Arroyo Grande City Council
January 13, 2026

CITY COUNCIL MEETING

AGENDA SUMMARY

Tuesday, January 13, 2026, 5:00 p.m.

In person at:

Arroyo Grande City Council Chamber
215 E. Branch Street, Arroyo Grande, CA 93420
AND via Zoom at:
https://arroyogrande-org.zoom.us/webinar/register/WN_NRsyFrUIQ_6179_iBTyDVA Please click the link above to register to join the Zoom Meeting This City Council meeting is being conducted in a hybrid in-person/virtual format. Please be advised that while the City will endeavor to ensure these remote participation methods are available, the City does not guarantee that they will be technically feasible or work all the time. Further, the City reserves the right to terminate these remote participation methods (subject to Brown Act restrictions) at any time and for any reason. Members of the public may participate and provide public comment on agenda items during the meeting in person at the location identified above, by joining the Zoom meeting, or by submitting written public comments to the Clerk of the Council at [email protected]. Meetings will be broadcast live on Channel 20 and streamed on the City’s Website.

CLOSED SESSION: 5:00 PM

1. CALL TO ORDER

2. ROLL CALL

3. FLAG SALUTE

4. PUBLIC COMMENT ON CLOSED SESSION ITEMS

5. CLOSED SESSION
The City Council will recess to a closed session for the following and will report any reportable action at the City Council Regular meeting at 6:00 p.m.:
a) LABOR NEGOTIATION PURSUANT TO GOVERNMENT CODE SECTION 54957.6:

1. Employee Organization: Service Employees International Union (SEIU), Local 620 City-designated negotiators: Che Johnson, Special Labor Counsel; Ashley Garcia, Human Resources Officer; Nicole Valentine, Director of Administrative Services

2. Employee Organization: Arroyo Grande Police Officers' Association City-designated negotiators: Che Johnson, Special Labor Counsel; Ashley Garcia, Human Resources Officer; Nicole Valentine, Director of Administrative Services

3. Unrepresented Management Employees
City-designated negotiators: Che Johnson, Special Labor Counsel

6. ADJOURNMENT
REGULAR MEETING 6:00 P.M.

1. CALL TO ORDER

2. ROLL CALL

3. MOMENT OF REFLECTION

4. FLAG SALUTE

5. AGENDA REVIEW

5.a Closed Session Announcements
City Attorney Rosen will announce any reportable action from the following meetings:

January 13, 2026
a) LABOR NEGOTIATION PURSUANT TO GOVERNMENT CODE SECTION 54957.6:

1. Employee Organization: Service Employees International Union (SEIU), Local 620 City-designated negotiators: Che Johnson, Special Labor Counsel; Ashley Garcia, Human Resources Officer; Nicole Valentine, Director of Administrative Services

2. Employee Organization: Arroyo Grande Police Officers' Association City-designated negotiators: Che Johnson, Special Labor Counsel; Ashley Garcia, Human Resources Officer; Nicole Valentine, Director of Administrative Services

3. Unrepresented Management Employees
City-designated negotiators: Che Johnson, Special Labor Counsel

5.b Ordinances read in title only
Recommended Action:

Move that all ordinances presented at the meeting shall be read by title only and all further readings be waived.

6. SPECIAL PRESENTATIONS

6.a City Manager Communications
(DOWNING)
Recommended Action:

Receive correspondence/comments as presented by the City Manager and Provide direction, as necessary.

7. CITY COUNCIL REPORTS
None.

Reports are made during the Second Council Meeting each month.

8. COMMUNITY COMMENTS AND SUGGESTIONS
This public comment period is an invitation to members of the community to present issues, thoughts, or suggestions on matters not scheduled on this agenda. Comments should be limited to those matters that are within the jurisdiction of the City Council. Members of the public may provide public comment in-person or remotely by registering and joining the Zoom meeting utilizing the link provided below. Once in the meeting, please use the “raise hand” feature to indicate your desire to provide public comment.

Click the link below to register to join the webinar: https://arroyograndeorg.zoom.us/webinar/register/WN_NRsyFrUIQ_6179_iBTyDVA •
After registering, you will receive a confirmation email containing information about joining the webinar.
•
Please be advised that while the City will endeavor to ensure these remote participation methods are available, the City does not guarantee that they will be technically feasible or work all the time.

Further, the City reserves the right to terminate these remote participation methods (subject to Brown Act restrictions) at any time and for any reason. Please attend in person or submit your comment via email to the City Clerk by 2:00 p.m. the day of the meeting to have it included as part of the record.

The Brown Act restricts the Council from taking formal action on matters not published on the agenda. In response to your comments, the Mayor or presiding Council Member may:
• Direct City staff to assist or coordinate with you.
• A Council Member may state a desire to meet with you.

It may be the desire of the Council to place your issue or matter on a future Council agenda.
•
Please adhere to the following procedures when addressing the Council:
• Comments should be limited to 1 minute or less.

Your comments should be directed to the Council as a whole and not directed to individual Council members.
•
Slanderous, profane or personal remarks against any Council Member or member of the audience shall not be permitted.
•

9. CONSENT AGENDA
The following routine items listed below are scheduled for consideration as a group. The recommendations for each item are noted. Any member of the public who wishes to comment on any Consent Agenda item may do so at this time. Any Council Member may request that any item be withdrawn from the Consent Agenda to permit discussion or change the recommended course of action. The City Council may approve the remainder of the Consent Agenda on one motion.

9.a Approval of Minutes
(MATSON)
Recommended Action:

Approve the minutes of the Regular City Council Meeting of December 9, 2025, as submitted.

9.b Cash Disbursement Ratification
(VALENTINE)
Recommended Action:

Review and ratify the attached listing of cash disbursements for the period of November 16

through November 30, 2025.

9.c Statement of Investment Deposits for November 2025
(VALENTINE)
Recommended Action:

Receive and file the attached report listing investment deposits of the City of Arroyo Grande as of November 30, 2025, as required by Government Code Section 53646(b).

9.d Fiscal Year 2025-26 First Quarter Financial Status Report (VALENTINE)
Recommended Action:

Receive and file the Fiscal Year 2025-26 First Quarter Financial Status Report.

9.e Accept the Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB 1600 Report); Including the Water and Sewer Capacity Fee Annual Reporting for FY 2024-25 (VALENTINE)
Recommended Action:
1) Accept Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB1600 Report) and Water and Sewer Capacity Fee Annual Report for FY 2024-25; and 2) Determine that accepting the Annual Development Impact Fee Report and Water and Sewer Capacity Fee Report for FY 2024-25 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, Cal. Code Regs., tit. 14, §§ 15060, subd. (c)(2)-(3), 15378.)

9.f Support for Legislation Supporting Extended Operations of Diablo Canyon Power Plant and Restoration of Unitary Tax Treatment
(DOWNING)
Recommended Action:
1) Authorize the County of San Luis Obispo to include the City as a supporter of the County’s request for legislation to authorize operations of the Diablo Canyon Nuclear Power Plant (DCPP) for an additional 20 years, restore pre-decommissioning unitary tax treatment for DCPP, and support the California Coastal Commission’s land conservation and public access plan for lands surrounding the DCPP; and
2) Find that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section 15060, subd. (c)(2)-(3), 15378.

9.g Water Wheeling Agreement Between the City of Arroyo Grande and the Oceano Community Services District
(ROBESON)
Recommended Action:

Adopt a Resolution granting a Water Wheeling Agreement between the City of Arroyo Grande and the Oceano Community Services District.

9.h Arroyo Grande Community Hospital Right of Way Acquisition and Reimbursement Agreement

(ROBESON)
Recommended Action:
1) Adopt a Resolution authorizing the City Manager to execute a right of way (ROW) acquisition and reimbursement agreement with Arroyo Grande Community Hospital (AGCH) in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney;
2) Approve a Budget Amendment Request for FY 2026-27 in the amount of $100,000 to account for the additional revenue and expenditures related to the reimbursement agreement with AGCH; and
3) Find that adopting a Resolution authorizing the City Manager to execute the ROW acquisition and reimbursement agreement with AGCH in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney 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.)

10. PUBLIC HEARINGS

10.a Introduction of Radar Speed Survey Extension Ordinance (ROBESON)
Recommended Action:
1) Introduce an Ordinance extending the certification of the 2018 five-year radar speed survey; and
2) Make findings that this extension 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.).

11. BUSINESS ITEMS

11.a San Luis Obispo Council of Governments (SLOCOG) Draft Transportation Expenditure Plan
(ROBESON)
Recommended Action:

Receive a presentation from San Luis Obispo Council of Governments (SLOCOG) on its Draft Transportation Expenditure Plan (Plan) and provide input and comment regarding the draft Plan.

11.b Evaluate Tourism Occupancy Tax (TOT) Measure Policy Direction and Potential Opportunities Related to Arroyo Grande Tourism Business Improvement District (AGTBID) (BOHLKEN)
Recommended Action:

Conduct a study session and:

Direct staff to not move forward with the preparation of options for a potential Transient Occupancy Tax (TOT) increase at this time;

1.

Discuss a potential increase to the AGTBID with lodging partners in the second half of Fiscal Year 2026-27; and

2. 3. Direct staff to monitor implementation of Senate Bill 346 by other municipalities.

12. COUNCIL COMMUNICATIONS
Any Council Member may ask a question for clarification, make an announcement, or report briefly on his or her activities. In addition, subject to Council policies and procedures, Council Members may request staff to report back to the Council at a subsequent meeting concerning any matter or request that staff place a matter of business on a future agenda. Any request to place a matter of business for original consideration on a future agenda requires the concurrence of at least two other Council Members.

13. ADJOURNMENT
All staff reports or other written documentation, including any supplemental material distributed to a majority of the City Council within 72 hours of a regular meeting, relating to each item of business on the agenda are available for public inspection during regular business hours in the City Clerk’s office, 300 E. Branch Street, Arroyo Grande. If requested, the agenda shall be made available in appropriate alternative formats to persons with a disability, as required by the Americans with Disabilities Act. To make a request for disability-related modification or accommodation, contact the Legislative and Information Services Department at 805-473-5400 as soon as possible and at least 48 hours prior to the meeting date.

This agenda was prepared and posted pursuant to Government Code Section 54954.2 Agenda reports can be accessed and downloaded from the City’s website at www.arroyogrande.org If you would like to subscribe to receive email or text message notifications when agendas are posted, you can sign up online through the “Notify Me” feature.

City Council Meetings are streamed live on the City’s Website and recorded for replay on Arroyo Grande’s Government Access Channel 20.

1 Item 9.a.

ACTION MINUTES

REGULAR MEETING OF THE CITY COUNCIL
December 9, 2025, 6:00 p.m.

Hybrid City Council Chamber/Virtual Zoom Meeting
215 East Branch Street, Arroyo Grande
Council Members Present: Mayor Caren Ray Russom, Mayor Pro Tem Kate Secrest, Council Member Jim Guthrie,
Council Member Jamie Maraviglia, Council
Member Aileen Loe
Staff Present: City Clerk Jessica Matson, City Attorney Isaac Rosen, City Manager Matthew Downing,
Assistant City Manager/Public Works Director
Bill Robeson, Administrative Services Director
Nicole Valentine, Community Development
Director Brian Pedrotti, Police Chief David
Culver, Fire Chief Scott Hallett, Human
Resources Officer Ashley Garcia, Planning
Manager Andrew Perez, Management Analyst
Aleah Bergam, City Engineer Shannon
Sweeney, Commander Greg Pierce,
Commander Zak Ayala
This meeting was conducted in a hybrid in-person/virtual format. _____________________________________________________________________

1. CALL TO ORDER
Mayor Ray Russom called the Regular City Council Meeting to order at 6:00 p.m.

2. ROLL CALL
City Clerk Matson took roll call.

3. MOMENT OF REFLECTION

4. FLAG SALUTE
Charles Jordan with the Arroyo Grande Rotary Club led the flag salute.

5. AGENDA REVIEW

5.a Closed Session Announcements
None.

2 Item 9.a.

5.b Ordinances read in title only
Moved by Mayor Ray Russom
Seconded by Council Member Maraviglia
Move that all ordinances presented at the meeting shall be read by title only and all further readings be waived.

AYES (5): Mayor Ray Russom, Council Member Maraviglia, Council Member Guthrie, Council Member Loe, and Mayor Pro Tem Secrest
Passed (5 to 0)

6. SPECIAL PRESENTATIONS

6.a Introduction and Oath of Office - Senior Officer Black Police Chief Culver introduced Senior Officer Jacob Black and highlighted his educational and professional background. City Clerk Matson administered the Oath of Office. A badge pinning ceremony followed.

6.b Honorary Proclamation Recognizing Fire Captain Quinlan, Engineer LoPresti, and Firefighter Vassaur
Mayor Ray Russom presented the Honorary Proclamation recognizing Fire Captain Quinlan, Engineer LoPresti, and Firefighter Vassaur.

Mayor Ray Russom invited public comment. Speaking from the public were Dianna and Andrew Chestnut. No further public comments were received.

No action was taken on this item.

6.c Honorary Proclamation Recognizing Fire Captain Paul Quinlan Upon His Retirement from Public Service
Mayor Ray Russom presented a Proclamation Recognizing Fire Captain Paul Quinlan Upon His Retirement from Public Service. Captain Quinlan addressed the Council and staff. Chief Hallett provided remarks.

Mayor Ray Russom wished all first responders a Merry Christmas and Happy Holidays.

6.d City Manager Communications
City Manager Downing provided updates on the Lopez Lake Litigation and the Ninth Circuit Court’s decision regarding water releases from Lopez; the Traffic Way Bridge scheduled to reopen and detours removed next week; Police Officers attendance at FBI training; current employment opportunities with the City; the Winter/Spring Activity Guide will be mailed December 12th; Tree Lighting and Snow event on December 14th at Elm Street Park; and the newest issue of the Arroyo Grande Gazette is available.

No action was taken on this item.

3 Item 9.a.

7. CITY COUNCIL REPORTS
None.

Reports are made during the Second Council Meeting each month.

8. COMMUNITY COMMENTS AND SUGGESTIONS
Mayor Ray Russom invited public comment. Speaking from the public was Dean Castelino. No further public comments were received.

9. CONSENT AGENDA
Mayor Ray Russom asked the Council if there were any questions or any items to be pulled from the consent agenda for further discussion.

Mayor Ray Russom declared a conflict of interest due to owning an ADU and requested items 9.k. and

9.l. be pulled for a separate vote.

Mayor Ray Russom invited public comment. No public comments were received.

Moved by Council Member Maraviglia
Seconded by Council Member Guthrie
Approve Consent Agenda Items 9.a. through 9.i., with the exception of Items 9.k. and 9.l., with the recommended courses of action.

AYES (5): Council Member Maraviglia, Council Member Guthrie, Council Member Loe, Mayor Pro Tem Secrest, and Mayor Ray Russom
Passed (5 to 0)

9.a Approval of Minutes
Approved the minutes of the Regular City Council Meeting of November 25, 2025, as submitted.

9.b Cash Disbursement Ratification
Reviewed and ratified the listing of cash disbursements for the period of November 1 through November 15, 2025.

9.c Statement of Investment Deposits for October 2025
Received and filed the report listing investment deposits of the City of Arroyo Grande as of October 31, 2025, as required by Government Code Section 53646(b).

9.d 2026 City Council Regular Meeting Schedule
Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE ESTABLISHING THE 2026 CITY COUNCIL REGULAR MEETING SCHEDULE".

9.e Selection of Council Member Maraviglia as Mayor Pro Tem Appointed Council Member Maraviglia as the Mayor Pro Tem for the next one-year period, pursuant to City Council policy.

4 Item 9.a.

9.f City Council Appointments to Regional and Local Boards and Committees Reviewed the list of Council appointments currently serving on the various regional and local boards and committees and approve appointments for calendar year 2026.

9.g Adoption of an Ordinance Granting to Phillips 66 Pipeline, LLC, a Pipeline Franchise Agreement
1) Adopted an Ordinance entitled: "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"; and
2) Found that adoption of the 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.);

9.h Award Engineering Design Services for 2025 Streets Project 1) Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES CONTRACT FOR ENGINEERING DESIGN SERVICES OF THE 2025 STREETS PROJECT (PW 2025-01) WITH PAVEMENT ENGINEERING, INC."; and 2) Found that awarding the contract for Engineering Design Services of the 2025 Streets Project is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline Section 15301(c) covering the repair and maintenance of existing streets, sidewalks, gutters, and similar facilities.

9.i Award of Water Main and Service Project
1) Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE AUTHORIZING THE CITY MANAGER TO EXECUTE A CONSTRUCTION CONTRACT FOR THE WATER MAIN AND SERVICE PROJECT (PW 2024-04) TO R. BAKER, INC. AND APPROVE A BUDGET ADJUSTEMENT"; and
2) Found that the project is categorically exempt from the California Environmental Quality Act (“CEQA”) under the Class 2 exemption, which applies to the replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced.

9.j Agreement Amendment for Consultant Services with Miniter Harnish for the Comprehensive General Plan Update
1) Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE AUTHORIZING THE DIRECTOR OF COMMUNITY DEVELOPMENT TO

EXECUTE AN AMENDMENT EXTENDING THE AGREEMENT FOR CONSULTANT

SERVICES WITH MINTIER HARNISH FOR THE COMPREHENSIVE GENERAL PLAN UPDATE"; and

5 Item 9.a.
2) Found that adopting a Resolution to extend the agreement is not a project subject to the California Environmental Quality Act “(CEQA”) because the amendment 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.)

9.k Adoption of an Ordinance Amending Title 16 Regarding Accessory Dwelling Units and Junior Accessory Dwelling Units
Moved by Council Member Maraviglia
Seconded by Council Member Guthrie
1) Adopted an Ordinance entitled: "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING SECTION 16.52.150 OF THE ARROYO GRANDE

MUNICIPAL CODE REGARDING ACCESSORY DWELLING UNITS AND JUNIOR

ACCESSORY DWELLING UNITS AND FINDING THE ACTION TO BE EXEMPT FROM CEQA UNDER PUBLIC RESOURCES CODE SECTION 21080.17"; and
2) Found that the Ordinance is statutorily exempt from review under the California Environmental Quality Act (CEQA) pursuant to Public Resources Code § 21080.17.

AYES (4): Council Member Maraviglia, Council Member Guthrie, Council Member Loe and Mayor Pro Tem Secrest
ABSENT (1): Mayor Ray Russom
Passed (4 to 0)

9.l Adoption of an Ordinance Amending Title 16 of the Arroyo Grande Municipal Code Regarding Urban Lot Splits and Two-Unit Development
Moved by Council Member Maraviglia
Seconded by Council Member Guthrie
1) Adopted an Ordinance entitled: "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING SECTIONS 16.20.180 AND 16.32.060 OF THE ARROYO

GRANDE MUNICIPAL CODE REGARDING URBAN LOT SPLITS AND TWO-UNIT DEVELOPMENTS"; and
2) Found that the Ordinance is exempt from review under the California Environmental Quality Act (CEQA) because it will not result in a direct or reasonably foreseeable indirect physical change in the environment (State Guidelines Section 15060(c)(2) and 15061(b)(3)).

AYES (4): Council Member Maraviglia, Council Member Guthrie, Council Member Loe and Mayor Pro Tem Secrest
ABSENT (1): Mayor Ray Russom
Passed (4 to 0)

6 Item 9.a.

10. PUBLIC HEARINGS

10.a Community Development Block Grant Recommendations for Year 2026 Planning Manager Perez presented the Item.

Mayor Ray Russom opened the public hearing. Upon hearing no public comments, Mayor Ray Russom closed the public hearing.

Moved by Council Member Loe
Seconded by Council Member Maraviglia
1) Approve funding recommendations for the City’s allocation of 2026 Community Development Block Grant (CDBG) funds as shown in Table 1; and
2) Find that this action is exempt from CEQA, pursuant to CEQA Guidelines Section 15061 subd. (b)(3).

AYES (5): Council Member Loe, Council Member Maraviglia, Council Member Guthrie, Mayor Pro Tem Secrest, and Mayor Ray Russom
Passed (5 to 0)

11. BUSINESS ITEMS

11.a Study Session on Cannabis Regulation Policy Direction City Manager Downing introduced the Item. Management Analyst Bergam presented the Item.

City Attorney Rosen, City Manager Downing, and Police Chief Culver responded to questions from Council.

Mayor Ray Russom invited public comment. Speaking from the public was Rachael Golding. No further public comments were received.

Council discussion ensued regarding regulatory options.

Council directed staff to proceed with the preparation of a local cannabis tax ballot measure (and draft tax language) to be placed on a future municipal ballot, for consideration at a future City Council meeting; and upon passing of a tax ballot measure, proceed with drafting regulations to allow commercial retail cannabis uses and return with zoning, permit process and a draft ordinance.

Council also provided staff direction on the following regulatory options:

1. Allow both medical and adult use cannabis businesses.

2. Types of businesses: Allow retail and delivery. Do not allow cannabis events. Need more information on distribution, cultivation, manufacturing, and testing.

3. Location and Zoning: Freeway access areas and shopping centers. Keep out of neighborhoods and the Village.

4. Number of businesses: 1-2.

7 Item 9.a.

5. Types of permits: Merit-based is preferred, but research what other cities have done.

6. Permit processing: Discretionary approval by Council, not ministerial.

7. Revenue: 6% local tax on gross receipts of cannabis sales. Possibly a development agreement as well.

8. Only tax on recreational.

12. COUNCIL COMMUNICATIONS
Mayor Pro Tem Secrest commented on her service as Mayor Pro Tem over the past year.

Mayor Ray Russom commented on the Tree Lighting and Snow event.

13. ADJOURNMENT
There being no further business to come before the City Council, Mayor Ray Russom adjourned the meeting at 7:31 pm.
_________________________
Caren Ray Russom, Mayor
ATTEST:
_________________________
Jessica Matson, City Clerk

Item 9.b.

MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services BY: Megan Schotborgh, Finance Manager
SUBJECT: Cash Disbursement Ratification
DATE: January 13, 2026
RECOMMENDATION:

Review and ratify the attached listing of cash disbursements for the period of November 16 through November 30, 2025.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There is a $2,250,992.06 fiscal impact for the period of November 16 through November 30, 2025, that includes the following items:
 Accounts Payable Checks $1,758,424.53
 Payroll & Benefit Checks $492,567.53
BACKGROUND:

Cash disbursements are made weekly based on the submission of all required documents supporting the invoices submitted for payment. Prior to payment, Administrative Services staff review all disbursement documents to ensure that they meet the approval requirements adopted in the Municipal Code and the City’s Purchasing Policies and Procedures Manual.

ANALYSIS OF ISSUES:

The attached listing represents the cash disbursements required of normal and usual operations during the period. The disbursements are accounted for in the FY 2025-26 budget.

ALTERNATIVES:

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

1. Approve staff’s recommendation;

2. Do not approve staff’s recommendation; or

3. Provide other direction to staff.

Item 9.b.

City Council
Cash Disbursement Ratification
January 13, 2026

ADVANTAGES:
 The Administrative Services Department monitors payments of invoices for accountability, accuracy, and completeness using standards approved by the City Council.
 Invoices are paid in a timely manner to establish goodwill with merchants.  Discounts are taken where applicable.

DISADVANTAGES:

There are no disadvantages identified in this recommendation.

