Arroyo Grande City Council
November 25, 2025

a. A cooking facility with appliances.
b. A food preparation counter and storage cabinets that are of a reasonable size in relation to the size of the JADU.

5. “Junior accessory dwelling unit” or “JADU” means a residential unit that satisfies all of the following:
a. It is no more than 500 square feet of interior livable space in size. b. It is contained entirely within an existing or proposed single-family structure. An enclosed use within the residence, such as an attached garage, is considered to be a part of and contained within the singlefamily structure. c. It includes its own separate sanitation facilities or shares sanitation facilities with the existing or proposed single-family structure. d. If the unit does not include its own separate bathroom, then it contains an interior entrance to the main living area of the existing or proposed single-family structure in addition to an exterior entrance that is separate from the main entrance to the primary dwelling. e. It includes an efficiency kitchen, as defined in subsection C.4 above.

6. “Livable space” means a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation.

7. “Living area” means the interior habitable area of a dwelling unit, including basements and attics, but does not include a garage or any accessory structure.

8. “Nonconforming zoning condition” means a physical improvement on a property that does not conform with current zoning standards.

9. “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the ADU or JADU.

10. “Proposed dwelling” means a dwelling that is the subject of a permit application and that meets the requirements for permitting.

11. “Public transit” means a location, including, but not limited to, a bus stop or train station, where the public may access buses, trains, subways, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public.

12. “Tandem parking” means that two or more automobiles are parked on a driveway or in any other location on a lot, lined up behind one another.

D. Approvals. The following approvals apply to ADUs and JADUs created under this section:

1. Ministerial ADU and Building Permits Required. Every ADU and JADU requires an ADU permit and a building permit. The city will review and approve permit applications in accordance with subsection D.3 below.

2. Processing Fee. The city may charge a fee to reimburse it for costs incurred in processing ADU permits, including the costs of adopting or amending the city’s ADU ordinance. The ADU-permit processing fee is determined by the most recent fee schedule approved by city council resolution.

3. Process and Timing.
a. Completeness.
i. Determination in 15 days. The city will determine whether an application to create or serve an ADU or JADU is complete and will provide written notice of the determination to the applicant within 15 business days after the city receives the application submittal.
ii. Incomplete Items. If the city’s determination under subsection D.3.a.i above is that the application is incomplete, the city’s notice must list the incomplete items and describe how the application can be made complete.
iii. Cure. After receiving a notice that the application is incomplete, the applicant may cure and address the items that were deemed by the city to be incomplete.
iv. Subsequent Submittals. If the applicant submits additional information to address incomplete items, within 15 business days of the subsequent submittal the city will determine in writing whether the additional information remedies all the incomplete items that the city identified in its original notice.

The city may not require the application to include an item that was not included in the original notice.
v. Deemed Complete. If the city does not make a timely
determination as required by this subsection a, the application or resubmitted application is deemed complete for the
purposes of subsection D.3.c below.
vi. Appeal of Incompleteness. An applicant may appeal the city’s determination that the application is incomplete by submitting a written appeal to the city clerk. The planning

commission will review the written appeal and affirm or reverse the completeness determination and provide a final written determination to the applicant within 60 business days after receipt of the appeal.
b. No Discretion or Hearing. Ministerial permits for an ADU or JADU are considered and approved without discretionary review or a hearing.
c. Deadline to Approve or Deny Ministerial Approvals. The city must approve or deny an application to create an ADU or JADU within 60 days from the date that the city receives a complete application. If the city has not approved or denied the complete application within 60 days, the application is deemed approved unless either:
i. The applicant requests a delay, in which case the 60-day time period is tolled for the period of the requested delay, or ii. When an application to create an ADU or JADU is submitted with a permit application to create a new single-family or multifamily dwelling on the lot, the city may delay acting on the permit application for the ADU or JADU until the city acts on the permit application to create the new single-family or multifamily dwelling, but the application to create the ADU or JADU will still be considered ministerially without discretionary review or a hearing.
d. Denial. If the city denies an application to create an ADU or JADU, the city must provide the applicant with comments that include, among other things, a list of all the defective or deficient items and a description of how the application may be remedied by the applicant.

Notice of the denial and corresponding comments must be provided to the applicant within the 60-day time period established by subsection D.3.c above.
e. Appeal of Denial. An applicant may appeal the city’s denial of the application by submitting a written appeal to the city clerk. The planning commission will review the written appeal and affirm or reverse the denial and provide a final written determination to the applicant within 60 business days after receipt of the appeal. f. Concurrent Review of Demolition. A demolition permit for a detached garage that is to be replaced with an ADU is reviewed with the application for the ADU and issued at the same time.

E. Classes.

1. Building-permit OnlyClass 1: Statutorily Regulated. Class 1 ADUs and JADUs are approved under Government Code section 66323. If an ADU or JADU complies with each of the general requirements in subsection F belowF below, it is allowed with only a building permit inin each of the following scenarios: provided in this subsection E.1. An ADU and JADU approved under subsection E.1.a may be combined with an ADU approved under subsection E.1.b, and ADUs approved under subsection E.1.c may be combined with ADUs approved under subsection E.1.d.
a. Converted on Single-family Lot with Single-Family: One ADU as described in this subsection E.1.aE.1.a and one JADU on a lot with a proposed or existing single-family dwelling on it, where the ADU or JADU:
i. Is either: within the space of a proposed single-family dwelling; within the existing space of an existing single-family dwelling; or (in the case of an ADU only) within the existing space of an accessory structure, plus up to 150 additional square feet if the expansion is limited to accommodating ingress and egress; and
ii. Has exterior access that is independent of that for the singlefamily dwelling; and iii. Has side and rear setbacks sufficient for fire and safety, as dictated by applicable building and fire codes.
iv. The JADU complies with the requirements of Government Code sections 66333 through 66339.
b. Limited Detached on Single-family Lot with Single-Family: One detached, new-construction ADU on a lot with a proposed or existing single-family dwelling (in addition to any JADU that might otherwise be established on the lot under subsection E.1.a above), if the detached ADU satisfies each of the following limitations:
i. The side- and rear-yard setbacks are at least four feet. ii. The total floor area is 800 square feet of livable space or smaller.
iii. The peak height above grade does not exceed the applicable height limit in subsection F.2F.2 below.
c. Converted on Multifamily Lot with Multifamily: One or more ADUs within portions of existing multifamily dwelling structures that are not used as livable space, including but not limited to storage rooms, boiler rooms, passageways, attics, basements, or garages, if

each converted ADU complies with state building standards for dwellings. Under this subsection E.1.cE.1.c, at least one converted ADU is allowed within an existing multifamily dwelling, up to a quantity equal to 25 percent of the existing multifamily dwelling units. d. Limited Detached on Multifamily Lot with Multifamily: No more than two detached ADUs on a lot with a proposed multifamily dwelling, or up to eight detached ADUs on a lot with an existing multifamily dwelling, if each detached ADU satisfies all of the following:
i. The side- and rear-yard setbacks are at least four feet. If the existing multifamily dwelling has a rear or side yard setback of less than four feet, the city will not require any modification to the multifamily dwelling as a condition of approving the ADU.
ii. The peak height above grade does not exceed the applicable height limit provided in subsection F.2F.2 below.
iii. If the lot has an existing multifamily dwelling, the quantity of detached ADUs does not exceed the number of primary
dwelling units on the lot.

2. Class 2: Locally Regulated. Class 2 ADUs are approved under Government Code sections 66314-66322. Except for Class 1 ADUs approved under subsection E.1 above, all ADUs are subject to the standards set forth in subsections F and G below.

2. ADU Permit.
a. Except as allowed under subsection D.1 above, no ADU may be created without a building permit and an ADU permit in compliance with the standards set forth in subsections E and F below.
b. The city may charge a fee to reimburse it for costs incurred in processing ADU permits, including the costs of adopting or amending the city’s ADU ordinance. The ADU-permit processing fee is determined by the most recent fee schedule approved by city council resolution.

3. Process and Timing.
a. An ADU permit is considered and approved ministerially, without discretionary review or a hearing.
b. The city must approve or deny an application to create an ADU or JADU within 60 days from the date that the city receives a completed application. If the city has not approved or denied the completed

application within 60 days, the application is deemed approved unless either:
i. The applicant requests a delay, in which case the 60-day time period is tolled for the period of the requested delay, or ii. When an application to create an ADU or JADU is submitted with a permit application to create a new single-family or multifamily dwelling on the lot, the city may delay acting on the permit application for the ADU or JADU until the city acts on the permit application to create the new single-family or multifamily dwelling, but the application to create the ADU or JADU will still be considered ministerially without discretionary review or a hearing. c. If the city denies an application to create an ADU or JADU, the city must provide the applicant with comments that include, among other things, a list of all the defective or deficient items and a description of how the application may be remedied by the applicant. Notice of the denial and corresponding comments must be provided to the applicant within the 60-day time period established by subsection 0 above.
d. A demolition permit for a detached garage that is to be replaced with an ADU is reviewed with the application for the ADU and issued at the same time.

F. E. General ADU and JADU Requirements. The following requirements apply to all Class 1 and Class 2 ADUs and JADUs that are approved under subsections D1. or D.2 above:

1. Zoning.
a. AnA Class 1 ADU subject only to a building permit under subsection D.1 E.1 above may be created on a lot in a residential or mixed-use zone.
b. AnA Class 2 ADU subject to an ADU permit under subsection D.2 aboveE.2 above may be created on a lot that is zoned to allow singlefamily dwelling residential use or multifamily dwelling residential use. c. In accordance with Government Code section 66333(a), a JADU may only be created on a lot zoned for single-family residences.

2. Height.
a. Except as otherwise provided by subsections E.2.b F.2.b and E.2.cF.2.c below, a detached ADU created on a lot with an existing or proposed single family or multifamily dwelling unit may not exceed 18 feet in height.

b. A detached ADU created on a lot with an existing or proposed single family or multifamily dwelling unit that is located within one-half mile walking distance of a major transit stop or high quality transit corridor, as those terms are defined in Section 21155 of the Public Resources Code, may be up to two additional feet in height (for a maximum of 20 feet) if necessary to accommodate a roof pitch on the ADU that is aligned with the roof pitch of the primary dwelling unit. c. An ADU that is located as a second story above an existing or proposed detached garage may be up to 25 feet in height. d. An ADU that is attached to the primary dwelling may not exceed 25 feet in height. Notwithstanding the foregoing, ADUs subject to this subsection E.2.dF.2.d may not exceed two stories.
e. For purposes of this subsection E.2F.2, height is determined by measuring the vertical distance from the average finished grade to the highest point of the coping of a flat roof or to the deck line of a mansard roof, or to the highest point of the highest gable of a pitch or hip roof, but exclusive of vents, air conditioners, chimneys, or other such incidental appurtenances.

3. Fire Sprinklers.
a. Fire sprinklers are required in an ADU or JADU if sprinklers are required in the primary residence.
b. The construction of an ADU or JADU does not trigger a requirement for fire sprinklers to be installed in the existing primary dwelling.

4. Rental Term. No ADU or JADU may be rented for a term that is shorter than 30 days. This prohibition applies regardless of when the ADU or JADU was created.

5. No Separate Conveyance. An ADU or JADU may be rented, but, except as otherwise provided in Government Code section 66341, no ADU or JADU may be sold or otherwise conveyed separately from the lot and the primary dwelling (in the case of a single-family lot) or from the lot and all of the dwellings (in the case of a multifamily lot).

6. Septic System. If the ADU or JADU will connect to an onsite wastewatertreatment system, the owner must include with the application a percolation test completed within the last five years or, if the percolation test has been recertified, within the last 10 years.

7. Owner Occupancy.

a. ADUs created under this section on or after January 1, 2020. ADUs are not subject to an owner-occupancy requirement.
b. JADUs.
i. b. Generally. As required by state law, all JADUs are subject to an owner-occupancy requirement. A natural
person with legal or equitable title to the property must reside on the property, in either the primary dwelling or JADU, as the person’s legal domicile and permanent
residence. However, the owner-occupancy requirement in
this subsection F.7.b.i does not apply if the
ii. Exceptions. The owner-occupancy requirement in this subsection F.7.b does not apply in either of the following situations:
(I) The JADU has separate sanitation facilities (i.e., does not share sanitation facilities with the existing primary dwelling unit structure).
(II) The property is entirely owned by another
governmental agency, land trust, or housing
organization.

8. Deed Restriction. Prior to issuance of a certificate of occupancy for an ADU ora JADU, a deed restriction must be recorded against the title of the property in the County Recorder’s office and a copy filed with the Community Development Department. The deed restriction must run with the land and bind all future owners. The form of the deed restriction will be provided by the city and must provide that:
a. Except as otherwise provided in Government Code section 66341, the ADU orThe JADU may not be sold separately from the primary dwelling.
b. The ADU or JADU is restricted to the approved size and to other attributes allowed by this section.
c. The deed restriction runs with the land and may be enforced against future property owners.
d. The deed restriction may be removed if the owner eliminates the ADU or JADU, as evidenced by, for example, removal of the kitchen facilities. To remove the deed restriction, an owner may make a written request of the Community Development Director, providing evidence that the ADU or JADU has in fact been eliminated. The Community Development Director may then determine whether the

evidence supports the claim that the ADU or JADU has been eliminated. Appeal may be taken from the Community Development Director’s determination consistent with other provisions of this Code. If the ADU or JADU is not entirely physically removed, but is only eliminated by virtue of having a necessary component of an ADU or JADU removed, the remaining structure and improvements must otherwise comply with applicable provisions of this Code. e. The deed restriction is enforceable by the Community Development Director or his or her designee for the benefit of the city. Failure of the property owner to comply with the deed restriction may result in legal action against the property owner, and the city is authorized to obtain any remedy available to it at law or equity, including, but not limited to, obtaining an injunction enjoining the use of the ADU or JADU in violation of the recorded restrictions or abatement of the illegal unit.

9. Building & Safety.
a. Must comply with building code. Subject to subsection E.9.b F.9.b below, all ADUs and JADUs must comply with all local building code requirements.
b. No change of occupancy. Construction of an ADU does not constitute a Group R occupancy change under the local building code, as described in Section 310 of the California Building Code, unless the building official, in consultation with the Community Development Director, makes a written finding based on substantial evidence in the record that the construction of the ADU could have a specific, adverse impact on public health and safety. Nothing in this subsection E.9.b F.9.b prevents the city from changing the occupancy code of a space that was uninhabitable space or that was only permitted for nonresidential use and was subsequently converted for residential use in accordance with this section.

10.Certificate of Occupancy Timing.
a. Generally. No certificate of occupancy for an ADU or JADU may be issued before the certificate of occupancy is issued for the primary dwelling unit.
b. Limited Exception for State-Declared Emergencies.

Notwithstanding subsection F.10.a above, a certificate of occupancy for an ADU may be issued before a certificate of occupancy for the primary dwelling if each of the following requirements are met:

i. The county is subject to a proclamation of a state of emergency made by the California Governor on or after
February 1, 2025.
ii. The primary dwelling was substantially damaged or destroyed by an event referenced in the Governor’s state of emergency proclamation.
iii. The ADU has been issued construction permits and has passed all required inspections.
iv. The ADU is not attached to the primary dwelling.

G. F. Specific ADU Requirements. The following requirements apply only to Class 2 ADUs that require an ADU permitare approved under subsection D.2 above.E.2 above. This subsection G does not apply to Class 1 ADUs or JADUs approved under subsection E.1 above.

1. Maximum Size.
a. The maximum size of a detached or attached ADU subject to this subsection F G is 1,200 square feet of interior livable space. b. An attached ADU that is created on a lot with an existing primary dwelling is further limited to 50 percent of the floor area of the existing primary dwelling.
c. Application of other development standards in this subsection F. G, might further limit the size of the ADU, but no application of the percent-based size limit in subsection F.1.b above G.1.b above or front setback may require the ADU to be less than 800 square feet of interior livable space.

2. Setbacks.
a. ADUs that are subject to this subsection F G must conform to 4-foot side and rear setbacks. ADUs that are subject to this subsection F G must conform to 20-foot front setbacks, subject to subsection G.1.c aboveG.1.c above.
b. No setback is required for an ADU that is subject to this subsection F G if the ADU is constructed in the same location and to the same dimensions as an existing structure.

3. Passageway. No passageway, as defined by subsection C.9 above, is required for an ADU.

4. Parking.

a. Generally. One paved off-street parking space is required for each ADU or bedroom, whichever is less. The parking space may be provided in setback areas or as tandem parking, as defined by subsection C.12 above.
i. Parking may be located on an existing driveway but shall not block sidewalk access or encroach into the public right-of-way. ii. Parking spaces located wholly or partially within a side yard must have a minimum clear space width of ten (10) feet. Vehicles shall not block exterior windows or doors of a dwelling or access to utility boxes or meters.
iii. Vehicles must be parked on a concrete, asphalt, gravel, brick, or permeable paver surface.
iv. No more than fifty (50) percent of a front yard shall be dedicated to vehicle parking.
b. Exceptions. No parking under subsection F.4.a G.4.a is required in the following situations:
i. The ADU is located within one-half mile walking distance of public transit, as defined in subsection C.11 above.
ii. The ADU is located within an architecturally and historically significant historic district.
iii. The ADU is part of the proposed or existing primary residence or an accessory structure under subsection E.1.a above. iv. When on-street parking permits are required but not offered to the occupant of the ADU.
v. When there is an established car share vehicle stop located within one block of the ADU.
vi. When the permit application to create an ADU is submitted with an application to create a new single-family or new multifamily dwelling on the same lot, provided that the ADU or the lot satisfies any other criteria listed in subsections F.4.b.i G.4.b.i through v above.
c. No Replacement. When a garage, carport, covered parking structure, or uncovered parking space is demolished in conjunction with the construction of an ADU or converted to an ADU, those offstreet parking spaces are not required to be replaced.

5. Architectural Requirements.
a. The materials and colors of the exterior walls, roof, and windows and doors must match the appearance and architectural design of those of the primary dwelling. Projects utilizing the City’s pre-designed ADU plans or factory building housing are not subject to this standard.
b. The exterior lighting must be limited to down lights or as otherwise required by the building or fire code.
c. When a garage is converted to an ADU, the garage door opening shall be replaced with exterior wall coverings, or residential windows and doors, to match the existing exterior garage wall covering and detailing.
d. The ADU must have an independent exterior entrance, apart from that of the primary dwelling.
e. Windows and doorsNo window or door of the ADU may not have a direct line of sight to an adjoining residential property. FencingEach window or door must either be located where there is no direct line of sight or screened using fencing, landscaping, or privacy glass may be used to provide screening andto prevent a direct line of sight. f. Second floor living area shall be setback five feet from the ground floor footprint.
g. Window sashes and doorframes shall be made of wood or vinyl.

Unfinished aluminum is not allowed.
h. The use of fluorescent "neon", "day-glo", or bright primary colors as the predominant shade on building facades is not permitted. For purposes of this standard, predominant means that the color is used on more than fifty percent (50%) of the wall area.
h. i. All windows and doors in an ADU are less than 30 feet from a property line that is not a public right-of-way line must either be (for windows) clerestory with the bottom of the glass at least six feet above the finished floor, or (for windows and for doors) utilize frosted or obscure glass.
i. j. Rooftop decks are prohibited on all detached ADUs.

6. Historical Protections. An ADU that is on or within 500 feet of real property that is listed in the California Register of Historic Resources must be located so as to not be visible from any public right-of-way.

H. G. Fees. The following requirements apply to all Class 1 ADUs and JADUs and Class 2 ADUs that are approved under subsections D.1 or D.2 above E.1 or E.2 above.

1. Impact Fees.
a. No impact fee is required for a JADU or an ADU that ishas less than 800 square feet in sizeof interior livable space. For purposes of this subsection G.1 H.1, “impact fee” means a “fee” under the Mitigation Fee Act (Gov. Code § 66000(b)) and a fee under the Quimby Act (Gov. Code § 66477). “Impact fee” here does not include any connection fee or capacity charge for water or sewer service. b. A JADU or ADU with less than 500 square feet of interior livable space does not increase assessable space by 500 square feet for purposes of Education Code section 17620(a)(1)(C), and is therefore not subject to school fees under Education Code section 17620.
c. b. Any impact fee that is required for an ADU that ishas 800 square feet or larger in sizemore of interior livable space must be charged proportionately in relation to the square footage of the primary dwelling unit. (E.g., the floor area of the ADU, divided by the floor area of the primary dwelling, times the typical fee amount charged for a new dwelling.)

2. Utility Fees.
a. If an ADU or JADU is constructed concurrently with a new singlefamily home, a separate utility connection directly between the ADU or JADU and the utility and payment of the normal connection fee and capacity charge for a new dwelling are required.
b. Except as described in subsection G.2.a H.2.a, JADUs and converted ADUs on a single-family lot that are created under subsection D.1.a E.1.a above are not required to have a new or separate utility connection directly between the JADU or ADU and the utility. Nor is a connection fee or capacity charge required. c. Except as described in subsection G.2.a H.2.a, all ADUs that are not covered by subsection G.2.b H.2.b require a new, separate utility connection directly between the ADU and the utility for any utility that is provided by the city. All utilities that are not provided by the city are subject to the connection and fee requirements of the utility provider. i. The connection is subject to a connection fee or capacity charge that is proportionate to the burden created by the ADU based on either the floor area or the number of drainagePage 175 of 283 fixture units (DFU) values, as defined by the Uniform
Plumbing Code, upon the water or sewer system.
ii. The portion of the fee or charge that is charged by the city may not exceed the reasonable cost of providing this service.

I. H. Nonconforming Zoning Code Conditions, Building Code Violations, and Unpermitted Structures.

1. Generally. The city will not deny an ADU or JADU application due to a nonconforming zoning condition, building code violation, or unpermitted structure on the lot that does not present a threat to the public health and safety and that is not affected by the construction of the ADU or JADU.

2. Unpermitted ADUs and JADUs constructed before 2020.
a. Permit to Legalize. As required by state law, the city may not deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 2020, if denial is based on either of the following grounds:
i. The ADU or JADU violates applicable building standards, or ii. The ADU or JADU does not comply with state ADU or JADU law or this ADU ordinance (section 16.52.150).
b. Exceptions:
i. Notwithstanding subsection H.2.a I.2.a above, the city may deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 2020, if the city makes a finding that correcting a violation is necessary to comply with the standards specified in California Health and Safety Code section 17920.3.
ii. Subsection H.2.a I.2.a above does not apply to a building that is deemed to be substandard in accordance with California Health and Safety Code section 17920.3.

J. I. Nonconforming ADUs and Discretionary Approval. Any proposed ADU or JADU that would otherwise be allowed under this section but that does not conform to the objective design or development standards set forth in subsections A through H I of this section may be allowed by the city with a conditional use permit, in accordance with the other provisions of this title.

Item 10.c.

MEMORANDUM
TO: City Council
FROM: Brian Pedrotti, Director of Community Development SUBJECT: Amendments to Title 8 and 15 of the Arroyo Grande Municipal Code and Adopting by Reference the 2025 California Building Standard Code and Uniform Code
DATE: November 25, 2025
RECOMMENDATION:
1) Conduct a public hearing regarding the proposed Ordinance; 2) Adopt an Ordinance amending provisions in Titles 8 and 15 of the Arroyo Grande Municipal Code and adopting by reference the 2025 California Building Standards Code (California Code Of Regulations, Title 24), including the 2025 California Administrative Code, 2025 California Building Code, 2025 California Electrical Code, 2025 California Mechanical Code, 2025 California Plumbing Code, 2025 California Fire Code, 2025 California Residential Code, 2025 California Energy Code, 2025 California Green Building Standards Code, 2025 Wildland-Urban Interface Code, and the 1997 Uniform Code for the Abatement of Dangerous Buildings and 2024 International Property Maintenance Code; and
3) Find that it can be seen with certainty that there is no possibility that the proposed action may have a significant adverse effect on the environment, since the Ordinance merely adopts updated building and safety standards. The adoption of this Ordinance is exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines. The adoption of the Ordinance will not result in a direct or reasonably foreseeable physical change in the environment; and the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There has been some financial impact associated with staff and consultant time preparing for the adoption of this Ordinance.

BACKGROUND:

The State mandates that the building and construction codes are updated every three years in all cities and counties throughout the State, known as the tri-annual update. The State published the 2025 California Building Standards Code on July 1, 2025, which will

Item 10.c.

City Council
Amendments to Title 8 and 15 of the Arroyo Grande Municipal Code and Adopting by Reference the 2025 California Building Standard Code and Uniform Code November 25, 2025

become effective statewide on January 1, 2026. The City adopts the California Building Standards Code by amending the City’s Municipal Code (Chapters 8 and 15) and incorporating the revised Building Code by reference.

On October 28, 20251, the City Council introduced the Ordinance regarding the 2025 California Building Standards Code, including certain changes and modifications deemed reasonably necessary due to local conditions in the City of Arroyo Grande.

ANALYSIS OF ISSUES:

The Ordinance is now ready for adoption. The new 2025 Building and Fire Codes will become effective thirty (30) days after adoption.

ALTERNATIVES:

The following alternatives are provided for the Council’s consideration:

1. Adopt the Ordinance as proposed; or

2. Modify the Ordinance and direct staff to return at a future public hearing to reintroduce the modified Ordinance; or

3. Provide other direction to staff.

ADVANTAGES:

Adoption of this Ordinance will keep the City of Arroyo Grande current and compliant with State law regarding construction and building codes, in addition to the City’s local amendments to those state standards. New requirements will also provide for safer and more energy-efficient buildings.

DISADVANTAGES:

Overall, adopting the local amendments to the 2025 California Building Standards Code will implement more stringent requirements for construction, which can increase development costs. New state legislation prohibits cities and counties from adopting new or more restrictive residential building standards beyond those adopted by the State, except under limited circumstances.

ENVIRONMENTAL REVIEW:

The proposed action is exempt from the California Environmental Quality Act (“CEQA”) because it can be seen with certainty that there is no possibility that the Ordinance may have a significant adverse effect on the environment, since the Ordinance merely adopts updated building and safety standards. The adoption of the Ordinance is exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines. The adoption of the Ordinance will not result in a direct or reasonably foreseeable physical change in the environment; and

1https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=97615df6-f61a-4d51-a002- 8aaf1cd0dc7b&Agenda=Agenda&lang=English&Item=50&Tab=attachments

Item 10.c.

