mavor —————orrv HALES 270Santa Maria Avenue Pcifes, alfornia 94044-2505 MAOKDTEM wa clvoTpaclca. oe Tensone counct Sedge snes etn tay an Nha WUiGoieean”” pecenber 25, 2012 ar sre q ssceveny tol secos STATENS FoR Bey oan cryaTomey Stephen M. Testa, Executive officer ‘Seoatnet oi Conaton EVRISESE State mining and’ coology Soara cream Departnent of Conservation DEC 17 20 Ti tttmery 01K street suite 2015 Fane Subject: 45-ay Notice to Correct Deficiencies, CA Mine ID#91-41~ fe a rnoas2 002, Pacific Quarry, City of Pacifica Lo manson ‘The City is in receipt of the 45-day Notice to Correct Farisalseims Defigiencice ("Notice eo Corsect™| from the Grate Mining snd sats tact Geology Board (“Board”) based on the October 3, 2012 Office of OUANON 4 ‘Mine Reclamation (“OMR”) Lead Agency Review Tean (“LART”) Report thqsrsene for the City of Pacifica. Thank you for the opportunity to adare: prone the following ieeuse: TBESSSS" — pettctency 1: Fatlure to adjust the financial assurance and Tir(Goyrsere gubsequentiy aiiowing the Financial Assurance Mechanien (TFAM")_of scoiemounn’ $1,044,179 €0 expire on January 17, 2012, without the alte bel votes armen aaE moe ‘the city in informed of ite obligations arising fron the pate Surface Mining and Reclamation Act ("SWARA"), and understands that milisomesne a FAM is necessary to ensure that available funds exist to reclaim mi leanses 4 site, In the past, the City has made efforts to ensure that tins ang) FAMB have not expired without reclaiming the aite, and the City: Hujeslresea intends to maintain thie practice in compliance with SMARA in the shettsr future. However, over the past two years, the city has been in Marea the unique position of overseeing an operator who obtained Pacifica Quarzy through foreclosure proceedings. Ae a result, the City has had difficulty obtaining various forms of compliance’ from Pacifica Lenders, the owner of Pacifica Quarry. Pacitica Lenders became the owner of Pacifica Quarry through foreclosure proceedings in 2010. At that tine, a Letter of Credit operated as the FAN for Pacifica Quarry, however the FAM officially expired on January 17, 2010. The City is informed and Path of Portola 1768+ San Francisco Bay Discovery Stebelieves that in 2009, all notices of expiration were sent to the State, who wae the beneficiary of the letter of Credit, Nevertheless, in September 2009 upon learning that the Letter of Credit was to expire in January 2020, the city made efforts to request that the owner at that tine, Peebles Corporation, obtain a new FAM before expiration. Peables represented to the city that a’FAM would be obtained by the new owner, since Pacifica Quarry was in the process of being sold. However, the new owner, Pacifica Lenders, never obtained a new FRM On April 19, 2011 the city emailed Pacifica Lenders requesting that a new FAM be obtained within 30 days. On May 25, 2011, the city issued Notice of Violation. However, pursuant to a response letter dated cune 2011 in which Pacifica Lenders requested an extension of tine to cbtain the FAN due to a prospective buyer, the City granted Pacifica Lenders a 90-day extension to cbtain a new FAM.” Apparently, negotiations with the buyer failed and Pacifica Lenders thereatter failed to obtain the requested FAM on October 27, 2012, the City issued a second Notice of Violation. in xesponse to this Notice, the city received a Financial Aesurance Cost Estinate ("Cost Estimate”) fron Pacifica Lenders’ consultant, LSA Associates, dated November 29, 2011 in the amount of $993,566. However, this Cost Estimate contained inconsistencies and did not reflect the increase in the construction cost index. As a xeault, the City rejected this firet Cost Bstinate on December 12, 2011. The same Cost Estimate was resubmitted to the city on January 2, 2012, this tine including explanations for the estimate However, after review, the Coat Eetinate wae rejected for the same reac ae before. Subecquently, a second Cost Eetinate