ENVIRONMENTAL REVIEW:

Ratifying the cash disbursements 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. November 16 through November 30, 2025 – Accounts Payable Check Register

2. November 28, 2025 – Payroll & Benefit Check Registers

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:1119HSA TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 110440 ICMA RETIREMENT CORP, PLAN ID 801844
306649 T 11/19/25 100 1111 ACCOUNTS RECEIVABLE - FCFA 556.12 306649 T 11/19/25 10014099 5136 RETIREES HEALTH INSURANCE 5,043.18 306649 T 11/19/25 22064303 5136 RETIREES HEALTH INSURANCE 323.87 REPORT TOTALS 5,923.17

COUNT AMOUNT
TOTAL EFT TRANSFERS 1 5,923.17
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 114672 AMAZON CAPITAL SERVICES
306650 P 11/21/25 10014120 5201 SUPPLIES-OFFICE 59.40
306650 P 11/21/25 10014140 5602 MAINTENANCE-OFFICE EQUIPME 435.02 306650 P 11/21/25 10014140 5702 DATA PROCESSING EQUIPMENT 125.53 306650 P 11/21/25 10034201 5201 SUPPLIES-OFFICE 770.79

106083 ARROYO GRANDE IN BLOOM INC
306651 P 11/21/25 10044420 5605 MAINTENANCE-GROUNDS 650.00

105507 AT & T
306652 P 11/21/25 10014145 5403 TELECOMMUNICATIONS 184.15

106607 AT&T
306653 P 11/21/25 10014145 5403 TELECOMMUNICATIONS 29.85

114289 AUTOSYS LLC
306654 P 11/21/25 64055953 7001 CONSTRUCTION 1,845.00

114310 BACK ON THE ROAD AUTOMOBILE
306655 P 11/21/25 22064303 5601 MAINTENANCE-VEHICLES 417.21

115380 BAKER TILLY US LLP
306656 P 11/21/25 10014120 5303 CONTRACTUAL SERVICES 10,142.50

115917 BELLA VISTA INVESTIGATIVE SVCS
306657 P 11/21/25 10034201 5315 PRE-EMPLOYMENT PHYSICALS 3,400.00

104753 BEST BEST & KRIEGER LLP
306658 P 11/21/25 10014003 5304 PROFESSIONAL SERVICES 54,416.69

101917 BOB'S EXPRESS WASH
306659 P 11/21/25 10034201 5601 MAINTENANCE-VEHICLES 39.00 306659 P 11/21/25 10034203 5601 MAINTENANCE-VEHICLES 361.00 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 306659 P 11/21/25 10044420 5601 MAINTENANCE-VEHICLES 38.00 306659 P 11/21/25 10044421 5601 MAINTENANCE-VEHICLES 13.00 306659 P 11/21/25 10054301 5601 MAINTENANCE-VEHICLES 52.00 306659 P 11/21/25 10054307 5601 MAINTENANCE-VEHICLES 13.00 306659 P 11/21/25 22064303 5601 MAINTENANCE-VEHICLES 39.00 306659 P 11/21/25 61254610 5601 MAINTENANCE-VEHICLES 25.00 306659 P 11/21/25 64054712 5601 MAINTENANCE-VEHICLES 51.00

112747 BOYER'S DIESEL
306660 P 11/21/25 61254610 5603 MAINTENANCE-MACH & EQUIP 675.00

112709 BRAND CREATIVE
306661 P 11/21/25 10034204 5272 PROTECTIVE/SAFETY CLOTHING 674.98

100087 BREZDEN PEST CONTROL, INC
306662 P 11/21/25 10054308 5303 CONTRACTUAL SERVICES 327.00

107958 BURNS, JEREMY
306663 P 11/21/25 10034204 5501 TRAVEL/CONFERENCE/TRAINING 676.08

112669 BURT INDUSTRIAL SUPPLY INC
306664 P 11/21/25 64054712 5255 SPECIAL DEPARTMENT SUPPLIE 52.23

100142 CAL-COAST MACHINERY, INC
306665 P 11/21/25 64054712 5603 MAINTENANCE-MACH & EQUIP 313.36

104391 CASEY PRINTING, INC
306666 P 11/21/25 10044421 5504 PUBLIC RELATIONS 14,360.00

113129 CHARTER COMMUNICATIONS
306667 P 11/21/25 10014140 5303 CONTRACTUAL SERVICES 1,349.00 306667 P 11/21/25 10014145 5401 UTILITIES 3,267.52
306667 P 11/21/25 10034201 5403 TELECOMMUNICATIONS 199.98 306667 P 11/21/25 21114101 5330 CABLE CASTING EXPENSE 1,349.00 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION

102223 CIO SOLUTIONS LP
306668 P 11/21/25 10014140 5303 CONTRACTUAL SERVICES 6,386.00 306668 P 11/21/25 10014140 5607 MAINTENANCE-COMPUTER SOFTW 6,642.00

109756 CIVICPLUS LLC
306669 P 11/21/25 10014002 5303 CONTRACTUAL SERVICES 1,429.05

112118 CK CONSULTING
306670 P 11/21/25 64505030 7701 CONCEPT STUDIES 3,000.00

100171 CLINICAL LABORATORY OF
306671 P 11/21/25 64054710 5310 WATER TREATMENT SERVICES 975.00

112527 COMMUNITY BANK OF SANTA MARIA
306672 P 11/21/25 10034201 5801 DEBT- PRINCIPAL PAYMENT 192,773.57 306672 P 11/21/25 10034201 5802 DEBT- INTEREST PAYMENT 8,959.97

114515 CRISP IMAGING
306673 P 11/21/25 10014002 5303 CONTRACTUAL SERVICES 9,920.62

112568 CSG CONSULTANTS INC
306674 P 11/21/25 10024160 5303 CONTRACTUAL SERVICES 317.25

106653 DATAPROSE LLC
306675 P 11/21/25 61254610 5555 BANK CHARGES 198.10
306675 P 11/21/25 64054710 5208 POSTAGE/MAILING 2,009.85 306675 P 11/21/25 64054710 5303 CONTRACTUAL SERVICES 400.00 306675 P 11/21/25 64054710 5555 BANK CHARGES 792.40

102102 DE LAGE LANDEN FINANCIAL SVCS
306676 P 11/21/25 10044421 5602 MAINTENANCE-OFFICE EQUIPME 481.04 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION

105712 ELECTRICRAFT INC
306677 P 11/21/25 10054330 5605 MAINTENANCE-GROUNDS 175.87

107743 FAMCON PIPE AND SUPPLY INC
306678 P 11/21/25 64054712 5610 MAINTENANCE-LINES & PUMPS 1,131.35

100240 FARM SUPPLY CO
306679 P 11/21/25 64054712 5610 MAINTENANCE-LINES & PUMPS 30.47

101884 FASTENAL COMPANY
306680 P 11/21/25 10044420 5255 SPECIAL DEPARTMENT SUPPLIE 1,303.52

108121 FIVE CITIES FIRE AUTHORITY
306681 P 11/21/25 10014145 5313 FIVE CITIES FIRE AUTHORITY 770,488.87 306681 P 11/21/25 12014118 5313 FIVE CITIES FIRE AUTHORITY 256,829.63

108559 GARDENSOFT
306682 P 11/21/25 22654306 5303 CONTRACTUAL SERVICES 340.92

105736 HALLIDAY PRODUCTS INC
306683 P 11/21/25 64054712 5610 MAINTENANCE-LINES & PUMPS 1,610.00

100726 ICMA RETIREMENT CORP, PLAN ID 302419
306726 T 11/21/25 110 2117 DEFERRED COMPENSATION 24,780.43

116454 ICMA RETIREMENT CORP PLAN ID 100498
306727 T 11/21/25 110 2117 DEFERRED COMPENSATION 2,041.65

107027 INTEGRA CLEAR CO.
306684 P 11/21/25 64054712 5610 MAINTENANCE-LINES & PUMPS 752.34 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION

116365 INTERSTATE BATTERIES OF CENTRAL COAST
306685 P 11/21/25 10044420 5601 MAINTENANCE-VEHICLES 144.95

100208 JB DEWAR, INC
306686 P 11/21/25 10034201 5608 GAS & OIL 123.57
306686 P 11/21/25 10034203 5608 GAS & OIL 877.09
306686 P 11/21/25 10044420 5608 GAS & OIL 366.96
306686 P 11/21/25 10054301 5608 GAS & OIL 82.84
306686 P 11/21/25 10054308 5608 GAS & OIL 105.85
306686 P 11/21/25 10054330 5608 GAS & OIL 62.37
306686 P 11/21/25 22064303 5608 GAS & OIL 112.15
306686 P 11/21/25 61254610 5608 GAS & OIL 171.81
306686 P 11/21/25 64054712 5608 GAS & OIL 239.46

116471 LOPEZ, JUDYTH A
306687 P 11/21/25 10044424 5352 SERVICES-LEAGUES 82.50

100429 MINER'S ACE HARDWARE, INC
306688 P 11/21/25 10054301 5255 SPECIAL DEPARTMENT SUPPLIE 191.31

107053 MNS ENGINEERS INC
306689 P 11/21/25 10054301 5303 CONTRACTUAL SERVICES 682.38

101265 NEW TIMES
306690 P 11/21/25 10014002 5301 ADVERTISING 732.00
306690 P 11/21/25 64055978 7001 CONSTRUCTION 594.00

107054 NORTH COAST ENGINEERING INC
306691 P 11/21/25 35505080 7501 DESIGN & SURVEY 16,052.50

999999 ONE TIME PAY
306692 P 11/21/25 100 2206 DEPOSITS-COMMERCIAL BLDG. 52.00 306693 P 11/21/25 22654306 5554 REBATES 200.00
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 999997 ONE TIME PAY REFUND
306694 P 11/21/25 640 2301 DEPOSIT RENTERS 27.26
306695 P 11/21/25 640 2301 DEPOSIT RENTERS 26.26
306696 P 11/21/25 640 2301 DEPOSIT RENTERS 32.99
306697 P 11/21/25 640 2301 DEPOSIT RENTERS 1,194.63
306698 P 11/21/25 640 2301 DEPOSIT RENTERS 319.85
306699 P 11/21/25 640 2301 DEPOSIT RENTERS 175.69
112474 PACIFIC CENTRAL COAST HEALTH
306700 P 11/21/25 10034201 5315 PRE-EMPLOYMENT PHYSICALS 448.00 306700 P 11/21/25 64054710 5315 PRE-EMPLOYMENT PHYSICALS 156.00 111410 PAVEMENT ENGINEERING INC
306701 P 11/21/25 35055638 7701 CONCEPT STUDIES 131,350.00 100498 PITNEY BOWES, INC
306702 P 11/21/25 10014145 5208 POSTAGE/MAILING 535.21
100531 RICHETTI COMPLETE WATER
306703 P 11/21/25 10034201 5303 CONTRACTUAL SERVICES 16.50 113127 ROBERT HALF
306704 P 11/21/25 10014120 5303 CONTRACTUAL SERVICES 1,080.63 100570 SAN LUIS POWERHOUSE
306705 P 11/21/25 10014140 5303 CONTRACTUAL SERVICES 860.20 115614 SANTA MARIA MOTORCYCLES LLC
306706 P 11/21/25 10034204 5601 MAINTENANCE-VEHICLES 1,879.03 106096 SLO COUNTY SHERIFF-CORONER
306707 P 11/21/25 10034204 5324 FORENSIC MANDATE SERVICES 639.00 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 100605 SOCALGAS
306708 P 11/21/25 10014145 5401 UTILITIES 175.61
103641 SOUTH COUNTY SANITARY SVC, INC
306709 P 11/21/25 10044420 5303 CONTRACTUAL SERVICES 433.10 306709 P 11/21/25 10054308 5303 CONTRACTUAL SERVICES 691.64 116045 STACCATO 2011 LLC
306710 P 11/21/25 10034203 5255 SPECIAL DEPARTMENT SUPPLIE 2,501.25 100622 SUN BADGE CO
306711 P 11/21/25 10034204 5272 PROTECTIVE/SAFETY CLOTHING 2,560.99 111810 SWCA ENVIRONMENTAL CONSULTANTS
306712 P 11/21/25 10024130 5303 CONTRACTUAL SERVICES 3,455.50 104666 SWRCB
306713 P 11/21/25 10054301 5303 CONTRACTUAL SERVICES 10,920.00 110550 SWRCB-DWOCP
306714 P 11/21/25 64054712 5501 TRAVEL/CONFERENCE/TRAINING 105.00 116278 TOTAL COMMUNICATIONS SOLUTIONS
306715 P 11/21/25 10014140 5303 CONTRACTUAL SERVICES 80.39 111796 TRAFFIC MANAGEMENT PRODUCTS INC
306716 P 11/21/25 22064303 5613 MAINTENANCE-STREETS & BRID 356.43 110017 TRANSUNION RISK
306717 P 11/21/25 10034201 5303 CONTRACTUAL SERVICES 100.00 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112125 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION

102377 TURF STAR, INC
306718 P 11/21/25 10044420 5603 MAINTENANCE-MACH & EQUIP 1,281.36

105252 ULTREX BUSINESS PRODUCTS
306719 P 11/21/25 10014102 5602 MAINTENANCE-OFFICE EQUIPME 170.54

106551 UNITED STAFFING ASSOC.
306720 P 11/21/25 10044420 5303 CONTRACTUAL SERVICES 2,320.70

116478 URBAN SDK INC
306721 P 11/21/25 35055615 7001 CONSTRUCTION 21,825.00

116429 VEGA, ELIZABETH
306722 P 11/21/25 10034201 5501 TRAVEL/CONFERENCE/TRAINING 150.00

102137 VERIZON WIRELESS
306723 P 11/21/25 10014145 5403 TELECOMMUNICATIONS 669.45 306723 P 11/21/25 10034201 5403 TELECOMMUNICATIONS 1,577.41

107599 WATER SYSTEMS CONSULTING INC
306724 P 11/21/25 61254610 5303 CONTRACTUAL SERVICES 400.50 306724 P 11/21/25 64054710 5303 CONTRACTUAL SERVICES 1,616.11

106578 WHITE CAP LP
306725 P 11/21/25 22064303 5273 SMALL TOOLS 315.36
306725 P 11/21/25 22064303 5613 MAINTENANCE-STREETS & BRID 304.64

REPORT TOTALS 1,601,747.16

COUNT AMOUNT
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112625 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION TOTAL PRINTED CHECKS 76 1,574,925.08
TOTAL EFT TRANSFERS 2 26,822.08
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112625 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 116307 ATLAS PERFORMANCE INDUSTRIES INC
306730 P 11/26/25 10014145 5553 RENT-BUILDINGS & LAND 2,100.00

114310 BACK ON THE ROAD AUTOMOBILE
306731 P 11/26/25 64054712 5601 MAINTENANCE-VEHICLES 136.02

113890 BOONE PRINTING & GRAPHICS INC
306732 P 11/26/25 10014145 5403 TELECOMMUNICATIONS 1,314.24

112747 BOYER'S DIESEL
306733 P 11/26/25 22064303 5601 MAINTENANCE-VEHICLES 530.00

107958 BURNS, JEREMY
306734 P 11/26/25 10034204 5501 TRAVEL/CONFERENCE/TRAINING 225.00

108558 CAME SECURITY ALARMS
306735 P 11/26/25 10054308 5303 CONTRACTUAL SERVICES 432.00

116282 DOWNING, MATTHEW
306736 P 11/26/25 10014101 5501 TRAVEL/CONFERENCE/TRAINING 246.40

110150 FILIPPIN ENGINEERING
306737 P 11/26/25 35055679 7001 CONSTRUCTION 86,947.62

116436 FORDYCE, GRANT
306738 P 11/26/25 10044424 5352 SERVICES-LEAGUES 82.50

116447 FORKLIFTS GROUP WEST INC
306739 P 11/26/25 22064303 5603 MAINTENANCE-MACH & EQUIP 560.98

108351 HARVEY'S HONEY HUTS
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112625 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 306740 P 11/26/25 22064303 5303 CONTRACTUAL SERVICES 106.08 306740 P 11/26/25 35055556 7001 CONSTRUCTION 965.39

100301 HEACOCK TRAILERS
306741 P 11/26/25 22064303 5613 MAINTENANCE-STREETS & BRID 71.78

115070 JD ELECTRIC
306742 P 11/26/25 10054308 5303 CONTRACTUAL SERVICES 220.00

111528 JTS INC
306743 P 11/26/25 64054712 5604 MAINTENANCE-BUILDINGS 100.00

116471 LOPEZ, JUDYTH A
306744 P 11/26/25 10044424 5352 SERVICES-LEAGUES 16.50

112812 MATSON, JESSICA
306745 P 11/26/25 10014002 5501 TRAVEL/CONFERENCE/TRAINING 186.56

116475 MERINO, JOCELYN DIAZ
306746 P 11/26/25 10044424 5352 SERVICES-LEAGUES 66.00

100429 MINER'S ACE HARDWARE, INC
306747 P 11/26/25 10044420 5605 MAINTENANCE-GROUNDS 106.53 306747 P 11/26/25 10054308 5604 MAINTENANCE-BUILDINGS 529.25 306747 P 11/26/25 22064303 5613 MAINTENANCE-STREETS & BRID 32.60 306747 P 11/26/25 64054712 5273 SMALL TOOLS 21.73

100481 PACIFIC GAS & ELECTRIC CO
306748 P 11/26/25 64054711 5402 POWER 14.92

101697 PET PICK-UPS
306749 P 11/26/25 10044420 5605 MAINTENANCE-GROUNDS 1,523.31 Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112625 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION

114729 PIERCE, GREGORY
306750 P 11/26/25 10034201 5501 TRAVEL/CONFERENCE/TRAINING 225.00

115459 PRUDENTIAL OVERALL SUPPLY
306751 P 11/26/25 10044420 5143 UNIFORM ALLOWANCE 102.41 306751 P 11/26/25 10054305 5143 UNIFORM ALLOWANCE 59.28 306751 P 11/26/25 10054308 5143 UNIFORM ALLOWANCE 51.06 306751 P 11/26/25 10054308 5303 CONTRACTUAL SERVICES 50.56 306751 P 11/26/25 10054330 5143 UNIFORM ALLOWANCE 48.04 306751 P 11/26/25 22064303 5143 UNIFORM ALLOWANCE 80.06 306751 P 11/26/25 61254610 5143 UNIFORM ALLOWANCE 49.54 306751 P 11/26/25 64054712 5143 UNIFORM ALLOWANCE 98.96

100520 QUINN COMPANY
306752 P 11/26/25 22064303 5603 MAINTENANCE-MACH & EQUIP 265.00

116388 SDI PRESENCE LLC
306753 P 11/26/25 10014140 5303 CONTRACTUAL SERVICES 14,994.74

116306 SIMPSON, WILLIAM R
306754 P 11/26/25 10044420 5303 CONTRACTUAL SERVICES 50.00

111308 SITEONE LANDSCAPE SUPPLY LLC
306755 P 11/26/25 10044420 5274 CHEMICAL SUPPLIES 161.20

100556 SLO COUNTY ENVIRONMENTAL
306756 P 11/26/25 64054710 5303 CONTRACTUAL SERVICES 2,531.75

114978 SOUSA, GARRETT
306757 P 11/26/25 10034203 5501 TRAVEL/CONFERENCE/TRAINING 225.00

100038 SOUTH COUNTY CHAMBERS
Attachment 1

City of Arroyo Grande

PAID INVOICES REPORT
Report generated: 12/29/2025 11:09
User: mschotborgh
Program ID: appdwarr

INV GROUP:112625 TO FISCAL 2025/05 07/01/2025 TO 06/30/2026

VENDOR NAME CHECK NO T CHK DATE GL ACCOUNT GL ACCOUNT DESCRIPTION 306758 P 11/26/25 10014110 5501 TRAVEL/CONFERENCE/TRAINING 2,000.00 116045 STACCATO 2011 LLC
306759 P 11/26/25 10034204 5272 PROTECTIVE/SAFETY CLOTHING 2,582.48 116183 THE SHERWIN-WILLIAMS CO INC
306760 P 11/26/25 10054330 5255 SPECIAL DEPARTMENT SUPPLIE 316.47 100673 US POSTAL SERVICE
306761 P 11/26/25 10014145 5208 POSTAGE/MAILING 3,000.00 109908 VISIT SLO CAL
306762 P 11/26/25 10004000 4771 COUNTY TMD ASSESSMNT ADMIN -468.25 306762 P 11/26/25 761 2007 DUE TO COUNTY OF SLO 23,412.59 114673 WHITE BRENNER LLP
306763 P 11/26/25 64054710 5575 INSURANCE CLAIMS/SETTLEMEN 4,382.90 REPORT TOTALS 150,754.20

COUNT AMOUNT
TOTAL PRINTED CHECKS 34 150,754.20
** END OF REPORT - Generated by Megan Schotborgh **
Attachment 1

General Fund 428,920.76 5101 Salaries Full time 274,524.06 Streets Fund 19,534.19 5101 Volunteer Employee Retirement - Sewer Fund 16,856.66 5102 Salaries Part-Time - PPT 6,843.18 Water Fund 27,255.92 5103 Salaries Part-Time - TPT 3,726.72 492,567.53 5105 Salaries OverTime 16,309.60
5106 Salaries Strike Team OT -
5107 Salaries Standby 1,933.72
5108 Holiday Pay 25,534.64
5109 Sick Pay 5,716.29
Administrative Services - 5110 Annual Leave Buyback -
Information Services - 5111 Vacation Buyback -
Community Development - 5112 Sick Leave Buyback -
Police 13,898.44 5113 Vacation Pay 8,325.12
Public Works - Maintenance 635.19 5114 Comp Pay 1,957.66 Public Works - Enterprise 1,021.68 5115 Annual Leave Pay 14,709.31 Recreation - Administration 754.29 5116 Salaries - Police FTO 41.47 Recreation - Special Events - 5121 PERS Retirement 39,087.78 16,309.60 5122 Social Security 24,059.77
- 5123 PARS Retirement 160.82
5126 State Disability Ins. 4,277.27
5127 Deferred Compensation 1,912.48
5131 Health Insurance 56,169.95
5132 Dental Insurance 2,991.36
5133 Vision Insurance 762.24
5134 Life Insurance 382.94
5135 Long Term Disability 484.59
5137 Leave Payouts -
5142 Unemployment Insurance -
5143 Uniform Allowance 134.56
5144 Car Allowance 1,034.50
5146 Council Expense -
5147 Employee Assistance -
5148 Boot Allowance -
5149 Motor Pay -
5150 Bi-Lingual Pay 200.00
5151 Cell Phone Allowance 1,287.50
492,567.53
OVERTIME BY DEPARTMENT:

CITY OF ARROYO GRANDE

DEPARTMENTAL LABOR DISTRIBUTION

PAY PERIOD
11/7/2025-11/20/2025
11/28/2025

BY FUND BY ACCOUNT
Attachment 2

Item 9.c.

MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services BY: Megan Schotborgh, Finance Manager
SUBJECT: Statement of Investment Deposits for November 2025 DATE: January 13, 2026
RECOMMENDATION:

Receive and file the attached report listing investment deposits of the City of Arroyo Grande as of November 30, 2025, as required by Government Code Section 53646(b).

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There is no funding impact on the City related to these reports. However, the City does receive interest revenue based on the interest rate of the investments. Little to no future staff time is projected.

BACKGROUND:

The Administrative Services department has historically submitted to the City Council a monthly report providing the following information:

1. Type of investment.

2. Financial institution (bank, savings and loan, broker, etc.).

3. Date of maturity.

4. Principal amount.

5. Rate of interest.

6. Current market value for all securities having a maturity of more than 12 months.

7. Relationship of the monthly report to the annual statement of investment policy.

ANALYSIS OF ISSUES:

This report represents the City’s investments as of November 30, 2025, and includes all investments managed by the City. As of November 30, 2025, the investment portfolio complied with all State laws and the City’s investment policy.

Item 9.c.

City Council
Statement of Investment Deposits for November 2025
January 13, 2026

ALTERNATIVES:

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

1. Approve staff’s recommendation to receive and file the attached report listing the investment deposits;

2. Do not approve staff’s recommendation; or

3. Provide other direction to staff.

ADVANTAGES:

Safety of principal is the foremost objective of the City. Investments are undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.

DISADVANTAGES:

Some level of risk is present in any investment transaction. Losses could be incurred due to market price changes, technical cash flow complications such as the need to withdraw a non-negotiable Time Certificate of Deposit early, or even the default of an issuer. To minimize such risks, diversification of the investment portfolio by institution and by investment instruments are being used as much as is practical and prudent.