City Council
Amendments to Title 8 and 15 of the Arroyo Grande Municipal Code and Adopting by Reference the 2025 California Building Standard Code and Uniform Code November 25, 2025

the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment.

PUBLIC NOTIFICATION AND COMMENTS:

The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.

ATTACHMENTS:

1. Ordinance

65501.00002\44322752.8
ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING PROVISIONS IN TITLES 8 AND 15 OF THE ARROYO GRANDE MUNICIPAL CODE AND ADOPTING BY REFERENCE THE 2025 CALIFORNIA

BUILDING STANDARDS CODE (CALIFORNIA CODE OF REGULATIONS, TITLE 24), INCLUDING THE 2025 CALIFORNIA ADMINISTRATIVE CODE, 2025 CALIFORNIA BUILDING CODE, 2025 CALIFORNIA ELECTRICAL CODE, 2025 CALIFORNIA MECHANICAL CODE, 2025 CALIFORNIA PLUMBING CODE, 2025 CALIFORNIA FIRE CODE, 2025 CALIFORNIA RESIDENTIAL CODE, 2025 CALIFORNIA ENERGY CODE, 2025 CALIFORNIA GREEN BUILDING
STANDARDS CODE, 2025 WILDLAND-URBAN INTERFACE CODE, AND THE 1997 UNIFORM CODE FOR THE ABATEMENT OF DANGEROUS BUILDINGS AND 2024 INTERNATIONAL PROPERTY MAINTENANCE CODE
WHEREAS, the City of Arroyo Grande (“City”) is a municipal corporation organized under the laws of the State of California; and
WHEREAS, pursuant to California Health and Safety Code Section 17921, the State of California (“State”) must adopt and enforce regulations for the protection of the public governing the construction, alteration, demolition, occupancy, or other use of buildings; and WHEREAS, pursuant to California Health and Safety Code Section 17958, cities may adopt ordinances imposing the California Building Standards requirements as established by the State; and
WHEREAS, the California Building Standards Commission (“Commission”) recently adopted the 2025 Edition of the California Building Standards Code; and WHEREAS, pursuant to Government Code section 50022.1 et seq., the City may adopt by reference the California Building Standards Code, 2025 edition, as provided in Title 24 of the California Code of Regulations and other codes; and
WHEREAS, California Health and Safety Code sections 17958, 17958.5, 17958.7, and 18941.5 allow for a city to adopt and make local amendments and modifications to the building standards in the California Building Standards Code to establish more restrictive building standards than those contained in the California Building Standards Code; and WHEREAS, California Health and Safety Code section 17958, 17958.5, 17958.7, and 18941.5 require a city, before making any amendments and modifications to the California Building Standards Code, to make an express finding that such amendments and modifications are reasonably necessary because of local climatic, geological or topographical conditions; and WHEREAS, pursuant to California Health and Safety Code section 17958, the changes or modifications proposed herein are substantially equivalent to changes or modifications previously adopted by the City, and/or relate to home hardening; and WHEREAS, based upon the recommendations of the Building Code Official and the Fire Chief, the City Council finds that the proposed amendments to the 2025 California Building Standards Code set forth in this Ordinance are more restrictive than the standards adopted by the California Building Standards Commission, would decrease the number of potential incidences of property damage, injury, and death due to fires and earthquakes, and are reasonable and necessary to mitigate local climatic, geological, or topographical conditions; and
WHEREAS, the City held a public hearing on November 25, 2025, at which time all interested

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2 persons had the opportunity to appear and be heard on the matter of adopting these amendments; and
WHEREAS, the City desires to amend its municipal code to adopt the most recent editions of the California Building Standards Codes and Fire Codes established by the State; and WHEREAS, it is the desire and intent of the City Council to provide citizens with the greatest degree of protection from fire; and
WHEREAS, the City Council, in the attached Exhibit “A”, makes findings that the changes or modifications to measures referred to herein are reasonably necessary because of local climatic, geographical, or topographical conditions in the area encompassed by the boundaries of the City of Arroyo Grande or other modifications, as permitted by the Health and Safety Code; and WHEREAS, additionally, by this Ordinance, the City Council desires to make general corrections to its Municipal Code in order to ensure internal consistency with other modifications set forth herein.

WHEREAS, all prerequisites to the adoption of this Ordinance have occurred.

NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Arroyo Grande as follows:

SECTION 1. Recitals. The above recitals and findings are true and correct and are incorporated herein by this reference.

SECTION 2. Authority. The City Council enacts this Ordinance under the authority granted to the City as follows:

A. California Government Code Section 50022 et seq. authorizes the City to adopt by reference the California Building Standards Code and authorizes the City to adopt other uniform codes by reference; and
B. California Health and Safety Code Section 17958.7 and 18941.5 authorize the City to adopt the California Building Standards Code with modifications determined to be reasonably necessary because of local climatic, geological, or topographical conditions.

SECTION 3. Findings.

The City Council hereby finds that the proposed amendments to the 2025 Building Standards Code are more restrictive than the standards adopted by the California Building Standards Commission, and are reasonably necessary because of local climatic, geological, or topographic conditions, based on the express findings and determinations, marked in relation to the respective amendments provided in this Ordinance, described in Exhibit “A” and attached hereto, and hereby adopted by the City Council as the findings to support the modifications to the California Building Standards Code.

SECTION 4. Amendment. Arroyo Grande Municipal Code (“AGMC”) Chapter 15.01, entitled "Building Code," is hereby amended as follows:

Chapter 15.01

BUILDING CODE

15.01.010 Adoption of California Administrative Code.

15.01.020 Adoption of California Building Code.

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3 15.01.020.1 Amendments to Building Code.

15.01.010 Adoption of California Administrative Code
Adoption of the California Administrative Code. The 2025 edition of the California Administrative Code is hereby adopted by reference as the Administrative Code of the City of Arroyo Grande.

15.01.020 Adoption of California Building Code.

Adoption of the California Building Code. The 2025 edition of the California Building Code is hereby adopted by reference as the Building Code of the City of Arroyo Grande, including Appendices B, I, J, P, and Q, except for the following amendments:

15.01.020.1 Amendments to California Building Code.
(a) CBC, Section 105.1, is hereby amended by adding the following:

Permits Required and Violations and Penalties.

It shall be unlawful for any person, firm, or corporation to erect, construct, enlarge, alter, repair, move, improve, remove, convert, demolish, equip, use, occupy, or maintain any building or structure in the City, or cause or permit the same to be done, contrary to or in violation of any of the provisions of this Code. Any person violating any of the provisions of this Code shall be deemed guilty of a misdemeanor. Each day that a violation continues shall be deemed a separate offense. The Building Official or his/her designee may commence any or all of the following proceedings in accordance with the Arroyo Grande Municipal Code:
(1) Issue an administrative citation in accordance with the provisions of Chapter 1.18 of Title 1 of the Arroyo Grande Municipal Code and related written policies. (2) Request the City Attorney to institute legal action. (b) CBC, Section 109.4, is hereby adopted by reference and Section 109.4.1 is added as follows:
109.4.1 Fees for Work Commencing Before Permit Issuance An investigation fee, in addition to the permit fee, shall be collected whether or not a permit is then or subsequently issued. The investigation fee shall be equal to the amount of the permit fee required by this code. The City Council may adopt or amend the fees set forth in this chapter by resolution.

Subsequent un-permitted work by the same permittee shall result in a progressive investigation fee being accessed, second violation would result in a three times the permit fee for the investigation fee, a third violation would result in a four times the permit fee for the investigation fee, a fourth violation would result in a five times the permit fee for the investigation fee, and so on to a maximum of a ten times the permit fee for the investigation fee.

The payment of such investigation fee shall not exempt an applicant from compliance with all other provisions of either this code or the technical codes nor from the penalty prescribed by law. Swimming Pool Safety Barriers not finaled prior to

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4 pool water placement are subject to an investigation fee. (c) Section 903.2 amended—Automatic sprinkler systems.

Sections 903.2 through 903.2.11.3 of the 2025 California Building Code shall be deleted in its entirety and replaced with the following:
903.2 Where required. Automatic sprinkler systems shall be installed in the following locations:

1. In all new buildings and structures that exceed 1,000 square feet.

2. In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% of the existing square footage to the structure AND results in a total square footage in excess of 1,000 (one thousand) square feet.
b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet.
c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure AND are in excess of 1,000 (one thousand) square feet.
d. Where there is a change of occupancy to a more hazardous use as determined by the building official or fire chief based on Table 903.2.1:

Table 903.2.1
Hazard Categories
Relative Hazard Occupancy Classifications
1 (Highest Hazard) H
2 I-2, I-2.1, I-3, I-4, L
3 A, E, I-1, M, R-1, R-2, R-2.1, R-4
4 B, F-1, R-3, R-3.1, S-1
5 (Lowest Hazard) F-2, S-2, U
e. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years. Buildings or structures separated by less than ten (10) feet shall be considered as a single building or structure unless separation is provided by a permitted, code compliant, rated assembly.

For the purpose of requiring the automatic fire sprinkler systems specified in this chapter, the floor area within the surrounding exterior walls shall be considered as one building (measured from the exterior surface of these exterior walls). For the purpose of calculating

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5 square footage for the application of fire sprinkler requirements and fire flow, the floor area shall be as defined by Floor Area, Gross in Section 202 of this code. (d) CBC, Appendix B, Board of Appeals, is adopted by reference and amended as follows:

1. Board of appeals established. In order to hear and decide appeals of orders, decisions or determinations made by the building official relative to the application and interpretation of this code, there shall be and is hereby created a board of appeals. The board of appeals shall be appointed by the City Council and shall hold office at its pleasure. The building official shall serve as clerk to the board.

2. Membership and qualifications. The board of appeals shall consist of three members who are qualified by experience and training to pass on matters pertaining to building construction and are not employees of the city.

3. Procedures. The board of appeals shall follow the procedures for the conduct of appeals set forth in Chapter 1.12 of Title 1 of the Arroyo Grande Municipal Code, or as may be established by the building official and shall provide for proper notice and a hearing that complies with due process procedures.

SECTION 5. Amendment. AGMC Chapter 15.02, entitled "Electrical Code," is hereby amended as follows:

Chapter 15.02

ELECTRICAL CODE

15.02.010 Adoption of California Electrical Code.

Adoption of the California Electrical Code. The 2025 edition of the California Electrical Code is hereby adopted by reference as the Electrical Code of the City of Arroyo Grande, except for the following amendments:

15.02.010.1 Amendments to Electrical Code.

The California Electrical Code adopted by reference by Section 15.02.010 of this Code is amended as follows:

89.108.4.1 Permits is hereby amended by adding the following:

The following provision is hereby added to the CEC regarding Unused Facilities:
(1) For all existing commercial and industrial establishments and places of assembly, when the service has been disconnected for ninety (90) continuous days or more, the service may not be reconnected without an inspection and approval from the Building Official. A permit shall be required for such inspection, and the fee shall be as set forth in Section 15.1.01.1 of this Article.
(2) For all existing residential buildings, when the service has been disconnected for ninety (90) continuous days or more, the service may not be reconnected without an

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6 inspection and approval from the Building Official. A permit shall be required for such inspection, and the fee shall be as indicated in Section 15.1.01.1 of this Article.

SECTION 6. Amendment. AGMC Chapter 15.03, entitled "Mechanical Code," is hereby amended as follows:

Chapter 15.03

MECHANICAL CODE

15.03.010 Adoption of California Mechanical Code.

Adoption of the California Mechanical Code. The 2025 edition of the California Mechanical Code is hereby adopted by reference as the Mechanical Code of the City of Arroyo Grande, including Appendices B and C.

SECTION 7. Amendment. AGMC Chapter 15.04, entitled "Plumbing Code," is hereby amended as follows:

Chapter 15.04

PLUMBING CODE

15.04.010 Adoption of the California Plumbing Code.

Adoption of the California Plumbing Code. The 2025 edition of the California Plumbing Code is hereby adopted by reference as the Plumbing Code of the City of Arroyo Grande, including Appendices A, B, D, H, I, J, and S, except for the following amendments:

15.04.010.1 Amendments to Plumbing Code.

The California Plumbing Code adopted by reference by Section 15.04.010 of this Code is amended as follows:
(a) The following provision is hereby added to the California Plumbing Code to read as follows:

Section 1205.1.1
In all existing commercial and industrial establishments and places of assembly, when the service has been discontinued for ninety (90) days or more, the gas meter may be turned on only after the piping has been pressure tested and when the test and gas appliances have been approved by the Administrative Authority. A permit shall be required for such test.

In all existing residential buildings where service has been discontinued for ninety (90) days or longer, the gas may be turned on only after the piping has been pressure tested and when the test and gas appliances have been approved by the Administrative Authority. A permit shall be required for such test.

SECTION 8. Amendment. AGMC Chapter 15.05, entitled "Dangerous Buildings," is hereby amended as follows:

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7 Chapter 15.05

DANGEROUS BUILDINGS

15.05.010 Uniform Code for the Abatement of Dangerous Buildings adopted.

For the purpose of providing a just, equitable, and practicable method, to be cumulative with and in addition to any other remedy provided by the California Building Code, 2025 Edition, the International Property Maintenance Code, 2024 Edition, or otherwise available by law, whereby buildings or structures, which from any cause endanger the life, limb, health, morals, property, safety, or welfare of the general public or their occupants, may be required to be repaired, vacated, or demolished, the 1997 Edition of the Uniform Code for the Abatement of Dangerous Buildings, as prepared by the International Conference of Building Officials, three (3) copies of which have been filed for use and examination by the public in the office of the City Clerk as provided by Section 50022.1 et seq. of the Government Code of the State, is hereby adopted by reference thereto as if fully set forth in this chapter.

SECTION 9. Amendment. AGMC Chapter 15.06 is hereby repealed.

SECTION 10. Amendment. AGMC Chapter 15.08, entitled "Residential Code," is hereby amended as follows:

Chapter 15.08

RESIDENTIAL CODE

15.08.010 Adoption of the California Residential Code.

Adoption of the California Residential Code. The 2025 edition of the California Residential Code is hereby adopted by reference as the Residential Code of the City of Arroyo Grande, including Appendices BB, BF, CI, and CJ, except for the following amendments:

Section R108.6.1 Fees For Work Commencing Before Permit Issuance is hereby added to read as follows:

An investigation fee, in addition to the permit fee, shall be collected whether or not a permit is then or subsequently issued. The investigation fee shall be equal to the amount of the permit fee required by this code. The City Council may adopt or amend the fees in this chapter by resolution.

Subsequent un-permitted work by the same permittee shall result in a progressive investigation fee being accessed, second violation would result in a three times the permit fee for the investigation fee, a third violation would result in a four times the permit fee for the investigation fee, a fourth violation would result in a five times the permit fee for the investigation fee, and so on to a maximum of a ten times the permit fee for the investigation fee.

The payment of such investigation fee shall not exempt an applicant from compliance with all other provisions of either this code or the technical codes nor from the penalty prescribed by law.

Swimming Pool Safety Barriers not finaled prior to pool water placement are subject to an investigation fee.

Section R309.1 Amended—Automatic sprinkler systems.

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8 Sections R309.2 and R309.2, Exception 1 shall be deleted in its entirety and replaced with the following:

Section R309.2 and R309.2, Exception 1. An automatic residential fire sprinkler system shall be installed in additions or alterations for all one- and two-family dwelling buildings or structures as follows:

1. In all new buildings and structures that exceed 1,000 square feet.

2. In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% of the existing square footage to the structure AND results in a total square footage in excess of 1,000 (one thousand) square feet.
b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet.
c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure AND are in excess of 1,000 (one thousand) square feet.
d. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years. Buildings or structures separated by less than ten (10) feet shall be considered as a single building or structure unless separation is provided by a permitted, code compliant, rated assembly.

For the purpose of requiring the automatic fire sprinkler systems specified in this chapter, the floor area within the surrounding exterior walls shall be considered as one building (measured from the exterior surface of these exterior walls). For the purpose of calculating square footage for the application of fire sprinkler requirements and fire flow, the floor area shall be as defined by Floor Area, Gross in Section 202 of this code.

SECTION 11. Amendment. AGMC Chapter 15.09, entitled "Energy Code," is hereby amended as follows:

Chapter 15.09

ENERGY CODE

15.09.010 Adoption of the California Energy Code.

Adoption of the California Energy Code. The 2025 edition of the California Energy Code is hereby adopted by reference as the Energy Code of the City of Arroyo Grande.

SECTION 12. Amendment. AGMC Chapter 15.10, entitled "Green Building Standards Code," is hereby amended as follows:

Chapter 15.10

GREEN BUILDING STANDARDS CODE

15.10.010 Adoption of the California Green Building Standards Code.

Adoption of the California Green Building Standards Code. The 2025 edition of the California

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9 Green Building Standards Code is hereby adopted by reference as the Green Building Standards Code of the City of Arroyo Grande including Appendices A4 and A5.

SECTION 13. Amendment. AGMC Sections 8.04.010, 8.04.016, 8.04.018, 8.04.020 and 8.04.22 are hereby repealed and replaced to read as follows:

Section 8.04.010 Adoption of California Fire Code.

Adoption of California Fire Code. The 2025 edition of the California Fire Code, including, Appendices A, B, BB, C, CC, D, F, H, and I is hereby adopted as the Fire Code of the City of Arroyo Grande, except for the following amendments:

Chapter 1 Administration
Section 101.1 Title. These regulations shall be known as the Fire Code of the City of Arroyo Grande, hereinafter referred to as “this code.”
Section 103 – Code Compliance Agency
Section 103.1 is amended to read as follows:
103.1 Creation of agency. The Five Cities Fire Authority is hereby created and the official in charge therefore shall be known as the Fire Code Official. The function of the agency shall be the implementation, administration and enforcement of the provisions of this code.

Section 104 – Duties and powers of the Fire Code Official.

Sections 104.10.2-104.10.5 is added to read as follows:
104.10.2 Fire Department personnel and police. The chief of the fire department and other members of the Five Cities Fire Authority designated by the Chief of the fire department have the authority of peace officers or public officers pursuant to California Penal Code sections 830.2(g), 830.7(d) and 836.5(a) in performing their duties under the California Fire Code. 104.10.3 Fire investigation unit. A fire investigation unit is established within the Five Cities Fire Authority under the direction of the Fire Chief. All members of the fire investigation unit shall, upon completion of requirements as set forth in California Penal Code section 832, or any successor legislation, have the full power, authority, and immunity of a California peace officer to issue citations for violations of this Code. 104.10.4 Arrests. In addition to Five Cities Fire Authority personnel, who are assigned as arson investigators pursuant to California Penal Code section 830.37, any other member of the Five Cities Fire Authority shall have the power to arrest, without a warrant, whenever that member has reasonable cause to believe the person to be arrested has committed the crime of misdemeanor or felony arson, as defined in California Penal Code sections 450 et seq. and California Code of Regulations, Titles 19, 24, and 25, in his/her presence, pursuant to the authority granted by California Penal Code section 836.5. 104.10.5 Citations. The Fire Code Official, or duly authorized agent, is granted the authority as provided in Section 836.5(a) of the California Penal Code to issue citations for violations of this code.

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10 Section 105 – Permits
105.3.3 Occupancy and use prohibited before approval. The building or structure shall not be occupied prior to the fire code official issuing a permit and conducting associated inspections indicating that applicable provisions of this code have been met. No appliance, device, equipment, or system shall be operated or used until the installation has been approved and permitted by the Fire Code Official and all applicable provisions of this code have been met. It shall be the duty of the permit applicant or contractor or both to cause the work to remain accessible and exposed for inspection purposes.

Section 113 – Violations
Section 113.4 is amended to read as follows:
113.4 Violation penalties. Persons who shall violate a provision of this code or shall fail to comply with any of the requirements thereof or who shall erect, install, alter, repair or do work in violation of the approved construction documents or directive of the Fire Code Official, or of a permit or certificate used under the provisions of this code, shall be guilty of a misdemeanor punishable by a fine of not more than one thousand dollars $1,000.00, or by imprisonment not exceeding three hundred sixty five (365) calendar days, or by both such fine and imprisonment.

Each day a violation continues, after due notice has been served, shall be deemed a separate offense.

Section 113.5 is added to read as follows:
113.3.5. Citations. The Fire Chief, Fire Marshal and Battalion Chiefs are each authorized to issue a citation to any person operating or maintaining an occupancy or a premises or vehicle subject to this code, and who allow a hazard to exist or fail to take immediate action to abate a hazard on such occupancy, premises or vehicle when ordered or notified to do so by any of those officials.

Chapter 4 Emergency Planning
Section 405 – Emergency Evacuation Drills
Section 405.8 is amended to read as follows:
405.8 Initiation. Where a fire alarm system is provided, emergency evacuation drills shall be initiated by activating the fire alarm system. Prior to initiating an alarm, the person initiating the alarm shall contact the fire alarm monitoring company and advise the company’s dispatcher of the fire drill. In cases where the fire alarm system is not monitored by a central station, notification shall be provided to the fire department dispatch center.

Chapter 5 Fire Service Features
Section 503 – Fire Apparatus Access Roads
Section 503.3 is amended to read as follows:
503.3 Marking. Fire lanes and fire apparatus access roads shall be identified by curbs painted red on both the top and face along the entire length of the fire lane or fire apparatus access road, as applicable. Where no curb exists or a rolled curb is installed, an eight-inch wide red

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11 (OSHA safety red) strip or approved posted signs applied the full length of the fire lane or fire apparatus access road, as applicable, shall be installed. “FIRE LANE – NO PARKING” shall be painted on top of curb in 3” white lettering at a spacing of 25 feet on center or portion thereof.

Exception: On school grounds, the markings to be implemented shall be as approved by the Fire Chief or his/her designee.

Section 503.4.2 is added to read as follows:
503.4.2 Removal of Obstructions. The Fire Code Official shall have the power and authority to remove or cause to be removed, without notice, any vehicle, vessel, or thing parked or placed in violation of any or all sections of this code. The owner of any item so removed shall be responsible for all charges connected therewith.

Section 503.6 – Security Gates
Sections 503.6.1-503.6.4 is added to read as follows;
503.6.1 Electrically operated gates. Any electrically operated gate which is installed across any required fire access road or fire lane shall have a Knox brand access switch installed which will open the gate. The switch (with dust cover) shall be installed so it will open the gate, and the gate will remain in the open position until re-set by fire department personnel. The key switch shall be placed between 42” and 48” above the roadway surface at the left side of the access gate unless otherwise allowed by the fire code official. The key switch shall be clearly labeled “FIRE DEPT”. The gate shall have a manual means of opening in the event of a power failure and shall be accessible from the exterior of the property. 503.6.2 Click to Enter Remotely Operated Gates. For electrically operated gates, a radiocontrolled system “Click to Enter” may be required in addition to the Knox key switch. A gate serving an individual single-family residence or duplex is exempt from this requirement. 503.6.3 Exiting. If there is no sensing device that will automatically open the gates for exiting, then a Knox brand electrical override switch (or substantially similar as determined by the Fire Chief) shall be placed on each side of the gate in approved locations. 503.6.4 Manually operated gates. Each manually operated gate which is installed across any required fire access road or fire lane and which is locked shall have a Knox brand (or substantially similar as determined by the Fire Chief) padlock installed. The Knox padlock (or substantially similar as determined by the Fire Chief) shall be integrated with any other lock in such a manner as to allow the gate to be opened only by unlocking the Knox padlock (or substantially similar as determined by the Fire Chief).

Section 505 – Premises Identification
Section 505.1 is amended to read as follows:
505.1 Address identification. New and existing buildings shall be provided with approved address identification. The address identification shall be legible and placed in a position that

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12 is visible from the street or road fronting the property. Address identification characters shall contrast with their background. Numbers shall not be spelled out. Address numbers shall be Arabic numbers or alphabetical letters. Each character shall be not less than 4 inches (102 mm) high for single family residential buildings and 8 inches (203.2 mm) for R-1, R-2 and nonresidential buildings, with a minimum stroke of 0.5 inch (12.7 mm), unless otherwise required to be greater in height or of reflective material as determined by the fire code official during the jurisdiction’s development review process for a specific project. Where required by the fire code official, address identification shall be provided in additional approved locations to facilitate emergency response. Where access is by means of a private road and the building cannot be viewed from the public way, a monument, pole or other approved sign or means shall be used to identify the structure. Address identification shall be maintained.

Section 505.1.1 is added to read as follows:
505.1.1 Directories. When required by the Fire Code Official, complexes with multiple buildings may be required to provide directories, premises maps and directional signs. The scale, design and location of directory signs shall be approved by the Fire Code Official and may be required to be illuminated.

Section 506 – Key Boxes
Section 506.1 is amended to read as follows:
506.1 Knox Box. All new commercial occupancies shall have a Knox brand key box (or substantially similar as determined by the Fire Chief) installed as directed by the fire code official. Existing commercial occupancies shall install a Knox brand key box (or substantially similar as determined by the Fire Chief), as directed by the fire code official when a building permit is obtained for any work. The key box shall contain keys which will allow the fire department access to all portions of the building. The keys shall have a tag affixed identifying their purpose. The nominal height of key box installations shall be five (5) feet above grade.

Section 506.3 is added to read as follows:
506.3 Electronic Controlled Gates. A final field inspection, by the Fire Code Official or an authorized representative, is required before electronic Knox (or substantially similar as determined by the Fire Chief) controlled gates may become operative. Prior to final inspection, electronic gates shall remain in a locked open position.

Section 507 – Fire Protection Water Supplies
507.5.7 Fire Department Connection. All newly installed fire department connections will be required to install Knox brand FDC caps (or substantially similar as determined by the Fire Chief). This also includes existing businesses that perform work to the structure that requires a building permit or any tenant improvement.

Chapter 6 – Building Services and Systems
Section 605 – Fuel Fired Appliances
Section 605.8 is amended to read as follows:
605.8 Gas meters. Above-ground gas meters, regulators and piping subject to damage shall

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13 be protected by a barrier complying with Section 312 or otherwise protected in an approved manner. Gas meters shall be permanently marked identifying the building or system served.

