet: None required None XVI,Utilities and Service.Systems The existing Alma Street Electric Utility substation will be abandoned after the relocation of the equipment to the Quarry Road Electric utility substation has been completed. The relocated equipment will increase the.electrical capacity of the existing Quarry Road substation. Alsobeing relocated are the transmission lines and communication system cables, relocation of the fiber optic system hub inside the Alma Street substation and constructing new 12kV electric distribution feeders to supply the electrical needs of Do~vntown Pa!o Alto from the Quarry Road substation. Mitigation Measures: Residual Impact: None required None 18 MANDATORY FINDINGS OF SIGNIFICANCE The project would not have an impact on fish or wildlife habitat, nor would it impact cultural or historic resources. The uses are appropriate for the site and the development would not result in an adverse visual impact. There is nothing in the nature of the proposed development and property improvements that would have a substantial adverse effect on human beings, or other life or environmental impacts. WE, THE UNDERSIGNED, HEREBY ATTEST THAT WE HAVE REVIEWED THIS INITIAL EVALUATION/DRAFT MITIGATED NEGATIVE DECLARATION PREPARED FOR THE PROPOSED DEVELOPMENT OF PROPERTY KNOWN AS QUARRY ROAD SUBSTATION CAPACITY INCREASE, 281 QUARRY ROAD PALO ALTO, CALIFORNIA. Applicant’s Signature Date Mitigation Measures: A Tree Protection and Preservation Plan for both demolition and construction (since some fencing will be expanded) shall be prepared by an ISA CertifiedArborist and submitted for revie~v and approval by the Planning Arborist. The plan shall be consistent with the City Tree Technical Manual, Section 2.00. All specific recommendations from the approved plan shall be implemented and maintained throughout construction. A Tree Protection Zone (TPZ) for each tree to be retained in which no soil.disturbance is permitted shall be established and be clearly designated on all improvement plans as a bold dashed line, including grading, utility and irrigation, and show that no conflict occurs with the trees. The plan shall specify, but not be limited to, monthly arborist inspections, and pruning, protective fencing, grading limitations and any other measures necessary to insure survival of the trees. Key elements of this pIan shall be printed on a Tree Protection Instructions sheet with the Project Arborist contact number. Any break in the vegetated hedge row along Alma Street, for the purposes of overhead lines or access for other activity, will be evaluated as to the potential impact to aesthetic visual erosion, and long term effects of the changes. Adequate mitigation will be impIemented by the project if this relocation option is selected. An 0il containment pit is to be constructed that would contain 100 percent of the oil volume of the transformers in the event of a leak. A transformer "low oil alarm" shall be installed to alert Palo Alt Utilities personnel of any oil tank leak. Utility personnel shall have spill prevention and spill countermeasures in place at the site at all times. 19