ENVIRONMENTAL REVIEW:

The Statement of Investment Deposits 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. Portfolio Summary: November 30, 2025

CITY OF ARROYO GRANDE
Portfolio Summary
November 30, 2025
Investments Principal Value
Current Market
Value
Interest
Rate Date of Purchase Term Maturity Date
% of
Portfolio
Local Agency Investment Fund $ 9,593,903.63 $ 9,593,903.63 4.096% 39.277% Certificates of Deposit
Pacific Premier Bank 249,000.00 249,000.00 3.680% February 21, 2025 12 mos February 21, 2026 1.015% Live Oak Banking Company Inc 249,000.00 249,000.00 3.150% May 26, 2022 48 mos May 26, 2026 1.015% UBS Bank USA 249,000.00 249,000.00 0.900% July 21, 2021 60 mos July 21, 2026 1.015% Toyota Financial Savings Bank 248,000.00 248,000.00 0.950% July 22, 2021 60 mos July 22, 2026 1.011% Chartway Federal Credit Union 248,000.00 248,000.00 5.250% July 28, 2023 60 mos July 28, 2026 1.011% California Credit Union Glendale 243,000.00 243,000.00 5.450% October 26, 2023 36 mos October 26, 2026 0.990% Alliant Credit Union 248,000.00 248,000.00 5.500% November 15, 2023 36 mos November 16, 2026 1.011% Capital One Bank USA 248,000.00 248,000.00 1.250% December 8, 2021 60 mos December 8, 2026 1.011% Bank United NA 249,000.00 249,000.00 1.350% December 8, 2021 60 mos December 8, 2026 1.015% Paragon Bank TN 245,000.00 245,000.00 4.050% March 19, 2025 24 mos March 19, 2027 0.998% Discover Bank 246,000.00 246,000.00 3.200% May 18, 2022 60 mos May 19, 2027 1.002% United Teletech Financial Credit Union 248,000.00 248,000.00 5.100% November 8, 2023 48 mos November 8, 2027 1.011% Medallion Bank UT 249,000.00 249,000.00 4.000% March 14, 2025 36 mos March 14, 2028 1.015% Amerant Bank NA 245,000.00 245,000.00 4.050% March 28, 2025 36 mos March 28, 2028 0.998% Freedom Northwest Credit Union 249,000.00 249,000.00 4.000% March 28, 2025 36 mos March 28, 2028 1.015% Morgan Stanley Bank 244,000.00 244,000.00 4.650% April 6, 2023 60 mos April 6, 2028 0.994% Maine Savings Federal Credit Union 249,000.00 249,000.00 4.800% July 21, 2023 60 mos July 21, 2028 1.015% SkyOneFederal Credit Union 249,000.00 249,000.00 3.900% October 25, 2024 48 mos October 25, 2028 1.015% Merrick Bank UT 249,000.00 249,000.00 4.000% March 19, 2025 48 mos March 19, 2029 1.015% Bank Hapoalim BM New York 244,000.00 244,000.00 4.500% May 21, 2024 60 mos May 21, 2029 0.994% Morgan Stanley Private Bank 244,000.00 244,000.00 4.650% May 22, 2024 60 mos May 22, 2029 0.901% Goldman Sachs Bank USA 245,000.00 245,000.00 4.000% March 18, 2025 60 mos March 18, 2030 0.905% BMW Bank NA Salt Lake 245,000.00 245,000.00 4.000% May 16, 2025 48 mos May 16, 2029 0.998% Texas Exchange Bank Crowley 249,000.00 249,000.00 4.000% May 23, 2025 48 mos May 23, 2029 1.015% Security First Bk Lincoln Neb 245,000.00 245,000.00 3.950% July 3, 2025 48 mos July 3, 2030 0.998% Synchrony Bank 245,000.00 245,000.00 3.600% October 24, 2025 60 mos October 24, 2030 0.998% Institution for Svgs Newbury 249,000.00 249,000.00 3.650% October 28, 2025 60 mos October 28, 2030 1.015% Total Certificates of Deposit 6,670,000.00 6,670,000.00 26.996% Attachment 1

CITY OF ARROYO GRANDE
Portfolio Summary
November 30, 2025
Investments Principal Value
Current Market
Value
Interest
Rate Date of Purchase Term Maturity Date
% of
Portfolio
Agency Bonds
Federal Home Loan Bank 999,500.00 991,560.00 0.800% March 17, 2021 60 mos March 10, 2026 4.073% Federal Home Loan Bank 994,396.00 983,960.00 2.400% March 17, 2021 72 mos March 29, 2027 4.052% Federal Home Loan Bank 500,000.00 496,625.00 3.375% May 17, 2022 60 mos May 17, 2027 2.037% Federal Agriculture Mortgage Corp 495,174.00 500,000.00 3.580% October 28, 2024 36 mos October 7, 2027 2.018% Federal Agriculture Mortgage Corp 2,029,036.00 2,072,440.00 4.650% May 17, 2024 60 mos April 26, 2029 8.268% Total Agency Bonds 5,018,106.00 5,044,585.00 20.448%
Municipal Bonds
California State GO Various Purp Bond $ 491,810.00 $ 498,090.00 2.500% May 12, 2022 47 mos April 1, 2026 2.004% California State Taxable GO Unlimited 1,256,116.00 1,334,934.80 3.500% November 1, 2023 53 mos April 1, 2028 5.119% California State Taxable GO Unlimited 525,935.25 550,108.25 2.500% December 19, 2024 57 mos October 1, 2029 2.143% Total Municipal Bonds 2,273,861.25 2,383,133.05 9.266%
Treasury Obligations
U.S. Treasury Z-2026 Series 984,728.00 985,250.00 1.100% December 6, 2021 53 mos May 31, 2026 4.013% Total Treasury Obligations 984,728.00 985,250.00 4.013% TOTAL INVESTMENTS $ 24,540,598.88 $ 24,676,871.68 100.000% Attachment 1

Item 9.d.

MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services SUBJECT: Fiscal Year 2025-26 First Quarter Financial Status Report DATE: January 13, 2026
RECOMMENDATION:

Receive and file the Fiscal Year 2025-26 First Quarter Financial Status Report.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

Preparation of the Fiscal Year (FY) 2025-26 First Quarter Financial Status Report (the “Q1 Report”) requires staff time within the existing work plan and budget for the Administrative Services Department. At the end of the first quarter, FY 2024-25 revenues for the Consolidated General Fund were $3 million, or two percent (2%), lower than the Budget Target (“Target”). Actual Expenditures were $8.3 million, or three percent (3%), lower than the Budget Target (“Target”).

BACKGROUND:

Each Fiscal Year, the City Council adopts a budget, which commits government resources and services to accomplish the City’s mission of making Arroyo Grande the best place possible for everyone who lives, works, and visits here. The Q1 Report is the first of four financial performance reports that staff will present to Council during the 2025- 26 fiscal year. The purpose of the FY 2025-26 Q1 Report is to:
 Compare first quarter revenues received and expenditures incurred to the first quarter of the prior year and to the budgeted Target to determine the City’s financial performance;
 Provide explanations for key account variances and identify any potential trends that might impact financial planning; and
 Provide other key first quarter information, including headcount statistics, status of Capital Improvement Projects, and requests for City Council’s approval of Budget Adjustment Requests that have not previously been approved.

The City’s actual first quarter financial results will be compared to both the prior year’s first quarter and the budgeted Target. The Target for expenditures is calculated as one fourth (25%) of the FY 2025-26 Budget and represents the 3-month period from July 2025

Item 9.d.

City Council
Fiscal Year 2025-26 First Quarter Financial Status Report January 13, 2026

through September 2025, except for the Non-Departmental Annual Payments line that has a Target of the full budget. This approach increases the expenditure Target from 25% to 26% for the first quarter. The Target for revenues does not use the 25% Target but a Target of 11.5% that more accurately reflects the anticipated revenues to be received in the first quarter of the fiscal year. Using the Target as a comparator against actual results provides a simplified method to evaluate performance for the quarter.

The Q1 Report also includes a section regarding Budget Adjustment Requests. This section summarizes individual budget adjustments approved by the City Council during the first quarter, as well as administrative adjustments completed by City staff.

ANALYSIS OF ISSUES:

Current Year Q1 Revenue and Expenditures Compared to Prior Year Table 1: Current Year Q1 Actuals Compared to Prior Q1 Actuals The Consolidated General Fund shown in Table 1 is the primary operating fund of the City, which accounts for resources and services traditionally associated with government.

The Consolidated General Fund provides administrative, financial, police protection, community development, public works, fire, and recreation services to the community.

The Consolidated General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund.

The City has historically reported on the Consolidated General Fund separately from the Local Sales Tax Fund, although the City’s auditors combine this information in the Annual Comprehensive Financial Report.

The Measure O-06 Sales Tax Fund accounts for the revenues derived from Measure O06, a local 1/2% sales tax approved by the City's voters in November 2006. Measure O06 included advisory measures when passed, providing guidance on the uses to which the funding should be allocated. To ensure accountability, the measure included a provision requiring the City to publish and distribute an annual report to each household on the revenues and expenditures from the sales tax proceeds. Measure E-24, passed during the November 5, 2024, election, will increase the city’s sales tax by 1%. Funds began being collected on April 1, 2025. To aid in the collection and reporting of this information, the City has accounted for these two funds in separate accounts.

A more thorough explanation of year-end variances is set forth in the attached financial report (Attachment 1).

First Quarter
FY 2025-26
First Quarter
FY 2024-25 Variance
Revenue 2,959,691 2,722,775 236,916
Expenditures 8,312,182 7,729,447 582,735

Item 9.d.

City Council
Fiscal Year 2025-26 First Quarter Financial Status Report January 13, 2026

Q1 Revenue and Expenditures Compared to Target
Table 2: Q1 Actuals Compared to Target
Table 2 above compares the FY 2025-26 first quarter actual results to the budgeted Target. Q1 actual revenue was short of the Target by $693,000. Q1 actual expenditures were short of the Target by approximately $891,117. A more thorough explanation of year-end variances is set forth in the attached financial report.

ALTERNATIVES:

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

1. Receive and file the Fiscal Year 2025-26 Q1 Financial Status Report; or

2. Provide other direction to staff.

ADVANTAGES:

The financial report presents an updated review of the City’s financial performance in the first quarter of FY 2025-26.

DISADVANTAGES:

No disadvantages have been identified at this time.

ENVIRONMENTAL REVIEW:

No environmental review is required for this item.

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. Fiscal Year 2025-26 First Quarter Financial Status Report FY 2025-26 First
Quarter Target
FY 2025-26 First
Quarter Actuals Variance
Revenue 3,652,692 2,959,691 (693,000)
Expenditures 9,203,299 8,312,182 (891,117)

ATTACHMENT 1

City of Arroyo Grande
Fiscal Year 2025-26
First Quarter Financial Status Report

INTRODUCTION
The following report is an overview of the City’s fiscal position at the end of the first quarter of Fiscal Year (FY) 2025-26. The purpose of this report is to update the public and the City Council on the City’s financial position at the end of the first quarter and compare actual results to the prior year and the Adjusted Budget to determine the City’s performance. The First Quarter report timeframe is July 1, 2025, through September 30, 2025.

The financial report is organized in the following sections:

Section 1 – an overview of City’s financial position after the end of the first quarter of FY 2025-26. This includes a comparison of first quarter results between the current and prior year. In addition, first quarter results will be compared to the budgeted Target. As part of the analysis, brief explanations of significant revenue and expenditure variances are included.

Section 2 – a listing of any personnel changes occurring during the first quarter and a summary of headcount by department. This section also includes the City’s calculated vacancy rate.

Section 3 – an update on the Capital Improvement Projects (CIP) managed by the Public Works and Community Development Departments. This section includes CIP that were completed in the first quarter along with their final costs.

Section 4 – a listing of Budget Amendment Requests previously approved by Council and completed in the first quarter of the fiscal year, as well as a list of additional budget adjustments that are being presented to Council along with the first quarter report for consideration and approval.

Section 5 – an update on the Goal Status Reports to Council that includes progress towards completing Major City Goals and Capital Improvement Plan.

ATTACHMENT 1

SECTION 1: OVERVIEW OF FINANCIAL POSITION

CITY FUND STRUCTURE
The overall City budget is comprised of many individual funds, which are categorized below. This financial report will focus primarily on the Consolidated General Fund but will also report on all Governmental Funds.

Consolidated General Fund – The Consolidated General Fund is the primary operating fund of the City, which accounts for resources and services traditionally associated with government. The Consolidated General Fund provides administrative, financial, police protection, community development, public works, fire, and recreation services to the community and other funds. The Consolidated General Fund accounts for revenues that have unrestricted uses and are not required legally or by contractual agreement to be accounted for in another fund. The City has historically reported on the Consolidated General Fund separately from the Measure O-06 Sales Tax Fund, although the City’s auditors traditionally combine this information in the Annual Comprehensive Financial Report (ACFR). The Measure O-06 Sales Tax Fund accounts for the revenues derived from Measure O-06, a local 1/2% sales tax approved by the City's voters in November 2006. Measure O-06 included advisory measures when passed, providing guidance on the uses to which the funding should be allocated. To ensure accountability, the measure included a provision requiring the City to publish and distribute an annual report to each household on the revenues and expenditures from the sales tax proceeds. Measure E-24, passed during the November 5, 2024 election, will increase the city’s sales tax by 1%. Funds began being collected on April 1, 2025. To aid in the collection and reporting of this information, the City has accounted for these two funds in separate accounts. This report will present information for the Consolidated General Fund that includes Measure O-06 and Measure E-24 Sales Tax Fund revenues and expenditures Special Revenue Funds – Special revenue funds are used to account and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects.

Debt Service Funds – This fund is used to account for the accumulation of resources and payment of longterm debt principal interest. This includes the USDA loan issued by the City to finance the relocation of City Hall.

Enterprise Funds - An enterprise fund is a separate accounting and financial reporting mechanism for which revenues and expenditures are segregated into a fund with financial statements separate from all other governmental activities. These funds include Water and Sewer services provided to City residents.

Private Purpose Fund – The private-purpose fund was created to hold the assets of the former Redevelopment Agency of the City of Arroyo Grande until they are distributed.

Agency Funds – Agency funds are funds that the City holds on behalf of another entity. Currently, there are three Agency funds. One is the Sanitation District fund, which accounts for the receipt and remittance of wastewater processing fees on behalf of the South San Luis Obispo County Sanitation District. The second is the Downtown Parking Fund, which collects assessments from Arroyo Grande Village merchants within the boundaries of the Parking and Business Improvement Area for maintenance of the Village

ATTACHMENT 1

parking lots. The third is the San Luis Obispo Tourism Marketing District (SLOTMD) Fund, which accounts for the receipt and remittance of assessments collected from lodging operators on behalf of the SLOTMD.

The following chart below shows an overview of the City’s fund structure.

CURRENT YEAR ACTUALS COMPARED TO PRIOR YEAR
Table 1 below reflects revenue and expenditure patterns through the end of the first quarter of FY 2025- 26 and compares the current quarter results against the prior year’s results for all Governmental Funds as well as the City’s Consolidated General Fund. The totals in the table reflect the first quarter actuals for both revenue and expenditures, divided by that fiscal year’s annual budget.

Table 1
The following discussion focuses on both the City’s Governmental Funds and the Consolidated General Fund and provides a comparison between first quarter results for the current and prior year for both revenue and expenditures. Governmental Funds and Consolidated General Fund revenue and expenditures for the first quarter of this year are generally on Target with prior year. The Governmental Funds category includes Special Revenue Funds, Debt Service Funds, as well as the Consolidated General Fund.

Legislative & Information Services Fire Protection Impact Fees City Hall Debt Service Sewer Successor Agency to RDA Downtown Parking Administrative Services Public Access Television Sewer Facility Sanitation Distribution Community Development Police Protection Impact Water San Luis Obispo Tourism Police Department Park Development Water Facility Marketing District Recreation Services Park Improvement Lopez Water (SLOTMD) Public Works Recreation Community Center
Local Sales Tax Fund Grace Lane Assessment District
Parkside Assessment District
Street (Gas Tax)
Traffic Signalization
Traffic Circulation
Transportation Facility Impact
Transportation
In-Lieu Water Neutralization
In-Lieu Affordable Housing
Tourism Business Improvement Dist.

Water Availability
CDBG Grant Fund
American Rescue Plan Act (ARPA)
State COPS Block Grant Agency Funds Special Revenue Funds GOVERNMENTAL FUNDS FIDUCIARY FUNDS

ALL FUNDS
PROPRIETORY FUNDS General Fund Debt Service Funds Enterprise Funds Private Purpose Fund First Quarter
FY 2025-26
First Quarter
FY 2024-25 Variance
Revenue $ 3,492,624 $ 5,285,963 $ (1,793,339)
Expenditures $ 8,968,000 $ 8,182,934 $ 785,067
First Quarter
FY 2025-26
First Quarter
FY 2024-25 Variance
Revenue $ 2,959,692 $ 2,722,775 $ 236,917
Expenditures $ 8,312,181 $ 7,729,447 $ 582,734
Governmental Funds
Consolidated General Fund Page 40 of 621
ATTACHMENT 1

Governmental Funds – At the end of the first quarter of FY 2025-26, Governmental Fund revenue was -33.9% or $1.8 million lower than prior year, and expenditures were lower by 9.6% or $785,067.

The majority of the revenue and expenditure variances in Governmental Funds were attributed to variances within the Consolidated General Fund and the American Rescue Plan Act (ARPA) Fund, which is separate from the Consolidated General Fund and not otherwise addressed in this report.

The Governmental Funds category includes the Consolidated General Fund as well as other Special Revenue Funds. The Consolidated General Fund and ARPA Fund variances are explained as follows:

Consolidated General Fund - Consolidated General Fund revenue at the end of the first quarter was

8.7%, or $236,917 million higher than the first quarter of the prior year. Expenditures increased by -

7.5%, or $582,734 higher than the first quarter of the prior year. The majority of the variance between the two fiscal years is related to increased costs of one-time payments for Liability and Property Insurance, CalPERS Unfunded Accrued Liability, Workers Compensation.

ARPA Fund – The ARPA Fund was created to help separately track funding provided pursuant to the American Rescue Plan Act. This Act is intended to provide financial aid to families, governments, businesses, schools, non-profits and others impacted by the COVID-19 public health crisis. To date the City has received the full amount allocated totaling $4,300,241. In FY 2021-22 expenditures totaled $604,246. In FY 2022-23 expenditures totaled $745,837. In FY 2023-24 expenditures incurred totaled $1,163,495 the remaining $1,786,663 is currently recognized as revenue in FY 2024-25.

CONSOLIDATED GENERAL FUND IMPACTS
The following discussion focuses on the City’s Consolidated General Fund performance. Chart 1 starts off with a simple overview of Consolidated General Fund performance compared to the Target. Next are expenditures by category (Table 2). This is followed by a summarized look at FY 2025-26 first quarter actual expenditures compared to the Target (Table 3). Lastly, a discussion of Consolidated General Fund revenue is included, which compares first-quarter actual results to the Target (Table 4).

Chart 1
Chart 1 shows a simple comparison
of actual revenue and
expenditures to the Target. The
actual first quarter Consolidated
General Fund revenue is less than
the budgeted Target by $693,000.
which is not unusual since revenue
realization is typically lower than
the Target through the first quarter
due to the time lag involved in
billing cycles and the receipt of
reimbursements. Likewise, actual
expenditures through the first
quarter totaled $8.3 million, or
23% of the full year’s Budget, and are under the Target by $891,117. A more detailed discussion on Consolidated General Fund revenue and expenditure variances is included later in this report.

ATTACHMENT 1

Table 2
Table 2 reflects major expenditure cost
categories within the Consolidated General
Fund. This chart is intended to explain where
the City’s resources were spent during the
first quarter. Within the total expenditures of
$4.7 million, 57% of the City’s costs are
associated with personnel, 41.8% with
operating and maintenance, 0.1% for the
City’s debt service, 0% for Capital Outlay, and

1.1% with transfers to other funds.

Table 3 reflects the first quarter status of all Consolidated General Fund operating departments. Some departments include multiple divisions. The divisions are consolidated under their respective department, rather than reflected individually within the table.

Table 3 – Consolidated General Fund Expenditures by Department Overall, first quarter expenditures were $891,117 under the Target. The majority of City departments were underspent, except for Administrative and Recreation Services. Some of the more significant savings occurred in the Police, Community Development, Public Works, City Administration, and Legislative & Information Services Departments. A more detailed explanation of key expenditure variances by individual department/division is provided below.

City Administration $ 1,940,770 $ 485,193 $ 306,729 $ 178,464 9% Legislative & Information Services 491,675 122,919 91,778 31,141 6% Measure O-06 Sales Tax Fund 1,521,200 380,300 320,931 59,369 4% Measure O-06 CIP Allocation 3,045,480 - - - 0%
Measure E-24 Sales Tax Fund 32,500 8,125 - 8,125 25%
Measure E-24 CIP Allocation 5,952,640 - - - 0%
Administration Services 5,030,480 1,257,620 1,514,468 (256,848) -5% Non-Departmental Annual Payments 3,419,000 3,419,000 3,322,177 96,823 3% Community Development 2,143,940 535,985 265,537 270,448 13% Police Department 7,629,296 1,907,324 1,589,941 317,383 4% Recreation Services 980,550 245,138 254,636 (9,498) -1% Public Works 3,366,780 841,695 645,985 195,710 6%
TOTAL EXPEDITURES 35,554,311 9,203,299 8,312,182 891,117 3% %
Fav/(Unfav)
Consolidated General Fund Department Variances - First Quarter Consolidated General Fund
Department
FY 2025-26
Budget
FY 2025-26
Actuals
Dollar
Fav/(Unfav)
FY 2025-26
Q1 Target
FY 2025-26 % of
Q1 Actuals Actuals
Personnel Costs $ 4,739,846 57.0%
Operating Costs 3,472,105 41.8%
Debt Service 5,483 0.1%
Capital Outlay 1,898 0.0%
Transfers Out 92,850 1.1%
Total $ 8,312,182
Expenditure Category

ATTACHMENT 1

KEY EXPENDITURE VARIANCES FOR INDIVIDUAL DIVISIONS/DEPARTMENTS FOR FISCAL YEAR 2025-26
Police Services includes the functions of Administration, Patrol Services, Support Services and the Office of
Traffic Safety (OTS) Grant for Traffic/DUI Enforcement
Program. For simplicity, Police Services will be analyzed in total rather than by individual divisions. Some of the more significant variances include:
 The Police Department had five vacancies throughout the first quarter fiscal year, resulting in labor savings of approximately $310,100.

The Community Development Department includes the
functions of Planning and Building & Safety Divisions.

The majority of the favorable variance in this
department can be attributed to salary savings and
lower spending in contractual services. Some of the
more significant variances include:
 Contractual services for the Planning Division had savings of approximately $97,200 related to the Comprehensive General Plan Update.
 The Building Division contractual services has a variance of $118,000 due to the timing of invoicing being received resulting in a savings to the overall department budget.

The Administrative Services Department includes the
City’s Finance and Information Technology functions,
along with other general City expenses. A “salary
savings” line item was included in this department as a placeholder, rather than trying to predict which
departments might have vacancies each year. Because
actual vacancies occurred in other departments—not in
Administrative Services—the savings appear in those areas instead. As a result, the first quarter shows this department slightly over its budget target, even though this is simply due to where the placeholder was originally budgeted.