Chapter 9 – Fire Protection and Life Safety Systems
Sections 903.2 through 903.2.11.3 of the 2025 California Fire Code shall be deleted in its entirety and replaced with the following:

Section 903.2. Where required. Approved automatic sprinkler systems shall be installed in the following locations:

1. In all new buildings and structures that exceed 1,000 square feet.

2. In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% to the existing square footage, and results in a total square footage equal or greater than 1,000 square feet.

Modifications that require addition of an automatic sprinkler system shall include removal, combining or rearrangement of demising or tenant space walls to create a single occupancy or tenant space of 1000 square feet or greater or changes in occupancy or use when the change of occupancy or use results in a requirement for an automatic sprinkler system as specified in Section 903, including, but not limited to, increased occupant load, multiple fire areas, use of hazardous materials and other increased hazards.
b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet.
c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure and are in excess of 1,000 square feet.
d. Where there is a change of occupancy to a more hazardous use as determined by the Building Official or Fire Chief based on Table 903.2.1.

Table 903.2.1
Hazard Categories
Relative Hazard Occupancy Classifications
1 (Highest Hazard) H
2 I-2, I-2.1, I-3, I-4, L
3 A, E, I-1, M, R-1, R-2, R-2.1, R-4
4 B, F-1, R-3, R-3.1, S-1
5 (Lowest Hazard) F-2, S-2, U
e. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years. [Intervening sections 903.2.1 to 903.2.8 intentionally deleted.] 903.2.8.1 Group R-3.

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14 An automatic sprinkler system installed in accordance with Section 903.3, including Section 903.3.1.3 for Group R-3, shall be provided throughout all buildings with a Group R fire area including all Manufactured, Modular or Mobile single family or Multifamily Homes or sleeping units.
[Intervening sections 903.2.8.2 to 903.2.9.4 intentionally deleted.] 903.2.10 Group S-2 parking garages

2. Where the enclosed parking garage, in accordance with Section 406.6 of the California Building Code, is located beneath other groups.

Section 907 – Fire Alarm and Detection Systems.
907.3.1 Duct smoke detectors. Smoke detectors installed in ducts shall be listed for the air velocity, temperature and humidity present in the duct. Duct smoke detectors shall be connected to the building’s fire alarm control unit when a fire alarm system is installed. Activation of a duct smoke detector shall initiate a visible and audible supervisory signal at a constantly attended location and shall perform the intended fire safety function in accordance with this code and the California Mechanical Code. Duct smoke detectors shall not be used as a substitute for required open area detection. The reset switch for the duct detectors shall be in an accessible location acceptable to the fire code official. A copy of the alarm system plan shall be accessible at the alarm panel indicating the location of the duct smoke detectors that correspond with the alarm fault activation name or number.

Exception:

1. In occupancies not required to be equipped with a fire alarm system, actuation of a smoke detector shall activate a visible and an audible signal in an approved location. Smoke detector trouble conditions shall activate a visible or audible signal in an approved location and shall be identified as air duct detector trouble.

Section 912 – Fire Department Connections.

Section 912.2.1 is amended as follows:
912.2.1 Visible locations. Fire department connections shall be located on the front access side of buildings, fully visible and recognizable from the street, or nearest point of fire department vehicle access or as otherwise approved by the Fire Chief or his/her designee fire code official. The location of fire department connections shall be approved and installed as follows:

1. Within 40 feet from an approved roadway or driveway and arranged so that hose lines can be readily attached to the inlets without interference from any nearby objects including buildings, fences, posts, plantings, or other fire department connections or otherwise approved by the Fire Chief or his/her designee.

2. Within 50 feet from an approved hydrant.

3. Inlet height shall not be less than 18 inches or more than 48 inches above grade.

4. Guard posts or other approved means shall be required to protect fire department inlet connections from vehicular damage.

Appendix D – Fire Apparatus Access Roads.

Appendix D Section D107.1 – Exception 1 shall be deleted in its entirety.

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15 Appendix D Section D109 and D109.1-D109.2 are added to read as follows:

SECTION D109 - DRIVEWAYS
D109.1 Driveways less than 150 feet in length. A driveway that serves one- or two-family residential (occupancy type R-3) up to 5 dwellings shall comply with all of the following:

1. Minimum 12 feet wide driveway.

2. Driveways with a grade of 12% or less shall be paved or approved all weather road base.

3. Driveways with a grade greater than 12% shall be approved paved non-skid surface.

4. Driveways cannot exceed 20% grade.

D109.2 Driveways that exceed 150 feet in length. A driveway that serves one or two family residential (occupancy type R-3) up to 5 dwellings shall comply with all of the following:

1. Minimum 16 feet wide driveway.

Exception: The driveway can be reduced to 12 feet wide with the installation of a Dry Standpipe as per Five Cities Fire Authority standards.

2. Driveways with a grade of 12% or less shall be an approved paved surface.

3. Driveways with a grade greater than 12% shall be approved paved non-skid surface.

4. Driveways cannot exceed 20% grade.

5. Driveway requires a Fire Department turnaround as per Five Cities Fire Authority standards.

6. Driveways in excess of 200 feet shall be provided with turnouts in addition to turnarounds. Turnouts shall be an all-weather road surface not less than 30 feet long and 10 feet wide.

SECTION 14. Amendment. Adoption of the 2025 California Wildland Urban Interface Code Chapter 15.16 – Adoption of the 2025 California Wildland Urban Interface Code is hereby added to Title 15 as follows:

The 2025 edition of the California Wildland Urban Interface Code is hereby adopted by reference as the Wildland Urban Interface Code of the City of Arroyo Grande, including Appendix G.

SECTION 15. Amendment. Adoption of the 2024 International Property Maintenance Code Chapter 15.17 – Adoption of the International Property Maintenance Code is hereby created as follows:

15.17.010
Adoption of the International Property Maintenance Code. The 2024 edition of the International Property Maintenance Code is hereby adopted by reference as the Property Maintenance Code of the City of Arroyo Grande, except for the following amendments:

A. The following Sections of the 2024 International Property Maintenance Code shall be revised to delete and insert the following:

Section 101.1 Title. Delete “Name of Jurisdiction” and insert “The City of Arroyo Grande”.

Section 103.1 Creation of agency. Delete “[Insert Name of Department]” and insert “The City of Arroyo Grande Community Development Department”.

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16 Section 108.4 Failure to Comply shall be deleted and replaced with the following:

Section 108.4 Failure to Comply. Any person who shall continue any work after having been served with a stop work order, except such work as that person is directed to perform to remove a violation or unsafe condition, shall be subject to fines of not less than triple the amount charged for the original permit fee(s), or more than one thousand dollars ($1,000).

Section 302.4 Weeds. Delete “jurisdiction to insert height in inches” and insert “four inches (4 inches)”.

Section 304.14 Insect screens. Delete “during the period from [Date] to [Date]” and insert “Year-round”.

Section 602.3 Heat supply. Delete “during the period from [Date] to [Date]” and insert “year-round”.

Section 602.4 Occupiable workspaces. Delete “during the period from [Date] to [Date]” and insert “year-round”.

SECTION 16. Amendment. General Penalty Provisions.

Chapter 15.18 – Violations and Penalties is hereby created as follows:

Chapter 15.18 - VIOLATIONS AND PENALTIES.

1. No person shall erect, construct, enlarge, alter, repair, move, improve, remove, convert or demolish, equip, use, occupy, or maintain any land, building or structure, building service equipment, machine or equipment, or cause or permit the same to be done, in violation of Title 15. Each such person shall be deemed guilty of a separate offense for each and every day or portion thereof during which any violation of any of the provisions of Title 15 is committed, continued, or permitted.

2. No person shall remove, deface, alter, or obstruct from view a posted notice of the Building Official, or his or her authorized representative, when such notice constitutes a stop work order or a warning of substandard or hazardous conditions or prohibits or restricts the occupancy or use of a building, structure, or building service equipment regulated by the Title 15.

3. Every violation of Title 15 shall be deemed a misdemeanor, punishable as set forth in Chapter 1.16. In addition, the City may apply administrative penalties provided in Chapter 1.18.

SECTION 17. Publication. Within fifteen (15) days after passage of this Ordinance, it shall be published in accordance with Government Code section 36933.

SECTION 18. Effective Date. This Ordinance shall take effect and be in full force and effect January 1, 2026.

SECTION 19. Severability. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the Ordinance would be subsequently declared invalid or

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17 unconstitutional.

SECTION 20. CEQA. The City Council hereby finds that it can be seen with certainty that there is no possibility that this Ordinance may have a significant adverse effect on the environment, since the Ordinance merely adopts updated building and safety standards. Thus, the adoption of this Ordinance is exempt from the requirements of the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) and 15061(b)(3) of the CEQA Guidelines. The adoption of the Ordinance will not result in a direct or reasonably foreseeable physical change in the environment; and the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment.

SECTION 21. Filing with Building Standards Commission. The City Clerk is directed to coordinate with the Community Development Department to file this Ordinance with the Building Standards Commission immediately after the adoption date of this Ordinance.

On motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote, to wit:

AYES:

NOES:

ABSENT:
the foregoing Ordinance was passed and adopted this ___ day of _____, 2025.

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18 ___________________________________

CAREN RAY RUSSOM, MAYOR
ATTEST:
___________________________________

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
______________________________________

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
___________________________________

ISAAC ROSEN, CITY ATTORNEY

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19 EXHIBIT A
Findings to Support Amendments to the
2025 Edition of the California Building Standards Code
This Exhibit A provides the express findings and determinations (where necessary pursuant to California Health & Safety Code sections 17958, 17958.5, 17958.7 and/or 18941.5) justifying the City of Arroyo Grande’s amendments to the 2025 Building Standards Code.

Arroyo Grande 2025 Code Adoption Summary Table

FINDINGS
1 Climactic
Climatically, the City has dry warm summer and early fall conditions (as well as moderate late fall and winter conditions) with dry winds which remove moisture from vegetation.

Further, the City frequently experiences Santa Ana wind conditions which exacerbate fire hazards and potential spread of fire within the area, both in rural and urban settings.

Coastal ground fog is a common occurrence. This climatic condition could obscure vision, compromising early detection of fire as well as impedes radio deployment of fire equipment to and at the scene of the emergency.
2 Geological
Geographically, the City is located in an area prone to frequent seismic activity which has a high potential for large scale, simultaneous building and infrastructure damage, including fire. A major seismic event would create a community-wide demand on fire protection services, which would be beyond the response capability of the Fire Department. This potential problem can be partially mitigated by requiring initial fire control through the installation of automatic fire protection systems. Further, the City has numerous older and historic buildings and structures which can often fail due to moderate seismic activity.

Additions, alterations and repairs of these antiquated structures need to be properly addressed.

Additionally, the many foothills and surrounding mountains are prime sites for residential development. These hillside residential sites, together with isolated rural and semi-rural settings of the City, create difficult conditions in which to provide immediate fire response.

The City is heavily vegetated throughout and encourages native wildlife protection and enhancement. As the community is developing and housing densities increase, the planting of shrubs and trees and other landscape is encouraged to beautify and enhance City living conditions. However, this increased density results in much higher fuel loads and together with increased planting, and when combined with native vegetation, significantly increases fire hazards and fire spreading from one dwelling or structure to another.
3 Topographical

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20 The topographic element of these Findings is closely associated with the geographical elements noted above. While the geographic features create the topographic conditions, the Findings in this section are, for the most part, a result of the construction and design of the City.

Highway 101 completely traverses and bisects the City. There are only three over/underpasses allowing access to either side of the City. These physical barriers create significant barriers to emergency response.

With limited parking and as the community grows and commercial activity increases in the City, delivery and other vehicles tend to double park. When added to already narrow streets, cars parked on the sides of streets and traffic congestion (especially around rush hour), emergency response times are significantly affected.

The City encourages and emphasizes affordable housing development. This creates buildings that provide minimum required clearances between structures and maximum allowable height. Although these buildings are built with more stringent standards, the reality is that this type of development creates significant barriers in terms of access and fuel load for firefighting purposes.

ADMIN Administrative In Nature, Procedural, No Impact
This amendment is necessary for administrative clarification, and does not modify a building standard pursuant to California Health & Safety Code Sections 17958, 17958.7 and/or 18941.5. This amendment establishes administrative standards for the effective enforcement of the building standards in the City of Arroyo Grande AB130 Health and Safety Code Section 17958(b)
(b) Commencing October 1, 2025, to June 1, 2031, inclusive, a city or county shall not make changes that are applicable to residential units in the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code or the other regulations thereafter adopted pursuant to Section 17922 to amend, add, or repeal ordinances or regulations which impose the same requirements as are contained in the provisions adopted pursuant to Section 17922 and published in the California Building Standards Code or the other regulations adopted pursuant to Section 17922 or make changes or modifications in those requirements upon express findings pursuant to Sections 17958.5 and 17958.7, unless one of the following conditions is met:

ES
(2) The commission deems those changes or modifications necessary as emergency standards to protect health and safety.

HH (3) The changes or modifications relate to home hardening. (4) The building standards relate to home hardening and are proposed for adoption by a fire protection district pursuant to Section 13869.7.
(5) The changes or modifications are necessary to implement a local code amendment that is adopted to align with a general plan approved on or before June 10, 2025, and that permits mixed-fuel residential construction consistent with federal law while also incentivizing all-electric construction as part of an adopted greenhouse gas emissions reduction strategy.

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21 (6) The changes or modifications are related to administrative practices, are proposed for adoption during the intervening period pursuant to Section 18942, and exclusively result in any of the following:
(A) Reductions in time for a local agency to issue a post entitlement permit. (B) Alterations to a local agency’s post entitlement fee schedule. (C) Modernization of, or adoption of, new permitting platforms and software utilized by the local agency.
(D) Reductions in cost of internal operation for a local agency. (E) Establishment, alteration, or removal of local programs related to enforcement of building code violations or complaints alleging building code violations.

PROPOSED ORDINANCE

15.01.020.1 Amendments to California Building Code.

ADMIN (a) CBC, Section 105.1, is hereby amended by adding the following:

Permits Required and Violations and Penalties.

It shall be unlawful for any person, firm, or corporation to erect, construct, enlarge, alter, repair, move, improve, remove, convert, demolish, equip, use, occupy, or maintain any building or structure in the City, or cause or permit the same to be done, contrary to or in violation of any of the provisions of this Code. Any person violating any of the provisions of this Code shall be deemed guilty of a misdemeanor. Each day that a violation continues shall be deemed a separate offense. The Building Official or his/her designee may commence any or all of the following proceedings in accordance with the Arroyo Grande Municipal Code:
(1) Issue an administrative citation in accordance with the provisions of Chapter 18 of Title 1 of the Arroyo Grande Municipal Code and related written policies. (2) Request the City Attorney to institute legal action. (b) CBC, Section 109.4, is hereby amended by adding the following:

ADMIN 109.4.1 Fees for Work Commencing Before Permit Issuance An investigation fee, in addition to the permit fee, shall be collected whether or not a permit is then or subsequently issued. The investigation fee shall be equal to the amount of the permit fee required by this code. The City Council may adopt or amend the fees set forth in this chapter by resolution.

Subsequent un-permitted work by the same permittee shall result in a progressive investigation fee being accessed, second violation would result in a three times the permit fee for the investigation fee, a third violation would result in a four times the permit fee for the investigation fee, a fourth violation would result in a five times the permit fee for the investigation fee, and so on to a maximum of a ten times the permit fee for the investigation fee.

The payment of such investigation fee shall not exempt an applicant from compliance with all other provisions of either this code or the technical codes nor from the penalty prescribed by law. Swimming Pool Safety Barriers not finaled prior to pool water placement are subject to an investigation fee.

ADMIN (c) CBC, Appendix B, Board of Appeals is amended as follows:

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22 1. Board of appeals established. In order to hear and decide appeals of orders, decisions or determinations made by the building official relative to the application and interpretation of this code, there shall be and is hereby created a board of appeals. The board of appeals shall be appointed by the City Council and shall hold office at its pleasure. The building official shall serve as clerk to the board.

2. Membership and qualifications. The board of appeals shall consist of three members who are qualified by experience and training to pass on matters pertaining to building construction and are not employees of the city.

3. Procedures. The board of appeals shall follow the procedures for the conduct of appeals set forth in Title 1, Chapter 12, Appeals of the Arroyo Grande Municipal Code, or as may be established by the building official and shall provide for proper notice and a hearing that complies with due process procedures.
(c) Section 903.2 amended—Automatic sprinkler systems.

Sections 903.2 through 903.2.11.3 of the 2025 California Building Code shall be deleted in its entirety and replaced with the following:

HH, 1, 2, 3
903.2 Where required. Automatic sprinkler systems shall be installed in the following locations:

1. In all new buildings and structures that exceed 1,000 square feet.

2. In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% of the existing square footage to the structure AND results in a total square footage in excess of 1,000 (one thousand) square feet.
b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet. c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure AND are in excess of 1,000 (one thousand) square feet.
d. Where there is a change of occupancy to a more hazardous use as determined by the building official or fire chief based on Table 903.2.1:
e. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years. Buildings or structures separated by less than ten (10) feet shall be considered as a single building or structure unless separation is provided by a permitted, code compliant, rated assembly.

For the purpose of requiring the automatic fire sprinkler systems specified in this chapter, the floor area within the surrounding exterior walls shall be considered as one building (measured from the exterior surface of these exterior walls). For the purpose of calculating square footage for the application of fire sprinkler requirements and fire flow, the floor area shall be as defined by Floor Area, Gross in Section 202 of this code.

ADMIN
The California Electrical Code adopted by reference by Section 15.02.010 of this Code is amended as follows:

89.108.4.1 Permits is hereby amended by adding the following:

The following provision is hereby added to the CEC regarding Unused Facilities:

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23 (1) For all existing commercial and industrial establishments and places of assembly, when the service has been disconnected for ninety (90) continuous days or more, the service may not be reconnected without an inspection and approval from the Building Official. A permit shall be required for such inspection, and the fee shall be as set forth in Section 15.1.01.1 of this Article.
(2) For all existing residential buildings, when the service has been disconnected for ninety (90) continuous days or more, the service may not be reconnected without an inspection and approval from the Building Official. A permit shall be required for such inspection, and the fee shall be as indicated in Section 15.1.01.1 of this Article.

ADMIN 15.04.010.1 Amendments to Plumbing Code.

The California Plumbing Code adopted by reference by Section 15.04.010 of this Code is amended as follows:
(a) The following provision is hereby added to the California Plumbing Code to read as follows:

Section 1205.1.1
In all existing commercial and industrial establishments and places of assembly, when the service has been discontinued for ninety (90) days or more, the gas meter may be turned on only after the piping has been pressure tested and when the test and gas appliances have been approved by the Administrative Authority. A permit shall be required for such test.

In all existing residential buildings where service has been discontinued for ninety (90) days or longer, the gas may be turned on only after the piping has been pressure tested and when the test and gas appliances have been approved by the Administrative Authority. A permit shall be required for such test.

15.08.010 Adoption of the California Residential Code.

For the purposes of prescribing regulations governing one- and two-family dwellings, the 2025 California Residential Code (CRC) promulgated by the California Building Standards Commission, which incorporates the adoption of the 202124 Edition of the International Residential Code, is hereby adopted by reference thereto as if fully set forth in this chapter. Copies of the 2025 California Residential Code are on file in the office of the City Clerk and Building Official. Any changes made by the California Building Standards Commission applicable to the City, including new editions, shall be deemed incorporated herein. If any conflicts between this Code and any other City, State or Federal Code should arise, the most restrictive code providing the highest level of safety as determined by the Building Official shall prevail.

ADMIN Section R108.6.1 Fees For Work Commencing Before Permit Issuance is hereby added:

An investigation fee, in addition to the permit fee, shall be collected whether or not a permit is then or subsequently issued. The investigation fee shall be equal to the amount of the permit fee required by this code. The City Council may adopt or amend the fees set forth in this chapter by resolution.

Subsequent un-permitted work by the same permittee shall result in a progressive investigation fee being accessed, second violation would result in a three times the permit fee for the investigation fee, a third violation would result in a four times the permit fee for the investigation fee, a fourth violation would result in a five times the permit fee for the investigation fee, and so on to a maximum of a ten times the permit fee for the investigation fee.

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24 The payment of such investigation fee shall not exempt an applicant from compliance with all other provisions of either this code or the technical codes nor from the penalty prescribed by law. Swimming Pool Safety Barriers not finaled prior to pool water placement are subject to an investigation fee.

Section R309.2 Amended—Automatic sprinkler systems.

HH, 1, 2, 3
Sections R309.2 and R309.2, Exception 1 shall be deleted in its entirety and replaced with the following:

Section R309.2 and R309.2, Exception 1. An automatic residential fire sprinkler system shall be installed in additions or alterations for all one- and two-family dwelling buildings or structures as follows:

1. In all new buildings and structures that exceed 1,000 square feet.

2. In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% of the existing square footage to the structure AND results in a total square footage in excess of 1,000 (one thousand) square feet.
b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet. c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure AND are in excess of 1,000 (one thousand) square feet.
d. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years. Buildings or structures separated by less than ten (10) feet shall be considered as a single building or structure unless separation is provided by a permitted, code compliant, rated assembly.

For the purpose of requiring the automatic fire sprinkler systems specified in this chapter, the floor area within the surrounding exterior walls shall be considered as one building (measured from the exterior surface of these exterior walls). For the purpose of calculating square footage for the application of fire sprinkler requirements and fire flow, the floor area shall be as defined by Floor Area, Gross in Section 202 of this code.

Adoption of California Fire Code. The 2025 edition of the California Fire Code, including Appendices A, B, BB, C, CC, D, F, H, and I and is hereby adopted as the Fire Code of the City of Arroyo Grande, except for the following revisions.

Chapter 1 Administration
ADMIN
Section 101.1 Title. These regulations shall be known as the Fire Code of the City of Arroyo Grande, hereinafter referred to as “this code.”
Section 103 – Code Compliance Agency
ADMIN
103.1 Creation of agency. The Five Cities Fire Authority is hereby created and the official in charge therefore shall be known as the Fire Code Official. The function of the agency shall be the implementation, administration and enforcement of the provisions of this code.

ADMIN Section 104 – Duties and powers of the Fire Code Official.

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25 104.10.2 Fire Department personnel and police. The chief of the fire department and other members of the Five Cities Fire Authority designated by the Chief of the fire department have the authority of peace officers or public officers pursuant to California Penal Code sections 830.2(g), 830.7(d) and 836.5(a) in performing their duties under the California Fire Code.
104.10.3 Fire investigation unit. A fire investigation unit is established within the Five Cities Fire Authority under the direction of the Fire Chief. All members of the fire investigation unit shall, upon completion of requirements as set forth in California Penal Code section 832, or any successor legislation, have the full power, authority, and immunity of a California peace officer to issue citations for violations of this Code. 104.10.4 Arrests. In addition to Five Cities Fire Authority personnel, who are assigned as arson investigators pursuant to California Penal Code section 830.37, any other member of the Five Cities Fire Authority shall have the power to arrest, without a warrant, whenever that member has reasonable cause to believe the person to be arrested has committed the crime of misdemeanor or felony arson, as defined in California Penal Code sections 450 et seq. and California Code of Regulations, Titles 19, 24, and 25, in his/her presence, pursuant to the authority granted by California Penal Code section 836.5. 104.10.5 Citations. The Fire Code Official, or duly authorized agent, is granted the authority as provided in Section 836.5(a) of the California Penal Code to issue citations for violations of this code.

ADMIN Section 105 – Permits
105.3.3 Occupancy and use prohibited before approval. The building or structure shall not be occupied prior to the fire code official issuing a permit and conducting associated inspections indicating that applicable provisions of this code have been met. No appliance, device, equipment, or system shall be operated or used until the installation has been approved and permitted by the Fire Code Official and all applicable provisions of this code have been met. It shall be the duty of the permit applicant or contractor or both to cause the work to remain accessible and exposed for inspection purposes.

ADMIN Section 113 – Violations
113.4 Violation penalties. Persons who shall violate a provision of this code or shall fail to comply with any of the requirements thereof or who shall erect, install, alter, repair or do work in violation of the approved construction documents or directive of the Fire Code Official, or of a permit or certificate used under the provisions of this code, shall be guilty of a misdemeanor punishable by a fine of not more than one thousand dollars $1,000.00, or by imprisonment not exceeding three hundred sixty five (365) calendar days, or by both such fine and imprisonment. Each day a violation continues, after due notice has been served, shall be deemed a separate offense.
113.3.5. Citations. The Fire Chief, Fire Marshal and Battalion Chiefs are each authorized to issue a citation to any person operating or maintaining an occupancy or a premises or vehicle subject to this code, and who allow a hazard to exist or fail to take immediate action to abate a hazard on such occupancy, premises or vehicle when ordered or notified to do so by any of those officials.

Chapter 4 Emergency Planning
ADMIN Section 405 – Emergency Evacuation Drills

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26 405.8 Initiation. Where a fire alarm system is provided, emergency evacuation drills shall be initiated by activating the fire alarm system. Prior to initiating an alarm, the person initiating the alarm shall contact the fire alarm monitoring company and advise the company’s dispatcher of the fire drill. In cases where the fire alarm system is not monitored by a central station, notification shall be provided to the fire department dispatch center.

Chapter 5 Fire Service Features
HH, 2, 3 Section 503 – Fire Apparatus Access Roads
503.3 Marking. Fire lanes and fire apparatus access roads shall be identified by curbs painted red on both the top and face along the entire length of the fire lane or fire apparatus access road, as applicable. Where no curb exists or a rolled curb is installed, an eight-inch wide red (OSHA safety red) strip or approved posted signs applied the full length of the fire lane or fire apparatus access road, as applicable, shall be installed. “FIRE LANE – NO PARKING” shall be painted on top of curb in 3” white lettering at a spacing of 25 feet on center or portion thereof.