waa submitted on June 26, 2012 in the amount of $1,067,043. This Cost Estimate was reviewed and found acceptable by the City and vas forvarded to OMR. However, no review comments Gore received Fram CM® and therefare, op Osteher ©, 2017 the Csty requested that LSA Associates and Pacifica Lendere proceed with obtaining a PAM in the anount of $1,067,043 as soon as possible. However, no new FAN has been obtained by the owner. singe the issuance of the Notice to Corsect, the City haa diligently worked with Pacifica Lenders to ensure that a new FAM is obtained, On October 16, 2012, Pacifica Lenders and LSA Associates were informed that the Notice to Correct was issued and that Pacifica Lenders must innediately obtain a FAM. On October 18, 2012, the City's Director of Public Works requested that LSA Associatés provide a date upon which a FAM vould be obtained, and again followed-up on October 23, 2012. On October 29, 2012, the City Manager sent a formal letter to Pacifica Lenders requesting that it obtain a FAM by Novenber 29, 2012, The City again followed up with LSA Associates on Novenber 8, 2012. on Novenber 20, 2022, the City and Pacifica Lenders held a meeting to @iscuse the FAM. Duing the meeting, Pacifica Lenders was given information from the Board’ s website regarding the varicus forms of acceptable PAKS. Alex Nobile of Pacifica Landers stated that his company is conmitted to nesting its obligations to provide the FAM required for Pacifica Quarry Pacifica Lenders acknowledged and undertood that the City has boon persistent and diligent in requiring that Pacifica Lenders understand and Ineet its obligations to provide an appropriate Cost Bstinave and FAN, According to Mz. Nobile, Pacifica Lenders is working with SA Associates, 26 it hae in the pact, to provide a Cost Eetinate and obtain a new FAM. Pacifica Lenders’ efforts to secure a FAK through the traditional methods and sources has not been successful principally because of the Fetreat from the market of most traditional hond providers and/or the 100% collateral requirenents of those parties willing to entertain requestsPacific Lenders acquired Pacifica Quarry through foreclosure and is a Special Purpose Entity whose only asset ic the property itself, As a result, Pacifica Lenders does not have a cash reserve or source to pay the §1,000,000+ that the traditional markets require for a reclamation hond, nor doce it have @ principal willing or able to provide the personal guaranty required in addition to the bond or letter of credit, However, Pacifica Lenders expressed confidence that it can raise the funds for a FAM through a solicitation to ite investors. According to Pacifica Lenders, this process is tine consuming and will require consultation with securities and transact ion counsel. A conservative estinate is that the process will take 60 to 90 days, not including the scattered holiday schedules. Pacifica Lenders believes that a realistic date for completion is March 31, 2013. Moreover, as an expression of its good faith and commitment to the City of Pacifica and the property, Pacifica Lenders has agreed to make a $100,000 paynent toward the FAM undertaking. The City is in the process of drafting a fornal agreenent whereby Pacifica Lendere will pay the City $100,009, to be held until Pacifica Lenders can, raise the additional capital necessary to obtain a FAN. The agreenent will provide that if Pacifica Lenders fails to obtain the new FAN by tareh 31, 2013, the City will inetitute enforcement procesdinge consistent with the enforcement actions authorized under SNARK. Once the agreement is fully executed, the City will forward a copy to the Board. ‘the City believes that Pacifica Lendeve is earnest in ite attempt co obtain the requisite FAK, Av a reault, the City intends to give Pacifica Lenders until March 31, 2013 to obtain the FAN, before holding a compliance hearing and instituting adninistrative penalties as provided by SHARA. Deficiency 