Department: Police Services
Division: Various (4201, 4203, 4204, 4207)
Issue: Overall savings in salaries and benefits
Impact to Consolidated General Fund:
$317,383 savings
Department: Community Development
Division: Various (4130, 4160)
Issue: Overall savings in contractual services
Impact to Consolidated General Fund:
$270,448 savings
Department: Administrative Services
Division: Various (4120, 4140, 4145)
Issue: Overall overage due to Salary Savings
budget
Impact to Consolidated General Fund:
$256,848 overage

ATTACHMENT 1

KEY REVENUE VARIANCES BY ACCOUNT FOR THE FIRST QUARTER
Table 4 – Consolidated General Fund Revenue
As reflected in Table 4, first quarter revenue is below the Target by $693,000. This table uses a Target of

11.5% that more accurately reflects the anticipated revenues to be received in the first quarter of the fiscal year. Revenue realization is typically low at the end of the first quarter of the fiscal year due to the time lag involved in billing cycles and the receipt of reimbursements. A more detailed discussion is included below to help explain actual revenue variances through the first quarter compared to the Target.

Property Tax – The majority of the City’s property tax revenue comes from Secured Property Taxes. This tax is billed on a fiscal year (July 1- June 30) basis and is payable in two (2) annual installments. Property owners typically receive their first property tax bill at the end of September or early October, with a due date of November 1st. The majority of property tax related to the first installment will be received in December 2025. The second property tax bill installment is received in April 2026 and will be included in the fourth quarter report. Property tax typically represents around 30% of the City’s annual revenue. The Target is based on one month of Property Tax revenue. Actual revenue for a full month was not received in this category and is much lower than the Target, making up the majority of the revenue variance this quarter.

Sales Tax, Measure O-06 Fund, and Measure E-24 Fund – Sales tax, Measure O-06, and Measure E-24 Sales Tax realization through first quarter is on track. Actual sales tax revenue received through the first quarter was $1,028,076. The Target is based on one month of revenue, taking into account the timing of anticipated payments.

Transient Occupancy Tax (TOT) – TOT revenue is reflecting a $78,248 favorable variance to the Target.

The Target and actual TOT revenue represents only two months of TOT receipts due to the timing of payments. Lodging facilities have thirty days after the month’s end to make their TOT payments.

Property Tax $ 7,164,400 $ 597,033 $ 29,859 $ (567,175) -8% Sales Tax 5,206,800 433,900 404,102 (29,798) -1%
Measure O-06 Sales & Use Tax 2,942,500 245,208 222,875 (22,334) -1% Measure E-24 Sales & Use Tax 5,870,000 489,167 401,099 (88,067) -2% Transient Occ. Tax 1,493,500 248,917 327,165 78,248 5%
Property Tax in Lieu of VLF 2,322,600 - - - 0%
Franchise Fees 921,100 153,517 113,340 (40,176) -4%
License & Permit Fees 576,000 144,000 107,360 (36,640) -6% User Fees 696,000 174,000 181,051 7,051 1%
Planning Fees 419,600 104,900 130,545 25,645 6%
Recreation Fees 364,800 91,200 92,838 1,638 0%
Transfers In 2,951,500 737,875 712,875 (25,000) -1%
Other Revenue 931,900 232,975 236,582 3,607 0%
TOTAL $ 31,860,700 $ 3,652,692 $ 2,959,691 $ (693,000) -2% %
Fav/(Unfav)
Consolidated General Fund Revenue Variances - First Quarter REVENUE BY CATEGORY FY 2025-26
Budget
FY 2025-26
Q1 Actuals
Dollar
(Unfav)/Fav
FY 2025-26
Q1 Target

ATTACHMENT 1

Property Tax in Lieu of Vehicle License Fees (VLF) – Property tax in lieu of VLF is received in two installments during the fiscal year. Typically, the revenue is received in the months of January (3rd quarter) and June (4th quarter). The Target for this revenue is zero in the first quarter.

Franchise Fees – Only two months of Waste Connection franchise fees were received through first quarter. In addition, Charter Communications franchise fees earned in the first quarter will not be paid and received until the second quarter. In light of the timing of payments, the Target is based on 2 months of revenue. Without the Charter communications franchise fee receipts, the actual revenue at the end of the first quarter is lower than the Target by $40,176.

License & Permit Fees, User Fees, and Planning Fees – License and permit revenue is below the Target by $36,640. User fee revenue is above the Target by $7,051. Planning revenue exceeded the Target by $25,645. The Target is based on 25% or 3 months of the fiscal year’s total budget. Revenue in this category is customer driven and fluctuates over the course of a year as well as year over year based on demand.

Recreation Fees – Recreation revenue is above the Target by $1,638. The Target is based on 3 months of the fiscal year’s total budget.

Other Revenues – This revenue category includes business license tax, fines, revenue from other government agencies, charges for services and any other revenues accounts received in the consolidated general fund. The Target is based on 3 months of the fiscal year’s total budget.

ATTACHMENT 1

SECTION 2: POSITION CHANGES AND HEADCOUNT NUMBERS

POSITION ALLOCATION CHANGES MADE BY THE CITY COUNCIL (FIRST QUARTER) None made during this quarter.

FULL TIME EQUIVALENT (FTE) BY DEPARTMENT – PERMANENT STAFF ONLY The following table reflects FTE staffing by department. The table only includes permanent staff and does not include part-time or temporary staffing. While departments may hire part-time staff on a regular or seasonal basis, they are not included in the analysis below.

EMPLOYEE VACANCY RATE
The City’s employee vacancy rate at the end of the first quarter of FY 2025-26 was 6.3%. This equates to five (5) vacant positions. The vacancy rate tracks the number of permanent vacant positions at the end of the quarter in comparison to the total number of permanent positions available. Unlike a turnover rate, which tracks employees that separated during the period, the vacancy rate only looks at vacancies at the end of period. The costs associated with turnover include advertising new positions, training, overtime, reduced productivity, and workload imbalance.

Department
Adopted Budget
Headcount (FTE’s)
Vacancies
(1st Qtr)
% of Total
Staffing Vacant Positions
City Manager & Human Resources 3 - 4%
Administrative Services 7 - 9%
Community Development 7 - 9%
Legislative & Info Services 2 - 3%
Police Department 31 5 38% Police Officer (4), Records
Clerk
Public Works 27 - 33%
Recreation Services 3 - 4%
Total 80 5 100%

ATTACHMENT 1

SECTION 3: UPDATE ON COMPLETED CAPITAL PROJECTS
This information is provided to keep the Council apprised of the status of the City’s Capital Improvement Projects (CIP).

Project Fund Total Budget*
Current
Status
Project Budget
Expended
Public Safety Video Cameras COPS $ 200,000 In Progress
Pavement Management Program
SB1/Measure E-2024
Measure O-2006 Sales
Tax/CDBG $ 4,139,506 In Progress $ 99
Halcyon Road Complete Streets
HSIP/RSHA/USHA/Safe
Routes to
School/General/Measure O2006 Sales
Tax/ATP/Transportation
Facilities DIF $ 11,601,500 In Progress $ 1,417,893
Traffic Way Bridge Replacement
HBP/Sales Tax -
Outreach/Measure O-2006
Sales Tax $ 14,500,593 In Progress $ 7,843,018
Financial Management Software
Sewer/Water/Measure O2006 Sales Tax $ 413,000 In Progress $ 230,238 Master Plan incl. ADA Access (Community
Center, Elm St. Park, Soto Sports Complex,
Don Roberts Field, Corp Yard) & Community
Survey Measure O-2006 Sales Tax $ 394,745 In Progress $ 133,372 Bridge Street Bridge Habitat Mitigation HBP $ 48,628 In Progress Virginia Drive and S. Halcyon Road Curb
Ramp and Sidewalk Improvement CDBG $ 56,749 Not Started $ - Le Point Street Parking Lot Expansion Measure O-2006 Sales Tax/In- $ 42,500 In Progress $ 4,990 Corrugated Metal Pipe (CMP) Investigation
and Repair Measure O-2006 Sales Tax $ 100,000 In Progress $ 4,200 SCADA Software/Electronics Design and
Upgrade Water Fund $ 330,000 In Progress $ -
New Play Structure - Parkside Park Parkside Assessment District $ 250,000 Completed $ 225,630 PD EOC Upgrade Other Gov Agencies/Measure $ 100,000 In Progress $ 129,043 Sidewalk Repairs and Improvements Measure E-2024 Sales Tax $ 500,000 In Progress $ - Water Well #11 Facilities Water Availability $ 42,771 Not Started $ - Opticom Preemptive Devices Measure O-2006 Sales Tax 48,200 In Progress $ 37,015 Traffic Way Bridge Replacement Habitat
Mitigation
HBP/Measure O-2006 Sales
Tax $ 50,000 In Progress $ -
Watershed Management Plan and
Stormwater Master Plan Measure O-2006 Sales Tax $ 500,000 Not Started $ - Soto Basin #2 Reservoir Liner Repair Measure O-2006 Sales Tax $ 200,000 In Progress $ - Replace Beach Volleyball Court at Rancho
Grande Park Measure O-2006 Sales Tax $ 25,000 In Progress $ - Fire Station 1 HVAC Unit Replacement Measure O-2006 Sales Tax $ 100,000 In Progress $ - Fire Station 1 Front Lobby Security Measure O-2006 Sales Tax $ 22,000 In Progress $ - City Structure Roof Repairs (City Hall,
Balcony & Southern & Western Siding, Old
City Hall, Council Chambers, PD, Women's
Club, Fire Station 1)
Measure O-2006 Sales
Tax/Park Improvement
$ 370,000 In Progress $ -
Old City Hall Building Repairs Measure O-2006 Sales Tax $ 100,000 Not Started $ 9,708 ADA Improvements Measure O-2006 Sales Tax $ 75,000 In Progress $ - Safety Improvements Measure O-2006 Sales Tax $ 25,000 In Progress $ - City Council Chambers Remodel Measure O-2006 Sales Tax $ 50,000 In Progress $ - E. Grand (Halcyon to Elm) Economic
Development Master Plan Measure O-2006 Sales Tax $ 250,000 In Progress $ - Replacement of Traffic Guardrails Measure O-2006 Sales Tax $ 200,000 In Progress $ - Huasna Road, Corbett Canyon, and E.

Branch Street Intersection Roundabout Transportation Facilities DIF $ 400,000 In Progress $ - Digital Community Bulletin Board Project Measure O-2006 Sales Tax $ 25,000 Not Started $ - Software for Public Safety Camera System
to allow Traffic Counts Transportation Facilities DIF $ 50,000 In Progress $ - Reservoir No. 5 Redundancy Interconnect
(Los Ciervos to Andre Dr.) Water Fund $ 100,000 In Progress $ - Water Main and Service Replacement
related to PMP Projects Water Fund/Water Facility $ 700,000 In Progress $ - City Hall Second Story Water Leak Repair Measure O-2006 Sales Tax $ 20,000 In Progress $ -

ATTACHMENT 1

SECTION 4: APPROPRIATION TRANSFERS AND BUDGET ADJUSTMENTS Administrative and Previously Approved First Quarter Budget Adjustments The following first quarter budget adjustments were previously approved by the City Council or are classified as administrative and not requiring City Council approval.

Capital Improvement: Administrative Carryover of $11,306,889 for the Capital Projects listed in the table below. Capital Project funds do not have annual appropriated budgets. Control over capital projects is maintained by a project-length capital improvement budget. This project-length budget authorizes total expenditures over the duration of a construction project, rather than year by year.

Police Department: Receive $80,000 of Office of Traffic Safety Grant funds and appropriated the funding to implement driving under the influence enforcement services. Approved on August 12, 2025, City Council meeting, Item 9.h.

Recreation Services Department: Appropriate $60,000 from the Arroyo Grande Tourism Business Improvement District (AGTBID) Fund Balance to reflect the changes in the authorized uses of assessments implemented by Resolution No. 2025-057. Approved on September 9, 2025, City Council meeting, Item

9.f.

Fund Project # Project Title
Project Budget
Adjustment
350 5422 LE POINT PARKING LOT $ 39,205
350 5453 FINANCIAL MGMT SOFTWARE 215,662
350 5463 WOMAN'S CLUB LIGHTING PROJECT 1,821
350 5468 PUBLIC SAFETY VIDEO CAMERA 244,300
350 5481 CITY HALL SECOND STORY WATER LEAK 20,000
350 5556 SOTO/ELM MASTER PLAN 69,815
350 5567 NEW PLAY STRUCTURE - PARKSIDE 250,000
350 5568 ADA BATHROOMS ELM ST. PA 235,000
350 5602 WAYFINDING 24,162
350 5606 HALCYON RD COMPLETE STRE 5,387,198
350 5616 HALCYON AT VIRGINIA DR C 113,498
350 5638 PAVEMENT MANAGEMENT PROG 571,736
350 5658 STRIPING, CROSSWLKS & SI 283,535
350 5679 TRAFFIC WAY BRIDGE IMPRO 3,362,385
350 5794 CORRUGATED METAL PIPE LI 95,800
612 5814 Wastewater Master Plan Update 10,000
640 5904 Water Master Plan Update 10,000
640 5944 Water Well #11 Facilities 42,771
640 5953 Scada Radio Upgrades 330,000
$ 11,306,889

ATTACHMENT 1

SECTION 5: UPDATE ON MAJOR CITY GOALS AND CAPITAL IMPROVEMENT PLAN This information is provided to keep the Council apprised of the status of the Goal Status Reports to Council that includes progress towards completing Major City Goals and the Capital Improvement Plan.

These reports present updates and communications about the status of City projects, goals, and performance measures. The five major goals are:

The following tables provide a breakdown of the Council Goal’s Work Plan by goal. Here is a key for purposes of defining each department.

CMO City Manager's Office
AS Administrative Services
LIS Legislative and Information Services
PD Police Department
PW Public Works
Rec Recreation Services
Fire Five Cities Fire Authority
CD Community Development
Key

ATTACHMENT 1

Goal Strategy Task/Action Carryover Action
or New
Responsible
Department
Anticipated to
Start
Completion
Target Update

1.1 Revenue Generation 1.1a 400 W. Branch Disposition and Development Agreement Carryover CMO/CA/CD In Progress 1Q FY 2026-27 In Progress Pursue New Revenue
Sources

1.1b Develop a Special Event that drives visitation during shoulder and winter months and build destination awareness Carryover Rec In Progress 4Q FY 2025-26 In Progress

1.1c Develop an Economic Development Program New CMO 1Q FY 2025-26 4Q FY 2025-26 In Progress

1.2 Consider Cannabis as a Means
of Economic Development 1.2a Evaluate cannabis operations that bring in revenue New CD/CMO 1Q FY 2025-26 2Q FY 2025-26 In Progress

1.2b Conduct study session with the City Council regarding potential cannabis ordinance Carryover CD/CA/CMO/LIS 3Q FY 2025-26 3Q FY 2025-26 In Progress

1.2c Conduct study session with the City Council regarding potential cannabis development agreement Carryover CD/CA/CMO/LIS 4Q FY 2025-26 4Q FY 2025-26 Not Started

1.2d Prepare and adopt cannabis ordinance, if directed by the City Council Carryover CD/CA/CMO 4Q FY 2025-26 1Q FY 2026-27 Not Started

1.2e Evaluate feasibility of a Cannabis Tax, if directed Carryover CD/AS/CA/CMO 4Q FY 2025-26 1Q FY 2026-27 In Progress

1.3 Transient Occupany Tax
Changes

1.3a Work on changes to TBID ordinance for expanded use of TOT funds New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26 Completed

1.3b Bring changes to TBID assessment and ordinance to Council for approval New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26 Completed

1.3c Evaluate opportunities related to City TBID and potential TOT Measure New CMO/Rec/LIS In Progress 4Q FY 2024-25 In Progress

1.3d Hold study session with City Council and visitor serving accomodations to eliminate TBID New CMO/Rec/LIS 1Q FY 2025-26 1Q FY 2025-26 Not Started

1.3e If directed by Council, issue RFP for consultant to develop a survey and outreach strategy to community for TOT New CMO/LIS 1Q FY 2025-26 2Q FY 2025-26 Not Started

1.3f Award contract for consultant to survey and develop outreach strategy for TOT New CMO/LIS 2Q FY 2025-26 2Q FY 2025-26 Not Started

1.3g Conduct public education regarding need for TOT New CMO/LIS 2Q FY 2025-26 2Q FY 2026-27 Not Started

1.3h Bring TOT measure to City Council for consideration of placing on the November 2026 ballot New CMO/Rec/LIS 4Q FY 2025-26 4Q FY 2025-26 Not Started

2.1 Pursue 2026 State Water Ballot
Measure

2.1a Meet with Department of Public Works at the County of San Luis Obispo to begin discussion surrounding purchasing some allocated State Water
New CMO/PW 4Q FY 2024-25 1Q FY 2025-26 In Progress
Achieve Water
Resilience

2.1b If directed by Council, Issue an RFP for a Consultant to evaluate feasibility of State Water Ballot Measure New CMO/PW/LIS 1Q FY 2025-26 1Q FY 2025-26 Not Started

2.1c Award bid to consultant and begin public outreach and community messaging regarding a potential State Water Ballot Measure New CMO/PW/LIS 2Q FY 2025-26 2Q FY 2026-27 Not Started

2.1d Seek Council approval on placing a November Ballot Measure New CMO/PW/LIS 4Q FY 2025-26 4Q FY 2025-26 Not Started

2.2 Seek new Water Sources 2.2a Identify opportunities and constraints associated with new Water Sources New CMO/PW In Progress Ongoing Ongoing

2.2b Support ongoing development and financing of regional water solution New CMO/PW In Progress Ongoing Ongoing

2.2c Conduct a water and wastewater rate study to adjust rates based on changes to water supply and changing or new regional partnerships New AS/PW 1Q FY 2025-26 4Q FY 2026-27 In Progress

2.3 Work with Regional Partners 2.3a Preserve Lopez water supply by working with the County on Lopez litigation New CMO/PW/CA In progress Ongoing Ongoing

2.3b NCMA Management Agreement Amendments Carryover PW In progress Ongoing Ongoing

ATTACHMENT 1

Goal Strategy Task/Action Carryover Action
or New
Responsible
Department
Anticipated to
Start
Completion
Target Update
Prioritize Key
Infrastructure Projects

3.1 Prioritize Key Infrastructure
Projects 3.1a 2025 Pavement Management Program Construction New PW 3Q FY 2025-26 4Q FY 2025-26 In Progress

3.1b Traffic Way Bridge Replacement Project Carryover PW In progress 2Q FY 2025-26 In Progress

3.1c Halcyon Complete Streets Design and Construction Carryover PW In progress 4Q FY 2026-27 In Progress

3.1d Concrete Repair Program Carryover PW 2Q FY 2025-26 Ongoing In Progress

3.1e CMP Lining Carryover CD/PW In Progress Ongoing Ongoing

3.2 Pursue Alternative Funding
Sources for Infrastructure Funding

3.2a Pursue Grant applications and administration for infrastructure projects
Carryover PW/CD/AS In progress Ongoing Ongoing

4.1 Economic Development Tasks 4.1a Retail Market Analysis Carryover CD 4Q FY 2024-25 1Q FY 2025-26 Completed

4.1b Market Demand Studies Carryover CD 4Q FY 2024-25 1Q FY 2025-26 Completed

4.2 General Plan Elements 4.2a Land and Safety Analysis Carryover CD 3Q FY 2023-24 2Q FY 2025-26 In Progress

4.2b Administrative Draft Carryover CD In Progress

4.3 EIR 4.3a Complete draft EIR Carryover CD 1Q FY 2025-26 3Q FY 2025-26 Not Started

4.3b Complete final EIR Carryover CD 3Q FY 2024-25 4Q FY 2025-26 Not Started

4.4 Code Update 4.4a Kick off code update Carryover CD/LIS Not Started

4.4b Bring code changes to Planning Commission for approval Carryover CD 3Q FY 2025-26 3Q FY 2025-26 Not Started

4.4c Bring draft Ordinance of code revision update to Council Carryover CD 4Q FY 2025-26 4Q FY 2025-26 Not Started

4.5 Climate Action Plan 4.5a Kick off CAP and research Carryover CD 1Q FY 2025-26 4Q FY 2025-26 In Progress

4.5b Admin Draft Carryover CD 4Q FY 2025-26 2Q FY 2026-27 Not Started

4.5c Final CAP Carryover CD 2Q FY 2026-27 3Q FY 2026-27 Not Started

5.1 Scope of Work and RFP 5.1a Define scope, research other communities New CD 4Q FY 2024-25 1Q FY 2025-26 In Progress

5.2 Kick Off and Public Outreach 5.2a Kick Off New CD 1Q FY 2025-26 1Q FY 2025-26 Not Started

5.2b Public Outreach New CD Ongoing Ongoing Not Started

5.3 CEQA 5.3a Environmental Review New CD 2Q FY 2025-26 3Q FY 2025-26 Not Started

5.4 Plan Draft 5.4a Administrative Draft Plan New CD 3Q FY 2025-26 4Q FY 2025-26 Not Started

5.5 Final Draft and Hearings 5.5a Final Draft New CD 4Q FY 2025-26 1Q FY 2026-27 Not Started

5.5b Planning Commission Hearings New CD 1Q FY 2026-27 2Q FY 2026-27 Not Started

5.5c City Council Hearings New CD 2Q FY 2026-27 2Q FY 2026-27 Not Started Complete General Plan
Update
Redevelop the East
Grand Avenue Corridor
(Halcyon Road to Elm
Street)

Item 9.e.

MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services BY: Megan Schotborgh, Finance Manager
SUBJECT: Accept the Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB 1600 Report); Including the Water and Sewer Capacity Fee Annual Reporting for FY 2024-25
DATE: January 13, 2026
RECOMMENDATION:
1) Accept Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB1600 Report) and Water and Sewer Capacity Fee Annual Report for FY 2024-25; and 2) Determine that accepting the Annual Development Impact Fee Report and Water and Sewer Capacity Fee Report for FY 2024-25 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, Cal. Code Regs., tit. 14, §§ 15060, subd. (c)(2)-(3), 15378.) IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There is no direct financial impact of the status report other than the staff time required to prepare it, which is built into the department workplan.

BACKGROUND:

The Mitigation Fee Act (Government Code Sections 66000, et seq.) requires local agencies to provide an accounting of impact fees imposed on development projects.

These fees, sometimes referred to as “AB 1600 fees,” are intended to mitigate the impacts of development projects on City facilities and infrastructure. AB 1600 requires the City to provide a detailed report of information related to development impact fees every year.

Similarly, Government Code Section 66013 requires annual reporting of the City’s water and sewer capacity fees. The City has combined the development impact fee and capacity fees into a single annual report for convenience.

Item 9.e.

City Council
Accept the Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB 1600 Report); Including the Water and Sewer Capacity Fee Annual Reporting for FY 2024-25
January 13, 2026

ANALYSIS OF ISSUES:

There are ten Development Impact Fees subject to AB 1600 reporting requirements, contained within the attached report.

1. Fire Protection Fund (Fund 210)

2. Police Protection Fund (Fund 212)

3. Park Facilities Fund (Fund 213)

4. Park Improvement Fund (Fund 214)

5. Recreation Facilities Fund (Fund 215)

6. Traffic Signalization Fund (Fund 222)

7. Transportation Facility Impact Fund (Fund 224)

8. Water Neutralization Impact Fund (Fund 226)

9. Storm Drain Facility Fund (Fund 231)

10.Water Availability Fund (Fund 241)
There are two capacity fees subject to the annual reporting requirements for capacity fees:

1. Sewer Facility Fund (Fund 634)

2. Water Facility Fund (Fund 642)
The annual Development Impact Fee and Water and Sewer Capacity Fee Report for FY 2024-25 is attached to this report as Attachment 1. The report includes the required financial information as of June 30, 2025. The report was made publicly available on the City’s website within 180 days after the close of FY 2024-25 and at least 15 days before this regular meeting, consistent with State law. Notice was also provided to any interested party who filed a written request of the meeting to review the AB 1600 report in accordance with Government Code Section 66006.

Pursuant to Government Code Section 66006(b), the City is required to make available to the public the following information each year:

1. A brief description of the type of fee in the account.

2. The amount of the fee.

3. The account’s beginning and ending balance.

4. The amount of fees collected and the interest earned.

5. A description of the improvements on which the funds were expended and the amount expended on each improvement, including the percentage of the improvement funded with development impact fees.