Exception: On school grounds, the markings to be implemented shall be as approved by the Fire Chief or his/her designee.
503.4.2 Removal of Obstructions. The Fire Code Official shall have the power and authority to remove or cause to be removed, without notice, any vehicle, vessel, or thing parked or placed in violation of any or all sections of this code. The owner of any item so removed shall be responsible for all charges connected therewith. 503.6.1 Electrically operated gates. Any electrically operated gate which is installed across any required fire access road or fire lane shall have a Knox brand access switch installed which will open the gate. The switch (with dust cover) shall be installed so it will open the gate, and the gate will remain in the open position until re-set by fire department personnel. The key switch shall be placed between 42” and 48” above the roadway surface at the left side of the access gate unless otherwise allowed by the fire code official. The key switch shall be clearly labeled “FIRE DEPT”. The gate shall have a manual means of opening in the event of a power failure and shall be accessible from the exterior of the property.
503.6.2 Click to Enter Remotely Operated Gates. For electrically operated gates, a radiocontrolled system “Click to Enter” may be required in addition to the Knox key switch. A gate serving an individual single-family residence or duplex is exempt from this requirement.
503.6.3 Exiting. If there is no sensing device that will automatically open the gates for exiting, then a Knox brand electrical override switch (or substantially similar as determined by the Fire Chief) shall be placed on each side of the gate in approved locations. 503.6.4 Manually operated gates. Each manually operated gate which is installed across any required fire access road or fire lane and which is locked shall have a Knox brand (or substantially similar as determined by the Fire Chief) padlock installed. The Knox padlock (or substantially similar as determined by the Fire Chief) shall be integrated with any other lock in such a manner as to allow the gate to be opened only by unlocking the Knox padlock (or substantially similar as determined by the Fire Chief).

HH, 2, 3 Section 505 – Premises Identification

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27 505.1 Address identification. New and existing buildings shall be provided with approved address identification. The address identification shall be legible and placed in a position that is visible from the street or road fronting the property. Address identification characters shall contrast with their background. Numbers shall not be spelled out.

Address numbers shall be Arabic numbers or alphabetical letters. Each character shall be not less than 4 inches (102 mm) high for single family residential buildings and 8 inches (203.2 mm) for R-1, R-2 and non-residential buildings, with a minimum stroke of 0.5 inch (12.7 mm), unless otherwise required to be greater in height or of reflective material as determined by the fire code official during the jurisdiction’s development review process for a specific project. Where required by the fire code official, address identification shall be provided in additional approved locations to facilitate emergency response. Where access is by means of a private road and the building cannot be viewed from the public way, a monument, pole or other approved sign or means shall be used to identify the structure. Address identification shall be maintained.
505.1.1 Directories. When required by the Fire Code Official, complexes with multiple buildings may be required to provide directories, premises maps and directional signs. The scale, design and location of directory signs shall be approved by the Fire Code Official and may be required to be illuminated.
2, 3 Section 506 – Key Boxes
506.1 Knox Box. All new commercial occupancies shall have a Knox brand key box (or substantially similar as determined by the Fire Chief) installed as directed by the fire code official. Existing commercial occupancies shall install a Knox brand key box (or substantially similar as determined by the Fire Chief), as directed by the fire code official when a building permit is obtained for any work. The key box shall contain keys which will allow the fire department access to all portions of the building. The keys shall have a tag affixed identifying their purpose. The nominal height of key box installations shall be five (5) feet above grade.
506.4 Electronic Controlled Gates. A final field inspection, by the Fire Code Official or an authorized representative, is required before electronic Knox (or substantially similar as determined by the Fire Chief) controlled gates may become operative. Prior to final inspection, electronic gates shall remain in a locked open position.

Section 507 – Fire Protection Water Supplies
507.5.7 Fire Department Connection. All newly installed fire department connections will be required to install Knox brand FDC caps (or substantially similar as determined by the Fire Chief). This also includes existing businesses that perform work to the structure that requires a building permit or any tenant improvement.

Chapter 6 – Building Services and Systems
Section 605 – Fuel Fired Appliances
605.8 Gas meters. Above-ground gas meters, regulators and piping subject to damage shall be protected by a barrier complying with Section 312 or otherwise protected in an approved manner. Gas meters shall be permanently marked identifying the building or system served.

Chapter 9 – Fire Protection and Life Safety Systems
Section 903.2 through 903.2.11.3 of the 2025 California Fire Code shall be deleted in its entirety and replaced with the following:

65501.00002\44322752.8
ORDINANCE NO.

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28 HH, 1, 2, 3
Section 903.2. Where required. Approved automatic sprinkler systems shall be installed in the following locations:
1) In all new buildings and structures that exceed 1,000 square feet. 2) In additions or alterations for all buildings or structures as follows:
a. Throughout structures where additions add more than 50% to the existing square footage, and results in a total square footage equal or greater than 1,000 square feet.

Modifications that require addition of an automatic sprinkler system shall include removal, combining or rearrangement of demising or tenant space walls to create a single occupancy or tenant space of 1000 square feet or greater or changes in occupancy or use when the change of occupancy or use results in a requirement for an automatic sprinkler system as specified in Section 903, including, but not limited to, increased occupant load, multiple fire areas, use of hazardous materials and other increased hazards. b. Throughout structures where alterations remove more than 50% of the exterior walls and/or remove more than 50% of the roof framing, and are in excess of 1,000 square feet. c. Throughout structures where additions and alterations combined encompass more than 50% of the existing square footage of the structure and are in excess of 1,000 square feet. d. Where there is a change of occupancy to a more hazardous use as determined by the Building Official or Fire Chief based on Table 903.2.1.

Table 903.2.1
Hazard Categories
Relative Hazard
1 (Highest Hazard)
2 3
4 5 (Lowest Hazard)
e. These requirements will be applicable to the combined square footage of all building permits issued for the address or site within the last five years.

HH, 1, 2, 3 903.2.8.1 Group R-3.

An automatic sprinkler system installed in accordance with Section 903.3, including Section 903.3.1.3 for Group R-3, shall be provided throughout all buildings with a Group R fire area including all Manufactured, Modular or Mobile single family or Multifamily Homes or sleeping units.

HH, 1, 2, 3 903.2.10 Group S-2 parking garages
2) Where the enclosed parking garage, in accordance with Section 406.6 of the California Building Code, is located beneath other groups.

HH, 1, 2, 3 Section 907 – Fire Alarm and Detection Systems.

65501.00002\44322752.8
ORDINANCE NO.

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29 907.3.1 Duct smoke detectors. Smoke detectors installed in ducts shall be listed for the air velocity, temperature and humidity present in the duct. Duct smoke detectors shall be connected to the building’s fire alarm control unit when a fire alarm system is installed.

Activation of a duct smoke detector shall initiate a visible and audible supervisory signal at a constantly attended location and shall perform the intended fire safety function in accordance with this code and the California Mechanical Code. Duct smoke detectors shall not be used as a substitute for required open area detection. The reset switch for the duct detectors shall be in an accessible location acceptable to the fire code official. A copy of the alarm system plan shall be accessible at the alarm panel indicating the location of the duct smoke detectors that correspond with the alarm fault activation name or number.

Exception:

1. In occupancies not required to be equipped with a fire alarm system, actuation of a smoke detector shall activate a visible and an audible signal in an approved location.

Smoke detector trouble conditions shall activate a visible or audible signal in an approved location and shall be identified as air duct detector trouble.

Section 912 – Fire Department Connections.
912.2.1 Visible locations. Fire department connections shall be located on the front access side of buildings, fully visible and recognizable from the street, or nearest point of fire department vehicle access or as otherwise approved by the Fire Chief or his/her designee fire code official. The location of fire department connections shall be approved and installed as follows:
1) Within 40 feet from an approved roadway or driveway and arranged so that hose lines can be readily attached to the inlets without interference from any nearby objects including buildings, fences, posts, plantings, or other fire department connections or otherwise approved by the Fire Chief or his/her designee.
2) Within 50 feet from an approved hydrant.
3) Inlet height shall not be less than 18 inches or more than 48 inches above grade. 4) Guard posts or other approved means shall be required to protect fire department inlet connections from vehicular damage.

HH, 1, 2, 3 Appendix D – Fire Apparatus Access Roads.

Appendix D Section D107.1 – Exception 1 shall be deleted in its entirety.

D109 - Driveways.

D109.1 Driveways less than 150 feet in length. A driveway that serves one- or two-family residential (occupancy type R-3) up to 5 dwellings shall comply with all of the following:

1. Minimum 12 feet wide driveway.

2. Driveways with a grade of 12% or less shall be paved or approved all weather road base.

3. Driveways with a grade greater than 12% shall be approved paved non-skid surface.

4. Driveways cannot exceed 20% grade.

D109.2 Driveways that exceed 150 feet in length. A driveway that serves one or two family residential (occupancy type R-3) up to 5 dwellings shall comply with all of the following:

1. Minimum 16 feet wide driveway.

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30 Exception: The driveway can be reduced to 12 feet wide with the installation of a Dry Standpipe as per Five Cities Fire Authority standards.

2. Driveways with a grade of 12% or less shall be an approved paved surface.

3. Driveways with a grade greater than 12% shall be approved paved non-skid surface.

4. Driveways cannot exceed 20% grade.

5. Driveway requires a Fire Department turnaround as per Five Cities Fire Authority standards.

6. Driveways in excess of 200 feet shall be provided with turnouts in addition to turnarounds. Turnouts shall be an all-weather road surface not less than 30 feet long and 10 feet wide.

ADMIN
Adoption of the International Property Maintenance Code. The 2024 edition of the International Property Maintenance Code is hereby adopted as the Property Maintenance Code of the City of Arroyo Grande, except for the following revisions.

A. The following Sections of the 2024 International Property Maintenance Code shall be revised to delete and insert the following:

Section 101.1 Title. Delete “Name of Jurisdiction” and insert “The City of Arroyo Grande”.

Section 103.1 Creation of agency. Delete “[Insert Name of Department]” and insert “The City of Arroyo Grande Community Development Department”.

Section 108.4 Failure to Comply shall be deleted and replaced with the following:

Section 108.4 Failure to Comply. Any person who shall continue any work after having been served with a stop work order, except such work as that person is directed to perform to remove a violation or unsafe condition, shall be subject to fines of not less than triple the amount charged for the original permit fee(s), or more than one thousand dollars ($1,000).

Section 302.4 Weeds. Delete “jurisdiction to insert height in inches” and insert “four inches (4 inches)”.

Section 304.14 Insect screens. Delete “during the period from [Date] to [Date]” and insert “Year-round”.

Section 602.3 Heat supply. Delete “during the period from [Date] to [Date]” and insert “year-round”.

Section 602.4 Occupiable workspaces. Delete “during the period from [Date] to [Date]” and insert “year-round”.

Item 10.d.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Director of Public Works/Assistant City Manager BY: Natalie Riddering, Planning/Engineering Permit Technician SUBJECT: Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
DATE: November 25, 2025
RECOMMENDATION:
1) Introduction of an Ordinance titled, “An Ordinance of the City Council of the City of Arroyo Grande Granting to Phillips 66, LLC a Pipeline Franchise Agreement to Construct, Operate, and Maintain Pipeline for the Transport of Oil, and Other Specified Material, in the City Of Arroyo Grande”;
2) Hold public hearing regarding the proposed Ordinance pursuant to Public Utilities Code section 6234; and
3) Find that adoption of the proposed Ordinance granting Phillips 66, a pipeline franchise is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.) IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

The annual franchise fee for the proposed franchise is set by state statute, pursuant to Public Utilities Code Section 6231.5, which establishes a rate per lineal foot based on the diameter of the pipeline, multiplied by the Consumer Price Index for the area. The most recent example of such payment received is depicted below in Figure 1.

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

Figure1 Phillips 66 2024-2025 payment received
In addition, staff have negotiated a $15,000 granting fee to offset City costs related to administering, monitoring, and enforcing the franchise. A separate $5,000 transactional fee was also negotiated to reimburse the City for the costs of negotiating and drafting the proposed Pipeline Franchise Agreement (Exhibit A of Attachment 1, the Ordinance).

BACKGROUND:

California Public Utilities Code section 62011 et seq. authorizes the City Council to adopt an ordinance to grant a franchise to a utility company to transmit oil, gas, water, or electricity through the City by means of a pipeline, conduit, or other transmission method.

As applicable here, Phillips 66 requests renewal of its existing franchise agreement to transport oil, and other specified materials through the City. A brief history of the agreements relating to the pipeline are summarized below.

On November 9, 1999, the City Council granted a franchise to Unocal California Pipeline Company, a California corporation (“Unocal”), for a term of 10 years.

On August 25, 2009, the City Council adopted Ordinance No. 613 (Attachment 2), reissuing the franchise to ConocoPhillips Pipeline Company, a Delaware corporation and successor-in-interest to Unocal (”ConocoPhillips”), for a term of 15 years.

1https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PUC&division=3.&title=&part= &chapter=2.&article=1

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

On July 18, 2024, Phillips 66 Pipeline, LLC, a Delaware corporation and successor-ininterest to ConocoPhillips requested an extension and renewal of the franchise. The City began reviewing the franchise terms and requested updated maps of current lines within city limits from Phillips 66. Updating these maps required additional time from Phillips 66 staff, which could not be completed by December 1, 2024, the date the franchise would expire. To memorialize that the franchisee’s obligations would continue during negotiations, the City executed a Letter of Understanding (Attachment 3) with the franchisee.

Following execution of the Letter of Understanding, the City has received the requested updated maps of Phillips 66 facilities and developed the proposed franchise agreement with a 15-year term that is amenable to both parties.

On October 28, 2025, the City Council adopted Resolution 2025-0752 declaring the City Council’s intention to adopt an ordinance to grant to Phillips 66 Pipeline, LLC a pipeline franchise agreement.

The pipeline franchise involves the operation of a pipeline owned by Phillips 66 within City right of way as part of the larger Phillips 66 pipeline system depicted below in Figure 2 and Figure 3.

2 http://weblink.arroyogrande.org/WebLink/DocView.aspx?id=365712&dbid=0&repo=ArroyoGrande

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

Figure 2 https://www.npms.phmsa.dot.gov/PIMMA/ Figure 3 City GIS ANALYSIS OF ISSUES:

Procedure of Adoption
Public Utilities Code Sections 6231 et. seq. establishes a multi-phase process for considering a pipeline franchise agreement.

The first step, which was completed on October 28, 2025, required adoption of a resolution that declared the City’s intention to grant the requested franchise. Resolution 2025-075 stated the character of the franchise and provided notice of when and where all individuals with objections could appear before the legislative body to be heard regarding the franchise. Within 15 days after the resolution passed, the notice was published in New Times on November 6, 2025.

The public hearing on the Ordinance (Attachment 1), occurring as part of this item, is the second step in the process. This step provides the public with an opportunity to formally object to the proposed granting of the franchise. As part of this hearing, the legislative body must hear and consider all protests to the grant of the franchise. Council then takes

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

action on the franchise application in accordance with the City’s standard ordinance adoption procedure. If Council acts to introduce the Ordinance at this November 25, 2025 meeting, the Ordinance will return for the third and final step of adoption at the City Council meeting on December 9, 2025.

Request Regarding Integrity and Materials of the Pipeline At the City Council meeting October 28, 2025, Council directed staff to provide recent pipeline inspection data to Council ahead of the November 25, 2025 public hearing including the integrity and materials of the pipeline, systems in place to detect leaks or rupture, coordination if there is a leak or rupture, occurrences or signs of leaks in the last 10 years, and if risk assessments have been conducted.

Staff has conducted outreach with both the Office of the State Fire Marshall (OSFM) and Phillips 66 to collect information responsive to Council’s request.

Response of OSFM to Staff Inquiry
On October 28, 2025, City staff requested information regarding the integrity and materials of the pipeline from OSFM. On November 10, 2025, City staff received a certified letter from OSFM (Attachment 3) dated October 29, 2025, confirming that Phillips 66 is in compliance with federal and state laws governing the maintenance and operation of its pipelines. This determination was based on standard annual inspections conducted on August 26–30, October 31, and November 18–21, 2024. Staff continues to monitor for additional information, if received in advance of the second hearing on December 9, 2025.

Response of Phillips 66 to Staff Inquiry
Staff also contacted Phillips 66, requesting the same information. Phillips 66 representatives stated that OSFM is the official record holder, but Phillips 66 was cooperative, and provided available information. They noted the pipelines have been inactive since 2023 due to the closure of the Nipomo refinery. Phillips 66 provided information regarding leak detection systems and a handful of preliminary post inspection reports (Attachment 4)
Agency Coordination in Event of Leak, Rupture
In the case of an oil line leak or rupture, response coordination for the lead agency would occur with both the OSFM, California Department of Fish and Wildlife, Office of Spill Prevention and Response and, if applicable, the California Water Resources Control Board.

Systems to Detect Leaks, Ruptures

1. RTTM (Real-Time Transient Model) which is a type of Computation Pipeline Monitoring (CPM) that is a continuous monitoring system that:
• Evaluates (flow in minus flow out) vs changes in (pressure, temperature, product properties)

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

• Able to detect small to large leaks quickly during steady-state, transient, or shutin conditions

2. SCADA (Supervisory Control and Data Acquisition) Deviation A continuous monitoring system using sensors to track real-time pipeline data and compares it to predefined limits. When a deviation occurs, the SCADA system triggers an alarm to alert operators.
• Includes alarm bracketing, high/low pressure alarms, and high/low flow alarms. • Best for detecting large leaks or ruptures quickly.

If more information is deemed necessary concerning questions regarding leak detection systems, Article 6 of the proposed agreement requires Phillips 66 to submit to the City Engineer, within six (6) months of the franchise’s effective date, a description of all protective devices and corrosion prevention methods, including the location and types of anodes used for protection against corrosion and electrolytic leakage.

Protective Terms of the Franchise Agreement
 The Franchise Agreement requires Phillips 66 to maintain a $2,000,000 bond in favor of the City. This ensures that funds are immediately available to the City in the event of an emergency leak or rupture. The bond is in addition to the insurance coverage required under the agreement.
 The Franchise Agreement provides for Commercial General Liability Insurance up to $5,000,000.00 for bodily and personal injury, property damage, and automobile coverage per accident.
 The proposed Franchise Agreement also includes provisions to ensure the City receives timely information throughout the term of the agreement. For example, Article 25 states that failure to provide requested data, documents, or reports within ten (10) business days of a written request or within an approved extended timeframe, will result in penalties of $250 per day for each day the violation continues.
 To protect City infrastructure, Article 9 of the proposed agreement requires the Grantee to repair, at its own expense, any damage resulting from its operations under the franchise. This includes defects in facilities installed or constructed pursuant to the agreement. The Grantee must also restore affected streets to a satisfactory condition to the City Engineer.
 Finally, Article 19 provides that failure by Phillips 66 to comply with any term, covenant, or condition of the Franchise Agreement constitutes default and may result in termination of the franchise by the City.

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

ALTERNATIVES:

1. Introduce the Ordinance granting Phillips 66 Pipeline, LLC a pipeline franchise;

2. Do not introduce the Ordinance; or

3. Provide other direction to staff.

ADVANTAGES:

Approval of the recommendation will allow consideration of the adoption of the proposed Ordinance granting the Pipeline Franchise Agreement, pursuant to the process set forth in the Public Utilities Code, as required by law. This agreement provides assurances that the subject pipeline system will meet State testing, inspection, and compliance requirements while providing the City with cost and liability protection in case of a safety incident.

DISADVANTAGES:

Staff has identified no disadvantages with the recommended action to introduce the Ordinance.

Should the City Council not adopt the Ordinance, the Phillips 66 pipeline franchise will terminate. Phillips 66 would be required to abandon the line in place or remove the line and possibly re-route it around city limits. If Phillips 66 did choose to re-route the line around the City, that new line could result in community impacts (particularly if the line were located near City limits) without the control offered by direct regulation through the franchise agreement. Phillips 66 is a regulated pipeline corporation and common carrier by the California Public Utilities Commission. Therefore, even if the franchise is not granted, Phillips 66 may be required by CPUC regulations to continue providing pipeline service until an alternative is approved by the CPUC. To the extent Phillips 66 continues service through the City, the company would be required to pay the franchise fee and abide by the franchise until such time as service can be discontinued.

ENVIRONMENTAL REVIEW:

Find that the adoption of an Ordinance granting to Phillips 66, a Pipeline Franchise is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.) No new development or intensification of development would result from the franchise, therefore there is no potential for significant effects on the environment.

PUBLIC NOTIFICATION AND COMMENTS:

The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.

ATTACHMENTS:

1. Ordinance

Item 10.d.

City Council
Introduction of Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
November 25, 2025

2. Ordinance No. 613

3. OSFM, Pipeline Safety Division Response Letter

4. Preliminary Post Inspection Findings

ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE GRANTING TO PHILLIPS 66, LLC A PIPELINE FRANCHISE AGREEMENT TO

CONSTRUCT, OPERATE, AND MAINTAIN PIPELINE FOR THE TRANSPORT

OF OIL, AND OTHER SPECIFIED MATERIAL, IN THE CITY OF ARROYO GRANDE
WHEREAS, Public Utilities Code section 6201 et seq. authorizes the City Council to grant a utility a franchise to use, or to lay and use, pipes and appurtenances for transmitting and distributing oil or products thereof in, along, across, upon, over, and under the public streets, ways, and alleys within a city; and
WHEREAS, on November 9, 1999, the City Council granted a franchise to Unocal California Pipeline Company, a California corporation (“Unocal”), for a term of 10 years to construct, operate, and maintain pipelines for the transportation of oil and other specified products in the City of Arroyo Grande (“City”); and
WHEREAS, on August 25, 2009, the City Council adopted Ordinance No. 613 re-issuing the franchise to ConocoPhillips Pipeline Company, a Delaware corporation and successor-in-interest to Unocal (“ConocoPhillips”), for a term of 15 years; and WHEREAS, on July 18, 2024, Phillips 66 Pipeline, LLC, a Delaware limited liability company, California common carrier, and successor-in-interest to ConocoPhillips (“Phillips 66”), requested an extension and renewal of the franchise; and WHEREAS, Phillips 66 has indicated its interest in renewing its franchise, and if granted the franchise, will pay to the City during the life of such franchise, a sum equivalent to the compensation provided in Public Utilities Code section 6231.5, which provides for the applicable base rate, as defined therein, multiplied by the Consumer Price Index for the area; and further that in the event the California Legislature amends the Franchise Act of 1937 to permit a franchise payment greater than the percentage formula specified herein, the franchise fee paid by Phillips 66 shall be automatically changed to the level expressed by the Legislature; and
WHEREAS, the City desires to extend and renew the franchise on the same or similar terms and conditions of the existing franchise; and
WHEREAS, pursuant to Public Utilities Code section 6232, prior to considering approval of a pipeline franchise, on October 28, 2025, the City Council adopted Resolution 2025- 075 declaring the City’s intention to grant a pipeline franchise to Phillips 66; and

ORDINANCE NO.

PAGE 2
WHEREAS, the City Clerk published a public hearing notice of the passage of the resolution of intention regarding the franchise agreement on November 6, 2025 in New Times; and
WHEREAS, the City Council of the City of Arroyo Grande conducted a public hearing regarding the City Council’s intention to grant a pipeline franchise agreement to Phillips 66 on November 25, 2025, in accordance with Public Utilities Code section 6232; and
WHEREAS, all prerequisites to the adoption of this Ordinance have occurred.

THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS:

SECTION 1: The above recitals and findings are true and correct and are incorporated herein by this reference.

SECTION 2: Pursuant to Public Utilities Code section 6232, the City Council of the City of Arroyo Grande grants Phillips 66 a franchise of fifteen (15) years to construct, operate, and maintain pipelines for the transportation of oil, and other specified products, in the City of Arroyo Grande, California, a copy of which is attached hereto and incorporated herein by this reference as shown in Exhibit “A” (the “Franchise Agreement”). The City Manager is authorized to execute the Franchise Agreement, subject to any minor, technical, or non-substantive changes as approved by the City Manager in consultation with the City Attorney. Delivery by Phillips 66 of a signed copy of the Franchise Agreement to the City Clerk within the statutorily required time period will constitute a filed written acceptance of the franchise pursuant to Public Utilities Code section 6235.

SECTION 3: The City Council finds that adoption of this Ordinance is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.) No new development or intensification of development would result from the franchise, therefore there is no potential for significant effects on the environment.

SECTION 4: This Ordinance shall become effective 30 days after its adoption.

SECTION 5: A summary of this Ordinance shall be published in a newspaper published and circulated in the City of Arroyo Grande at least five (5) days prior to the City Council meeting at which the proposed Ordinance is to be adopted. A certified copy of the full text of the proposed Ordinance shall be posted in the office of the City Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the names of those City Council members voting for and against the Ordinance shall be published again, and the City Clerk shall post a certified copy of the full text of such adopted Ordinance.

ORDINANCE NO.

PAGE 3
On motion of Council Member , seconded by Council Member , and on the following roll call vote to wit:

AYES:

NOES:

ABSENT:
the foregoing Ordinance was adopted this 9
th day of December 2025.

ORDINANCE NO.