2: Failure to conduct adequate inspections, ‘The City feels that it has conducted an adequate inspection as to all items in the reclamation plan. Moreover, 211 itene listed in Block VII of the OMR Form NRRC-1 have been inspected. Thic ic consistent with the City’s understanding of SMARA inspection requirements, as well as with inspection forms completed by the Board when the Board was the lead agency for Pacifica Quarsy.. (See attached inspection forms completed by the Board for 2004 and 2005). Tn accordance with SMARA, previous inspection reports have also been completed. As evidence, the City is attaching ite three most recent inspection forms, completed in May 2010, June 2011, and June 2012 Note that in general, the site ie vory clean. There ie no equipment, rock, structure or any other material that may pose a hazard to anyone of site. In fact, the safety conditions at the site are such that the city was successful in securing a grant to construct, and subsequently constructed, a public recreational biking and hiking trai’ adjacent to the quarry aite Although veclanation has not yet begun, the site is being maintained ina fate manner so aa to ensure the health, safety and welfare of the general public. As reported, no reclamation work has begun, mining activities have ceased and no such activities are anticipated in the future. Because mining activities have ceased, there have been no material changes in the site Since 1995. Any changes have been recorded in conjunction with the following form MRRC-1 categories: + Wildlife Habitat; + Re-vegetation; + agricultural Land:Stream Protection; Tailings and Mine Waste Management; Closure of Surtace openings; Building, structure, and Equipment Renoval; ‘Topsoil Salvage, Maintenance, and Redistribution; Backfilling, Re-grading, Slope Stability, and Re-contouring; and Drainage, Diversion structures, Waterways, and Erosion Most recently, work in the veclamation plan hae not begun, and therefore, certain violations have been noted and reported. These violations include Re-vegetation: ‘Topseil Salvage, Maintenance, and Redistribution; Backfilling, Re-grading, Slope Stability, and Re-contouring: and Drainage, Diversion structures, Waterways, and Erosion. Because Pacifica Quarry ie currently owned and operated by Pacifica Lenders through the foreclosure proceeding discussed above, the quarry is in austate of linho while the current ovners wait for a buyer to purchase the land, As recognized by Mr. Testa during a recent necting with the City, it ie most practical to wait until a developer purchases and plans to develop the land before beginning reclamation activities. While inspections will continue to be made and conditions noted and reported, the City anticipates that actual reclamation will begin when a developer purchases the land for future development As Indicated by the City’ s completion of Inspection Form MRRC-1, the city hag made adequate inspections of Pacifica Quarry and reported violations and deficiencies in compliance with ONARA, and will continue to do #o in the Eature Deficiency 3: Yatlure to seek forfeiture of financial assurances and to Garry out Feclanation of surface aining operations LART reported that the Pacifica Quarry operator was able to cash in che FAM. However, che FAM which was previously in place was a Letter of Credit, of which, ‘OMR was the sole beneficiary. The city never issued a veleast of the Fal and the City would have puraued the forfeiture of the FAK if the release was requested. As noted above, all notices of expiration wore sent to the state, rathor than the City because of OMR's status as sole beneficiary. Im the future, forfeiture of the FAM, when in place, 11] certainly be sought by the City if the cumer fails to complete reclamation. Deficiency 4: Failure to take appropriate enforcenent actions. LART failed to report that the City has taken enforcement actions in the past, including issuance of two Notices of Violation