6. An approximate date by which the construction of a public improvement will begin if the City determines that sufficient funds have been collected to complete financing on the incomplete improvement.

7. A description of each inter-fund transfer or loan made from the account, including the public improvement on which the transferred or loaned fees will be expended,

Item 9.e.

City Council
Accept the Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB 1600 Report); Including the Water and Sewer Capacity Fee Annual Reporting for FY 2024-25
January 13, 2026

and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.

8. The amount of any refunds made for failing to identify the approximate date by which construction of the public improvement will commence within 180 days of the local agency’s determination that sufficient funds have been collected to complete financing on an incomplete public improvement.

9. Identify all public improvements identified in previous annual reports as having sufficient funding for completion, and whether construction began on the approximate date previously listed. If construction did not begin on the approximate date listed in a prior report, the annual report must include the reason for the delay and a revised approximate date that construction will begin.

10. Specify the number of persons and entities identified to receive refunds.

Pursuant to Government Code Section 66013(d), the City is required to make available to the public the following information each year:

1. A brief description of the type of fee in the account.

2. The account’s beginning and ending balance and the interest earned.

3. The amount of charges collected in the fiscal year.

4. An identification of all of the following:
(A) Each public improvement on which charges were expended and the amount of the expenditure for each improvement, including the percentage of the total cost of the public improvement that was funded with those charges if more than one source of funding was used.
(B) Each public improvement on which charges were expended that was completed during that fiscal year.
(C) Each public improvement that is anticipated to be undertaken in the following fiscal year.

The City has established separate capital facility accounts for each development impact fee and capacity fee collected. Earned interest is deposited in, and recorded for, each account.

ALTERNATIVES:

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

1. Staff’s recommendation; or

2. Provide other direction to staff.

Item 9.e.

City Council
Accept the Annual Development Impact Fee Report for Fiscal Year (FY) 2024-25 (AB 1600 Report); Including the Water and Sewer Capacity Fee Annual Reporting for FY 2024-25
January 13, 2026

ADVANTAGES:

By accepting the annual report on Development Impact Fees and capacity fees, the City will be complying with requirements that local agencies provide an annual accounting of impact fees and capacity fees collected from development projects.

DISADVANTAGES:

There are no disadvantages in relation to the recommended action.

ENVIRONMENTAL REVIEW:

Accepting the annual report on the receipt and use of Development Impact Fees (AB 1600) and water and sewer capacity fees 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, Cal. Code Regs., tit. 14, §§ 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. Annual Development Impact Fee and Water and Sewer Capacity Fee Report for FY 2024-25

1 City of Arroyo Grande
Annual
Development Impact Fee Report
and Water and Sewer Capacity Fee
Report
Fiscal Year 2024-25
Attachment 1

2 Background
The City of Arroyo Grande (City) is located in Southern San Luis Obispo County. The City borders the incorporated cities of Pismo Beach and Grover Beach on the west, and adjoins unincorporated County territory along its other boundaries.

The Mitigation Fee Act (Government Code Sections 66000 et seq.), established by AB 1600, requires local agencies to provide an accounting of impact fees imposed on development projects. These fees are intended to mitigate certain impacts of development projects on City facilities and infrastructure.

The accounting and reporting responsibilities of AB 1600 require the City to provide a detailed reporting of the use of development impact fees every year in accordance with Government Code section 66006.

Annual Development Impact Fee Reporting Requirements
Pursuant to Government Code section 66006(b), the City is required to make available to the public the following information each year:

1. A brief description of the type of fee in the account.

2. The amount of the fee.

3. The account’s beginning and ending balance.

4. The amount of fees collected and the interest earned.

5. A description of the improvements on which the funds were expended and the amount expended on each improvement, including the percentage of the improvement funded with development impact fees.

6. An approximate date by which the construction of a public improvement will begin if the City determines that sufficient funds have been collected to complete financing on the incomplete improvement.

7. A description of each interfund transfer or loan made from the account, including the public improvement on which the transferred or loaned fees will be expended, and, in the case of an interfund loan, the date on which the loan will be repaid, and the rate of interest that the account or fund will receive on the loan.

8. The amount of any refunds made for failing to identify the approximate date by which construction of the public improvement will commence within 180 days of the local agency’s determination that sufficient funds have been collected to complete financing on an incomplete public improvement.

9. Identify all public improvements identified in previous annual reports as having sufficient funding for completion, and whether construction began on the approximate date previously listed. If construction did not begin on the approximate date listed in a prior report, the annual report must include the reason for the delay and a revised approximate date that construction will begin.

10. Specify the number of persons and entities identified to receive refunds.

Attachment 1

3 List of City’s Development Impact Fees
There are twelve active Development Impact Fees identified as subject to AB 1600 reporting requirements.

1. Fire Protection Fund (Fund 210)

2. Police Protection Fund (Fund 212)

3. Park Facilities Fund (Fund 213)

4. Park Improvement Fund (Fund 214)

5. Recreation Facilities Fund (Fund 215)

6. Traffic Signalization Fund (Fund 222)

7. Transportation Facility Impact Fund (Fund 224)

8. Water Neutralization Impact Fund (Fund 226)

9. Storm Drain Facility Fund (Fund 231)

10.Water Availability Fund (Fund 241)

11.Sewer Facility Fund (Fund 634)

12.Water Facility Fund (Fund 642)
Commencement of Annual DIF Reports for Each Fund
The first annual report for the Traffic Signalization Fee, the Transportation Facility Fee, and the Drainage Facility Fee was required in January 1999. The first annual report for the Water Neutralization Fee was in 2003. The first annual report for the Fire Protection Fee, the Police Facilities Fee, the Community Center Fee, and the Park Improvement Fee was in 2005.

Separation of Funds and Interest
The City utilizes fund accounting to track and segregate Development Impact Fees from other City revenues. Although the City pools its cash for investment purposes, interest income is allocated to each of the funds based on their respective cash balances. Staff examined the accounts to determine if any Development Impact Fees remain unexpended. No interfund transfers or loans have been made to any of the Development Impact Funds. The most recent Development Impact Fee Study was prepared in 2024.

Attachment 1

4 Fire Protection Fund (Fund 210)
The purpose of the Fire Protection Fee is to ensure that new development funds its share of fire protection facilities. The City owns a single fire station. The City is planning to spend fire facilities fee revenues on an expansion and reconfiguration of the sleeping quarters at the fire station. This will allow the Five Cities Fire Authority to increase staffing and service capacity as the City grows. The 10-Year Capital Improvement Project (CIP) schedule includes a Fire Station 1 Expansion and Reconfiguration of the Sleeping Quarters in FY 2028-29 totaling $150,000.

The Current Amount of the DIF for Residential per square foot is $0.24 and for Nonresidential per square foot Commercial is $0.21 and Office is $0.33.

Fire Protection Funds were not spent on improvements in FY 2024-25. The City has not determined sufficient funds have been collected for projects at this time and there were no projects that were identified in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Fire Protection Fund. There were no refunds made from the Fire Protection Fund, and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Impact Fees $ 15,382
Interest Income 21,186
Transfers in - operating
Total Revenues 36,568
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 36,568
Other Financing Uses:

Capital Transfers Out -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 36,568
Fund Balance, Beginning of Year 426,745
Fund Balance, End of Year $ 463,313
Attachment 1

5 Police Protection Fund (Fund 212)
The purpose of the Police Protection Fee is to ensure that new development funds its share of police protection facilities. This fee provides funding for the expansion of police facilities, including upgrades to its records management system, upgrades to property and evidence storage, and new community safety cameras. The 10-Year CIP schedule includes an upgrade to the Police Departments Report Management System in FY 2026- 27 totaling $25,000 and a Property and Evidence Storage System Upgrade in FY 2027- 28 totaling $25,000.

The Current Amount of the DIF for Residential per square foot is $0.17 and for Nonresidential per square foot Commercial is $0.15 and Office is $0.23.

Police Protection Funds were not spent on improvements in FY 2024-25. The City has not determined sufficient funds have been collected for projects at this time and there were no projects that were identified in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Police Protection Fund. There were no refunds made from the Police Protection Fund, and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Impact Fees $ 11,920
Interest Income 3,378
Total Revenues 15,299
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 15,299
Other Financing Uses:

Capital Transfers Out -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 15,299
Fund Balance, Beginning of Year 64,022
Fund Balance, End of Year $ 79,321
Attachment 1

6 Park Facilities Fund (Fund 213)
The City plans to use park and recreation facilities fee revenue to purchase parkland and open space and construct improvements to add to the system of park facilities that serves new development. The City may only use impact fee revenue to provide facilities and intensify usage of existing facilities needed to serve new development. The 10-Year CIP schedule includes the following projects:
• Expansion to the ADA Bathrooms at Elm Street Park in FY 2026-27 totaling $175,000.
• Design and Construction of a new Park Plaza at Short street with funding in FY 2026-27 totaling $135,000 and in FY 2032-33 totaling $600,000. • Pump Track and Skate Park in FY 2030-31 totaling $100,000.

The Current Amount of the DIF for Residential per square foot is $3.27. Nonresidential property is not subject to this fee.

Park Facilities Funds were not spent on improvements in FY 2024-25. The City has not determined sufficient funds have been collected for projects at this time and there were no projects that were identified in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Park Facilities Fund. There were no refunds made from the Park Facilities Fund, and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Impact Fees $ 63,817
Interest Income 75,786
Total Revenues 139,603
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 139,604
Other Financing Uses:

Capital Transfers Out -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 139,604
Fund Balance, Beginning of Year 1,511,892
Fund Balance, End of Year $ 1,651,496
Attachment 1

7 Park Improvement Fund (Fund 214)
The purpose of the park improvement fee is to be used to maintain the adopted level of service for neighborhood and community parks. The 10-Year CIP schedule includes an upgrade to the Foot Bridge and Kiosk at Entrance of the James Way Open Space in FY 2026-27 totaling $50,000. The City will continue to use these funds for turf rehabilitation each fiscal year until the balance is drawn down.

This development impact fee is no longer being collected as of April 14, 2024. Revenue was received in FY 2024-25 on permit fees from a building permit started in 2022 and finalized in FY 2024-25.

Park facilities impact fees were spent on turf rehabilitation FY 2024-25 totaling $36,226 which represents 100% of the total cost of the improvements. The City had not determined sufficient funds had been collected for projects in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Park Improvement Fund. There were no refunds made from the Park Improvement Fund, and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Impact Fees $ 59,967
Interest Income 11,460
Total Revenues 71,427
Expenditures:

Operating Expenses 36,226
Excess of Revenues Over
Expenditures 35,201
Other Financing Uses:

Capital Transfers Out -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 35,201
Fund Balance, Beginning of Year 207,747
Fund Balance, End of Year $ 242,948
Attachment 1

8 Recreation Facilities Fund (Fund 215)
The purpose of the recreation facilities impact fee is to ensure that new development funds its fair share of recreation facilities. The City’s recreation facilities inventory is comprised of the Community Center/Woman’s Club, Historical Society Complex, and Mark M. Millis Community Center. The City plans to construct a new community center to replace the Millis Community Center. The 10-Year CIP schedule includes new Recreation Services/Community Center Building with funding totaling $15,000 allocation in FY 2027- 28 and FY 2028-29.

The Current Amount of the DIF for Residential per square foot is $0.17. Nonresidential property is not subject to this fee.

Recreation facilities impact fees were not spent on improvements in FY 2024-25. The City has not determined sufficient funds have been collected for projects at this time and there were no projects that were identified in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Recreation Facilities Fund. There were no refunds made from the Recreation Facilities Fund and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Impact Fees $ 8,902
Interest Income 1,767
Expense Recovery
Total Revenues 10,669
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 10,669
Other Financing Uses:

Capital Transfers Out -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 10,669
-
Fund Balance, Beginning of Year 32,468
Fund Balance, End of Year $ 43,137
Attachment 1

9 Traffic Signalization Fund (Fund 222)
The purpose of the Traffic Signalization Impact Fee is to install traffic signals needed to serve future development in the City. The fee revenues are used to fund the construction of traffic signal systems, signs, and other traffic control devices. The projects are based on the City’s signalization plan and General Plan Circulation Element. The 10-Year CIP schedule includes adding Opticom Preemptive Devices to all remaining traffic signals within City Limits in FY 2027-28 totaling $84,000.

This development impact fee is no longer being collected as of April 14, 2024. Revenue was received in FY 2024-25 on permit fees from a building permit started in 2022 and finalized in FY 2024-25.

Traffic signalization impact fees were spent on improvements in FY 2024-25 totaling $37,015 which represents 100% of the total cost of the improvements related to the Opticom Preemptive Devices installed on City traffic signals. There are no interfund transfers or loans made from the Traffic Signalization Fund. There were no refunds made from the Traffic Signalization Fund and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Traffic Signal Assessments $ 17,977
Interest Income 58,911
Total Revenues $ 76,888
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 76,888
Other Financing Uses:

Capital Projects 37,015
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 39,872
Fund Balance, Beginning of Year 1,195,833
Fund Balance, End of Year $ 1,235,706
Attachment 1

10 Transportation Facility Impact Fund (Fund 224)
The purpose of the transportation impact fee is to ensure that transportation facilities and demand can accommodate growth within the City. The fees will fund projects identified in the Arroyo Grande Citywide Circulation Study to mitigate new development’s impact on traffic level of service as new development added trips to the City’s circulation network.

The 10-Year CIP schedule includes the following projects in FY 2025-26:
• Halcyon Road Complete Streets project totaling $788,500; • Huasna Road, Corbett Canyon, and East Branch Street Intersection Roundabout totaling $400,000; and
• Software for Public Safety Camera System to allow Traffic Counts totaling $50,000.

The 10-Year CIP schedule includes the following projects in FY 2026-27:
• Traffic Way Corridor Plan totaling $472,000; and
• Huasna Road, Corbett Canyon, and East Branch Street Intersection Roundabout totaling $1,600,000.

The Current Amount of the DIF for Residential per square foot is $1.39 and for Nonresidential per square foot Commercial is $7.05 and Office is $7.39.

Transportation facility impact fees were not spent on improvements in FY 2024-25. The City had not determined sufficient funds had been collected for projects in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Transportation Facility Impact Fund.

There were no refunds made from the Transportation Facility Impact Fund and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Transportation Impact Fees $ 107,798
Interest income 140,910
Total Revenues 248,708
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 248,708
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 248,708
Fund Balance, Beginning of Year 2,835,751
Fund Balance, End of Year $ 3,084,459
Attachment 1

11 Water Neutralization Impact Fund (Fund 226)
The purpose of this fee is to ensure that water facilities and demand can accommodate growth within the City. The need for water facilities improvements is based on the water demand placed on the system by development and the Water System Master Plan.

The Current Amount of the DIF are assessed at time of permit issuance for all new commercial buildings and when residential dwelling units are created. This fee allows the developer to pay this fee instead of searching out all nearby water uses that are not under current standard of low flush toilets and other water saving devices.

City fee is $5,946 per acre-foot.

To calculate the fee, first find the use factor from the May 1990 City of San Luis Obispo Water Use Factor chart.
• Residential uses are based on the average acre-feet/year per dwelling unit, apartment, motel room, etc.
• All other uses are based on the acre-feet/year per 1000 square feet of floor area.

For residential uses, multiply $5,946 by the water use factor, then multiply by the total number of dwelling units or guest rooms and that will result in the fee to be charged.

Single-Family Residence Chart
(for individual dwellings only)
For all other uses, divide the water use factor (from the chart) by 1,000, and then multiply it by the actual square footage. Take this result and multiply it by the City fee of $5,946.

The result is the total fee due for water neutralization.

Lot sizes of less than 0.09 acre (up to 3,920 Sq Ft) 0.26/dwelling $1,546.

Lot sizes between 0.1 and 0.25 acre (between 3,921 & 10,890 sq ft) 0.37/dwelling $2,200.

Lot sizes greater than 0.26 acre (greater than 10,890 sq ft) 0.75/dwelling* $4,459. *This may be reduced to 0.56/dwelling, if there is a recorded easement running with land to, to limit irrigated planting area to 3,000 square feet or less. = $3,330.

Sample: 1545 sq. ft Office, General use (non-medical), water use factor = .082 per 1,000 sq. ft.

Calculation: .082/1,000 = .000082 x 1545 = .12669
.12669 x $5,946 = Water neutralization fee of $753.

Attachment 1

12 Here is a reporting of the Revenues, Expenditures, and change in Fund Balances at June 30, 2025.

Water Neutralization Impact fees were spent on improvements in FY 2024-25 totaling $37,015 which represents 100% of the total cost is related to the Washing Machine and Cash for Grass Rebate Programs. The City had not determined sufficient funds had been collected for projects in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Water Neutralization Impact Fund. There were no refunds made from the Water Neutralization Impact Fund and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Water Neutralization Fee $ 38,713
Interest Income 12,299
Transfer In - Water Fund -
Total Revenues 51,012
Expenditures:

Operating Expenses 26,705
Excess of Revenues Over/(Under)
Expenditures 24,307
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 24,307
Fund Balance, Beginning of Year 251,183
Fund Balance, End of Year $ 275,490
Attachment 1

13 Storm Drain Facility Fund (Fund 231)
The purpose of this fee is to ensure that storm drain facilities and demand can accommodate growth within the City. Most new development generates storm water runoff that must be controlled through storm drain facilities by increasing the amount of land that is impervious to precipitation. The 10-Year CIP schedule includes Corrugated Metal Pipe Investigation and Repair with allocations over multiple fiscal years:
• FY 2026-27 totaling $10,000
• FY 2027-28 totaling $2,500
• FY 2029-30 totaling $2,500
• FY 2031-32 totaling $10,000
• FY 2033-34 totaling $10,000
The 10-Year CIP schedule includes Trash amendment compliance as mandated by the MS4 Stormwater Permit required by the State of California with allocations over multiple fiscal years:
• FY 2026-27 totaling $2,500
• FY 2027-28 totaling $5,000
• FY 2028-29 totaling $2,500
The Current Amount of the DIF for Residential per square foot is $0.03 and for Nonresidential per square foot Commercial and Office is $0.01.

Storm drain impact fees were not spent on improvements in FY 2024-25. The City had not determined sufficient funds had been collected for projects in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Storm Drain Facility Fund. There were no refunds made from the Storm Drain Facility Fund and no one was entitled to receive a refund.

FY 2024-25
Actual
Revenues:

Drainage Fees $ 5,819
Interest Income 390
Total Revenues 6,210
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 6,210
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 6,210
Fund Balance, Beginning of Year 5,965
Fund Balance, End of Year $ 12,174
Attachment 1

14 Water Availability Fund (Fund 241)
This purpose of this fee is to account for the accumulation of water availability charge revenues. The Water Availability charge was enacted pursuant to the provision of Section 38743 of the Government Code, and Section 13.04.040 of the City Municipal Code. Water availability charges are imposed upon each parcel of property not served with city water.

These charges are restricted for the sole purpose of expanding water supply.

The Current Amount of the Water Availability charge is $2,650 per parcel not served with city water.

Water Availability impact fees were not spent on improvements in FY 2024-25. The City had not determined sufficient funds had been collected for projects in the prior year’s report that requires a response to section 66006(b)(1)(F) reporting requirements. There are no interfund transfers or loans made from the Water Availability Fund. There were no refunds made from the Water Availability Fund and no one was entitled to receive a refund.

FY 24-25
Actual
Revenues:

Interest Income $ -
Water Availability Charges 39,200
Total Revenues 39,200
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 39,200
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 39,200
Fund Balance, Beginning of Year 73,035
Fund Balance, End of Year $ 112,235
Attachment 1

15 Sewer Facility Fund (Fund 634)
The City’s Sewer Facility fee is a sewer capacity fee imposed pursuant Government Code, section 66013 and is therefore only subject to the annual reporting requirements of section 660013(d) and not the annual and five-year reporting requirements pursuant to Chapter 5 of the Mitigation Fee Act. The annual reporting for this fee is being provided in this report for convenience only.

The purpose of this fee is to ensure that sewer facilities can accommodate growth within the City. The need for sewer facilities improvements is based on the sewer demand placed on the system by development and the Wastewater System Master Plan.

The 10-Year CIP schedule includes:
• Trenchless Sewer Rehabilitation, that will upgrade clay sewers to smooth all pipe that will increase capacity, in FY 2026-27 totaling $138,744, in FY 2027-28 totaling $432,200, in FY 2029-30 totaling $475,000, in FY 2031-32 totaling $300,000. • Huasna Road Sewer Upgrade in FY 2034-35 totaling $850,000.

The Current Amount of the Sewer Facility fees for Residential per square foot is $0.60 and for Nonresidential per square foot Commercial is $0.26 and Office is $0.29.

Sewer Facility impact fees were not spent on improvements in FY 2024-25. There are no public improvements that are anticipated to be undertaken in the following fiscal year.

There are no interfund transfers or loans made from the Sewer Facility Fund. There were no refunds made from the Sewer Facility Fund and no one was entitled to receive a refund.

FY 24-25
Actual
Revenues:

Interest Income $ 21,564
Sewer Facility Charges 157,632
Total Revenues 179,196
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 179,196
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 179,196
Fund Balance, Beginning of Year 378,609
Fund Balance, End of Year $ 557,804
Attachment 1

16 Water Facility Fund (Fund 642)
The City’s Water Facility fee is a water capacity fee imposed pursuant Government Code, section 66013 and is therefore only subject to the annual reporting requirements of section 660013(d) and not the annual and five-year reporting requirements pursuant to Chapter 5 of the Mitigation Fee Act. The annual reporting for this fee is being provided in this report for convenience only.

The purpose of this fee is to ensure that water facilities can accommodate growth within the City. The need for water facilities improvements is based on the water demand placed on the system by development and the Water System Master Plan.

The 10-Year CIP schedule includes:
• Water Main and Service Replacements, includes upgrading Vernon from a 4 inch to a 6 inch main upgrade and Phased Main Replacement for Wesley from Cast Iron to PVC in FY 2025-26 totaling $401,100.
• Phased Main Replacements, upgrading from cast iron to PVC which will increase capacity, in FY 2026-27 totaling $191,955 and in FY 2031-32 totaling $429,800. • Miller Way Booster Zone Upgrade in FY 2028-19 totaling 150,000. • Lierly Lane to Coach Road Upgrade in FY 2031-32 totaling $315,000. • Coach Road and Greenwood Drive Upgrades in FY 2033-34 totaling $292,500.

The Current Amount of the water capacity fee is based on meter size shown in the table below:

Meter Size
Water Capacity
Fee per Meter
5/8 inch $ 2,629
3/4 inch 3,943
1 inch 6,573
1-1/2 inch 13,145
2 inch 21,032
3 inch 39,435
4 inch 65,725
6 inch 131,450
Attachment 1

17 Here is a reporting of the Revenues, Expenditures, and change in Fund Balances at June 30, 2025.

Water Facility impact fees were not spent on improvements in FY 2024-25. There are no public improvements that are anticipated to be undertaken in the following fiscal year.

There are no interfund transfers or loans made from the Water Facility Fund. There were no refunds made from the Water Facility Fund and no one was entitled to receive a refund.

FY 24-25
Actual
Revenues:

Interest Income $ 56,041
Water Main Charges -
Distribution Charges 87,862
Total Revenues 143,903
Expenditures:

Operating Expenses -
Excess of Revenues Over
Expenditures 143,903
Other Financing Uses:

Capital Projects -
Excess of Revenues Over
(Under) Expenditures and
Other Financing Uses 143,903
Fund Balance, Beginning of Year 1,107,830
Fund Balance, End of Year $ 1,251,733
Attachment 1

Item 9.f.

MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
SUBJECT: Support for Legislation Supporting Extended Operations of Diablo Canyon Power Plant and Restoration of Unitary Tax Treatment DATE: January 13, 2026
RECOMMENDATION:
1) Authorize the County of San Luis Obispo to include the City as a supporter of the County’s request for legislation to authorize operations of the Diablo Canyon Nuclear Power Plant (DCPP) for an additional 20 years, restore pre-decommissioning unitary tax treatment for DCPP, and support the California Coastal Commission’s land conservation and public access plan for lands surrounding the DCPP; and 2) Find that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section 15060, subd. (c)(2)-(3), 15378.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

No immediate financial impact is projected as a result of this report.

BACKGROUND:

San Luis Obispo County is the host county for the Diablo Canyon Power Plant (DCPP), the only operating commercial nuclear power plant in California which provides approximately 9% of the State’s total power generation. Historically, the DCPP was assessed a unitary tax, providing approximately $21 million in revenues for the County, cities, school districts, and special districts. The DCPP also provides a number of highwage jobs within the County, further supporting the region’s economy.

In 2016, Pacific Gas and Electric Company announced that DCPP would close by 2025 after a decommissioning process with a corresponding reduction in local tax revenues, the loss of approximately 1,500 jobs and other indirect economic impacts to the region.

As a result of this announcement, the City joined other agencies in the County in filing protests against the decommissioning, which ultimately led to a settlement agreement between the parties and the passage of Senate Bill 1090 in 2018. SB 1090 was a

Item 9.f.

City Council
Support for Legislation Supporting Extended Operations of Diablo Canyon Power Plant and Restoration of Unitary Tax Treatment
January 13, 2026

bipartisan law focused on easing the impacts of the planned closure of DCPP by funding a Community Impact Mitigation Settlement.

However, in 2022, following an increase in energy demand and future demand projections, the State Legislature approved, and the Governor signed, Senate Bill 846 to extend operations at DCPP through 2030 to ensure energy reliability as California continued developing clean energy supplies. However, this legislation included provisions to exempt new investment in DCPP from extending its operations. This exemption prevented the restoration of unitary tax revenues to the region. As a result, unitary tax receipts have been reduced to $8 million in countywide revenues as the assessed value of the plant has declined pending its planned closure.

Unitary tax distribution amounts to the City of Arroyo Grande over the past five fiscal years is as follows:

ANALYSIS OF ISSUES:

On December 16, 20251, the County Board of Supervisors approved the circulation of a draft letter (Attachment 1) to agencies that have received DCPP unitary tax revenue to request State legislation in the 2026 legislative session to:
1) Authorize operations of the DCPP for an additional 20 years; 2) Restore pre-decommissioning unitary tax treatment for the DCPP or, in the alternative, provide other financial mitigations to the County and local jurisdictions impacted by exemptions to the taxable value of the DCPP during the period of extended operations; and
3) Support the California Coastal Commission’s land conservation and public access plan for lands surrounding the DCPP.

The County is seeking support from cities within San Luis Obispo County for this request to the legislature in the interest of having a unified coalition of agencies to convey the importance of this issue to the long-term financial stability and public benefit of the region.

Participation in the request would allow the inclusion of the City’s name and/or logo on the letter to the legislature.

Staff is bringing this request to the Council as the City does not have a Legislative Platform providing policy guidance on considering this request, and a review of previous

1 https://agenda.slocounty.ca.gov/iip/sanluisobispo/agendaitem/details/19787 Fiscal Year Amount
2021-22 $ 83,300
2022-23 76,600
2023-24 67,700
2024-25 62,200
2025-26 55,200

Item 9.f.

City Council
Support for Legislation Supporting Extended Operations of Diablo Canyon Power Plant and Restoration of Unitary Tax Treatment
January 13, 2026

Council direction on DCPP did not clearly support this request. Representatives of the County will attend the Council meeting in support of this request, which is also being considered by other cities this month.

ALTERNATIVES:

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

1. Authorize the County to include the City as a supporter of the County’s request, as recommended;

2. Do not authorize the County to include the City as a supporter of the County’s request, as recommended; or

3. Provide other direction to staff.

ADVANTAGES:

The City, the County, other local cities, schools, and special districts have traditionally received a total of $21 million annually in unitary taxes attributable to DCPP, which have been reduced to $8 million as the assessed value of the plant has declined pending its planned closure. If the County’s efforts are successful, that unitary tax amount could be significantly restored.

DISADVANTAGES:

None identified by staff.

ENVIRONMENTAL REVIEW:

The agenda item 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 Sections 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. Letter Requesting Legislation Supporting Extended Operations of DCPP, Coastal Land Conservation, and Restoration of Unitary Tax Treatment

Draft

COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS
John Peschong District One Supervisor
Bruce Gibson District Two Supervisor
Dawn Ortiz-Legg Chairperson, District Three Supervisor
Jimmy Paulding Vice-Chairperson, District Four Supervisor Heather Moreno District Five Supervisor
Katcho Achadjian Government Center County of San Luis Obispo 1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5450 | (F) 805-781-1350 [email protected] | slocounty.ca.gov
12/16/2025
To: Members of the California State Legislature
Cc: Relevant Legislative Committees
Subject: Request for Legislation Supporting Extended Operations of Diablo Canyon Power Plant, Coastal Land Conservation, and Restoration of Unitary Tax Treatment Dear Members of the Legislature:

On behalf of the County San Luis Obispo Board of Supervisors, we write to express our firm support for legislative action to enact measures authorizing Diablo Canyon Power Plant (DCPP) to operate for up to twenty (20) additional years, restore unitary tax treatment for DCPP, and support coastal land conservation and public access near the facility.

As the host county for California’s only operating commercial nuclear power plant which provides approximately 9% of the State’s total generation of power, San Luis Obispo County recognizes Diablo Canyon as a critical component of the State’s clean energy infrastructure. Extending the plant’s operational life for up to 20 years would provide stable, carbon free baseload power that strengthens grid reliability, reduces greenhouse gas emissions, and advances California’s clean energy and climate goals.

Continuation of operations, however, must be accompanied by fiscal fairness for the communities that host and support the facility. We therefore urge the Legislature to restore predecommissioning unitary taxation for DCPP during any extended period of operation. Historically, unitary tax revenues have been distributed to the County, cities, school districts, and special districts, supporting essential public services, educational programs, infrastructure maintenance, and public safety. Restoration of this tax structure is critical to maintaining the fiscal stability of local governments and public agencies.

If restoring the pre-decommissioning unitary tax treatment proves infeasible, we request alternate financial mitigations to the County and local jurisdictions impacted by exemptions of taxable value on the DCPP during the period of extended operations established by the statutory prohibition against including operating costs in PG&E’s rate base.

In tandem with extended operations, we support further conservation and public access frameworks for lands surrounding Diablo Canyon. Protecting these coastal and natural resources ensures long term environmental stewardship while providing opportunities for responsible public Attachment 1
1 of 2

Draft
County of San Luis Obispo Government Center
1055 Monterey Street | San Luis Obispo, CA 93408 | (P) 805-781-5000 | (F) XXX-XXX-XXXX [email protected] | slocounty.ca.gov
access and public benefit. This balanced approach of clean energy, fiscal stability, and environmental conservation serves both local communities and the broader interests of the State.

In addition, future DCPP allocations related to changes in the values being assessed for portions of the property that may legislatively transition from highest and best use assessed acres of land towards lower value assessed acres of land due to new conservation restrictions should not financially penalize the affected region with lower assessed revenue figures.

Accordingly, we respectfully request that the Legislature:

1. Support the Nuclear Regulatory Commission’s regulatory approval process and establish a state licensing pathway to authorize DCPP to operate for up to 20 additional years.

2. Enact legislation restoring historic pre-decommissioning unitary tax treatment for Diablo Canyon Power Plant including land valuation for the duration of its extended operations or provide alternate equivalent financial mitigations.

3. Support the California Coastal Commission’s land conservation and public access plan for lands surrounding Diablo Canyon, in coordination with appropriate regulatory and conservation agencies.

Taken together, these actions represent a prudent and forward-looking policy framework that balances California’s clean energy needs with local fiscal health, environmental protection, and community interests.

Thank you for your attention to this important matter. We stand ready to work collaboratively with the Legislature to enact legislation that reflects these priorities and supports a sustainable and equitable future for San Luis Obispo County and the State of California.

Sincerely,
Chair
County San Luis Obispo Board of Supervisors
San Luis Obispo County
Attachment 1
2 of 2

Item 9.g.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Public Works Director BY: Shane Taylor, Utilities Manager
SUBJECT: Water Wheeling Agreement Between the City of Arroyo Grande and the Oceano Community Services District
DATE: January 13, 2026
RECOMMENDATION:

Adopt a Resolution granting a Water Wheeling Agreement between the City of Arroyo Grande and the Oceano Community Services District.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

Under the proposed Water Wheeling Agreement, the City will charge the Oceano Community Services District (OCSD) standard City wheeling fees for water transported through the City’s water system. Wheeling fees will be billed bi-monthly based on metered water deliveries to the subject property, 1243 Huasna Road, Arroyo Grande, within unincorporated San Luis Obispo County.

OSCD will also reimburse the City for actual administrative costs incurred to negotiate and prepare the Agreement, as well as any City costs associated with pumps, meters, and/or connections necessary to perform the Agreement. City staffing impacts are expected to be limited to routine administration, meter reading, and billing activities.

BACKGROUND:

OCSD receives water pursuant to a series of agreements referred to as the Water Contracts, more particularly defined in Attachment 1.

The owners of property located at 1243 Huasna Road in the unincorporated area of San Luis Obispo County, just outside City limits, currently rely on a domestic well for potable water. According to the property owners, the well is unable to reliably produce water that meets minimum health standards. The property includes a primary single-family residence and an accessory dwelling unit.

Item 9.g.

City Council
Water Wheeling Agreement Between the City of Arroyo Grande and the Oceano Community Services District
January 13, 2026

The property owners seek a permanent potable water supply from OCSD. OCSD is prepared to provide water allocated to it under the Water Contracts, and the City is prepared to wheel/transport that water through the City’s water system to the property, subject to the terms of a Water Wheeling Agreement between the City and OCSD and a separate service agreement involving OCSD and the property owners. The City has several water wheeling agreements in place for properties outside City limits.

ANALYSIS OF ISSUES:

The proposed Water Wheeling Agreement establishes the terms under which the City will transport (“wheel”) water allocated to OCSD under the Water Contracts to the subject property. Key provisions include:

Water Source and Quality:

OCSD is responsible for confirming its legal authority to deliver water under the Water Contracts. Wheeled water must be potable and subject to all applicable Water Contract terms. The City makes no warranties regarding water quality or suitability.

Quantity:

The initial allocation is estimated to be 0.33 acre-feet per year. Deliveries will be periodically reviewed and adjusted to balance actual property consumption with OCSD allocations and City system capacity.

Infrastructure:

OCSD’s water will be delivered through a future metered connection to the City’s existing water main, which extends and terminates in front of the subject property. All costs associated with that connection are the responsibility of the property owners pursuant to a separate agreement.

Fees and Costs:

OCSD will pay the City’s standard wheeling fees in effect at the time water is transported and will reimburse the City for administrative and infrastructure-related costs.

Term and Contingencies:

The Agreement becomes effective only after satisfaction of specified contingencies, including compliance with applicable law, environmental review, required agency approvals, and completion of obligations under the service agreement. If contingencies are not met by December 31, 2026, the Agreement expires automatically.

Risk Allocation:

OCSD agrees to indemnify and defend the City against claims arising out of the Agreement, except for claims resulting from the City’s active negligence.

Item 9.g.

City Council
Water Wheeling Agreement Between the City of Arroyo Grande and the Oceano Community Services District
January 13, 2026

ALTERNATIVES:

1. Adopt the Resolution as recommended;

2. Modify and adopt the Resolution; or

3. Decline to approve the Agreement and provide alternative direction to staff.

ADVANTAGES:

Approval of the Water Wheeling Agreement allows the City to; (1) facilitate a long-term potable water solution that does not reduce or rely upon City water allotments but instead uses existing regional/OCSD water allocations, (2) recover administrative and operational costs associated with water wheeling; and (3) clearly allocate responsibilities and risks between the City and OCSD for wheeling water to a customer.

DISADVANTAGES:

If approved, the Agreement requires ongoing administrative coordination and billing by City staff. However, no significant disadvantages have been identified given the cost recovery provisions and defined scope of City responsibilities.

ENVIRONMENTAL REVIEW:

Approval of the Resolution to approve a water wheeling agreement between the City and OCSD is not committing to or approving any development plans at this time, including the future connection between the City’s water main system and the property. The water wheeling agreement becomes effective only after satisfaction of certain contingencies set forth in the agreement, including satisfactory completion of environmental review in compliance with the California Environmental Quality Act ("CEQA"). This water wheeling agreement does not bind any party, or commit to any definite course of action, prior to CEQA compliance. It does not restrict the lead agency responsible for the future connection to the City’s water main from considering any feasible mitigation measures and alternatives, including the “no project” alternative. This agreement shall also not restrict the lead agency for CEQA review of such future connection to the water main from denying the approval of such connection to the water main. No environmental review is required for this item.

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 with Exhibit A - Water Wheeling Agreement

ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE GRANTING A WATER WHEELING

AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE AND

THE OCEANO COMMUNITY SERVICES DISTRICT
WHEREAS, California Water Code sections 1810 through 1814 authorize a public agency that owns or operates a water conveyance facility to transport water for another public agency or person, subject to reasonable terms and conditions and the recovery of costs associated with such transportation; and
WHEREAS, the City of Arroyo Grande owns and operates a municipal water system and is authorized under state law to provide water wheeling services using that system, provided such services do not impair the City’s ability to serve its own customers; and WHEREAS, the Oceano Community Services District (OCSD) has requested that the City wheel water from the District through the City’s water system to serve property located at 1243 Huasna Road, Arroyo Grande; and
WHEREAS, the Water Wheeling Agreement provides for the transportation of water allocated to OCSD under existing water supply contracts and requires payment of the City’s applicable wheeling fees and reimbursement of City costs, consistent with California Water Code sections 1810 et seq; and
WHEREAS, the City and OCSD have negotiated a Water Wheeling Agreement that establishes the terms and conditions under which the City will transport OCSD water, including provisions addressing quantity, fees, infrastructure responsibilities, indemnification, and contingencies; and
WHEREAS, approval of the water wheeling agreement between the City and OCSD is not committing to or approving any development plans at this time, including the future connection between the City’s water main system and the property. The water wheeling agreement becomes effective only after satisfaction of certain contingencies set forth in the agreement, including satisfactory completion of environmental review in compliance with the California Environmental Quality Act ("CEQA"). This water wheeling agreement does not bind any party, or commit to any definite course of action, prior to CEQA compliance. It does not restrict the lead agency responsible for the future connection to the City’s water main from considering any feasible mitigation measures and alternatives, including the “no project” alternative. This agreement shall also not restrict the lead agency for CEQA review of such future connection to the water main from denying the approval of such connection to the water main. No environmental review is required for this item; and

RESOLUTION NO.

PAGE
WHEREAS, staff recommends granting a water wheeling agreement between the City of Arroyo Grande and OCSD; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo Grande, California, as follows:

1. RECITALS. The foregoing recitals are true and correct and are incorporated herein.

2. GRANTING AN AGREEMENT. The City Council approves a Water Wheeling Agreement between the City of Arroyo Grande and OCSD, incorporated herein as Exhibit A, and authorizes the City Manager to execute the Water Wheeling Agreement, subject to minor clerical, technical or non-substantive changes approved by the City Manager in consultation with the City Attorney.

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

AYES:

NOES:

ABSENT:

The foregoing Resolution was passed and adopted this 13th day of January, 2026.

RESOLUTION NO.

PAGE
_________________________________________

CAREN RUSSOM, MAYOR
ATTEST:
________________________________________

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
________________________________________

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
________________________________________

ISAAC ROSEN, CITY ATTORNEY

RESOLUTION NO.

PAGE

EXHIBIT A

WATER WHEELING AGREEMENT

WATER WHEELING AGREEMENT
THIS WATER WHEELING AGREEMENT, (the “Agreement”) is made and entered into as of February ___, 2026 between the City of Arroyo Grande, a municipal corporation, (the “City”) and the Oceano Community Services District, a community services district organized and existing pursuant to California state law, (the “District”) (collectively the “Parties”), with reference to the following facts:

A. The District, City, and San Luis Obispo County Flood Control and Water Conservation District (the “SLOFCD”) have previously entered into a variety of contracts relating to the supply of water (collectively the “Lopez Contracts”).

B. Both the District and the City receive water from SLOFCD and are allocated certain amounts of water through the Lopez Contracts.

C. Karina and Will Marchese (the “Property Owners”) are the owners of certain real property located at 1243 Huasna Road, Arroyo Grande, CA in the unincorporated area of San Luis Obispo County, California described as set forth on the attached Exhibit A (the “Property”).

D. The Property consists of a lot that totals 4.86 acres in area. There's currently one (1) single family home that is 2400 SF (“Primary Home”) and one (1) accessory dwelling unit that is 1200 SF (“Secondary Unit”). The Primary Home is 3 beds, 3 baths, and includes 1 bathtub, 1 bath shower combo, 2 showers, 4 faucets. The kitchen has 2 faucets.

E. The Property has historically obtained potable water from an existing domestic water well but according to the Property Owners, the Property Owners are currently unable to pump potable water that meets minimum health standards.

F. The Property obtained potable water from an existing domestic water well but according to the Property Owners, the Property Owners are currently are unable to pump potable water that meets minimum health standards and the same constitutes an existing or impeding threat to the public health or safety of the property owners within the meaning of Government Code Section 56133 and the Property Owners desire to acquire a better water source from the District.

G. The Property Owners desire to acquire a permanent water supply source from the District and the City is prepared to deliver the District’s water by wheeling District water, subject to separate agreement between the District and the Property Owners (“Service Agreement”) and the completion of certain infrastructure requirements.

NOW THEREFORE, in consideration of the mutual promises, covenants and conditions contained herein, the parties hereto agree as follows:

1. TRUTH OF RECITALS. According to the Parties’ best knowledge, all the matters specified in the Recitals above are true and correct as of this Agreement’s date; however, the City and the District have no actual knowledge and make no representations as to the actual status of the Property Owners’ wells, water quality, or supply and the City has no actual knowledge as to whether the District has sufficient supply to provide water to the Property.

2. DISTRICT WATER RIGHTS AND QUALITY.
a. The District is entitled to water through the Lopez Contracts and is also entitled to water through a State water subcontract, collectively herein referred to as “Water Contracts.”
b. The District’s water delivered to the City shall be potable water not less in quality as water otherwise delivered pursuant to the Water Contracts and subject to all the Water Contracts’ terms and conditions. c. The City shall wheel the water used by the Property that the District is entitled to under the Water Contracts or any other source the City deems appropriate (“Wheeled Water”) to the Property on the terms and conditions stated in this Agreement.

3. CITY DELIVERY OF DISTRICT WATER TO PROPERTY. After the last contingency set forth in Section 8 has been satisfied, the City shall accept from SLOFCD the Wheeled Water and shall wheel the Wheeled Water to the Property.

In connection therewith:
a. The Wheeled Water’s quantity shall be limited by the quantity supplied by SLOFCD on behalf of the District to the City.
b. The Wheeled Water delivery to the City shall be effected through District instruction to the SLOFCD to deliver a portion of the District’s water delivery entitlement under the Water Contracts to the City’s facilities which receive the City’s water delivery entitlement under the Water Contracts. c. City makes no warranties or guaranties as to the quality of the water or its suitability for use by District, Property Owner, or any other party. d. The Wheeled Water shall be delivered to the Property by the City through a future connection between the City’s water main system and the Property whereby the cost of such a connection shall be the sole responsibility of Property Owner as described in the Service Agreement. e. Such water wheeling shall be consistent with the delivery schedule contained in the Water Contracts.

4. QUANTITY OF WHEELED WATER. The Parties acknowledge that the water consumption from the Property shall vary from day to day. The Parties agree

that they periodically shall meet and confer to review the data for both the water deliveries from SLOFCD to the City on behalf of the District and the water deliveries from the City to the Property. The District shall instruct SLOFCD to adjust the water deliveries to the City as necessary to assure, on average, they are in balance with the Property’s consumption and consistent with City’s available capacity. The starting water allocation is estimated to be 0.33 acre feet per year, however, the Property Owners are not limited to that amount. City shall not be responsible for any shortages resulting from any of the following:
reduction or function in the water supply under the Water Contracts; drought, weather, or other water shortage conditions beyond the City’s control; emergencies, catastrophic events, acts of nature, vandalism or terrorism; impediments to ground water recharge, well failures, mechanical failures, and system servicing requirements of City; the SLOFCD and other participants in the regional water supply system; or any other events beyond the City’s control.

5. PAYMENT.
a. Rates. The District will be charged the applicable standard City wheeling fee in the year, and at the time, the water is actually transported. The City’s fiscal year 2024-2025 and fiscal year 2025-2026 wheeling fees are attached as Exhibit B. Should the District not timely pay the fees, rates or charges referenced herein, the City’s duty to wheel the Wheeled Water is suspended until all fee arrearages are paid. The Parties acknowledge and agree that the rates and charges set forth in Exhibit B are consistent with Water Code Section 1810, et seq., and any updated rates or charges shall, in addition to meeting the requirements of this Agreement, comply therewith.
b. Costs. The District agrees to reimburse the City for:
i. The City’s actual administrative costs incurred to negotiate and prepare this Agreement. Administrative costs shall be due even if the contingencies set for in Section 8 are not fulfilled; and, ii. Any and all costs incurred by City for any pumps, connections and meters necessary to perform the obligations set forth in this Agreement.

6. ADMINISTRATION AND BILLING. Bi-monthly, the City shall read the meter, determine the volume of water delivered by the City through the meter to the Property, calculate the wheeling fees assessed for the Wheeled Water by multiplying the meter reading by the fee amount, and transmit an invoice to the District for such fee. The District shall pay all invoices submitted by the City for water deliveries under this Agreement within thirty (30) days after receipt.

7. TERM. This Agreement shall commence on the date the contingencies set forth in Section 8 hereof have been satisfied. District shall provide written notification to City that all contingencies have been satisfied not less than 30 days prior to the first date the City shall be required wheel water pursuant to this Agreement.

This Agreement shall continue for as long as the City provides services to its incity customers or until the occurrence of one of the following events:
a. If the contingencies in the Service Agreement have not been satisfied by December 31, 2026, this Agreement shall automatically expire, with no further obligation on the City’s part. Upon expiration pursuant to this Section 7.a. the District shall not be relieved of its obligation under Section

5.a. of this Agreement.
b. District notifies City that the Property Owners are in material breach of the Service Agreement and directs City to stop wheeling water pursuant to this Agreement.
c. If this Agreement is determined to violate the provisions of the Water Contracts or any other local, state, or federal laws related to water wheeling, this agreement shall be null and void and no longer in effect.

8. CONTINGENCES. This Agreement and all of the terms, provisions, conditions, covenants and obligations imposed on the parties hereto, are contingent upon all of the following by December 31, 2026, or this Agreement shall be no further force and effect unless extended in writing by both the City and District. a. Compliance by the Parties with all applicable law, including, but not limited to, the provisions of the California Environmental Quality Act required to enter into this Agreement;
b. Application to the San Luis Obispo County Local Agency Formation Commission (LAFCO) and an amendment to the City’s sphere of influence to include the Property in the District’s sphere of influence, and subsequent annexation into the District’s boundaries; c. Written confirmation from LAFCO to the City and District that the Property Owners have met all necessary LAFCO requirements, or that the Property is exempt from LAFCO involvement for the public agencies to perform the obligations imposed by the Wheeling Agreement between them;
d. The Property Owners’ completion of all required tasks in the Service Agreement; and
e. The foregoing approvals shall be processed by the District, and the District shall provide written notification and proof to the City that all such approvals have been obtained not the less than 30 days prior

to the first date that the City shall be required to wheel water pursuant to the Agreement.

Upon satisfaction of the contingences set forth in this Section 8, and written notification of such satisfaction by District to City, this Agreement and all of its terms, provisions, conditions and covenants hereof shall be effective and binding on the parties hereto, without any further action required. The District understands that if the use of the Property changes or if the Property is subdivided, Arroyo Grande reserves the right to impose new charges, fees, requirements, and/or connections as needed to meter the actual water delivered.