PAGE 4

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

EXHIBIT A

FRANCHISE AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE AND PHILLIPS 66 PIPELINE LLC, FOR A FRANCHISE TO CONSTRUCT, OPERATE,

AND MAINTAIN PIPELINES FOR THE TRANSPORTATION OF OIL, AND OTHER

SPECIFIED MATERIALS, IN THE PUBLIC STREETS OF THE CITY OF ARROYO

GRANDE, STATE OF CALIFORNIA

EXHIBIT A

TABLE OF CONTENTS
Page
ARTICLE 1 NATURE OF FRANCHISE............................................................................ 3 ARTICLE 2 APPURTENANCES....................................................................................... 6 ARTICLE 3 LOCATION OF PIPELINES........................................................................... 6 ARTICLE 4 CONSTRUCTION OF NEW PIPELINES....................................................... 7 ARTICLE 5 COMMENCEMENT OF CONSTRUCTION ................................................... 7 ARTICLE 6 MAPS AND REPORTS TO BE FURNISHED................................................ 8 ARTICLE 7 COMPENSATION TO THE CITY.................................................................. 8 ARTICLE 8 EMERGENCY EQUIPMENT AND CREWS ................................................ 10 ARTICLE 9 REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY STREETS........................................................................................................ 11 ARTICLE 10 REARRANGEMENT OF FACILITIES........................................................ 11 ARTICLE 11 GRANTEE’S REMOVAL OR ABANDONMENT OF FACILITIES............... 13 ARTICLE 12 COMPLETION OF WORK......................................................................... 16 ARTICLE 13 RECOVERY OF COSTS OF REPAIRS AND UNPAID FEES.................... 16 ARTICLE 14 BOND.........................................................................................................17 ARTICLE 15 INSURANCE ............................................................................................. 18 ARTICLE 16 INDEMNIFICATION BY GRANTEE........................................................... 19 ARTICLE 17 CHANGES IN CONTROL OF FRANCHISE .............................................. 18 ARTICLE 18 WAIVER OF BREACH ...............................................................................22 ARTICLE 19 DEFAULT.................................................................................................. 23 ARTICLE 20 SCOPE OF RESERVATION ..................................................................... 23 ARTICLE 21 NOTICE......................................................................................................24 ARTICLE 22 SUCCESSORS ......................................................................................... 24 ARTICLE 23 ACCEPTANCE OF FRANCHISE .............................................................. 24 ARTICLE 24 FORCE MAJEURE.....................................................................................25 ARTICLE 25 LIQUIDATED DAMAGES.......................................................................... 25 ARTICLE 26 ATTORNEY’S FEES ................................................................................. 26 ARTICLE 27 FAILURE TO COMPLY............................................................................27 ARTICLE 28 COMPLIANCE WITH APPLICABLE LAW................................................ 27 ARTICLE 29 SEVERABILITY.........................................................................................27 ARTICLE 30 EFFECTIVE DATE....................................................................................27

EXHIBIT A
1 RECITALS
WHEREAS, the Franchise Act of 1937 (the “Act”) codified at California Public Utilities Code section 6201 et seq. authorizes cities to grant franchises to public utilities to use, or to construct or lay and use, under, along, across, or upon the public streets, ways and alleys and places within the city, facilities that are part of a pipeline system transmitting oil or products thereof;
WHEREAS, on December 1, 2009, the City Council of the City of Arroyo Grande (“City”) approved a franchise agreement with ConocoPhillips Pipe Line Company, a Delaware corporation and California public utility and common carrier, for a term of fifteen (15) years, granting the pipeline company a franchise to use, or to construct or lay and use, pipeline facilities and appurtenances under, along, across, or upon the City’s streets for the purposes of transmitting oil or products thereof;
WHEREAS, on July 10, 2012, the City adopted Resolution No. 4470 consenting to the transfer of the franchise from ConocoPhillips Pipe Line Company to Phillips 66 Pipeline LLC, a Delaware limited liability company (“Phillips 66”), pursuant to Article 17 of the franchise, which continues to operate oil pipelines within the City’s streets and otherwise controls and holds the franchise;
WHEREAS, the franchise with Phillips 66 expired on December 1, 2024 and Phillips 66 has applied to the City for the re-issuance of the franchise on similar terms and conditions; and
WHEREAS, Phillips 66 desires to continue to use City streets for the purposes of transmitting oil and products thereof and the City and Phillips 66 have agreed to enter into a new franchise for such purpose. The City and Phillips 66 may be referred to individually as Party, and collectively as “the Parties.”
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

ARTICLE 1

NATURE OF FRANCHISE
A. Grant of Franchise and Terms.

1. The City hereby grants to Phillips 66 (“Grantee”), for the term which

EXHIBIT A
2 shall begin on the effective date of this franchise and which term shall be for fifteen (15) years ending at 5:00 p.m. Pacific Prevailing Time on January 8 , 2041, subject, however, to all the limitations and restrictions herein contained, the non-exclusive right, privilege and franchise to, within the City, construct, erect, maintain, operate, repair, renew, abandon, and change the size of and remove pipelines, not to exceed twelve (12) inches nominal internal diameter, for the transportation of oil, oil products, hydrocarbon gases and other gases necessary for the operation and maintenance of the pipelines, water and mixtures thereof, movable by pipeline, in, under, along, and across the public streets, ways, alleys and places (hereinafter, “streets”), more fully described and shown on the site maps in Exhibit A-1, attached hereto and made a part hereof.

2. Unless otherwise specifically stated, the following provisions shall govern the interpretation and construction of the franchise granted herein:
(a) This franchise shall supersede any and all prior franchise agreements between the parties and/or their predecessors in interest, including, but not limited to, that Franchise Agreement granted to Unocal California Pipeline Company, dated November 9, 1999, and that Franchise Agreement granted to ConocoPhillips Pipe Line Company, dated December 1, 2009, and shall include the right, for the period and subject to the conditions hereof, to construct, erect, maintain, operate, repair, renew, abandon and change the size and remove said pipelines, if any, of Grantee, as laid and constructed in said streets.
(b) The terms and conditions of this franchise shall also apply to any pipeline or other facilities of Grantee which are located within the right of way of any public road or street at the time such road or street becomes a City street, except in cases where Grantee maintains easement rights that are prior to or pre-date the establishment of such public road or street.
(c) Grantee shall not be relieved of its obligation to promptly comply with any provision of this franchise by failure of the City to enforce prompt compliance. (d) Any right or power conferred, or duly imposed upon any officer, employee, department, or other City entity, by the terms of this franchise, may be legally transferred to any other City officer, employee, department, or other City entity. (e) Grantee shall have no recourse whatsoever against the City for any loss, cost, expense, or damage suffered by Grantee and arising out of any provision or requirement of this franchise or its lawful enforcement by the City. (f) This franchise does not relieve Grantee of any applicable requirements of the Arroyo Grande Municipal Code or of any applicable federal, state, or county law, ordinance, rule, regulation, or specification, including, but not limited to, any requirement relating to street work, street excavation permits, or the use, removal or relocation of property in streets, or the payment of applicable permit fees, except as specifically prescribed herein. This franchise is non-exclusive. Neither the granting of this franchise nor any of the provisions contained herein shall be construed to prevent the City

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3 from granting any identical or similar franchise to any other person or entity. (g) The compensation provided for in this franchise is for (i) the rights and privileges granted by this franchise; and (ii) the right and privilege granted to the Grantee to construct, erect, maintain, operate, repair, renew, abandon and change the size of and remove said pipelines pursuant to this franchise within the City’s streets. The City expressly reserves the right to impose and collect from Grantee, on a non- discriminatory basis, processing and inspection fees from street cutting and excavation permits to the extent such fees are imposed generally on all nongovernmental applicants for such permits within the City and the amount of such fees does not exceed the reasonable costs to the City of processing such permits and inspecting the work done thereunder. (h) Any activities involving the use of a pipeline system for the transmitting of oil, products thereof, hydrocarbon gases and other gas necessary for the operation and maintenance of the pipelines, water and mixtures thereof, which are not specifically authorized under this franchise are prohibited under this franchise. Any telecommunication or other uses not authorized in this franchise must be approved by the City, in its sole discretion, under a separate franchise. (i) If any provision of this franchise, or the application of this franchise to any person or circumstance is held invalid by a court of competent jurisdiction or is not in compliance with any requirement of the California Public Utilities Commission, the City, or any other federal or state body or agency having jurisdiction over Grantee’s franchise activities, the remainder of this franchise, or the application of this franchise to persons or circumstances other than those to which it is held invalid or not in such compliance, shall not be affected thereby.

B. Limitations Upon Grant.

1. No privilege or exemption is granted or conferred by this franchise, except those specifically prescribed herein.

2. Any privilege claimed under this franchise by Grantee in any street shall be subordinate to any prior lawful occupancy of the street.

3. The rights and privileges of this franchise are granted solely to Grantee, except as provided within this franchise. This franchise is not be to sold, transferred, leased, assigned, or disposed of as a whole or in part either by forced sale, merger, consolidation, or otherwise, without the City’s prior written consent as described in Article 17, infra, or as otherwise expressly provided herein.

C. Rights Reserved to the City.

1. The rights reserved to the City under this franchise are in addition to all other rights of the City, whether authorized by the Arroyo Grande Municipal Code, or any other federal, state, or county law, rule, or regulation. No action, proceeding or exercise of a right shall affect any other rights which may be held by the City. Grantee, by acceptance

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4 of this franchise, shall be bound thereby and to comply with any action or requirement of the City in its exercise of any such right power.

2. The City shall have the power and right at all times during the term of this franchise to require Grantee to conform to the laws, rules and regulations governing the operation of pipelines now or hereafter adopted by the City Council to the extent permitted by law.

3. The City may enforce, when not preempted by other state or federal authority and to the maximum extent permitted by law, the inspection and testing of pipelines, pursuant to state and federal standards. Failure to meet state and/or federal standards shall result in liquidated damages to the City for each day of noncompliance after the initial ten (10) days of non-compliance, unless the oil pipeline is shutdown.

ARTICLE 2

APPURTENANCES
The Grantee shall have the right, subject to the prior written approval of the City Engineer, to construct and maintain such traps, manholes, conduits, valves, appliances, attachments, and appurtenances (hereinafter, “appurtenances”), as may be necessary for the proper maintenance and operation of the pipelines under said franchise. Said appurtenances shall be so located as to conform to any order of the City Engineer in regard thereto and not to interfere with the use of the streets for travel. The Grantee shall have the right, subject to such ordinances, rules, or regulations as are now or may hereafter be in force, to make all necessary excavations in said streets for the construction and repair of said pipelines and appurtenances subject, to the prior written approval of the City Engineer. “Appurtenances” shall also include any adjunct communications lines and/or conduits as coaxial cable, optical fiber, wire, or other transmission lines or forms of transmission, and associated equipment and devices located in, upon, along, across, under or over the streets of the City, the sole function of which is to monitor or control the operation or safety of the pipeline system via the distribution of video, audio, voice, or data signals. An adjunct communications line shall not include any facility which distributes, through any means, to subscribers or persons other than Grantee, the signal of one or more broadcast television or radio stations or other sources of video, audio, voice, or data signals.

ARTICLE 3

LOCATION OF PIPELINES
Any pipeline hereinafter laid shall be located as directed in writing by the City Engineer. Repairs to the streets shall be pursuant to the City’s laws, regulations and policies then in effect.

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5 ARTICLE 4
ARTICLE4 CONSTRUCTION OF NEW PIPELINES
A. Terms of Construction. The pipelines and appurtenances laid, constructed or maintained under the provisions of this franchise shall be installed, maintained, and inspected by the Grantee in a satisfactory, safe, and workmanlike manner, of good material, and in conformity with all applicable ordinances, rules, or regulations now or hereafter adopted or prescribed by the City Council, state, or federal authorities.

B. Restoration of Streets. The work of laying, constructing, maintaining, operating, renewing, repairing, changing and moving any of the pipeline system contemplated by this franchise and all other work in exercise of this franchise shall be conducted according to the provisions of the City’s encroachment ordinances and other rules from time to time prevailing, and otherwise in accordance with applicable federal and state law and City ordinances, and with the least possible hindrance or interference to the use of City streets by the public, and Grantee shall provide all necessary warning, safety and traffic control devices as are or may be required by City, state or federal regulations. All excavations shall be pursuant to the City’s laws, regulations and policies then in effect. The City streets shall be placed in as good and serviceable condition as existed at the beginning of this work, to the satisfaction of the City Engineer and pursuant to the City’s laws, regulations and policies then in effect.

ARTICLE 5

COMMENCEMENT OF CONSTRUCTION
The Grantee, in good faith, shall commence with the work of laying any new pipelines and appurtenances within four (4) months from the date of the written approval of the work by the City, and if any such pipelines be not so commenced within said time, this franchise shall be declared forfeited; provided, however, that if the Grantee is maintaining and operating an existing pipeline system consistent with this Franchise Agreement over the route referred to in Article 1 herein, it shall be deemed to be in compliance with the foregoing.

The Grantee shall not commence the construction of any new pipelines under the provision of this franchise or add to such existing pipeline system, if any there be, until it first shall have applied for and obtained a permit therefor from the City Engineer and the Director of Community Development, where appropriate.

The application of the Grantee for the construction of new pipelines shall show the following facts: the length, approximate depth and proposed location of the pipeline proposed to be laid or constructed, the size and description of the pipeline intended to be used, and such other facts as the City Engineer may require. The Grantee shall pay any and all processing and inspection fees of the City. Upon the completion of the construction of any pipelines constructed pursuant to said franchise, the Grantee shall render a statement to the City showing in detail the permit or permits issued and the total length of pipeline, the construction of which was authorized under such permit, or permits, and the total length of pipeline actually laid, and the Grantee shall accompany said report with payment to the City

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6 for the pipelines which have actually been constructed under said franchise at the rate of $100 per mile.

ARTICLE 6

MAPS AND REPORTS TO BE FURNISHED
A. Within six (6) months of the effective date of this Franchise Agreement for existing pipelines, and within ninety (90) days following the date in which any additional pipelines have been laid or constructed under this franchise, the Grantee shall file a map in such form as may be required by the City Engineer showing the approximate location and size of all its facilities then in place, and shall, upon installation of any additional facilities or upon removal, change or abandonment of all or any portion thereof, file a revised map or maps showing the location and size of all such additional and/or abandoned facilities as of said date. Cathodic protection is to be used for all facilities installed or maintained pursuant to this franchise. For facilities previously in liquid service and where the liquids have been removed and the facilities inerted, or for facilities previously in gas service that are not pressurized, cathodic protection shall be maintained consistent with City or other legal requirements. A description of all the protective devices shall be furnished to the City Engineer which shall show the location and types of anodes, including a description of methods to be used as a protection against corrosion and electrolytic leakage.

B. Grantee shall file with the City’s Director of Administrative Services, within sixty (60) days after the expiration of the calendar year, or fractional calendar year, following the date of the granting of this franchise and within sixty (60) days after the expiration of each calendar year thereafter, two copies of a report verified by the oath of Grantee or by the oath of a duly authorized representative of Grantee, showing, for the immediately preceding franchise period, the length of pipelines in streets, the nominal internal diameter of such pipelines, the rate per foot per year (when applicable) and the total amount due to the City. In this report, Grantee shall also show any change in franchise footage since the last franchise report, segregating such footage as to new pipelines and adjunct communications lines laid, old pipelines and adjunct communications lines removed, and old pipelines and adjunct communications lines abandoned in place.

C. Grantee shall file with the City Engineer within sixty (60) days after the end of the calendar year a report, in duplicate, showing the permit number of each permit obtained for the installation of new pipelines during the immediately preceding franchise report period, together with the length and size of said pipelines.

ARTICLE 7

COMPENSATION TO THE CITY
A. During the term of this franchise, Grantee shall pay to the City annual fees for this franchise, said fees to be those fees prescribed by the California Public Utilities Code section 6231.5, provided that the rate shall be increased each calendar year to the maximum rate established in subsequent amendments of the California Public Utilities Code or as

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7 allowed by law. Annual payments to be made pursuant to this franchise shall be due and payable in arrears April 1 of each year of this franchise. The first annual fees payment hereunder shall be prorated for the remainder of the current calendar year based on a 365- day year.

At the time of payment of fees by Grantee, Grantee shall file a verified statement with the Director of Administrative Services, with a copy to the City Engineer, showing in detail the number of lineal feet and the diameter thereof, expressed in inches, of pipelines covered by this franchise during the previous calendar year, or portion thereof.

The compensation provided for in this Article shall be increased after the first year of the franchise and each subsequent year during the term of this franchise, to the maximum rate established in subsequent amendments of the California Public Utilities Code or as allowed by law.

In addition to the increase in fees above described, the compensation provided for in this Article shall be increased annually as provided in Section 6231.5 which provides that the applicable base rate, as defined therein, shall be multiplied by the Consumer Price Index for the area, as published by the United States Department of Labor, Office of Information for the month of September immediately preceding the month in which payment is due and payable, and divided by the Consumer Price Index for June 30, 1989, which is declared to be 100.0. Under no circumstances shall the multiplying factor be less than one.

Nothing regarding the re-issuance of this franchise to Grantee shall re-set the current fees paid for by Grantee or otherwise modify the formula or base rate and applicable Consumer Price Index adjustments applicable to past or current franchises, and such fees and adjustments shall continue for the life of this franchise.

Notwithstanding the provisions as otherwise stated in this Article and franchise, the Grantee shall be liable to pay the City the annual fee for the period to and including the date of either actual removal of the facilities or the effective date of the abandonment “in place,” and until the Grantee shall have fully complied with all of the provisions of law relative to such abandonments.

In the event of partial abandonment of facilities as provided in this Franchise Agreement, or in the event of partial removal of such facilities by the Grantee, the payments otherwise due the City for occupancy of the streets by such facilities shall be reduced by the length and diameter of pipelines abandoned or the actual pipeline removed beginning with the first day of the next succeeding franchise year, and for each franchise year thereafter; provided, however, that the base rate shall be modified to reflect the adjustment (per this Article) applicable to such abandoned or removed pipeline at the beginning of the next succeeding franchise year following abandonment or removal.

Grantee shall pay to the City, upon demand, the cost of all repairs made by the City to public property arising out of the operations of the Grantee under this franchise.

Any fees charged or expenses charged to Grantee by City pursuant to this Article, or

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8 any other provision of this Franchise Agreement, unless disputed in good faith, shall be paid when due or shall be deemed delinquent. Any undisputed delinquent amounts shall be charged a ten percent (10%) penalty and, in addition, shall accrue interest commencing thirty (30) days after the due date, at a rate of one and one-half percent (1.5%) per month (based upon a 30-day calendar month) or any lesser amount if required by law. Any neglect, omission or refusal by said Grantee to pay any undisputed delinquent franchise fee with any late charges, within thirty (30) days of delinquency, at the times or in the manner herein provided, shall be grounds for a declaration of a forfeiture of this franchise and of all rights hereunder.

Payments are to be made to the City of Arroyo Grande, Director of Administrative Services, 300 E. Branch Street, Arroyo Grande, CA 93420, or at such place as the City shall, from time to time, designate in writing.

B. In addition to any other fee specified herein, Grantee shall pay the City a granting fee of Fifteen Thousand Dollars ($15,000.00) and an additional Five Thousand Dollars ($5,000.00) for City transactional costs associated with this franchise within thirty (30) days after the date the City approves this franchise.

C. Grantee shall pay the City, within sixty (60) days after the end of each calendar year, for each year during the life of this franchise, an initial construction charge calculated at the rate of One Hundred Dollars ($100.00) per mile or fraction thereof for all new pipelines laid pursuant to this Franchise Agreement during the preceding year.

D. The City shall have the right to inspect Grantee’s pipeline accounting and other records relating to its annual report and to audit and re-compute any and all accounts payable under this franchise. Costs of audit shall be borne by Grantee when an audit results in an increase of more than five percent of Grantee’s annual payments to the City.

Acceptance of any payment shall not be construed as a release, waiver, acquiescence, or accord and satisfaction of any claim the City may have for further or additional sums payable under this franchise or for the performance of any other obligation hereunder.

ARTICLE 8

EMERGENCY EQUIPMENT AND CREWS
At all times during the term of this franchise, the Grantee shall maintain or arrange for, on a 24-hour-a-day basis, adequate emergency equipment and a properly trained emergency crew within a reasonable distance so as to provide a response time of no more than ten (10) minutes from any pipelines, appurtenances and facilities installed or maintained pursuant hereto for the purpose of monitoring the leak detection system and the communications systems if applicable, and of shutting off the pressure and the flow of contents of such facilities in the event of an emergency resulting from an earthquake, act of war, civil disturbance, fire, flood, or any other cause or nature whatsoever. At all times during the term of this franchise, Grantee shall provide City Engineer with the name, address and telephone numbers of Grantee’s emergency crew supervisors.

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9 ARTICLE 9

REPAIR OF DEFECTIVE FACILITIES AND REPAIR OF DAMAGE TO CITY STREETS If any portion of any street shall be damaged by any reason related to the Grantee’s operations pursuant to this franchise including defective facilities laid or constructed under this franchise, Grantee shall, at its own expense, repair any defect of its facilities and put such street in as good condition as it was before such damage was incurred, to the satisfaction of the City Engineer. Repairs to streets shall be pursuant to the City laws, regulations and policies then in effect shall require repairing the asphalt for at least one- half (1/2) the width of the street in order to assure uniformity of the street section. If Grantee, within ten (10) days after receipt of written notice from the City Engineer instructing it to repair such damage, fails to commence to comply with such instruction, or, thereafter, fails diligently to prosecute such work to completion, then the City Engineer immediately may take any actions which are, in the sole judgment and discretion of the City Engineer, necessary to repair said damage. Any and all costs and expenses so incurred shall be the sole responsibility of Grantee including the current rate of overhead being charged by the City for reimbursable work, which cost and expense, by the acceptance of this franchise, Grantee agrees to pay upon demand. If such damage constitutes an immediate danger to public health or safety requiring the immediate repair thereof, the City Engineer, without notice, may repair such damage and Grantee agrees to pay the cost thereof upon demand.

ARTICLE 10

REARRANGEMENT OF FACILITIES
A. Expense of Grantee.

1. If any of the Grantee’s facilities, in the opinion of the City Engineer, shall endanger the public or interfere with the use of any street by the public or, for public purposes, the City shall have the right to require the Grantee, and the Grantee shall repair, replace, move, alter or relocate the same (hereinafter, “rearrangement”) to avoid such danger, interference or obstruction, in conformity with the written notice of the City Engineer, at the Grantee’s sole expense.

2. The City reserves the rights for itself and for all other public entities which are now or may later be established, to change the grade, to change the width or to alter or change the location, of any street which is located within the service area for which this franchise is granted. If any of the facilities heretofore or hereafter constructed, installed or maintained by Grantee pursuant to this franchise on, along, under, over, in, upon or across any street are located in a manner which prevents or interferes with the change of grade, traffic needs, operation, maintenance, improvement, repair, construction, reconstruction, widening, alteration or relocation of the street, or any work or improvement upon the street, Grantee shall relocate permanently or temporarily, as directed at the sole discretion of the City Engineer, any such facility at no expense to the City or other public entity upon receipt of a written request from the City Engineer to do so, and shall commence such work, by beginning engineering, surveying, or other pre- construction activities, on or

EXHIBIT A
10 before the date specified in such written request, which date shall be not less than ninety (90) days from receipt of (a) final plans of the public works improvement project approved by the City, and (b) all requisite governmental permits and authorizations necessary to undertake the pipeline facility location. Grantee shall thereafter diligently prosecute such work to completion. Should Grantee neglect or fail to relocate its facilities in a timely manner after receipt of any such notice, Grantee shall be responsible for and shall reimburse the City for any and all additional and properly incurred costs or expenses incurred by City due to or resulting from such delay in the relocation of the facilities plus the current rate of overhead being charged by the City for reimbursable work. Grantee’s obligation for such damages and/or costs will not apply if its failure to relocate arises from the sole proven negligence of the City or a third party. If such street is subsequently constituted a state highway, while it remains a state highway the rights of the State of California shall be as provided in Streets and Highways Code section 680.

3. The City reserves the right, to lay, construct, repair, alter, relocate and maintain subsurface, surface or other improvements of any type or description in a governmental but not proprietary capacity within, over or under the streets over which this franchise is granted. If the City, or other public entity finds that the location or relocation of such subsurface, surface or other improvements conflicts with the facilities laid, constructed or maintained under this franchise, whether such facilities were laid before or after the improvements of the City, or such public entity, Grantee shall relocate permanently or temporarily, as directed at the sole discretion of the City Engineer, any such facility at no expense to the City, or other public entity, upon receipt of a written request from the City Engineer to do so and shall commence such work, by beginning engineering, surveying or other pre- construction activities, on or before the date specified in such written request, which date shall not be less than ninety (90) days from receipt of (a) final plans of the public works improvement project approved by the City, and (b) all requisite governmental permits and authorizations necessary to undertake the pipeline facility location. Repairs to the street shall be pursuant to the City’s laws, regulations and policies then in effect. The Grantee shall thereafter diligently prosecute such work to completion. Should Grantee neglect or fail to relocate its facilities in a timely manner after receipt of any such notice, in addition to the liquidated damages as set forth in Article 25, Grantee shall be responsible for and shall reimburse the City for any and all additional costs or expenses incurred by City due to or resulting from such delay in the relocation of the facilities plus the current rate of overhead being charged by the City for reimbursable work. Grantee’s obligation for such damages and/or costs will not apply if its failure to relocate arises from the sole proven negligence of the City or its agents or contractors. If such street is subsequently constituted a state highway, while it remains a state highway the rights of the State of California shall be as provided in Streets and Highways Code Section 680.

4. If Grantee, after the notice provided for herein from the City, or other public entity, fails or refuses to relocate permanently or temporarily its facilities located in, on, upon, along, under, over, across, or above any street, or to pave, surface, grade, repave, resurface, or regrade as required pursuant to any provision of this Franchise Agreement, the City or public entity may cause the work to be done, and shall keep an itemized account of the entire costs thereof, and Grantee shall defend, indemnify and hold harmless the City,

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11 its officers and employees from any liability which may arise or be claimed to arise from the moving, cutting or alteration of any of Grantee’s facilities, or any necessary relocation of the facilities of other utilities.

5. Grantee agrees to, and shall, reimburse the City, or other public entity for such cost within thirty (30) days after presentation to Grantee of an itemized account documenting properly incurred costs arising out of the actions taken in this Section A of Article 10.

B. Expense of Others.

1. The City shall have the right to require the Grantee to rearrange any part of the Grantee’s facilities for the accommodation of any person, firm, or corporation.

When such rearrangement is done for the accommodation of any person, firm or corporation, other than one of said utility systems owned or operated by the City, the cost of such rearrangement shall be borne by the accommodated party. Such accommodated party, in advance of such rearrangement, shall deposit with the Grantee or the City Clerk cash or a corporate surety bond in an amount, as in the reasonable discretion of the City Engineer, shall be required to pay the costs of such rearrangement, and such accommodated party shall execute an instrument agreeing to defend, indemnify and hold harmless the Grantee and the City from any and all damages or claims caused by such rearrangement.

2. The rearrangement referred to in this Article 10, Section B.1 shall be accomplished in conformity with the written notice of the City Engineer.