on May 25, 2011 and October 27, 2011. As explained above, the transition in ownership of Facifica Quarry to Pacifica Lenders has resulted in difficulty obtaining a new FAM, However, given Pacifica Landers’ recent showing of a good faith effort to ensure that a FAN de obtained, the City de willing co work with Pacifica Lenders to allow increased time to obtain the appropriate FAM, and thereafter pursue enforcement action as necessary. As detailed above, the city is taking active steps to enforce the provisions of SARA, and will proceed with conpliance hearings and possible Soninistrative penalties, 1f necessary, after March 31, 2013As always, the City appreciates the Board’ s guidance and time in this watter. Please feel free to contact us with any questions or concerns Sincerels van poninié ocdape, P. E. Director of Public Works cc: File Steve Rhodes, city Manager attachnente 1. Letter from FOR & Sons of New York dated Noverber 20, 2012 2. Completed Inspection Forns MERC-1 for years 2004, 2005, 2010, 2011, 2032 3. Photos: Pacifica Quarry & Bike/Pedestrian TrailNovember 20, 2012 Alex Noble ‘Ambit Funding 24 South Fiver Strest Wikes-Berre, PA 18702 Re: Reclamation Bond Dear Alex [At your request we have reseerched the the long list of bond markets that wite reclamation bonds. A this time there are three mejor players in his rea. Al theoa have declined this risk citing the following: Reclamation bonds are one of the higher risk bonds that require strong financials end Indemnity to support what could potentially be a long duration obligation. At this ime the companies re mostly writing reclamation bende for very large companies with rong financials that have siriicant premiums with the company 2 supporting business Sincerely, SON GORPORATION & ¢ Fulby Ria Seno VP/Menaging Ditector (xtedfion 1208) Direct (516) 471-1722 ‘e-mail:tiby rid@foason.com end,DEPARTMENT OF CONSERVATION (OFFICE OF MINE RECLAMATION. "RE Page oe Om SURFACE MINING INSPECTION REPORT Inn orcaphing he ene ie. Aaah le) vn) ane en ard mrcape TH TSS BPTI TI STN TTT Pacifica Quay t= 47-0001 SRR TAS TO ETAT Cy oF acta eared JessieD. de Gunman (650) 7383767 a Ta ‘Associate vl gine Deparment Public Works Enginaering Oven 170 Sonatara Avenue a 108 OSEST equzmanjocioacfcacaus sa aaareer Shannen L Metay 24 South iver Steet aT (212) 2473050 60.8205 Wilkes ane Pa 18702 fexarnaraan Shannon Mclayeembstundingom Teme Fr | [rome urrecse Frond Recaro? © [r [e [ re curries Yes eir sng Opener avalon SMAREA Ghamone mr Tver Yer pavseon rbot Fea oe Lntetesionsimtertsin BP: ‘ate Gam No EN (US Font Se ain Noa (FE OF ‘1STHBUTION roa Opam Cpa Sty Lan gy es Hoey Oe. LM UES esdSEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION. Sines boat em) SURFACE MINING INSPECTION REPORT Canteen” [snare [ee sime a eS — : oe ; oe wn anes im as : = : oS : = ; ‘Tiatlar hanes Amos cocuaton weve repre” MENT SORY ct revmat | Oumet Remon: May 7, 2009 (Dees ie meduniaisontiecoverthe sew annus exicdatont [Yas BN | Salon macrenam somes"? May 11,2010 Financial Assurance Mechaitm muttincude the Cy ofPacic an the Department of Conservation OMRas Bena, DDSTmUTIN Crp Ow, open Ey Lind Age Labs Ape, Sb On nsBLMr UES eurePARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION tropes ee 805), SURFACE MINING INSPECTION REPORT —_rn FL | | & Jmetncon ay ra2010 7 ri[rel[r[e aie a oe — Flririe Duewion st impcton 1.5 ‘as tivo ee c[elr[e ona tore T [|e | & | oreo omerscmen 34 ‘ig Sen ot nono e[rF[r[e ee 7 [|e | & | meoren cone me try ra Sse Sy Reg ri[rlrle ten Corie rcs Wore mle TPP | oe | emnenannn om me cree oneni rlelrle niger earecen ea) nb fancier) "WW bon checked for ems in BLOCK Vlas no operation in progres, "WRecarationn accordance withthe approved reclamation plan should commence prompty a ining actile have ceaeed and nosuch actives ae arpated nthe ute May 10,2010 ng Se by Ct) ne LM USS ane)DEPARTMENT OF CONSERVATION EEICE OF MINE RECLAMATION SURFACE MINING INSPECTION REPORT somone