9. INDEMNIFICATION. The District shall indemnify, defend, protect and hold the City and its council members, commissioners, directors, officers, partners, agents, consultants, and employees free and harmless from and against any and all claims, causes action, demands, injuries, damage, liabilities, losses, costs, or expenses (including, but not limited to, attorneys’ fees, and court costs) to the extent arising out of or resulting from, this Agreement’s terms, provisions, conditions, and covenants, including but not limited to, any and all claims, causes of action, demands, injuries, damage, liabilities, losses, costs or expenses (including, but not limited to, attorneys’ fees, and court costs) resulting from discontinuing water wheeling service pursuant to this Agreement, except as to those arising out of the active negligence of the City and/ or its council members, commissioners, directors, officers, partners, agents, consultants, and/or employees.

10. ADDITIONAL INDEMNIFICATION. In a separate agreement between the District and the Property Owners, the District shall require that the Property Owners take all necessary measurements to assure that backflow prevention and other devices are installed, operated and maintained to assure that there is no cross-connection between the private water system on the Property and the City system, or other cross-contamination of water from the Property’s domestic wells, storage and delivery systems, into City’s system, and shall specifically indemnify City pursuant to this Agreement’s Section 9 for any such cross-contamination, and shall bear any remediation costs required City’s system or water supply.

11. NOTICE. Any and all notices or other communications required or permitted by this Agreement or by Law to be delivered to, served on, or given to any party to this Agreement by any other party to this Agreement shall be in writing and shall be deemed properly delivered, served, or given when personally delivered to the

party to whom it is directed, or in lieu of such personal service, when deposited in the United States mail, first class, postage pre-paid, addressed to:

City of Arroyo Grande
Atten: City Manager
City Manager / Matthew Downing
300 E. Branch St.

Arroyo Grande, CA 93420
With Copy To:

Attorney for City of Arroyo Grande / Isaac Rosen
300 South Grand Ave., Suite 2500
Los Angeles, CA 90071
Oceano Community Services District General Manager / Peter Brown PO Box 599
Oceano, CA 93475-0599
With Copy To:

District Counsel / Robert Schultz
3940 Broad Street, Suite 7-155
San Luis Obispo, CA 93401
Any party to this Agreement may change his address for the purposes of this Section by giving written notice of such change in accordance herewith.

12. MODIFICATION. This Agreement may be amended or modified only by an instrument in writing, stating the amendment or modification, executed by Parties hereto and attached to the end of this instrument.

13. GOVERNING LAW/VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of California. In the event that it is necessary to institute any action to enforce any right granted herein or to redress any alleged breach hereof, then the exclusive venue for such action shall reside with the branch of the Superior Court of the State of California in and for the County of San Luis Obispo, California.

14. HEIRS AND SUCCESSORS. This Agreement shall be binding on and shall insure to the benefit of the heirs, executors, administrators, successors and assigns of

the parties hereto. District shall not assign its rights or obligations under this Agreement to any party without prior written consent of City.

15. SEVERABILITY. Should any portion of this Agreement be held unenforceable or inoperative for any reason, such shall not affect any other portion had to been contained herein.

16. ATTORNEY’S FEES. In the event that it is necessary for either party to this Agreement to institute an action to enforce any right granted hereunder or to redress the breach of any provision of this Agreement, then the prevailing party in such action, in addition to any other award made by the Court, shall be entitled to his attorney’s fees and costs incurred in prosecuting such action and the enforcement of any judgment entered in such action from the non-prevailing party, all in an amount to be determined by the Court. Any judgment entered in such action shall include a specific provision authorizing the recovery of the attorney’s fees and costs incurred in enforcing such a judgment.

17. COMPLETE AGREEMENT. This Agreement constitutes the full and complete Agreement of the Parties.

18. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.

19. GOOD FAITH COOPERATION. The Parties mutually understand and agree that certain provisions of this Agreement may require cooperation to facilitate the intent of Parties, including but not limited to Sections 3, 4, 5, and 8. The Parties therefore commit to cooperate in all regards reasonable and/or necessary to effectuate the Parties’ intent of this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date and year above first written.

EXHIBIT A

WHEELING FACILITY CONNECTION LOCATION AND SPECIFICATIONS Point of Delivery (Wheeling Facility Connection Location and Specifications):

The current connection point between the City and the Marchese’s address located at 1243 Huasna Road, Arroyo Grande, CA.

Legal Description:

ALL THAT PORTION OF LOT 8 OF THE RESUBDIVISION OF A PART OF THE

RANCHOS CORRAL DE PIEDRA, PISMO AND BOLSA DE CHEMISAL,
SURVEYED BY R. R. HARRIS, NOVEMBER 1885, IN THE COUNTY OF SAN

LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP FILED FOR RECORD NOVEMBER 24, 1886 IN BOOK A, PAGE 63 OF MAPS, IN THE

OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 8, WHICH IS NORTH 53 1/2° WEST 20 FEET FROM POST S.29 AT THE MOST SOUTHERLY CORNER OF SAID LOT 8, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 44° EAST, 5.26 CHAINS PARALLEL WITH

THE SOUTHEASTERLY LINE OF SAID LOT TO THE MOST SOUTHERLY CORNER OF THE PROPERTY CONVEYED TO EDWARD V. METHEVER, ET UX., BY DEED RECORDED MARCH 22, 1888 IN BOOK Z, PAGE 625 OF DEEDS; THENCE NORTH 51 1/4° WEST, 21.25 CHAINS ALONG THE

SOUTHWESTERLY LINE OF THE PROPERTY SO CONVEYED TO THE MOST WESTERLY CORNER THEREOF; THENCE SOUTH 43 1/2° WEST, 5.99

CHAINS, MORE OR LESS TO THE SOUTHWESTERLY LINE
OF SAID LOT 8; THENCE SOUTH 53 1/2° EAST, 21.27 CHAINS TO THE POINT OF BEGINNING.

EXCEPTING THEREFROM THAT PORTION DESCRIBED IN THE DEED TO THE CITY OF ARROYO GRANDE RECORDED AUGUST 21, 1985 IN BOOK 2741, PAGE 238 OF OFFICIAL RECORDS.

EXHIBIT B

CITY OF ARROYO GRANDE WHEELING CHARGE

Item 9.h.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Director of Public Works BY: Natalie Riddering, Planning/Engineering Permit Technician SUBJECT: Arroyo Grande Community Hospital Right of Way Acquisition and Reimbursement Agreement
DATE: January 13, 2026
RECOMMENDATION:
1) Adopt a Resolution authorizing the City Manager to execute a right of way (ROW) acquisition and reimbursement agreement with Arroyo Grande Community Hospital (AGCH) in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney;
2) Approve a Budget Amendment Request for FY 2026-27 in the amount of $100,000 to account for the additional revenue and expenditures related to the reimbursement agreement with AGCH; and
3) Find that adopting a Resolution authorizing the City Manager to execute the ROW acquisition and reimbursement agreement with AGCH in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney 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:

To accommodate the roundabout for the Halcyon Complete Streets (PW2023-015) Project (the “Project”) at the intersection of Halcyon Road and Fair Oaks Avenue, the City needs to acquire 2,292 square feet of ROW from AGCH. The ROW has been appraised at $72,484.50. ROW costs associated with Halcyon Complete Streets (PW 2023-015) are eligible for reimbursement to the City under the SB1 grant, which provides 100% reimbursement of eligible ROW costs up to $526,400.

The proposed reimbursement agreement additionally addresses an incomplete condition of approval (COA) #68 from AGCH’s 2017 Emergency Room Expansion, Planning

Item 9.h.

City Council
Arroyo Grande Community Hospital Right of Way Acquisition and Reimbursement Agreement
January 13, 2026

Commission Resolution 17-22771. This condition required the undergrounding of existing and proposed utilities along the south Halcyon frontage. The estimated cost to underground the utilities is $100,000. AGCH will provide the City with a deposit, which the City will use to pay for the utility undergrounding work. If actual costs exceed the City’s estimates, AGCH will be invoiced for any additional expenses incurred by the City. If approved by Council, Administrative Services will update the budget to reflect the increased project revenue and corresponding expenditure.

BACKGROUND:

The City has received 90% complete plans for design of the Project, including the roundabout and adjacent improvements. To implement the project, the City must acquire ROW from three corners of the Halcyon Road and Fair Oaks Avenue intersection.

On September 23, 2025, the Council adopted Resolution 2025-0662, approving acceptance of on offer of dedication for the required ROW from Tract 3101. In addition, the City is in the process of executing grant of easement documents with Lucia Mar Unified School District to construct and maintain the roundabout within the affected portion of Harloe Elementary School’s property. The ROW acquisition from AGCH is the final ROW needed for staff to certify to Caltrans that all ROW requirements have been satisfied for construction. This certification is required to remain compliant with the timely use of funds requirements, request allocation of construction funds under the grant, and maintain the project schedule. This is similar to the grant requirements of the recent Traffic Way Bridge Replacement Project.

Meetings with AGCH staff regarding the ROW needs, as well as verbal communications from hospital representatives, indicate that the hospital is amenable to the City’s request.

On September 15, 2025, staff sent a letter of intent to AGCH representatives outlining the required ROW, the associated compensation, and the proposed reimbursement agreement for utility undergrounding. The purpose of the letter was to confirm that all parties agreed in principle to the proposed transactions while legal counsel negotiated the formal agreements. Once executed, the letter will also be used to certify that ROW requirements for the Halcyon Complete Streets Project have been met, allowing the City to request allocation of construction funds and demonstrate compliance with the grant’s timely use of funds requirements.

ANALYSIS OF ISSUES:

To facilitate the ROW acquisition necessary for the City to construct the roundabout as part of the Project, a Purchase and Sale Agreement (Attachment 1, Exhibit A) has been prepared. The Purchase and Sale Agreement (PSA) outlines two ROW transactions and one reimbursement agreement, which are described and depicted in greater detail and

1 http://weblink.arroyogrande.org/WebLink/DocView.aspx?id=187042&dbid=0&repo=ArroyoGrande 2 http://weblink.arroyogrande.org/WebLink/DocView.aspx?id=365182&dbid=0&repo=ArroyoGrande

Item 9.h.

City Council
Arroyo Grande Community Hospital Right of Way Acquisition and Reimbursement Agreement
January 13, 2026

summarized below. City staff is awaiting AGCH's approval of the terms and is requesting that the City Council approve the PSA in its existing form, subject to final negotiations, so the City does not need to return to City Council based on those ongoing discussions and can maintain associated grant timelines. Should negotiations result in ROW acquisition costs exceeding the $526,400 grant reimbursement amount for ROW, the item will be returned to the Council for review and approval.

ROW Purchase
The City will acquire 2,292 square feet for $72,484.50. The PSA includes language requiring that the executed temporary construction easement (TCE), temporary access easement (TAE), and reimbursement agreement be provided to escrow by both the buyer (City) and seller (AGCH) before or upon the transaction closing.

TCE and TAE
Constructing the roundabout requires the temporary use of AGCH property for construction activities and site access. The combined footprint of the two easements is 13,240 square feet and has been valued at $33,180. The City Manager is authorized to accept these easements in accordance with Resolution 2025-0713.

Reimbursement Agreement
COA #68 from AGCH’s 2017 Emergency Room Expansion required compliance with Development Code Section 16.68.0504, which mandates the undergrounding of existing and proposed utilities. Staff were previously advised that this work would be completed as part of a future rehabilitation project, which has not yet commenced. To streamline project delivery and avoid future utility work that could impact the completed roundabout, the City will complete AGCH’s utility undergrounding obligations as part of the Project.

AGCH will reimburse the City for all expenses associated with fulfilling these obligations.

ALTERNATIVES:

1. Adopt a Resolution as recommended; or

2. Do not adopt the Resolution; or

3. Provide other direction to staff.

ADVANTAGES:

Execution of the ROW acquisition and reimbursement agreement with AGCH secures the final right of way needed to certify ROW compliance with Caltrans for the Project. This certification is critical to maintaining requirements of SB1 grant, meeting the timely use of funds requirements, and allowing the City to request allocation of construction funds without delay, thereby preserving the project schedule.

3 http://weblink.arroyogrande.org/WebLink/DocView.aspx?id=365494&dbid=0&repo=ArroyoGrande 4https://library.municode.com/ca/arroyo_grande/codes/code_of_ordinances?nodeId=CD_ORD_TIT16DECO_CH16.6 8IM_16.68.050UNUT

Item 9.h.

City Council
Arroyo Grande Community Hospital Right of Way Acquisition and Reimbursement Agreement
January 13, 2026

The purchase of the required ROW is fully reimbursable under the SB1 grant, resulting in no net cost to the City for acquisition. Additionally, the reimbursement agreement ensures that AGCH fulfills its outstanding condition of approval related to undergrounding utilities, with the City recovering all associated costs. This protects City financial resources while allowing utility work to be coordinated efficiently with Halcyon Complete Streets construction.

DISADVANTAGES:

The reimbursement agreement to underground utilities for AGCH may exceed staff estimated costs. Cost overruns for that component of the project could result in shortterm cash flow impacts.

ENVIRONMENTAL REVIEW:

Adopting a Resolution authorizing the City Manager to execute the ROW acquisition and reimbursement agreement with AGCH in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney 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

ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO

GRANDE AUTHORIZING THE CITY MANAGER TO EXECUTE A RIGHT

OF WAY ACQUISITION AND REIMBURSMENT AGREEMENT WITH

ARROYO GRANDE COMMUNITY HOSPITAL IN ITS EXISTING FORM

SUBJECT TO FINAL NEGOTIATIONS
WHEREAS, the City must acquire right of way (ROW) from three corners of the Halcyon Road and Fair Oaks Avenue intersection to accommodate the roundabout as part of the Halcyon Complete Streets Project (PW 2023-015); and
WHEREAS, the City needs to acquire 2,292 square feet from Arroyo Grande Community Hospital (AGCH) to certify ROW needs have been met to stay incompliance with timely use of funds restrictions and request allocation for construction funds as part of the SB1 grant funding Halcyon Complete Streets (PW 2023-015); and WHEREAS, the City seeks to streamline project delivery by executing a reimbursement agreement for costs associated with the City undergrounding utilities for AGCH to fulfill AGCH’s 2017 Emergency Room Expansion Condition of Approval #68 requiring undergrounding of existing and proposed utilities along Halcyon Road; and WHEREAS, the City has prepared a Purchase and Sale Agreement (Exhibit A) to facilitate the ROW acquisition and reimbursement agreement.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo Grande does hereby:

1. All recitals above are true and correct and incorporated herein.

2. The City Council authorizes the City Manager to execute a ROW acquisition and reimbursement agreement with AGCH in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney.

3. The City Council of Arroyo Grande finds that adopting a Resolution authorizing the City Manager to execute a ROW acquisition and reimbursement agreement with AGCH in its existing form subject to final negotiations, as approved by the City Manager in consultation with the City Attorney, 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.)

RESOLUTION NO. ATTACHMENT 1
PAGE 2
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 13th day of January, 2026.

RESOLUTION NO. ATTACHMENT 1
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

65501.00115\44467391.3

EXHIBIT A

SUBJECT TO FINAL NEGOTIATION
1 PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS – ROW ACQUISITION
This Purchase and Sale Agreement and Joint Escrow Instructions – ROW Acquisition (this “Agreement”) is made as of , 2025, by and between DIGNITY HEALTH, a California nonprofit public benefit corporation (“Seller”), and the CITY OF ARROYO GRANDE, a California municipal corporation (“Buyer”). Buyer and Seller are sometimes individually referred to herein as “Party” and collectively as “Parties.” This Agreement shall be effective as of the date, this Agreement has been approved by Buyer’s governing body and signed by all Parties (“Effective Date”).

RECITALS
A. Seller is the owner in fee of certain real property located within the City of Arroyo Grande, County of San Luis Obispo, California, and more particularly described in Exhibit “A” attached hereto and incorporated by reference (“Property”).

B. Portions of the Property are needed for construction of the Halcyon Complete Streets Capital Improvement Project (PW-2023-15), which includes the installation of a roundabout at the intersection of Halcyon Road and Fair Oaks Ave. (“Project”).

C. In connection with the Project, Buyer desires to:
(i) purchase a portion of Property in fee for right of way purposes (“ROW Portion”) as is more particularly described in Exhibit “B” attached hereto, incorporated hereto by reference,
(ii) obtain a temporary construction easement in a portion of the Property (“TCE”) as described in Exhibit “C” and incorporated herein by reference, and (iii) obtain a temporary access easement in a portion of the Property (“TAE”) as described in Exhibit “D,” attached hereto and incorporated herein by reference.” Reference herein to the ROW Portion shall include all of Seller’s right, title and interest in and to any and all improvements, rights-of-way, utility rights, entitlements, claims or other benefits in any way connected with the ROW Portion. Seller desires to sell the ROW Portion to Buyer, and grant the TCE and TAE to Buyer, upon the terms and provisions set forth herein.

NOW, THEREFORE, in consideration of the above facts and for the covenants and agreements contained herein, the Parties hereto agree as follows:

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
2 TERMS
ARTICLE 1. PURCHASE AND SALE.

1.1 Property. Seller agrees to sell the ROW Portion to Buyer, and Buyer agrees to purchase the ROW Portion from Seller, upon the terms and conditions set forth herein.

1.2 Purchase Price. The total purchase price for the ROW Portion, the TCE, and the TAE is ONE HUNDRED FIVE THOUSAND FIVE HUNDRED EIGHTY-FOUR DOLLARS AND 50/100 CENTS ($105,584.50) (the “Purchase Price”), calculated as follows:

1.2.1 The ROW Portion acquisition: $72,484.50;

1.2.2 The TCE and TAE: $33,180

1.2.3 The Purchase Price constitutes full and complete just compensation for all property rights acquired by Buyer and for any and all claims of Seller against Buyer arising out of or relating to the acquisition of the Property and the Project, including, without limitation, claims for inverse condemnation, pre-condemnation damages, interest, attorneys’ fees, costs, and any severance damages to any remainder.

ARTICLE 2. DUE DILIGENCE.

2.1 Due Diligence Period; Inspection and Access.

2.1.1 Due Diligence Period. The “Due Diligence Period” means the period beginning on the Effective Date and ending at 5:00 p.m. on the date which is thirty (30) days thereafter.

2.1.2 Access to Information and the ROW Portion. Buyer shall conduct its investigation of the ROW Portion during the Due Diligence Period at no cost to Seller. This investigation (“Due Diligence Investigation”) may include, at Buyer’s option: right of access and a physical inspection of the ROW Portion and all improvements thereon, including soil, geological and other tests, engineering evaluations of the mechanical, electrical, and other systems and review of any plans; review of all governmental matters affecting the ROW Portion , including zoning, environmental and building permit and occupancy matters; review and verification of all financial and other information previously provided by Seller relating to the operation of the ROW Portion; review of the condition of title to the ROW Portion , and review of such other matters pertaining to an investment in the ROW Portion as Buyer deems advisable. In addition, Buyer and its representatives shall have the right of access during reasonable business hours to all files, books and records maintained by Seller or its agents (including, without limitation, all of the Additional Documents to be made available to Buyer at the ROW Portion pursuant to Section 2.3) relating to the ROW Portion, including the right to copy the same. Buyer and its representatives shall also have the right of access to the ROW Portion during reasonable business hours to conduct its investigation of the physical condition of the ROW Portion. Seller agrees that the rights granted to Buyer herein and the results of its Due Diligence Investigation shall not relieve Seller of any obligations Seller may have under any other provisions of this Agreement, or under other documents entered into concurrently herewith, or implied by law, nor shall they constitute a waiver

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SUBJECT TO FINAL NEGOTIATION
3 by Buyer of the right to enforce any of the same. Seller shall cooperate with Buyer in its due diligence activities and provide access to the ROW Portion, its records, or provide information so long as it is within Seller’s control.

2.2 Delivery of Preliminary Documents. Within 5 business days after the Effective Date, Seller shall deliver to Buyer, at Seller’s expense, all of the documents described in the remaining subsections of this Section 2.2 (collectively, the “Preliminary Documents”) in Seller’s possession or control.

2.2.1 Title Report and Survey. Buyer has received a Condition of Title Guarantee, Guarantee No. FSLC-512500721, dated December 1, 2025 (the “Title Guarantee”) issued by Fidelity National Title Insurance (the “Title Company”), covering the ROW Portion.

Buyer, at Buyer’s sole cost, may obtain an as-built survey of the ROW Portion (the “Survey”) prepared by a certified land surveyor in accordance with the most recent American Land Title Association standards, certified by such surveyor to Buyer and the Title Company in a form acceptable to the Title Company for the purpose of deleting any survey exception from the Title Policy described in Section 3.1.3.

2.2.2 Additional Documents and Information. Within five(5) days of the Effective Date Seller shall deliver or make available to Buyer (a) any soils reports on the ROW Portion in Seller’s possession or control, including any reports on compliance with recommended soils work; (b) any structural, mechanical, environmental, or geological reports in Seller’s possession or control concerning the ROW Portion; (c) real property tax bills; (d) any licenses, permits, or certificates required by governmental authorities in connection with the ROW Portion; and (e) all written inspection or similar reports received by Seller within three (3) years prior to the Effective Date from insurance companies, governmental agencies, or other persons or entities requiring correction of any condition or modification or termination of any use of the ROW Portion, together with Seller’s summary of any related oral reports and the present status of any matters noted in such reports (collectively, the “Additional Documents”).

2.3 Approval/Disapproval of Due Diligence Investigations. Buyer shall approve or disapprove the results of Buyer’s Due Diligence Investigation, in the exercise of Buyer’s sole discretion, by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Buyer’s disapproval shall terminate this Agreement unless, at the time Buyer gives notice of its disapproval, Buyer also notifies Seller of Buyer’s desire to enter into negotiations with Seller for the purpose of reaching an accommodation concerning the disapproval. If Buyer so notifies Seller and the parties have not reached a written agreement satisfactory to both of them regarding the disapproval within 10 days after the date of the disapproval notice, Buyer, at its option, may either (a) elect to terminate this Agreement by so notifying Seller and recover the amount of , or (b) elect to proceed with the transactions contemplated by this Agreement notwithstanding its earlier disapproval. If Buyer fails to deliver to Seller notice of its approval or disapproval of the results of its Due Diligence Investigation, Buyer shall be deemed to have disapproved such results.

If Buyer elects to terminate the Agreement, Buyer shall return to Seller all of the Preliminary Documents and Additional Documents previously delivered by Seller to Buyer within 5 business days of such termination.

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4 2.4 Title Review.

2.4.1 Monetary Liens. At its expense, Seller shall remove all liens on the ROW Portion at or prior to the Closing (collectively, “Monetary Liens”): (i) all delinquent taxes, bonds and assessments and interest and penalties thereon (it being agreed that Seller shall not be required to remove any non-delinquent taxes and assessments imposed by any governmental agency that are paid with the property taxes for the ROW Portion); and (ii) all other monetary liens, including without limitation all those shown on the Title Guarantee (including judgment and mechanics’ liens, whether or not liquidated, and mortgages and deeds of trust, with Seller being fully responsible for any fees or penalties incurred in connection therewith).

2.4.2 Approval/Disapproval of Title Review. Buyer shall approve or disapprove of the Title Guarantee, the Survey and any exceptions to title shown thereon (other than the Monetary Liens) in the exercise of Buyer’s sole discretion, by the expiration of the Due Diligence Period. If Buyer disapproves, Buyer may either (a) terminate this Agreement by giving Seller written notice of termination or (b) give Seller a written notice (“Disapproval Notice”) identifying the disapproved title matters (“Disapproved Title Matters”). With respect to any Disapproved Title Matters, other than the Monetary Liens, Seller shall notify Buyer in writing within 5 days after Seller’s receipt of the Disapproval Notice whether Seller will cause the Disapproved Title Matters to be removed or cured at or prior to Closing. If Seller elects not to remove or cure all Disapproved Title Matters, Buyer may, at its option: (i) subject to satisfaction of the other conditions to Closing, close the purchase of the ROW Portion and take title subject to the Disapproved Title Matters which Seller elects not to remove or cure; or (ii) terminate this Agreement in accordance with Section 8.6.1.