C. Rearrangement of the Facilities of Others.

Nothing in this franchise shall be construed to require the City to move, alter or relocate any of its facilities upon said streets, at its own expense, for the convenience, accommodation or necessity of any other public utility, person, firm or corporation now or hereafter owning a public utility system of any type or nature, to move, alter or relocate any part of its system upon said streets for the convenience, accommodation or necessity of the Grantee.

D. Notice.

The Grantee shall be given not less than ninety (90) days written notice of any rearrangement of facilities which the Grantee is required to make hereunder. Such notice shall specify in reasonable detail the work to be done by the Grantee and shall specify the time that such work is to be accomplished. In the event that the City shall change the provisions of any such notice given to the Grantee, the Grantee shall be given an additional period of not less than thirty (30) days to initiate such work.

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12 ARTICLE 11
GRANTEE’S REMOVAL OR ABANDONMENT OF FACILITIES
A. The City reserves the right to require Grantee to remove its facilities from the City streets in the event of the expiration, revocation or termination of this Franchise Agreement or at any time thereafter with respect to those facilities abandoned in place, or for the facilities affected by the permanent discontinuance of all or a portion of the facilities.

Further, so long as any facilities installed under the authority of this franchise remain in a City street, Grantee shall maintain a performance bond, security fund, or other form of collateral, acceptable to the City, sufficient to cover the cost of the removal of all such facilities from the City streets.

B. At the expiration, revocation or termination of this Franchise Agreement or of the permanent discontinuance of the use of all or a portion of its facilities, Grantee shall, within thirty (30) days thereafter, make written application to the City Engineer for authority either:

1. To abandon all or a portion of such facilities in place; or

2. To remove all or a portion of such facilities. Such an application shall describe the facilities desired to be abandoned, their location with reference to City streets, and shall describe with reasonable accuracy the physical condition of such facilities. As part of the application for removal or abandonment of these facilities, Grantee shall submit a soil test, taken within thirty (30) days of the submittal of the application, for those materials to be tested annually pursuant to federal, state and local laws. A soil test shall be taken along that portion of the pipeline to be removed or abandoned at such intervals as directed in writing by the City Engineer and reasonably consistent with established sampling protocols. The City Engineer shall determine whether any abandonment or removal which is thereby proposed may be effected without detriment to the public interest and the conditions under which such proposed abandonment or removal may be effected. The City Engineer shall then notify Grantee of the City Engineer’s determinations. Grantee shall also obtain permits to abandon or remove the pipeline from the City for all pipelines prior to the removal, abandonment or discontinuation of use of all or a portion of Grantee’s facilities. The City also reserves the right to require removal of Grantee’s facilities abandoned in place at any time following the expiration, revocation or termination of this franchise. Grantee shall be required to meet the bonding, insurance, indemnification and annual franchise fee requirements of this franchise, for facilities abandoned in place.

C. Within thirty (30) days after receipt of Notification from the City Engineer pursuant to Article 11.B.2 above, Grantee shall apply for a permit from the City to abandon or remove the facility.

D. Grantee shall, within sixty (60) days after obtaining such a permit, commence and diligently prosecute to completion the work authorized by the City permit.

EXHIBIT A
13 E. In the event Grantee applies to remove its facilities, and the City Engineer determines that any or all of the facilities cannot be removed due to a moratorium preventing work in the City streets, the payment of annual franchise fees may be deferred during any such moratorium period, provided that Grantee promptly removes its facilities after notice by the City of the cessation of the moratorium and direction to remove such facilities. In the event Grantee does not promptly remove such facilities as directed, any deferred annual franchise fees shall be due and payable within thirty (30) days of notice to pay.

F. Failure to Comply with City’s Orders Regarding the Removal or Abandonment of Facilities.

1. If any orders or prescribed conditions relating to the abandonment of any facilities are not complied with, the City may impose such additional orders and conditions as the City Engineer deems appropriate, including an order that the Grantee remove any or all of such facilities. Grantee shall comply with such additional orders.

2. In the event that Grantee fails to comply with the terms and conditions of abandonment or removal as may be required by this Franchise Agreement, and within such time as may be prescribed by the City Engineer, then the City may remove or cause such facilities to be removed at Grantee’s expense. Grantee shall pay to the City all of the costs of removing and disposing of these facilities, as well as returning the rights-of-way occupied pursuant to this franchise to a good and safe condition, including, but not limited to: (a) the cost of all environmental testing the City must conduct to determine the environmental condition of any rights-of-way occupied pursuant to this franchise; (b) all cleanup costs, disposal costs, and any other costs associated with returning these rightsof-way to a safe condition; (c) all costs of removing, storing, and disposing of the Grantee’s facilities; (d) all costs of returning all streets to a safe structural condition; (e) plus the current rate of overhead being charged by the City for reimbursable work.

3. If, at the expiration, revocation or termination of this franchise, or of the permanent discontinuance of the use of all or a portion of its facilities, Grantee, within thirty (30) days thereafter, fails or refuses to make written application for the above- mentioned authority to remove or abandon its facilities, the City Engineer shall make the determination as to whether the facilities shall be abandoned in place or removed. The City Engineer shall then notify Grantee of his determinations. Grantee shall thereafter comply with the applicable provisions of this Article 11.

G. For those facilities Grantee abandons in place, Grantee shall be required to maintain an acceptable performance bond, letter of credit or security fund, as determined by the City, to cover the costs for the removal of any such abandoned facilities from the City streets for any and all periods of time, including those periods following the expiration, revocation or termination of this franchise, that Grantee’s facilities remain in the City streets.

Grantee shall be required to maintain insurance and to indemnify the City pursuant to this Article during any periods the abandoned facilities remain within the City streets. Provided, however, that any pipelines which cannot be removed due to a moratorium preventing work in the City streets may be deferred from the payment of annual franchise fee. The payment of annual franchise fees may be deferred during any such moratorium period, provided that

EXHIBIT A
14 Grantee promptly removes its facilities after notice by the City of the cessation of the moratorium and direction to remove such facilities. In the event Grantee does not promptly remove such facilities as directed, any deferred annual franchise fees shall be due and payable within thirty (30) days of notice to pay.

H. Notwithstanding anything herein to the contrary, City shall have the right take possession of and use Grantees pipeline facilities that are abandoned in place. City shall provide Grantee with written notice of the specific pipeline facility it will take possession of and use. When City takes possession of a pipeline facility abandoned in place, Grantee shall be relieved of its obligation to bond, insure, indemnify and pay annual franchise fees for said facility.

ARTICLE 12

COMPLETION OF WORK
In the event that the Grantee fails to commence any work or act and diligently proceed therewith or to complete any such act or work required of the Grantee by the terms of this franchise within the time limits required hereby (and except as is otherwise provided in Articles 1O and 11), the City may cause such act or work to be completed by the City or, at the election of the City, by a private contractor. The Grantee agrees to pay the City, within thirty (30) days after delivery of an itemized bill, the cost of performing such an act or work plus an amount equal to fifteen percent (15%) thereof for City administrative costs, including but not limited to, staff and overhead costs. If the Grantee is dissatisfied with any decision made by the City Engineer hereunder or the determination of the cost of any work performed by the City pursuant to this Agreement, it may petition the City Council to review the same within sixty (60) days after such decision or determination.

ARTICLE 13

RECOVERY OF COSTS OF REPAIRS AND UNPAID FEES
If the Grantee has not paid the City for such fees and expenses and/or liquidated damages incurred by or payable to the City as hereinabove set forth, the City may institute the following collection procedures (which procedures are in addition to any other rights, in law or equity, which the City has to collect amounts due under this franchise and to enforce the terms of this franchise):

A. The City Engineer shall keep an itemized account of the expenses incurred by the City pursuant hereto, or the fees unpaid by the Grantee. Sixty (60) days after the presentation of the bill to the Grantee therefore, the City Engineer shall prepare and file with the City Clerk a report specifying the work done by the City, or the unpaid fees, the itemized and total cost of the work, a description of the work performed, and the name and address of the Grantee entitled to notice pursuant to this Article.

B. Upon receipt of said report, the City Clerk shall present it to the City Council for consideration. The City Council shall fix a time, date and place for hearing said report, and

EXHIBIT A
15 any protest or objections thereto. The City Clerk shall cause notice of said hearing to be posted in a newspaper of general circulation in the City, and served by certified mail, postage prepaid, addressed to the Grantee as set forth herein. Such notice shall be given at least ten (10) days prior to the date set for hearing and shall specify the day, hour, and place when the City Council will hear and pass upon the City Engineer’s report, together with any objections or protests which may be filed as hereinafter provided.

C. The Grantee may file written protests or objections with the City Clerk at any time prior to the time set for the hearing on the report of the City Engineer. Any such protest or objection must contain a description of the work or unpaid fee or liquidated damages in which the Grantee is interested and the grounds of such protest or objection and the date it was received by him. He or she shall present such a protest or objection to the City Council at the time set for the hearing, and no other protest or objection shall be considered.

D. Upon the day and hour fixed for the hearing, the City Council shall hear and pass upon the report of the City Engineer, together with any such objections or protests, make such revision, correction or modification to the charge as it may deem just; and when the City Council is satisfied with the correctness of the charge, the report (as revised, corrected or modified), together with the charge, shall be confirmed or rejected. The decision of the City Council on the report and the charge, and on all protests or objections, shall be the final and conclusive decision of the City.

E. The City Council may thereupon order that such charge shall be made a personal obligation of the Grantee or assess such charge against the property of the Grantee.

1. If the City Council orders that the charge shall be a personal obligation of the Grantee, it shall direct the City Attorney to collect the same on behalf of the City by use of all appropriate legal remedies.

2. If the City Council orders that the charge shall be assessed against the property of the Grantee, it shall confirm the assessment, cause the same to be recorded on the assessment roll, and thereafter, said assessment shall constitute a special assessment secured by a lien against the property.

F. The validity of any assessment made under the provisions of this franchise shall not be contested in any action or proceeding unless the same is commenced within ninety (90) days after the assessment is placed upon the assessment roll as provided herein.

ARTICLE 14
BOND
A. Grantee shall, concurrently with the filing of and acceptance of award of this franchise, file with the City Clerk, and yearly thereafter, maintain in full force and effect, a bond in favor of the City in the penal sum of Two Million and 00/100 Dollars ($2,000,000.00), with a surety to be approved by the City, conditioned that Grantee shall,

EXHIBIT A
16 well and truly observe, fulfill and perform each and every term and condition of this franchise, and in case of a breach of condition of said franchise, at the discretion of the City, a percentage of the amount of the bond shall be paid to the City according to the following schedule, which cumulative amount for any said breach not cured within the time specified below shall not exceed the full amount of the bond, in addition to any damages recoverable by the City and shall be recoverable from the principal and sureties of the bond:

Following receipt of notice by Certified
Mail sent by the City, failure to cure said
breach of condition, within:
10 business days
30 calendar days
60 calendar days
90 calendar days
Penal sum paid to City:
5% of the amount of the bond
30% cumulative amount of the bond
70% cumulative amount of the bond
100% cumulative amount of the bond
B. The faithful performance bond shall continue to exist for one (1) year following the City’s approval of any sale, transfer, assignment or other change of ownership of this franchise, or of the expiration or termination of this franchise. The City may release said bond prior to the end of the one (1) year period upon satisfaction by Grantee of all the obligations under this franchise, as determined in City’s sole discretion.

ARTICLE 15

INSURANCE
A. The Grantee shall procure and shall keep in force for the term of the franchise, at the sole cost and expense of the Grantee, the following insurance. All insurance coverages are to be placed either with insurers which have A.M. Best’s rating of not less than B + VIIIW, or with financially sound stock or mutual insurers of recognized responsibility at the sole discretion and approval of the City. Grantee may satisfy the requirements of this Article 15 by showing proof of self-insurance satisfactory to City, in City’s sole discretion.

Commercial General Liability Insurance {CGL}: Grantee shall maintain in full force and effect Commercial General Liability Insurance with the following coverages:

1. Personal Injury and Bodily Injury, including death resulting therefrom.

2. Property Damage.

The amount of insurance shall be: Single limit on the coverage applying to bodily and personal injury, including death resulting therefrom, property damage, and automobile coverage in the total amount of $5,000,000.00.

EXHIBIT A
17 The following endorsements must be provided in the CGL policy:

1. If the insurance policy covers on an “accident” basis, it must be changed to “occurrence.”

2. The policy must cover personal injury as well as bodily injury.

3. Blanket contractual liability must be afforded, and the policy must contain a cross-liability or severability of interest endorsement.

4. Broad Form Property Damage Liability must be afforded.

5. Products and Completed Operations coverage must be provided.

6. Sudden and Accidental Pollution Liability Insurance must be provided.

7. The City, its officers, employees and agents shall be named as additional insured under the policy to the extent of the risks, liabilities and indemnification obligations assumed by Grantee in the Agreement. The policy shall provide that the insurance will operate as primary insurance to the extent of the risks, liabilities and indemnification obligations assumed by Grantee in the Agreement. No other insurance affected by the City, whether commercial or self- insurance, will be called upon to contribute to a loss hereunder.

Auto Liability Insurance: Grantee shall maintain in full force and effect Auto Liability Insurance with a combined bodily injury and property damage limit of US $5,000,000 per accident, or per statutory requirements, whichever amount is greater, covering all owned, non-owned, and/or leased vehicles.

The following requirements apply to all insurance to be provided by Grantee:

1. A certificate of insurance or letter of self-insurance shall be furnished to the City upon request.

2. Certificates shall state that the City shall be notified, as soon as is reasonably practicable, but no later than thirty (30) days thereafter, of any cancellation, reduction in coverage or change in any other material matter.

B. Failure on the part of Grantee to procure or maintain required insurance and bonding shall constitute a material breach of this franchise upon which the City may immediately terminate or suspend this franchise however only upon reasonable notice to the Grantee and ability of Grantee to remedy.

EXHIBIT A
18 ARTICLE 16

INDEMNIFICATION BY GRANTEE
The Grantee, by the acceptance or use of the franchise hereby granted, shall defend and indemnify and shall keep and save free and harmless the City, its officers, agents and/or employees against any and all liability, claims, demands or causes of action which may be asserted, prosecuted or established against them, or any of them, for damage to persons, or property, of whatsoever nature, arising out of the use by it of the City streets hereunder or arising out of any of the operations or activities of the Grantee pursuant to this franchise, whether such damage shall be caused by its own sole negligence or negligence concurrent with the City. Grantee shall not be responsible for any liability, claim, demand, or cause of action which may be asserted, prosecuted or established against the City under the provision of the Worker’s Compensation Act for injury to or the death of any of City’s officers, agents or employees while acting within the scope of their employment.

ARTICLE 17

CHANGES IN CONTROL OF FRANCHISE
A. On and after the Grantee’s acceptance of this franchise as provided in Article 23 herein, Grantee, its partners, its shareholders, or any other person or persons holding an interest in Grantee shall not transfer any interest in the franchise - where such a transfer would lead to another person achieving a twenty-five percent (25%) or greater interest in this franchise - or change control of this franchise, unless the City approves such a transfer or change in control. The City shall approve a request for transfer or change in control only if doing so serves the public interest. As used in this Franchise Agreement, “control” includes actual working control in whatever manner exercised.

1. The City shall deny any such request for transfer or change in control if the transferor or transferee fails to comply with any applicable provision of this Article of this franchise or if the City determines the transferor is in non-compliance with the terms and conditions of this franchise or if a transferee is lacking in experience and/or financial ability to operate the pipelines authorized by this franchise, or if the proposed transfer will be detrimental to the public interest.

B. Both the Grantee and the proposed transferee shall inform the City of any pending change in control of this franchise or of any pending transfer of an interest in the franchise requiring the City’s consent pursuant to this Article, and each shall provide applications containing all documents on which the transfer or change in control is predicated and all documents which the City determines are necessary to evaluate the transfer or change of control. These applications shall be signed by duly authorized representatives of the Grantee and the proposed transferee, with signatures acknowledged by a notary. The appropriate transfer fee described in Article 17.C, infra, shall accompany these applications.

EXHIBIT A
19 1. Grantee’s application shall include:
(a) Identification and ownership of the proposed transferee in the same detail as if the proposed transferee were an applicant for an initial grant; (b) Current financial statements showing the financial condition of the Grantee as of the date of the application. In this application, the Grantee shall also agree to submit financial statements showing the condition of the franchise as of the closing. Said financial statements shall have been audited and certified by an independent certified public accountant, and shall be submitted within ninety (90) days of the closing.

2. The proposed transferee’s application shall contain current financial statements of the proposed transferee and other such information and data, including but not limited to sources of capital, as will demonstrate conclusively that the proposed transferee has all the financial resources necessary to acquire the pipeline(s), carry out all of the terms and conditions of the franchise, remedy any and all defaults and violations of the provisions of this franchise in the Grantee’s past and present operations, make such other improvements and additions as may be required or proposed to maintain and conduct the services and facilities required under this franchise. The proposed transferee will be required to authorize the release of financial information to the City from financial institutions relating to information supplied by the proposed transferee in support of the application. The proposed transferee’s application shall also include:
(a) A construction schedule, describing type and placement of construction, detail phases of construction, and include map(s) correlated to the phases of construction. Map(s) shall include detail on the location, length, depth, and internal diameter of any planned pipelines.
(b) Copies of any agreements with utility companies for the use of any facilities including, but not limited to, poles, lines and conduit. (c) A description of plans for emergency equipment and personnel enabling the transferee to meet the emergency equipment personnel requirements in Article 8 herein.
(d) Any information indicating as specifically as possible that any principal, manager, or associate of the proposed transferee or a parent entity of the proposed transferee has previously been or is currently:
i. A party to a criminal proceeding (involving felonies or misdemeanors) in which any of the following offenses have been charged: fraud, embezzlement, tax evasion, bribery, extortion, jury tampering, obstruction of justice (or other misconduct affecting public or judicial officers in the performance of their duties), false/misleading advertising, perjury, antitrust violations (state or federal), violation of environmental laws or regulations, or conspiracy to commit any of the foregoing;

EXHIBIT A
20 ii. A party to a civil proceeding concerning liability for any of the following: unfair or anticompetitive business practice, antitrust violations (state or federal) including instances in which consent decrees were entered, violations of security laws (state or federal), false/misleading advertising, racketeer influences and corrupt organizations, violation of environmental laws or regulations, or contraband forfeitures; iii. Subject to any penalty, criminal or civil, involving failure to comply with the requirements of a pipeline franchise;
iv. Involved in instituting legal action against its franchising authorities;
v. Involved in revocation/non-renewal of any other franchise; (e) Any other details, statements, information or references pertinent to the subject matter of such application which shall be required or requested by the City or by any provision of law.
(f) An express and unconditional written acceptance of the terms and conditions of this franchise Agreement, in its most current form, as a condition to the transfer.

C. A fee shall be submitted with the application(s) for the City’s consent to transfer or change of control.

1. Where the City’s consent to a transfer or a change of control of this franchise does not result in the modification of this franchise the fee for each application shall be as set forth in the City’s fee schedule, or if not set forth in said schedule said fee shall be established by the City Council in its sole discretion.

2. Where the City’s consent to a transfer or a change of control of this franchise results in the modification of this franchise this fee shall be as set forth in the City’s fee schedule, or if not set forth in said schedule said fee shall be established by the City Council, in its sole discretion.

3. In the event the costs to process the applications exceed the fees detailed above, the applicants may be required to pay any additional costs incurred by the City in processing the applicants’ requests for the City’s consent to the transfer of change of control of this franchise. Such costs may include the cost incurred for hiring consultants to assist in evaluating the applications. Such costs shall be paid by the applicants prior to final consideration of the request by the City.

D. Within thirty (30) days of the effective date of the City’s approval of the transfer or change of control, or within thirty (30) days of the date of the close of the transfer or change of control, the Grantee shall file with the City (1) a certified copy of each duly executed instrument of such a transfer or change in control; and (2) the submittal of a final accounting and report of all fees due under this franchise. The proposed transferee shall be

EXHIBIT A
21 responsible for any underpayment, and shall be entitled to a credit for any overpayment.

Within ninety (90) days of the closing of the transfer or change of control, the Grantee shall submit financial statements, audited and certified by an independent certified public accountant, showing the condition of the franchise as of the closing. If such duly executed instruments are not filed with the City by the deadlines imposed in this Article, or if the final documents are different from the preliminary documents, the City may inform the proposed transferee that the transfer or change in control is not deemed to be in force and effect. The City may then administratively determine that this franchise is forfeited and the City Council may, without notice, repeal this franchise.

E. As a condition to the granting of consent to such a transfer or change in control, the City Council may impose such additional terms and conditions upon this franchise and upon the proposed transferee as are in the public interest. Such additional terms and conditions shall be imposed by ordinance. Nothing herein contained shall be construed to grant the Grantee the right to transfer or change control of this franchise or any part thereof, except in the manner aforesaid. This Article 17 applies to any transfer of this franchise, or of any change in control of this franchise, whether by operation of law, by voluntary act of Grantee, or otherwise.

ARTICLE 18

WAIVER OF BREACH
No waiver of the breach of any of the covenants, agreements, restrictions, or conditions of this franchise by the City shall be construed to be a waiver of any succeeding breach of the same or other covenant, agreements, restrictions or conditions of this franchise. No delay or omission of the City in exercising the right, power or remedy herein provided in the event of default shall be construed as a waiver thereof, or acquiescence therein, nor shall the acceptance of any payments made in a manner or at a time other than is herein provided be construed as a waiver of or variation in any of the terms of this franchise.

ARTICLE 19

DEFAULT
A. In the event that the Grantee shall default in the performance of any of the terms, covenants and conditions herein, the City shall give written notice to the Grantee of such default by certified mail. In the event that the Grantee does not commence the work necessary to cure such default within fifteen (15) business days after such notice is received or prosecute such work diligently to completion, the City may declare this franchise forfeited by giving written notice thereof to the Grantee by certified mail, whereupon this franchise shall be void and the rights of the Grantee hereunder shall terminate and the Grantee shall execute an instrument of surrender and deliver the same to the City. If the City Council declares this franchise forfeited, it may thereupon and thereafter exclude the Grantee from further occupancy or use of all City roads authorized under this franchise. A forfeiture of said franchise shall not of itself operate to release any bond filed for said franchise. Upon declaring a franchise forfeited, the City Council may elect to draw against the bond as

EXHIBIT A
22 liquidated damages or pursue any other legal remedy for any damage, loss or injury suffered by the City as a result of such breach or both. After forfeiture, any bond shall remain in full force and effect for a period of one (1) year unless exonerated by the City Council. No bond shall be exonerated unless a release is obtained from the City Engineer and is filed with the City Clerk. The release shall state whether all excavations have been back filled, all obstructions removed, and whether the substratum or surface of City streets occupied or used have been placed in good and serviceable condition.

Release shall not constitute a waiver of any right or remedy which the City may have against the Grantee or any person, firm or corporation for any damage, loss or injury suffered by the City as a result of any work or activity performed by the Grantee in the exercise of this franchise.

B. No provision herein made for the purpose of securing the enforcement of the terms and conditions of this franchise shall be deemed an exclusive remedy, or to afford the exclusive procedure, for the enforcement of said terms and conditions, but the remedies and procedure herein provided, in addition to those provided by law shall be deemed to be cumulative.

ARTICLE 20

SCOPE OF RESERVATION
Nothing herein contained shall ever be construed so as to exempt the Grantee from compliance with all applicable ordinances of the City now in effect or which may be hereafter adopted which are not inconsistent with the terms of this franchise. The enumeration herein of specific rights reserved shall not be construed as exclusive; or as limiting the general reservation herein made or as limiting such rights as the City may now or hereafter have in law.

ARTICLE 21
NOTICE
Any notice required to be given under the terms of this franchise, the manner of service of which is not specifically provided for, may be served as follows:

Upon the City, by serving the City Clerk, personally or by addressing a written notice to the Director of Administrative Services of the City of Arroyo Grande, and depositing such notice in the United States mail, postage prepaid.

Upon the Grantee, by addressing a written notice to Grantee addressed to Phillips 66 Pipeline LLC, 2331 CityWest Blvd., Houston, TX 77042, Attn: Real Estate Manager, Real Estate Services, or such other address as may from time to time be furnished in writing by one party to the other and depositing said notice in the United States mail, postage prepaid.

When service of any such notice is made by mail, the time of such notice shall begin with and run from the date of the deposit of same in the United States mail.

EXHIBIT A
23 ARTICLE 22

SUCCESSORS
The terms herein shall inure to the benefit of and shall bind, as the case may be, the permitted successors and assigns of the parties hereto, subject, however, to the provisions of Article 17.

ARTICLE 23

ACCEPTANCE OF FRANCHISE
A. This franchise is granted and shall be held and enjoyed only upon the terms and conditions herein contained.

1. Grantee shall, within thirty (30) days after the passage of this approval of this Franchise Agreement, file with the City Clerk an express and unconditional written letter of acceptance of, and consent to, the terms and conditions of this Franchise Agreement, in its current version, and as subsequently amended.

B. Grantee’s letter of acceptance shall be signed by one (1) duly authorized representative of Grantee, whose signature shall be acknowledged by a notary and shall be accompanied by the performance bond and evidence of insurance required by this Franchise Agreement.

ARTICLE 24

FORCE MAJEURE
The time within which Grantee is obligated hereunder to construct, erect, maintain, operate, repair, renew, change the size of and remove pipelines or other improvements shall be extended for a period of time equal in duration to, and performance in the meantime shall be excused on account of, and for, and during the period of any delay caused by strikes, threats of strikes, lockouts, war, threats of war, insurrection, invasion, acts of God, calamities, violent action of the elements, fire, action or regulation of any governmental agency law or ordinance, impossibility of obtaining materials, or other things beyond the reasonable control of Grantee.