he ent en ach o) viatn a cn Mebad nce Tae Rane aT eT TG pena au. [ron | SA Ot TTS TST AT HT Cy of Paciea Tae ‘este Ode Gurman (680) 7383767 To oa ‘Associate Cv Engines Deparment of ub Works-Engnesring DMson 7OSama ass hue a Fa Paces a sao dlegurmanjadipucfencaus Sei tendon ea “ase atest (212) 2473490 De Soutniverst a kaa Withee ase ra ‘e702 BiLezrshgemtitinaing com Tremont a ee ‘assed cai EP [or [er [Fe overe9s ash pets fos ng Opomen Mana Rap GRR Chaos Vr zm Tom FR RSS RST OTE =o ne [ cooraten cams ean, DETROUTON Oxprtw Oe, Cones WS by eae oy, Labs ae Se Ey Oe BLM USS reDEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION ates Page ze fe 800) SURFACE MINING INSPECTION REPORT Tana : oats : Tiras ; Trees ; Tre : Fain : cr ws | ance cen ha Dees heainenmecrenimsintieceerinenevarnusiaivain? ver FN | Byls madame nuns"? 6-20-2010 nancial Assurance Mechanism mustinclude the Cy of Pais andthe Deparment of Conservation OMR as benef, DETMBUTIN: Ota Ose Cin Sy an ge ab Agee, St by pe rd BU crDEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION. SURFACE MINING INSPECTION REPORT Rubsesmmaynemnne we semen emserond] oc Tow Tow [mn [meee —— TL | O | & |emmoe ine. Senet cir] ole Tocanaind ale) a) & [acer error i ee eee Thode vas ee nlr{nle® conttamoone TPE Le] & | mnmenonesinen 5 a elrlele rs on ae Roc i ay ore clr[rle Soae ce esas SS oun rlelrlr iat evenpion on rn) ‘Hedman anemone “MA Boxchectad fortes in Slck las no operation itn progres ae 1. Gnnet has actobtined Financ Asurnce Mechanl Nate of Vian sentto Gwner May 25,2011, 2.Reclration not begun when mining acivveshave ceased and na such actives ae atpated inthe future. June 9,2011DEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION. nes age 13 80) SURFACE MINING INSPECTION REPORT eelon tr cmptig hm reo ee Ach sf be June 12,2012 TRS AST RATT SS ST a Cty of Paces TH a aa ECT iy of acca Jesse Die Gusran (650 738767 Ta aT ‘Associate Cigna DPWEngineeing "70 Sonts aa Ave, "aces ners ALC cadre a ites (222) 2472080 2aSouth vert fea a ar Wilkes Bore Pa 6702 binleishigambifuncing om Reena? eo ‘aren cs Pan TL Dr | wares. asco fa Mang pen Aol Raat fre MARA cio Yon me Toon SSS aaa RTS oe a ‘ora ing Kobe a. ee | STHEUTON: Cia pen Cos Se by Lat Ren Lanny, Sy Opes nM UE eure,JEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION SURFACE MINING INSPECTION REPORT RST ST TTT aor swt eracinrmeemantananpeeonee eae ine 12 2012 see T sow so 7 Tr cot come 7 7 eter of Creat . r Ttearoa 7 TpeawatRomra 7 or r 7 Gio ee PRS wenn Deesbecarnimacanuns nti cone ere armaaon? [Yen Xin | FI, dae common ee ed 6 0 aang —{$— nen Assurance Mechanism FAN) must ince the iy of Pata andthe Deparment of Conservation OMR at benefetni 2010 Fanci Assurance Cos Estimate (ACE) approved but n FAM cbained by Owner. Notice of ation eed May 25,2011 ‘ns etober 27,201, FACE dated Novernber20,2011eiewed, To be ese by Owner, ACE dated May 23,2012 recived June 262012 Reviewed and forwarded to Deparment of Consrvation-OMR TRIBUTION: Noha Ope. Car: Samy 658 Foy, eb ome Se by Cone) ad LOSES maidSEPARTMENT OF CONSERVATION OFFICE OF MINE RECLAMATION SURFACE MINING INSPECTION REPORT wa Rr | |r Joeooan: June 2.2002 ewan rlel[ei[r ‘ cle[ele besdiec ol rere “inane zPrlelr i tc Or [|e [| meeimeccmatnszcnne 24 at San a aso x{rleler Torgerson P| [Lo | ses cnmtonenmer ne Daag etre, See Si Rae rlelrlr Cera rene Once Warne an Tm | |r | mereamiencam av one deren nen n[cl[ol[o camp aconson ase) riens encgion ai om Violations noted (i as rectamation has net beoun. Grading to loner the westerly bf elevation and reshaping the Main Foce and ast Fan removal of loose fi and landslide depos ro the East Flank cainage, keyway,feslng le compete Pad Ain the ‘Quarry Pit and form Pad B below the Wainerance Road and e-vegetaton have not begun. hstecplermins on he property ‘Owner noted on Febuary 2.2012 that the Reclamation Plan end date expred with noecemation, aT —— TET AN June27 2012 OsTRaow SgmtoGwn C589) he ne Sor pe wt NCU meh