ARTICLE 25

LIQUIDATED DAMAGES
A. By acceptance of this franchise, Grantee understands and acknowledges that failure to timely comply with any performance requirements stipulated in this Franchise Agreement will result in damages to the City, and that it is and will be impractical to determine the actual amount of such damage in the event of delay or nonperformance. Each of the amounts set forth below has been set in recognition of the difficulty of affixing actual

EXHIBIT A
24 damages arising from breach of these times of performance requirements. Each of said amounts constitute a reasonable estimate of these damages. This section does not limit the rights and remedies available to the City for damages other than the timely compliance with performance requirements as described in this section. The liquidated damages set forth below shall be chargeable to the bond, letter of credit or security fund provided for herein, supra, should Grantee not make payment within thirty (30) days of written notice by certified mail by the City that the following amounts are due for the following concerns:

1. Failure to provide data, documents, or reports within ten (10) business days after written request by the City, by certified mail, or such longer time as may be specified in said request: Two Hundred Fifty Dollars ($250.00) per day for each day, or part thereof that each violation continues.

2. Failure to provide to the City within ten (10) business days after written request by the City, by certified mail, current evidence of insurance and bonding: Two Hundred Fifty Dollars ($250.00) per day for each day, or part thereof, that each noncompliance continues. Nothing in this Section shall preclude immediate termination or suspension of this franchise as provided for herein.

3. After ten (10) business days written request by the City, by certified mail, to do so, the failure by Grantee to timely restore public or private property after performance of work: Two Hundred Fifty Dollars ($250.00) per day or part thereof, that each non-compliance continues.

4. Failure to timely comply with any performance requirements stipulated in this Franchise Agreement within ten (10) business days after written request or notice by the City, by certified mail: Two Hundred Fifty Dollars ($250.00) per day or part thereof, that each non-compliance continues.

B. If the City Engineer determines that Grantee is liable for liquidated damages, the City Engineer shall issue to Grantee by certified mail written notice of intention to charge liquidated damages. Liquidated damages shall begin to accrue as of the date of the written notice and as set forth in said notice. The notice shall set forth the basis for the liquidated damages and give Grantee a reasonable time in which to remedy the violation.

C. Grantee shall have the right to appeal any notice to the City by certified mail within fifteen (15) days after issuance of the notice by the City Engineer. The City shall make a determination within sixty (60) days after receipt of an appeal. The City Council’s decision shall be the final decision of the City.

D. If Grantee does not appeal to the notice within said fifteen (15) day period, Grantee shall pay the amount(s) of liquidated damages as stated in the notice. If payment is not made as provided for in this Article, the City may withdraw against the bond provided for in Article 14 herein.

EXHIBIT A
25 ARTICLE 26
ATTORNEY’S FEES
In the event the City or Grantee brings legal action against the other, or against Grantee’s bonding companies or insurance carriers to compel performance of, or to recover for breach of any covenant, agreement or condition contained in this franchise, or for damages, the prevailing party shall be entitled to, in addition to any other relief obtained, such reasonable attorney’s fees as are fixed by the judge of the court in which such action is brought.

ARTICLE 27

FAILURE TO COMPLY
If Grantee shall fail, neglect or refuse to comply with any of the provisions or conditions hereof, or of the Act, as amended, in accordance with the provisions of which this Franchise is granted, and shall not within fifteen (15) business days, or within such other time period provided herein otherwise, after the written demand for compliance, begin the work of compliance, or after such beginning, shall not prosecute the same with due diligence to completion, then the City may declare this franchise forfeited. The City may sue in its own name for the forfeiture of this franchise in the event of non-compliance by Grantee, its successors or assigns, with any of the condition hereof.

ARTICLE 28

COMPLIANCE WITH APPLICABLE LAW
Until such time as (a) this franchise terminates, (b) the Grantee removes all of its facilities, and (c) the Grantee completes any necessary remedial work, the Grantee will comply with all applicable law.

ARTICLE 29

SEVERABILITY
This Agreement and the various parts, sections and clauses thereof are hereby declared to be severable. If any part, sentence, paragraph, section or clause is adjudged unconstitutional or invalid, the remainder of this Agreement shall not be affected. If any part, sentence, paragraph, section or clause of this Agreement, or its application to any person or entity is adjudged unconstitutional or invalid, such unconstitutionality or invalidity shall affect only such part, sentence, paragraph, section or clause of this Agreement, or person or entity; and shall not affect or impair any of the remaining provisions, parts, sentences, paragraphs, sections or clauses of this Agreement, or its application to other persons or entities. The City Council hereby declares that this Agreement would have been adopted had such unconstitutional or invalid part, sentence, paragraph, section or clause of this Agreement not been included; or had such person or entity been expressly exempted from the application of this Agreement.

EXHIBIT A
26 ARTICLE 30

EFFECTIVE DATE
This Agreement shall be effective on January 8
th, 2026.

EXHIBIT A
27 IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on the dates below.

CITY OF ARROYO GRANDE,
a municipal corporation
Matthew Downing,
City Manager
Dated: __________________________
PHILLIPS 66 Pipeline, LLC,
a Delaware Limited Liability Company
Name: __________________________
Title: __________________________
Dated: __________________________

EXHIBIT A
EXHIBIT A-1

FRANCHISE MAPS OF ACTIVE PIPELINES AND OTHER APPURTENANCES AND

FACILITIES

P66_6000_cpConoco.mxt
290+00300+00

PIPESPECIFICA

ETXIOHINBSIT A

COATING DETAIL

BEGIN END COATING
277+66 280+43 OTHER
280+43 280+63 EPOXY
280+63 313+03 OTHER
313+03 313+18 EPOXY
313+18 324+46 OTHER

PIPE DETAIL
BEGIN END OD x WT SPEC SMYS LS INSTAL MANUF
277+66 324+46 8.625 x 0.277 UNKNOWN 35000 ERW 1/1/1954 UNKNOWN ANC
277+66 NC-40-10 - Santa Maria Refinery to Miossi 324+46 PLS
Dower
T32S R13E Sec 028
Beech
Quan Alder
Wood
000
000 032S
013E
032S
012E
Las Casitas
Halcyon PRICE CANYON TO SUMMIT STATION LINE 400 SUMMIT TO AVILA 8 INCH IDLE Focus Pipe Line
Legend
1000' Station Increment
De Los Desca
San Luis Obispo, CA
Rena
Alpine
Reference Pipe Line
AIP or Sold Pipe Lines
Township/Range Line
Section/Abstract Line
County Line
State Line
Sheet Note
Waterway
Road or Highway
Railroad
Fence
Telephone Line
OH Power Line
Buried Power Line
Television Cable /
Fiber Optic Cable
Water Line
Pipeline
Sewer Line, Field Tile
Property Line
Casing
River Weight
Station Equation
Test Lead

AGM / AGR
Bypass Valve
Block Valve (MOV, Manual)
Blowoff or Relief Valve
Check Valve
Sleeve
Reducer
Pig Signal
Cathodic Protection System
Meter
Regulator Setting
Tap, Tee, Branch Connect
Aerial Marker
Launcher, Receiver,
or Scraper Trap
Vent
The information contained on this drawing is for the private use of Phillips 66 Pipeline LLC and is not to be disclosed, used, or duplicated except as authorized in writing by Phillips 66 Pipeline LLC. 350
300
250
200

8.625" x 0.277"
35000
350
300
250
200

ENGINEERING ALIGNMENT SHEET
NC40_SANTA MARIA REFINERY TO SANTA MARGARITA

SANTA MARIA/MIOSSI
150
100
150
100
0 SCALE:

GENERATION DATE
500

DRAWING NAME
1,000
Feet

MAP NUMBER
50 277+66 280+00 290+00 300+00 310+00 320+00
50 324+46
01/26/23 NC40_400 07 of 17
37 Gaynfair
Mulberry

PROFILE PIPE DETAIL PLAN VIEW PIPELINE STATIONING
Temple
1050 Series : Sta 277+66 Match Sheet NC40_400_006
277+66
The
279+73 CL CALLE DE LOS SUEI 280+00
280+52 2.2' SLEEVE
De Los Suei
282+54 CL CLL DE LOS SUEI
Virginia 284+90 CL VIRGINIA DRIVE
Sycamore
288+00 CL WILLOW LANE
Cameron 289+61 AGR | AGM 10
Creekside
Sandalwood 293+15 CL 12 IN LINE 300
293+35 CL 8 IN LINE 300
Farroll 294+91 CL FARROLLAVENUE
Farroll
Olive 297+66 CL OLIVE STREET
298+27 CL 8 IN BURIED WATER LINE300+16 CL TODD LANE Todd Fair Oaks
302+85 CL FAIR OAKS AVENUE304+50 SANTA MARIA/MIOSSI308+55 AGR | AGM 11309+32 CL SERVICE A3
s
1 h0+00
Dodson 313+00 CL DODSON WAY 313+13 2' SLEEVE
Newman
Maple Eman
320+00
320+62 CL PARK WAY
324+46 1050 Series : Sta 324+46 Match Sheet NC40_400_008

P66_6000_cpConoco.mxt

PIPESPECIFICAETXIOH

INBSITA

COATING DETAIL

BEGIN END COATING
324+46 339+77 OTHER
339+77 340+08 EPOXY
340+08 342+84 OTHER
342+84 343+28 EPOXY
343+28 370+03 OTHER
370+03 370+75 EPOXY
370+75 376+86 OTHER

PIPE DETAIL
BEGIN END ODx WT SPEC SMYS LS INSTAL MANUF
324+46 376+86 8.625x 0.277 UNKNOWN 35000 ERW 1/1/1954 UNKNOWN ANC
324+46 NC
-40-10- Santa Maria Refinery to Miossi 376+86
PLS T32S R13E Sec 028 T32S R13E Sec 029 T32S R13E Sec 020 000 000 032S
013E
032S
012E
Focus Pipe Line
Legend
1000' Station Increment
San Luis Obispo, CA
Reference Pipe Line
AIP or Sold Pipe Lines
Township/Range Line
Section/Abstract Line
County Line
State Line
Sheet Note
Waterway
Road or Highway
Railroad
Fence
Telephone Line
OH Power Line
Buried Power Line
Television Cable/
Fiber Optic Cable
Water Line
Pipeline
Sewer Line, Field Tile
Property Line
Casing
River Weight
Station Equation
Test Lead

AGM/ AGR
Bypass Valve
Block Valve (MOV, Manual)
Blowoff or Relief Valve
Check Valve
Sleeve
Reducer
Pig Signal
Cathodic Protection System
Meter
Regulator Setting
Tap, Tee, Branch Connect
Aerial Marker
Launcher, Receiver,
or Scraper Trap
Vent
The information contained on this drawing is for the private use of Phillips 66 Pipeline LLC and is not to be disclosed, used, or duplicated except as authorized in writing by Phillips 66 Pipeline LLC. 350
300
250
200

8.625"x 0.277"
35000
350
300
250
200

ENGINEERING ALIGNMENT SHEET
NC40_SANTA MARIA REFINERY TO SANTA MARGARITA

SANTA MARIA/MIOSSI
150
100
150
100
0 SCALE:

GENERATION DATE
500

DRAWING NAME
1,000
Feet

MAP NUMBER
50 324+46 330+00 340+00 350+00 360+00 370+00
50 376+86
01/26/23 NC40_400 08 of 17
37 PROFILE PIPE DETAIL PLAN VIEW PIPELINE STATIONING
1050 Series : Sta 324+46 Match Sheet NC40_400_007 324+58 CL SOUTH HALCYON ROAD 324+67 CL EAST GRAND AVENUE325+05 SANTA MARIA/MIOSSI325+05 SANTA MARIA/MIOSSI325+06 SANTA MARIA/MIOSSI325+06 SANTA MARIA/MIOSSI325+06 SANTA MARIA/MIOSSI325+06 SANTA MARIA/MIOSSI325+26 CL 12 IN LINE 300325+38 CL 8 IN LINE 300329+35 CL SERVICE330+62 CL SERVICE 324+46
330+00
339+77 31' SLEEVE 340+00
342+67 AGR | AGM 12 342+84 44' SLEEVE349+45 CL BRISCO ROAD 350+00
352+48 CL NORTH ELM STREET
360+00 360+16 TEST LEAD
360+69 AGR | AGM 13361+98 CL FAIR VIEW DRIVE366+42 CL SERVICE368+27 CL SERVICE 370+00 370+03 72.2' SLEEVE
371+19 CL COURTLAND STREET373+27 CL SERVICE375+02 CL SERVICE 376+86 1050 Series : Sta 376+86 Match Sheet NC40_400_009

P66_6000_cpConoco.mxt
37 PIPESPECIFICAETXIOH

INBSITA

CASING DETAIL

BEGIN END NOM DIA CROSSING
411+64 414+25 12 ROAD

BEGIN END COATING
376+86 414+28 OTHER
414+28 417+65 LAYERED_FBE
417+65 417+66 EPOXY
417+66 422+72 LAYERED_FBE
422+72 430+06 OTHER

COATING DETAIL

PIPE DETAIL
BEGIN END ODx WT SPEC SMYS LS INSTAL MANUF
376+86 411+57 8.625x 0.277 UNKNOWN 35000 ERW 1/1/1954 UNKNOWN 411+57 414+28 8.625x 0.322 API-5L 42000 ERW 1/1/2000 UNKNOWN 414+28 422+72 8.625x 0.322 API-5L 42000 ERW 6/1/2015 UNKNOWN 422+72 430+06 8.625x 0.277 UNKNOWN 35000 ERW 1/1/1954 UNKNOWN ANC
376+86 NC
-40-10- Santa Maria Refinery to Miossi 430+06
PLS T32S R13E Sec 020
032S
013E
000
032S
012E
000
Focus Pipe Line
Legend
1000' Station Increment
San Luis Obispo, CA
Reference Pipe Line
AIP or Sold Pipe Lines
Township/Range Line
Section/Abstract Line
County Line
State Line
Sheet Note
Waterway
Road or Highway
Railroad
Fence
Telephone Line
OH Power Line
Buried Power Line
Television Cable/
Fiber Optic Cable
Water Line
Pipeline
Sewer Line, Field Tile
Property Line
Casing
River Weight
Station Equation
Test Lead

AGM/ AGR
Bypass Valve
Block Valve (MOV, Manual)
Blowoff or Relief Valve
Check Valve
Sleeve
Reducer
Pig Signal
Cathodic Protection System
Meter
Regulator Setting
Tap, Tee, Branch Connect
Aerial Marker
Launcher, Receiver,
or Scraper Trap
Vent
The information contained on this drawing is for the private use of Phillips 66 Pipeline LLC and is not to be disclosed, used, or duplicated except as authorized in writing by Phillips 66 Pipeline LLC. 300
250
200
150

8.625"x 0.277"
35000

8.625"x 0.322"
42000

8.625"x 0.277"
35000
300
250
200
150

ENGINEERING ALIGNMENT SHEET
NC40_SANTA MARIA REFINERY TO SANTA MARGARITA

SANTA MARIA/MIOSSI
100
50 100
50 0
SCALE:

GENERATION DATE
500

DRAWING NAME
1,000
Feet

MAP NUMBER
00 01/26/23 NC40_400 09 of 17
376+86 390+00 400+00 410+00 420+00 430+06

PROFILE PIPE DETAIL PLAN VIEW PIPELINE STATIONING
1050 Series : Sta 376+86 Match Sheet NC40_400_008 378+55 CL OAK PARK BOULEVARD 379+25 CL 14.5' X 15' CONC VLV VAULT 376+86 379+22 CL 8" X 8" TEE 379+23 CL FLANGE
379+25 8" GATE SL55

MANUAL VALVE
380+00
380+55 CL SERVICE381+08 CL SERVICE 379+26
379+26379+32
CL FLANGECL 8" X 8" TEETEST LEAD 382+08 CL RAMONA AVENUE 386+87 CL 4 IN GENERIC POWER LINE386+91 CL BRIGHTON AVENUE 390+00
390+88 CL 2 IN GENERIC TELEVISION
CABLE
392+28 CL NEWPORT AVENUE392+79 CL 2 IN GENERIC TELEVISION CABLE
392+80 CL 6 IN GENERIC POWER LINE395+25 AGR | AGM 14395+86 CL SARATOGAAVENUE396+95 CL 3 IN GENERIC POWER LINE399+28 CL 6 IN GAS PIPELINE399+47 CLATLANTIC CITY AVENUE 400+00 404+36404+38
TEST LEADTEST LEAD 404+39 PL MARKER | TYPE:CARSONITE
405+39 SANTA MARIA/MIOSSI407+10 PL MARKER | TYPE:STEEL POST408+55 PL MARKER | TYPE:409+40 PL MARKER | TYPE:
410+00
410+83 PL MARKER | TYPE:
411+36 STREAM411+65 FENCE411+70 PL MARKER | TYPE:STEEL POST 411+64 BEGIN 12" CASING 411+57 414+25 END CASING
414+30 TEST LEAD
417+58 8" VALVE
417+65 SPLIT TEE
415+68 PL MARKER | TYPE:STEEL POST417+04 FENCE417+71 FENCE418+61 PL MARKER | TYPE:STEEL POST 420+00
422+72 STQ BK=42271.54 AH=42278.00422+72 CSS CHANGE STATION SERIES 422+72424+46 CL OAK PARK BOULEVARD Grieb
2900SJe ar i me s e: Ssta430+06 430+00 430+06 Match Sheet NC40_400_010

P66_6000_cpConoco.mxt
2900 Series : Sta 484+96

PIPESPECIFICAETXIOH

INBSITA

COATING DETAIL

BEGIN END COATING
430+06 463+50 OTHER
463+50 463+53 GEOTEX
463+53 484+96 OTHER

PIPE DETAIL
BEGIN END ODx WT SPEC SMYS LS INSTAL MANUF
430+06 484+96 8.625x 0.277 UNKNOWN 35000 ERW 1/1/1954 UNKNOWN ANC
430+06 NC
-40-10- Santa Maria Refinery to Miossi 484+96
PLS T32S R13E Sec 020
032S
013E 032S
012E
000 000
000 Focus Pipe Line
Legend
1000' Station Increment
000
000
031S
014E
031S
012E
030S
013E
000
Reference Pipe Line
AIP or Sold Pipe Lines
Township/Range Line
Section/Abstract Line
County Line
State Line
Station Equation
Test Lead

AGM/ AGR
Bypass Valve
Block Valve (MOV, Manual)
San Luis Obispo, CA
031S
013E
032S
013E
Sheet Note
Waterway
Road or Highway
Railroad
Fence
Telephone Line
OH Power Line
Buried Power Line
Television Cable/
Fiber Optic Cable
Water Line
Pipeline
Sewer Line, Field Tile
Property Line
Casing
River Weight
Blowoff or Relief Valve
Check Valve
Sleeve
Reducer
Pig Signal
Cathodic Protection System
Meter
Regulator Setting
Tap, Tee, Branch Connect
Aerial Marker
Launcher, Receiver,
or Scraper Trap
Vent
The information contained on this drawing is for the private use of Phillips 66 Pipeline LLC and is not to be disclosed, used, or duplicated except as authorized in writing by Phillips 66 Pipeline LLC. 400
350
300
250

8.625"x 0.277"
35000
400
350
300
250

ENGINEERING ALIGNMENT SHEET
NC40_SANTA MARIA REFINERY TO SANTA MARGARITA

SANTA MARIA/MIOSSI
200
150
200
150
0 SCALE:

GENERATION DATE
500

DRAWING NAME
1,000
Feet

MAP NUMBER
100
430+06 440+00 450+00 460+00 470+00 480+00
100
484+96
01/26/23 NC40_400 10 of 17
37 PROFILE PIPE DETAIL PLAN VIEW PIPELINE STATIONING
2900 Series : Sta 430+06 Match Sheet NC40_400_009
430+06
430+91 SANTA MARIA/MIOSSI432+27 CL JAMES WAY433+27 SANTA MARIA/MIOSSI433+28 SANTA MARIA/MIOSSI438+36 SANTA MARIA/MIOSSI439+37 CL OAK PARK BOULEVARD439+38 CL SERVICE 440+00441+30 CL OAK PARK BOULEVARD443+97 CL OAK PARK BOULEVARD 448+04 1' SLEEVE
449+52 STREAM450+60 CL MEADOWLARK DRIVE
450+00
451+94 CL OAK PARK BOULEVARD
457+88 TEST LEAD
460+00
462+85 PL MARKER | TYPE:STEEL POST463+33 FENCE463+40 PL MARKER | TYPE:STEEL POST 463+40 463+70 TEST LEAD 4' SLEEVE464+72 PL MARKER | TYPE:STEEL POST466+42 FENCE468+58 PL MARKER | TYPE:CARSONITE 470+00
470+69 PL MARKER | TYPE:PLASTIC (PVC)472+67 PL MARKER | TYPE:STEEL POST474+22 STREAM476+00 AM 10.00 477+11 TEST LEAD 477+30 FENCE
480+00 480+07 PL MARKER | TYPE:CARSONITE
482+13 PL MARKER | TYPE:CARSONITE
484+96 Match Sheet NC40_400_011
Dennis

ORDINANCE NO. 613

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY

OF ARROYO GRANDE GRANTING TO

CONOCOPHILLIPS CALIFORNIA PIPELINE COMPANY A

FRANCHISE TO CONSTRUCT, OPERATE, AND

MAINTAIN PIPELINES FOR THE TRANSPORTATION OF

OIL, AND OTHER SPECIFIED MATERIALS, IN THE CITY

OF ARROYO GRANDE, STATE OF CALIFORNIA

THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS:

1. The City Council hereby approves and authorizes the Mayor to execute an Agreement Granting To ConocoPhillips California Pipeline Company, A California Corporation, A Franchise To Construct, Operate, And Maintain Pipelines For The Transportation Of Oil and Other Specified Materials, In The City Of Arroyo Grande, State Of California "Pipeline Franchise Agreement a true and correct copy of which is on file, and at all relevant times shall be kept on file, in the Office of the City Clerk. Said Pipeline Franchise Agreement expires on November 30, 2024, unless sooner terminated pursuant to the terms and conditions thereof.

On motion by Council Member Fellows, seconded by Council Member Arnold, and by the following roll call vote, to wit:

AYES: Council Members Fellows, Arnold, Guthrie, Costello, and Mayor Ferrara NOES: None
ABSENT: None
the foregoing Ordinance was adopted this 13 day of October 2009.

ATTACHMENT 2

ORDINANCE NO. (p 13
PAGE 2
TONY FER rr
MAYOR
ATTEST:

KELLY ETbRE, CITY CLERK
APPROVED AS TO CONTENT:

A A S, CITY MANAGER
APPROVED AS TO FORM:

TIn Y J. EL, CITY ATTORNEY
2 ATTACHMENT 2

OFFICIAL CERTIFICATION
I, KELLY WETMORE, City Clerk of the City of Arroyo Grande, County of San Luis Obispo, State of California, do hereby certify under penalty of perjury, that the attached is a true, full, and correct copy of Ordinance No. 613 which was introduced at a regular meeting of the City Council /Redevelopment Agency on September 22, 2009; was passed and adopted at a regular meeting of the City Council of the City of Arroyo Grande on the 13 day of October 2009; and was duly published in accordance with State law (G.C. 40806).

WITNESS my hand and the Seal of the City of Arroyo Grande affixed this 14 day of October 2009.

KELLY W TM RE, CITY CLERK
ATTACHMENT 2

ATTACHMENT 3

Phillips 66 Pipeline 0594A 0594B OSFM
Standard Ann Page 1 of 2
Post-Inspection Written Preliminary Findings
Generated on 2024.December.13 13:16
This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

Date of Transmittal: 12/13/2024
Dates of Inspection: November 18-21, 2024
Operator: PHILLIPS 66 PIPELINE LLC
Operator ID: 31684 (primary)
Inspection Systems: 86455 and 86456
Assets (Unit IDs) with results in this report: OSFM Inspection Units 0594A and 0594B System Type: HL
Inspection Name: Phillips 66 Pipeline 0594A 0594B OSFM Standard Ann Lead Inspector: Mark McCaleb
Operator Representative: Val Flores
Unsatisfactory Results
No Preliminary Findings.

Concerns
No Preliminary Concerns.

This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other ATTACHMENT 4

Phillips 66 Pipeline 0594A 0594B OSFM
Standard Ann Page 2 of 2
information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

ATTACHMENT 4

Phillips 66 IU 594A and 594B Standard
Main Page 1 of 1
Post-Inspection Written Preliminary Findings
Generated on 2022.September.27 11:52
This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

Date of Transmittal: 09/27/2022
Dates of Inspection: 06/06/2022 to 06/10/2022
Operator: PHILLIPS 66 PIPELINE LLC
Operator ID: 31684 (primary)
Inspection Systems: N/A
Assets (Unit IDs) with results in this report: OSFM Inspection Units 0594A and 0594B System Type: HL
Inspection Name: Phillips 66 IU 594A and 594B Standard Main Inspection Lead Inspector: Ha Nguyen
Operator Representative: Allan Cuada
Unsatisfactory Results
No Preliminary Findings.

Concerns
No Preliminary Concerns.

This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

ATTACHMENT 4

Phillips 66 Pipeline 0596A OSFM Standard
Annual Pi Page 1 of 2
Post-Inspection Written Preliminary Findings
Generated on 2024.September.25 11:08
This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

Date of Transmittal: 09/25/2024
Dates of Inspection: August 26-30, 2024
Operator: PHILLIPS 66 PIPELINE LLC
Operator ID: 31684 (primary)
Inspection Systems: OSFM Inspection Unit 0596A
Assets (Unit IDs) with results in this report: 86457
System Type: HL
Inspection Name: Phillips 66 Pipeline 0596A OSFM Standard Annual Pipeline Lead Inspector: Mark McCaleb
Operator Representative: Allan Cuadra
Unsatisfactory Results
No Preliminary Findings.

Concerns
No Preliminary Concerns.

This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other ATTACHMENT 4

Phillips 66 Pipeline 0596A OSFM Standard
Annual Pi Page 2 of 2
information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

ATTACHMENT 4

Phillips 66 Pipeline 596A Standard Main Page 1 of 1
Post-Inspection Written Preliminary Findings
Generated on 2023.March.26 14:00
This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

Date of Transmittal: 03/26/2023
Dates of Inspection: 02/21/2023, 02/22/2023, 02/23/2023, and 02/24/2023 Operator: PHILLIPS 66 PIPELINE LLC
Operator ID: 31684 (primary)
Inspection Systems: N/A
Assets (Unit IDs) with results in this report: OSFM IU 0596A System Type: HL
Inspection Name: Phillips 66 Pipeline 596A Standard Main Inspection Lead Inspector: Sampson Tang
Operator Representative: Allan Cuadra, DOT Coordinator, Northwest Region

Unsatisfactory Results
No Preliminary Findings.

Concerns
No Preliminary Concerns.

This document is for informational purposes only. It does not commit PHMSA or state pipeline safety regulators to any of the findings, analyses, determinations, conclusions or other information contained herein. All the findings, analyses, determinations, conclusions or other information in the document are preliminary in nature and subject to change without notice, at the discretion of PHMSA or state pipeline safety regulators. The absence of findings, analyses, determinations, conclusions or other information in this document does not constitute an approval of an operator's facility, records, or procedures. Future inspections or investigations may identify additional matters of concern regarding topics that were covered during this inspection.

ATTACHMENT 4

Item 11.a.

MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
BY: Bill Robeson, Assistant City Manager/Director of Public Works Nicole Valentine, Director of Administrative Services
Shane Taylor, Utilities Manager
SUBJECT: Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
DATE: November 25, 2025
RECOMMENDATION:
1) Adopt a Resolution Authorizing an Interfund Loan from the General Fund to the Water Enterprise Fund in the amount not to exceed $1,430,000; 2) Appropriate $1,430,000 from Water Enterprise Fund to pay the County of San Luis Obispo Flood Control Zone 3 Contract Water Billing for Fiscal Year (FY) 2024-25 Costs; and
3) Find that adoption of the Resolution is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378).

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

Appropriation of $1,430,000 from the Water Enterprise Fund to pay the County of San Luis Obispo Flood Control Zone 3 will impact future water rates. To avoid significant cash deficits in the Water Fund, the Interfund Loan from the General Fund will support this payment. Measure O-06 Sales Tax Fund of the General Fund has this amount of cash available without impacting any Capital Improvement Projects in the approved 10-Year Plan.

BACKGROUND:

The City’s Utilities Division has numerous important obligations to maintain a safe water supply for the entire community. In addition to staffing the Utilities Division with professionals with the required training, certification, and experience to maintain and service the City’s complex water system, the Utilities Division must also have a capital program that replaces and updates water system components regularly to meet safety

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

standards. Due to continuously updated State water quality standards as well as the needs of the City’s aging system, the City conducts a water rate study to assess the operating and capital needs of the Utilities Division and recommends rate adjustments as necessary. Given the important public health responsibilities associated with maintaining the water system, periodic rate adjustments are necessary to ensure the system remains financially solvent.

On March 8, 20221, the City Council conducted a public hearing to adopt a Resolution establishing Water and Wastewater Rates for Fiscal Year 2021-22 through Fiscal Year 2025-26, with the final increase on January 1, 2026. The City issued an RFP in Fall of 2024 and selected Tuckfield and Associates to complete a Long-Range Financial Plan that can be used for the future rate study update.

In August 2024, several environmental organizations filed a lawsuit against the County of San Luis Obispo (the “County”), claiming that prior water releases from Lopez Lake were not sufficient to protect endangered steelhead trout, as required by the federal Endangered Species Act (ESA). The groups requested increased water flows to support fish habitat and improve fish passage downstream of the dam.

Lopez Lake was built in 1969, before the ESA was established. Since then, the County has taken steps to comply with the ESA, by managing water releases from Lopez Dam into Arroyo Grande Creek to help support steelhead trout and the surrounding creek habitat. These efforts have followed an Interim Downstream Release Schedule while the County works to finalize a Habitat Conservation Plan (HCP). Once completed, the HCP will provide long-term guidance and authorization for various County activities in and around the creek, including the continued operations of Lopez Dam in a way that balances the needs of both local wildlife and the community.

On January 15, 2025, in response to a preliminary injunction issued by the United States District Court to the County, Lopez Lake downstream releases were increased from 2.0 million gallons per day to 5.1 million gallons per day, or 4,800 AF per year (AFY). This requirement could remain in place until the lake level drops to 20,000 acre-feet – well below its full capacity of 55,000 acre-feet. At that point, releases would be reduced to 4,300 AFY. The County appealed the District Court’s decision to issue a preliminary injunction, and the Court of Appeal is expected to issue its ruling soon.

The increased release does not impact the City’s contract entitlement (how much water the City receives) from Lopez Lake. In 2024, the total water use by the City of Arroyo Grande was 659 million gallons, of which 640 million gallons came from Lopez Lake, meaning Lopez Lake provided 97% of the City’s total water supply. However, the

1 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=1644

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

increased downstream releases are a significant concern for the long-term stability of Lopez Lake as a water supply.

Council Goals Workplan
In the current Council Goals workplan for FY 2025-27, under the Council Goal of “Achieve Water Resilience”, the Council directed staff to Seek new Water Sources and Work with Regional Partners, with the subtasks listed below:

2.2c Conduct a water and wastewater rate study to adjust rates based on changes to water supply and changing or new regional partnerships.

2.3a Preserve Lopez water supply by working with the County on Lopez Litigation.

County Zone 3 Contract Water Billing for FY 2024-25 Costs On May 15, 2025, the SLO County Zone 3 (Zone 3) Advisory Committee received a status update on litigation-related legal defense costs. Through April 30, 2025, total costs amounted to $1,773,540.73, resulting in a net unbudgeted impact of $1,324,545.73, as shown in Table 1. The unanticipated budget total at that time related to Arroyo Grande was $669,557.87.

Table 1: Legal Defense Costs

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

On September 18, 2025, the Zone 3 Advisory Committee received a Fourth Quarter Budget status update on FY 2024-25. The $7.7M budget is broken into three categories:

Routine Operations & Maintenance, Non-Routine Operations & Maintenance, and Capital Outlay. At the end of the fiscal year, 123% of the total annual budget was expended.

Below is a chart to show the budget and expenses for FY 2024-25 and what the project carryforwards would be for FY 2025-26. Based on the balance available and carryforwards, this shows what the estimated true-up will be in November 2025, as shown in Table 2.

Table 2: Zone 3 Advisory Committee Fourth Quarter Budget

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

Arroyo Grande is responsible for 50.55% of the costs associated with Lopez Dam as a result of constituting 50.55% of the water entitlements. The Zone 3 Contract Water Billing for FY 2024-25 invoice was received on November 1, 2025, totaling $1,426,491.50. To continue providing uninterrupted water service to the residents of Arroyo Grande, staff has continued to work on Financing Options on how to pay for this unanticipated cost without an immediate rate increase to the ratepayers.

The City is currently evaluating timing associated with potential future water rate increases, with the water rate study proceeding in either timeframe. This study will include a detailed long-range financial plan to help the City prepare not only for potential rate adjustments, but also for funding future infrastructure needs beyond the current Zone 3 Contract Water Billing for FY 2024-25. As discussed with County Finance staff, additional true-up bills may occur in future years depending on actual Zone 3 costs. While an interfund loan resolves the immediate FY 2024-25 obligation, it may not prevent the need for similar financing solutions if drastic true-up amounts arise in the future. This reinforces the importance of the upcoming rate study and long-term financial planning efforts to ensure a sustainable and proactive path forward for the Water Fund.

ANALYSIS OF ISSUES:

The City received the Zone 3 Contract Water Billing for FY 2024-25. The costs invoiced are $1,426,491.50, related to the FY 2024-25 true-up billing from the Lopez Litigation. To address this financial obligation within the Water Enterprise Fund, the following sections outline five potential funding options:

1. Raising water rates,

2. General Fund interfund loan,

3. Bank loan,

4. General Obligation bonds, or

5. Lease Revenue bonds.

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

Below is a brief overview of each option along with its associated pros and cons, providing a framework for evaluating the most feasible and sustainable approach to meet this obligation.

Water Rate Increases
The City establishes water rates through a Water Rate Study that evaluates the full cost of providing safe and reliable water service, including daily operations, maintenance, infrastructure replacement/improvements, and future capital needs. The study ensures that rates are fair, equitable, and aligned with the true cost of service. Any proposed rate adjustments are subject to the Proposition 218 process, which requires the City to notify all affected property owners and customers at least 45 days before a public hearing.

During the hearing, the community has an opportunity to provide input, and the proposed rates can only be adopted if a majority of property owners do not submit formal protests.

Pros/Cons of Water Rate Increases
 Pros:
o Ensures transparency and public input.
o Aligns rates with actual service costs.
o Helps maintain reliable infrastructure and water quality.  Cons:
o The process can be lengthy and costly.
o Public resistance can delay needed rate increases.
o Rates may still feel burdensome to some customers despite justification.

General Fund Interfund Loan
A General Fund interfund loan is a temporary transfer of money from the City’s General Fund to another City fund – such as the Water, Sewer, or Capital Projects Fund – to provide short-term financing for specific needs or timing differences in revenue collection.

The General Fund encompasses multiple revenue sources, including unrestricted general tax revenues as well as dedicated local sales tax measures such as Measure O-06 and Measure E-24. While these revenue streams are accounted for in separate funds for transparency and tracking, they are all legally part of the City’s overall General Fund. For this reason, any interfund loan would come from one of these General Fund components – the base General Fund, Measure O-06, or Measure E-24. If the Council determines that an interfund loan is the preferred option, staff recommends utilizing Measure O-06, as the Measure O-06 Sales Tax Fund currently has sufficient cash available to support a loan of this size without impacting any Capital Improvement Projects (CIP) in the approved 10- Year CIP Plan.

Under an interfund loan, the borrowing fund repays the General Fund source over a defined period, with interest, to ensure that resources are fully restored. Loan terms – including repayment schedule and interest rate – are approved by the City Council and structured to comply with applicable accounting and budgetary requirements. This

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

financing tool allows the City to support critical projects or address unexpected costs without immediately turning to external borrowing.

Pros/Cons of General Fund Interfund Loan
 Pros:
o Provides a flexible, low-cost internal financing option. o Avoids fees, and delays associated with outside debt issuance. o Supports timely payment to address unexpected costs.
o Requires diligent tracking to ensure timely repayment and fiscal transparency.
 Cons:
o Temporarily reduces available General Fund reserves.
o May limit resources for other General Fund priorities until repayment. o Requires future rate increases to ensure adequate revenue for repayment. o Reduces future budget flexibility due to required debt service payments.

Bank Loan
A bank loan to support the Water Enterprise Fund provides external financing to fund capital improvements, infrastructure replacement, or other high-cost projects when available reserves are insufficient. The City enters into an agreement with a financial institution to borrow a set amount, repaid over time with interest. This approach can help advance critical water projects without placing immediate pressure on operating revenues, though it commits the fund to long-term repayment obligations.

Pros/Cons of Bank Loans
 Pros:
o Provides immediate access to large amounts of capital. o Allows major infrastructure projects to proceed without delay. o Spreads the cost of improvements over their useful life.  Cons:
o Increases long-term debt obligations and interest costs. o Reduces future budget flexibility due to required debt service payments. o Requires rate increases to ensure adequate revenue for repayment.

Financing Options - Types of Municipal Debt
Municipal bonds are a form of long-term financing that cities use to support large onetime costs or stabilize cash flow when available resources are not sufficient to meet immediate obligations. By issuing debt, a city can access upfront funding and repay it gradually over many years, creating predictable annual payments rather than requiring large near-term budget impacts. Although bonds are most commonly used for major capital improvements, they can also be considered for other substantial financial needs when it is important to preserve General Fund liquidity or avoid steep rate increases.

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

Bonds allow costs to be smoothed over time so that the financial burden is shared across the period in which services are delivered or benefits are realized. When evaluating debt as a cash-flow tool, cities often consider General Obligation Bonds and Lease Revenue Bonds, each with its own requirements, limitations, and implications for taxpayers or ratepayers.

General Obligation Bonds
General Obligation Bonds (GO Bonds) are municipal bonds that provide a way for local governments to raise money for projects (e.g. streets and roads or water infrastructure projects) that may not generate a revenue stream directly. GO Bonds require voter approval of a new revenue source (property taxes) to pay debt service. These bonds are secured by the full faith, credit, and taxing power of the municipality, which typically results in the lowest possible interest rates for financing a capital project, which is the primary advantage of borrowing money by issuing GO bonds. These types of bonds are approved by a 2/3rd voter approval and paid from an additional property tax levied on property owners.

Another advantage of using GO Bonds to finance capital projects is the generally lower cost of issuance, when compared to most other methods of financing capital projects.

This is because the legal structure for the issuance of GO Bonds is less complex than most other financing methods. Cities borrow funds to pay for infrastructure with a long useful life, rather than using current cash. In the case of public assets like a street or water capital project, paying for it over time provides “intergenerational equity.” Pros/Cons of GO Bonds
 Pros:
o Does not rely on existing General Fund resources.
 Cons:
o Long lead time, usually 9-12 months.
o High voter hurdle requires 2/3 voter approval.
o Limited flexibility of use of proceeds.
o Property owners are paying for the use of the City instead of rate payers.

Lease Revenue Bonds
Lease revenue bonds (LRBs) are another form of debt financing public agencies often use to fund capital projects, including street and road upgrades. To utilize LRBs the City would establish a separate public financing entity that would issue the bonds and collect lease payments from the City in an amount sufficient to cover the debt service payments.

LRBs usually finance the construction of facilities, including office buildings, correction facilities, water infrastructure projects, and streets, and are secured through an encumbrance on a City building or facility. Unlike revenue bonds that use money generated by the project itself (e.g. a bridge toll) to make the debt service payments, facilities funded by LRBs often do not have a dedicated funding source. For this reason,

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

the issuance of LRBs are often paired with a new funding source (e.g. increased water rate) sufficient to cover the debt service.

Pros/Cons of LRBs
 Pros:
o City Council approval of bond issuance, although approval could be necessary based on the funding source (Water Rate increase). o Quick implementation.
o Very flexible and widely available.
 Cons:
o Encumbrance of facility.
o Requires an unencumbered funding source, such as a voter-approved sales tax measure or a Water Rate increase.
o Would be used towards CIP projects.

Based on the analysis of available financing options, staff recommends proceeding with an interfund loan from the General Fund’s Measure O-06 Sales Tax Fund. Measure O06 has sufficient available cash to support the $1.43 million need without affecting any projects in the approved 10-Year Capital Improvement Plan. The loan would be structured using the current LAIF market yield rate to establish the interest rate, ensuring a fair return to the General Fund while maintaining affordability for the Water Enterprise Fund. Under this approach, repayment would begin in FY 2029-30 and continue over a 10-year term, with interest accruing annually over a 14-year term, providing adequate time for water rates and long-range financial planning efforts to support the scheduled payments. This option offers the most stable, cost-effective, and predictable path forward while preserving flexibility for future budget decisions.

ALTERNATIVES:

The following alternatives are provided for the Council’s consideration:

1. 1) Adopt a Resolution Authorizing an Interfund Loan from the General Fund to the Water Enterprise Fund in the amount not to exceed $1,430,000; 2) Appropriate $1,430,000 from Water Enterprise Fund to pay the County of San Luis Obispo Flood Control Zone 3 Contract Water Billing for FY 2024-25 Costs; and
3) Find that adoption of the Resolution is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378);

2. Direct staff to use an alternative funding source to the Water Enterprise Fund in the amount not to exceed $1,430,000; or

3. Provide other direction to staff.

Item 11.a.

City Council
Appropriate Water Enterprise Funds and Authorize an Interfund Loan from the General Fund to the Water Enterprise Fund
November 25, 2025

ADVANTAGES:

Proceeding with an interfund loan from the General Fund, specifically the Measure O-06 Sales Tax Fund provides several key benefits to both the Water Enterprise Fund and the City as a whole. This approach allows the City to meet its $1,430,000 payment obligation without taking on the higher interest rates or administrative burdens associated with external borrowing. Because Measure O-06 has sufficient available cash, the loan can be issued without delaying or impacting any planned Capital Improvement Projects. Using the LAIF market yield rate ensures the General Fund is fully compensated while still keeping costs lower for water customers. Additionally, delaying repayment until FY 2029- 30 gives the Water Fund time to stabilize through upcoming rate adjustments and financial planning efforts, reducing pressure on near-term rates, although interest will accrue annually for a 14-year term. Overall, this option strengthens cash flow, preserves financial flexibility, and keeps City resources working for the community rather than paying outside lenders.

DISADVANTAGES:

Using General Fund sales tax resources—even temporarily—reduces available cash reserves until the Water Fund begins repayment in FY 2029-30. This potentially limits the City’s ability to respond to unplanned needs, emergencies, or new priority projects during that period. Because the repayment term extends over 10 years, this option also commits future Water Fund revenues, reducing long-term budgetary flexibility. Additionally, although interest would be based on the LAIF market rate, the General Fund may earn slightly less compared to investing those funds externally, depending on market conditions. Finally, relying on internal borrowing does not eliminate the underlying structural challenges of the Water Fund, which will still require ongoing rate adjustments to ensure long-term financial sustainability.

ENVIRONMENTAL REVIEW:

Adoption of a Resolution is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378).

PUBLIC NOTIFICATION AND COMMENTS:

The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2.

ATTACHMENTS:

1. Resolution

65501.00014\44391136.1
ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO

GRANDE APPROVING A LOAN IN AN AMOUNT NOT TO EXCEED
$1,430,000 FROM THE GENERAL FUND TO THE WATER FUND
WHEREAS, the City of Arroyo Grande (“City”) operates a municipal water system that provides water service to properties within the City’s service area; and WHEREAS, the City maintains a separate enterprise fund for the purpose of owning and operating the water system (the “Water Fund”); and
WHEREAS, the County of San Luis Obispo (the “County”) is currently defending a lawsuit over its operations of the Lopez Dam (the “Lawsuit”);
WHEREAS, the City has water rights to the Lopez Dam for its municipal water system and is required to pay a portion of the County’s legal expenses related to the lawsuit (the “Legal Expenses”) which are estimated at approximately $1,430,000 this fiscal year; and WHEREAS, the Water Fund currently lacks sufficient funding to pay the Legal Expenses; and
WHEREAS, the City desires to loan funds from its General Fund to the Water Fund for the purpose of paying its portion of the Lawsuit’s Legal Expenses (the “Interfund Loan”) pursuant to the terms of the Interfund Loan Agreement (the “Agreement”) attached hereto as Exhibit “A”; and
WHEREAS, it is unknown at this time the total amount of Legal Expenses the City could be required to pay and it is possible additional Interfund Loans could be contemplated, to the extent funding is available; and
WHEREAS, the Interfund Loan serves a public purpose by satisfying the City’s obligations to the County related to Lopez Dam and ensuring the continued access to water and the provision of water service to the City’s water customers.

NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Arroyo Grande does hereby declare the foregoing recitals are all true and correct and are incorporated herein by this reference:

1. This Resolution is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378 of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has not potential for resulting in physical change to the environment, directly, or indirectly).

RESOLUTION NO.

PAGE 2

2. Approves the Interfund Loan in an amount not to exceed $1,430,000, for the purpose of paying the Legal Expenses. Staff is hereby authorized to make such changes to the Agreement as are necessary to effectuate the purposes provided herein, provided such changes may not increase the not-to-exceed principal amount, interest rate, or term of the Interfund Loan.

3. The Interfund Loan shall accrue interest at a rate of 4.34% per year. The 4.34% interest rate reflects the City’s current rate of return on investment on surplus General Funds invested in the Local Agency Investment Fund as of September 30, 2025.

4. The Interfund Loan shall mature in 13 years with principal and interest payable annually on December 1 of each year commencing December 1, 2029, as set forth in more detail in Agreement.

5. The Interfund Loan may be prepaid in whole or in part at any time upon direction of the City Council.

6. The obligations to repay the Interfund Loan shall be subordinate to all other debts of the City’s municipal water system.

7. This Resolution shall become effective immediately upon adoption.

On motion of Council Member ______________, seconded by Council Member _____________, and on the following roll call vote, to wit:

AYES:

NOES:

ABSENT:
the foregoing Resolution was passed and adopted this 25th day of November, 2025.

RESOLUTION NO.

PAGE 3

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

EXHIBIT A
A-1

INTERFUND LOAN AGREEMENT
This INTERFUND LOAN AGREEMENT ("Agreement") is entered into this 25th day of November, 2025, by and among the Water Fund and General Fund of the City of Arroyo Grande (the "City"), each of which has a separate and distinct source of income, to wit, the Water Fund is a special fund and is funded by fees paid by users of the City’s water utility and the General Fund is funded by various revenue sources of the City such as its taxes, fees, and penalties.

RECITALS
A. The City owns and operates a municipal water system that provides service to its water customers (the “Water Utility”).

B. The City maintains the water fund (the “Water Fund”) as an enterprise fund for the purpose of owning and operating the Water Utility.

C. The County of San Luis Obispo (the “County”) is currently defending a lawsuit over its operations of the Lopez Damn (the “Lawsuit”). The City has water rights in the Lopez Damn for its municipal water system and is required to pay a portion of the County’s legal expenses related to the lawsuit (the “Legal Expenses”). The estimated Legal Expenses due from the City to the County is approximately $1,430,000 this fiscal year.

D. The Water Fund currently lacks sufficient funding to pay the Legal Expenses.

E. The City desires to loan funds from its General Fund to the Water Fund for the purpose of paying its portion of the Legal Expenses (the “Interfund Loan”).

F. It is unknown at this time the total amount of Legal Expenses the City could be required to pay. It is possible additional interfund loans could be contemplated, to the extent funding is available.

G. The Interfund Loan serves a public purpose by satisfying the City’s obligations to the County related to Lopez Damn and ensuring the continued access to water and the provision of water service to the City’s water customers.

COVENANTS
Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both parties, the General Fund and Water Fund hereby agree as follows:

1. Recitals Incorporated.

A-2
The Recitals are true and correct and are incorporated into this Agreement by this reference.

2. Interfund Loan.

On November 26, 2025 (“Closing Date”), the General Fund shall transfer to the Water Fund the amount of $1,430,000. This amount is based upon the amounts submitted and requested by the County. The Interfund Loan shall be tracked by the City’s Finance Department. The funds may only be used for costs associated with the Legal Expenses.

3. Repayment.

The Water Fund agrees to repay the Interfund Loan Amount, with interest accruing annually at 4.34% over a 14-year term, as set forth in “Exhibit A” hereto. Interest shall accrue commencing on the Closing Date. Principal and interest shall be payable each year on December 1, commencing on December 1, 2029. The interest rate is calculated based on the current rate of return on investment of surplus General Funds in the Local Agency Investment Fund.

4. Subordination.

The indebtedness hereunder and under any future Interfund Loans shall be junior and subordinate to (i) all existing and future bonds, loans or other direct indebtedness of the Water Fund; (ii) all existing and future financial agreements and other contractual obligations of the Water Fund; and (iii) all operations and maintenance costs of the Water Fund; provided however that the Water Fund may incur indebtedness that is subordinate to the Interfund Loan pursuant to Section 5 below.

5. Additional Debt.

The Water Fund may incur indebtedness which is superior, on a parity or subordinate to the Interfund Loan. In the absence of an express determination by the Water Fund to the contrary, any such indebtedness shall be superior to the Interfund Loan.

6. Prepayment; Suspension of Payment.

The Water Fund may prepay any Interfund Loan without penalty at any time during the term of the Interfund Loan. The City Council or the City Manager may temporarily suspend principal and interest payments at any time for a period not to exceed one year.

7. Entire Agreement; Amendment.

This Agreement shall constitute the entire agreement related to the Interfund Loan.

Except as otherwise provided, this Agreement may be modified or amended only by an agreement approved by the City Council.

A-3

8. Non-Liability of City Officials, Officers, and Employees.

No officer, official, employee, agent, representative, or volunteer of the City shall be personally liable for any amount which may become due to the General Fund hereunder.

9. Termination of Agreement.

This Agreement shall continue in full force and effect for a period of and the obligations of the Water Fund shall terminate on written notice by either party of such termination or payment in full of the Interfund Loan, whichever occurs first.

10. Loan Forgiveness.

Continued financial hardship including but not limited to emergency, drought, unforeseen or sudden failure of infrastructure shall warrant forgiveness of this Interfund Loan upon review and approval by the City Council.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date and year first written above.
[Signature Page Follows]

A-4

CITY OF ARROYO GRANDE (GENERAL
FUND)
By: ________________________________
Caren Ray Russom
Mayor
ATTEST:
_______________________________
Jessica Matson
City Clerk
APPROVED AS TO FORM:

By: ____________________________
Isaac Rosen
City Attorney

CITY OF ARROYO GRANDE (WATER FUND)
By: _______________________________
Caren Ray Russom
Mayor
ATTEST:
________________________________
Jessica Matson
City Clerk

A-5
“EXHIBIT A”

PAYMENT SCHEDULE
Pmt No.

Payment
Date
Beginning
Balance
Total
Payment Principal Interest
Ending
Balance
Cumulative
Interest
1 12/1/2026 1,430,000.00 - (62,062.00) 62,062.00 1,492,062.00 62,062.00 2 12/1/2027 1,492,062.00 - (64,755.49) 64,755.49 1,556,817.49 126,817.49 3 12/1/2028 1,556,817.49 - (67,565.88) 67,565.88 1,624,383.37 194,383.37 4 12/1/2029 1,624,383.37 203,675.84 133,177.60 70,498.24 1,491,205.77 264,881.61 5 12/1/2030 1,491,205.77 203,675.84 138,957.51 64,718.33 1,352,248.26 329,599.94 6 12/1/2031 1,352,248.26 203,675.84 144,988.27 58,687.57 1,207,259.99 388,287.51 7 12/1/2032 1,207,259.99 203,675.84 151,280.76 52,395.08 1,055,979.24 440,682.60 8 12/1/2033 1,055,979.24 203,675.84 157,846.34 45,829.50 898,132.90 486,512.10 9 12/1/2034 898,132.90 203,675.84 164,696.87 38,978.97 733,436.02 525,491.06 10 12/1/2035 733,436.02 203,675.84 171,844.72 31,831.12 561,591.31 557,322.19 11 12/1/2036 561,591.31 203,675.84 179,302.78 24,373.06 382,288.53 581,695.25 12 12/1/2037 382,288.53 203,675.84 187,084.52 16,591.32 195,204.01 598,286.57 13 12/1/2038 195,204.01 195,204.01 186,732.16 8,471.85 - 606,758.43