2.4.3 Buyer’s Options. If any Disapproved Title Matters (including the Monetary Liens) have not been removed at least 5 days prior to Closing or provision for their removal at the Closing has not been made to Buyer’s satisfaction, Buyer may, at its option: (i) close the purchase of the ROW Portion and take title subject to the Disapproved Title Matters which have not been removed; (ii) close the purchase of the ROW Portion and cure or remove the Disapproved Title Matters which have not been removed. Buyer may credit the costs of such cure or removal against the Purchase Price by reducing the amount of cash payable by Buyer at the Closing, but only to the extent such costs are expended to remove (A) Monetary Liens referred to in Section 2.5.1 or (B) Disapproved Title Matters which Seller agreed to remove; or (iii) terminate this Agreement in accordance with Section 8.6.1.

2.4.4 Failure to Disapprove. If Buyer fails to notify Seller of its approval or disapproval of the Title Guarantee, the Survey or the exceptions shown thereon by the end of the Due Diligence Period, then Buyer shall be deemed to have disapproved the same.

ARTICLE 3. CONDITIONS PRECEDENT.

3.1 Buyer’s Conditions. Buyer’s obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 3.1 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or in part by Buyer by written notice to Seller.

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5 3.1.1 Due Diligence. Buyer having approved of the results of its Due Diligence Investigation pursuant to Section 2.4;

3.1.2 Title Review. Buyer having approved of the results of its review of title pursuant to Section 2.5.

3.1.3 Title Policy. Seller having caused the Title Company to deliver to Buyer (a) an ALTA Standard Owner’s policy of title insurance, provided that Buyer may require an ALTA Owner’s Policy if Buyer pays the incremental premium for ALTA Extended coverage (“Title Policy”) (or at Buyer’s election a binder therefor) for the ROW Portion, or (b) the Title Company’s irrevocable commitment to issue such policy of title insurance, (including such coinsurance, reinsurance and endorsements as Buyer shall require), with liability equal to the Purchase Price showing fee title to the ROW Portion vested in Buyer and subject only to: (i) the matters and exceptions which were approved by Buyer pursuant to Section 3.5; and (ii) the standard printed exceptions in the form of title policy called for (collectively, “Conditions of Title”).

3.1.4 Performance of Covenants. Seller performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Seller prior to or at the Closing.

3.1.5 Representations and Warranties. The representations and warranties of Seller set forth in Article 4 being true and accurate on the Closing Date, as if made on such date.

3.1.6 Non-Foreign Certification. Seller having executed and delivered to Buyer on or prior to the Closing Date a certification (the “Non-Foreign Certification”), substantially in the form of Exhibit C.

3.1.7 California Certification. Seller having furnished the residency certification required pursuant to Sections 18805 and 26131 of the California Revenue and Taxation Code (“Form 593”) or having authorized Escrow Holder in writing to withhold from the Purchase Price the amounts required to be withheld by such Sections.

3.2 Seller’s Conditions. Seller’s obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 3.2 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or part by Seller by written notice to Buyer.

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6 3.2.1 Covenants. Buyer performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Buyer prior to or at the Closing.

3.2.2 Representations and Warranties. The representations of Buyer set forth in Article 5 being true and accurate on the Closing Date, as if made on such date.

ARTICLE 4. SELLER’S REPRESENTATIONS AND WARRANTIES.

Subject to Buyer’s opportunity to conduct its Due Diligence Investigation of the ROW Portion , Seller hereby makes the following representations and warranties to Buyer with the understanding that each such representation and warranty is material and is being relied upon by Buyer:

4.1 Compliance. The ROW Portion , and the operation thereof, are in compliance with all applicable laws, ordinances, rules, regulations, judgments, orders, covenants, conditions, restrictions, whether federal, state, local, foreign or private, and Seller has not received any notice of any violation of the same. Seller has not received any request either formal or informal, oral or written, that Seller modify or terminate any use of the ROW Portion . The zoning of the Property permits the current use of the ROW Portion , and, there is no pending or to Seller’s knowledge, contemplated rezoning. The ROW Portion complies with all applicable subdivision laws and all local ordinances enacted thereunder and no subdivision or parcel map not already obtained is required to transfer the Property to Buyer.

4.2 Documents. All of the Preliminary Documents and the Additional Documents which have been delivered or made available to Buyer pursuant to Article 2, and all other documents delivered to Buyer by or on behalf of Seller (a) are true, correct and complete copies of what they purport to be, (b) represent truly the factual matters stated therein, (c) are in full force and effect, (d) have not been modified, except as set forth therein and (e) do not omit any information required to make the submission thereof accurate and complete in all material respects.

4.3 Taxes and Condemnation. There are no presently pending or, contemplated special taxes or assessments which will affect the ROW Portion. There are no presently pending or, to Seller’s knowledge, contemplated proceedings to condemn or demolish the ROW Portion or any part of it.

4.4 Licenses. Seller has all required licenses, permits (including, without limitation, all building permits and occupancy permits), easements and rights-of-way which are required in order to continue the present use of the ROW Portion. Seller has no knowledge of any law or regulation of any governmental authority having jurisdiction which might require the ROW Portion to be improved beyond its present state or which might restrict the use and enjoyment of the ROW Portion in the manner it is presently being used and enjoyed.

4.5 Contracts/Leases/Occupancy Rights. There are no agreements or obligations to which Seller is party or, to Seller’s knowledge, by which it or the ROW Portion is bound which may affect the current use of the Property, nor are there any current leases, occupancy or operating agreements in force. No party has a right to occupancy, tenancy, or a license to use or enter the ROW Portion.

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7 4.6 Litigation. There are no actions, suits, proceedings, judgments, orders, decrees or governmental investigations pending or threatened against the ROW Portion or Seller which could affect the ROW Portion or the purchase, use or enjoyment thereof by Buyer.

4.7 Agreements with Governmental Authorities. There are no agreements with governmental authorities, agencies, utilities or quasi-governmental entities which affect the ROW Portion except those agreements which are identified in the Title Guarantee and those matters which are disclosed by the Survey.

4.8 Hazardous Materials.

4.8.1 Definitions. For purposes of this Agreement:
(a) “Environmental Law(s)” means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601, et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq., the Clean Water Act, 33 U.S.C. Sections 1251 et seq., [The Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. H&S Code Sections 25249.5- 25249.13), the Carpenter-Preseley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections 25300 et seq.), and the California Water Code Sections 1300, et seq.], as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation or ordinance which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or Release or threatened Release into the environment of Hazardous Material.
(b) “Hazardous Material” means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials or (viii) radioactive materials. (c) “Release” means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing into the environment of any Hazardous Material (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Material).

4.8.2 Representations. Except as otherwise disclosed in Schedule 4.10.2:
(a) The ROW Portion and all existing uses and conditions of the ROW Portion are in compliance with all Environmental Laws, and Seller has not received any written notice of violation issued pursuant to any Environmental Law with respect to the ROW Portion or any use or condition thereof.
(b) Neither Seller nor any other present or former owner of the ROW Portion has used, handled, stored, transported, released or disposed of any Hazardous Material on, under or from the ROW Portion in violation of any Environmental Law.

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8 (c) There is no Release of any Hazardous Material existing on, beneath or from or in the surface or ground water associated with the ROW Portion. (d) All required permits, licenses and other authorizations required by or issued pursuant to any Environmental Law for the ownership or operation of the ROW Portion by Seller have been obtained and are presently maintained in full force and effect. (e) There exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation pending or, to Seller’s knowledge, threatened pursuant to any Environmental Law relating to (i) the ownership, occupancy or use of any portion of the ROW Portion by Seller or occupant or user of any portion of the ROW Portion or any former owner of any portion of the ROW Portion, (ii) any alleged violation of any Environmental Law by Seller or occupant or user of any portion of the Property or any former owner of any portion of the ROW Portion or (iii) the suspected presence, Release or threatened Release of any Hazardous Material on, under, in or from any portion of the ROW Portion.
(f) There are no above-ground or underground tanks located on the ROW Portion used or formerly used for the purpose of storing any Hazardous Material.

4.9 Title to the Property. Seller has good and marketable title to the ROW Portion, subject to the Conditions of Title. There are no outstanding rights of first refusal or first look, options to purchase, rights of reverter, or claim of right relating to the transfer or sale of the ROW Portion or any interest therein. To Seller’s knowledge, there are no unrecorded or undisclosed documents or other matters which affect title to the ROW Portion. No person holding a security interest in the Property or any part thereof has the right to consent or deny consent to the sale of the ROW Portion as contemplated herein, and Seller has the right to pay off such person and to remove all such liens as of the Closing Date. Seller has enjoyed the continuous and uninterrupted quiet possession, use and operation of the ROW Portion.

4.10 Seller’s Authority. Seller has the requisite power and authority to own the ROW Portion. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Seller (or its board of directors or shareholders) in order to consummate the transactions contemplated herein. This Agreement and the other documents executed by Seller in connection herewith are legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement by Seller, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Seller was organized, or any indenture, mortgage, deed of trust, agreement, undertaking, instrument or document to which Seller or any affiliate thereof is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller.

4.11 Zoning. Seller has received no written notice from any governmental agency that the ROW Portion is not in compliance with zoning requirements and laws.

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9 4.12 Foreign Person. Seller is not a “foreign person” within the meaning of Section 1445(f) of the Internal Revenue Code.

4.13 Inspections. Schedule 4.13 accurately describes (a) all inspections of the ROW Portion by any governmental agency or insurance company occurring within three (3) years prior to the Effective Date, (b) all matters which were noted by such governmental agency or insurance company as requiring correction, requesting or recommending modifications or termination of uses of the ROW Portion and (c) the present status of each such noted matter.

4.14 Misstatements and Omissions. Neither the representations and warranties made by Seller in this Article 4 nor elsewhere in this Agreement contain any untrue statement or any omission of a material fact. Seller has no documents in its possession, nor has any knowledge, that omits material facts related to the property or which would contradict or negate any of its representations contained in this Agreement.

ARTICLE 5. BUYER’S REPRESENTATIONS AND WARRANTIES.

Buyer makes the following representation and warranties to Seller with the understanding that each such representation and warranty is material and is being relied upon by Seller:

5.1 Buyer’s Authority. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Buyer in order to consummate the transactions contemplated herein.

5.2 No Conflict. Neither the execution nor delivery of this Agreement by Buyer, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Buyer was organized, or any agreement to which Buyer is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Buyer.

5.3 Disclaimer of Representations. Buyer has made no, and explicitly disclaims any, representation or warranty, which are not explicitly set forth herein, including, without limitation, with respect to the future use of the ROW Portion by or on behalf of Buyer. Seller acknowledges and agrees, to the extent the Closing hereunder occurs, that Buyer shall have the right, in its sole and absolute discretion to utilize, improve, dispose of, or develop the ROW Portion in the manner in which Buyer deems appropriate. Seller further acknowledges that neither this Agreement nor any other document contemplated hereby shall operate as a restriction on Buyer’s use of the ROW Portion from and after the Closing.

ARTICLE 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES

6.1 Survival of Warranties. Buyer and Seller agree that each representation and warranty, covenant by the respective parties contained herein or made in writing pursuant to this Agreement are intended to and shall be deemed made as of the date of this Agreement or such

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10 writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.

6.2 Notice of Changed Circumstances. If either party becomes aware of any fact or circumstances which would render false or misleading a representation or warranty made by such party, then it shall immediately give notice of such fact or circumstance to the other party, but such notice shall not relieve any party of any liabilities or obligations with respect to any representation or warranty.

ARTICLE 7. SELLER’S PRECLOSING COVENANTS.

Seller shall comply with the covenants contained in this Article 7 from the Effective Date through the Closing Date unless Buyer consents otherwise in writing. Buyer may grant or withhold any such consent requested by Seller in Buyer’s sole discretion.

7.1 Contracts and Documents. Seller shall not, without Buyer’s approval, not to be unreasonably withheld or delayed, (a) amend or waive any right under any Preliminary Document or Additional Document, or (b) enter into any material agreement of any type affecting the ROW Portion that would survive the Closing Date.

7.2 Insurance. Seller shall maintain or cause to be maintained in full force and effect its present insurance policies for the ROW Portion .

7.3 Compliance with Obligations. Seller shall fully and timely comply with all obligations to be performed by it under the Service Contracts, the other Preliminary Documents, the Conditions of Title and all permits, licenses, approvals and laws, regulations and orders applicable to the ROW Portion.

7.4 No Transfers. Seller shall not sell, encumber or otherwise transfer any interest in all or any portion of the ROW Portion, or agree to do so.

7.5 Termination of Occupancy Rights. Seller hereby covenants, at its sole cost and expense, to terminate any leases, licenses or occupancy rights such that Seller can deliver exclusive use and possession of the ROW Portion to Buyer at Closing free of any lease, license or occupancy rights including, without limitation, Seller.

7.6 Maintenance. At its sole cost and expense, Seller shall operate and maintain the ROW Portion such that on the Closing Date the ROW Portion shall be in at least as good a condition and repair as on the Effective Date, reasonable wear and tear excepted. Seller shall not make any material alterations to the ROW Portion, without Buyer’s prior consent.

7.7 Best Efforts. Seller shall use its best efforts to cause the conditions set forth in Section 3.1 to be satisfied by the Closing Date, and Seller shall not take or permit any action that would result in any of the representations and warranties set forth in Article 5 becoming false or incorrect.

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11 ARTICLE 8. CLOSING.

8.1 Time. Provided all conditions set forth in Article 3 have been either satisfied or waived, the parties shall close this transaction (the “Closing”), on the date which is thirty (30) days after the expiration of the Due Diligence Period (the “Closing Date”), as such date may be extended by the provisions of Article 9.

8.2 Escrow. This Article 8, together with such additional instructions as [Insert escrow information], Attention: (“Escrow Holder”), shall reasonably request and the parties shall agree to, shall constitute the escrow instructions to Escrow Holder. If there is any inconsistency between this Agreement and the Escrow Holder’s additional escrow instructions, this Agreement shall control unless the intent to amend this Agreement is clearly stated in said additional instructions. Buyer and Seller shall cause Escrow Holder to execute and deliver a counterpart of this Agreement to each of them. If the Title Company does not serve as the Escrow Holder, the Title Company shall provide a letter to Buyer, in form and content acceptable to Buyer, pursuant to which the Title Company accepts responsibility and liability for the acts and omissions of Escrow Holder in discharging Escrow Holder’s obligations hereunder, including, without limitation, any acts or omissions of Escrow Holder relating to the Title Company’s commitment to issue the Title Policy, the receipt, recordation or delivery of any documents placed into escrow, and the receipt and disbursement of any funds placed into escrow.

8.3 Seller’s Deposit of Documents and Funds Into Escrow. Seller shall deposit into escrow on or before Closing the following documents:

8.3.1 A duly executed and acknowledged TCE in the form attached as Exhibit “F”;

8.3.2 A duly executed and acknowledged TAE in the form attached as Exhibit “G”;

8.3.3 A duly executed and acknowledged grant deed, in the form acceptable to Buyer, conveying the ROW Portion to Buyer (“Grant Deed”) in the form attached as Exhibit “E”;

8.3.4 An executed Reimbursement Agreement in the form attached as Exhibit “H”

8.3.5 Seller’s Non-foreign Certification;

8.3.6 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the ROW Portion in accordance with this Agreement; and

8.3.7 Form 593.

8.4 Deliveries Outside of Escrow. Notwithstanding Section 8.3, Seller and Buyer may elect to deliver the documents described in Section 8.3 outside of escrow (other than documents which are to be recorded) by giving Escrow Holder a joint written notice of such election,

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12 specifying the documents which will be so delivered outside of escrow. Upon receipt of such notice, Escrow Holder shall have no further obligation concerning such specified documents.

8.5 Buyer’s Deposit of Documents and Funds. Buyer shall deposit into escrow:

8.5.1 The Purchase Price in accordance with the provisions of Article 1, plus or minus prorations as provided in Section 8.8, by electronic transfer of federal funds to Escrow Holder, on or before the Closing Date;

8.5.2 An executed Reimbursement Agreement in the form attached as Exhibit “H”

8.5.3 Certificate of Acceptance attached to the Grant Deed, TAE, and TCE; and

8.5.4 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the ROW Portion in accordance with this Agreement.

8.6 Default, Termination and Remedies.

8.6.1 Buyer’s Termination. This Agreement shall automatically terminate without further notice or action by Buyer upon the occurrence of any of the following events, provided that Buyer is not then in material breach of this Agreement: (a) any condition to Closing contained in Section 3.1 has not been satisfied or waived by Buyer by the Closing Date; or (b) Buyer having exercised its right to terminate this Agreement pursuant to Section 2.4 (disapproval of Due Diligence Investigation), Section 2.5 (disapproval of title) or Article 9 (damage or condemnation). In such event, the parties shall have no further obligation to each other except for those obligations that specifically survive the termination of this Agreement. If this Agreement terminates as a result of Seller’s material breach of this Agreement, Buyer shall have all remedies it may have hereunder or at law as a result of such occurrence, including the remedy of specific performance.

8.6.2 Seller’s Termination. Provided that Seller is not then in material breach of this Agreement, this Agreement shall automatically terminate without further notice or action by Seller if any condition to Closing contained in Section 3.2 has not been satisfied or waived by Seller by the Closing Date.

8.6.3 Release from Escrow. Upon termination of this Agreement pursuant to Section 8.6.1 or 8.6.2, Escrow Holder shall promptly return to Buyer and Seller, respectively, all documents and monies deposited by them into escrow without prejudice to their rights and remedies hereunder.

8.6.4 Remedies.
(a) Buyer’s Remedies. If Seller breaches this Agreement, Buyer shall be entitled to pursue all remedies permitted herein and by law, including the remedy of specific performance. No termination of the escrow by Buyer following a breach by Seller shall be deemed to waive such breach or any remedy otherwise available to Buyer.

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13

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14 (b) Seller’s Remedies/Liquidated Damages. IF BEFORE THE CLOSE OF ESCROW BUYER FAILS TO COMPLY WITH OR PERFORM BUYER’S OBLIGATIONS

UNDER THIS AGREEMENT AND (EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH 9.6) DOES NOT CURE SUCH FAILURE WITHIN TEN BUSINESS DAYS AFTER SELLER’S WRITTEN NOTICE OF SUCH FAILURE, THEN SELLER MAY THEREAFTER: (I) TERMINATE THIS AGREEMENT; (II) RECEIVE AND RETAIN $2,500 AS LIQUIDATED DAMAGES IF SUCH DEFAULT OCCURS AFTER BUYER’S APPROVAL PERIOD; AND (III) EXERCISE THE OTHER RIGHTS AND REMEDIES RESERVED BY SELLER AS PROVIDED IN THIS PARAGRAPH. IN THE EVENT SELLER TERMINATES THIS AGREEMENT BY REASON OF BUYER’S DEFAULT, BUYER AND SELLER SHALL

BE RELIEVED OF ANY FURTHER OBLIGATION TO EACH OTHER WITH RESPECT TO

THIS AGREEMENT AND THE PROPERTY EXCEPT FOR ANY OBLIGATIONS WHICH EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER’S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND

IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF

THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER’S DEFAULT IN LIGHT OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER’S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
_________________ _________________
SELLER’S INITIALS BUYER’S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER’S

OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER

CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER

ACKNOWLEDGES THAT THE PROVISIONS OF THIS PARAGRAPH ARE A MATERIAL

PART OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING INTO THIS

AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGREEMENT IN THE ABSENCE OF THE PROVISIONS OF THIS PARAGRAPH. _________________ _________________
SELLER’S INITIALS BUYER’S INITIALS

8.7 Closing.

8.7.1 When Escrow Holder has received all documents and funds identified in Sections 8.3 and 8.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
(a) Record the Grant Deed;

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15 (b) Record the TAE;
(c) Record the TCE;
(d) Cause the Title Company to issue the Title Policy to Buyer; (e) To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b)
(f) The Non-foreign Certification;
(g) Deliver the Purchase Price (as adjusted pursuant to Section 8.8) to Seller;

8.7.2 Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal Revenue Service (with copies to Buyer and Seller) the reporting statement required under Section 6045(e) of the Internal Revenue Code.

8.8 Prorations. Subject to the other provisions of this Section 8.8, all receipts and disbursements of the ROW Portion will be prorated as of 11:59 p.m. on the day immediately preceding the Closing Date. Not less than five business days prior to the Closing, Seller shall submit to Buyer for its approval a tentative prorations schedule showing the categories and amounts of all prorations proposed, including all rents and operating expenses. Security deposits shall be credited to Buyer from Seller proceeds. The parties shall agree on a final prorations schedule prior to the Closing and shall deliver the same to Escrow Holder. If following the Closing either party discovers an error in the prorations statement, it shall notify the other party and the parties shall promptly make any adjustment required. The parties agree that any trailing bills that pertain to the ROW Portion operations before the Closing Date, which are not available as of Closing, may be presented to Buyer for proration and reimbursement up to forty five (45) days after Closing. Failure to provide any bills by such date shall be a waiver by Seller of such reimbursement and Buyer shall have no further obligation for any such bills and ROW Portion expenses. This section 8.8 shall survive closing.

8.8.1 Property Taxes. General real estate taxes, personal property taxes, or any other governmental tax or charge levied or assessed against the ROW Portion (collectively, the “Taxes”), relating to the ROW Portion and payable during the year in which Closing occurs shall not be prorated between Seller and Buyer in Escrow. Upon recordation of the Grant Deed, Buyer will request cancellation of the real property taxes for the ROW Portion pursuant to California Revenue and Taxation Code Section 4986. If current taxes have not yet been paid as of the Closing Date, then at Closing Seller shall pay through Escrow or out of Seller’s proceeds, the full amount of the installment applicable for the period in which Closing occurs. Seller shall be entitled to a refund of any excess payment made to the taxing authority on account of the ROW Portion, including any taxes paid by Seller and applicable to any period from and after the Closing Date.

The taxing authority will notify Seller of any refund due Seller resulting from the subject acquisition after a review and any subsequent proration of the property tax assessment by the county assessor. Seller retains the right, following close of escrow, to apply to the appropriate

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
16 governmental authority/ies for refund of real property taxes pursuant to Revenue and Taxation Code Section 5096.7 (or such other applicable law), and Buyer shall reasonably cooperate with Seller’s efforts to obtain said refund.

8.9 Possession. Seller shall deliver exclusive right of way of the ROW Portion to Buyer on the Closing Date, subject only to the Conditions of Title.

ARTICLE 9. DAMAGE, DESTRUCTION AND CONDEMNATION.

This Agreement shall be governed by the Uniform Vendor and Purchaser Risk Act as set forth in Section 1662 of the California Civil Code as supplemented and modified by this Article 9. Seller shall promptly notify Buyer in writing of any material damage to the ROW Portion and of any taking or threatened taking of all or any portion of the ROW Portion. Within a reasonable period of time after receipt of such notice, Buyer shall determine whether a material part of the ROW Portion has been damaged or whether such taking or threatened taking has affected or will affect a material part of the ROW Portion. As used herein, (a) the destruction of a “material part” of the ROW Portion shall be deemed to mean an insured or uninsured casualty to the Property having an estimated cost of repair which in the reasonable judgment of Buyer equals or exceeds $200,000 and (b) a taking by eminent domain of a portion of the ROW Portion shall be deemed to affect a “material part” of the ROW Portion if in the reasonable judgment of Buyer the estimated value of the portion of the ROW Portion taken exceeds $200,000. Upon making its determination, Buyer shall notify Seller in writing of the results of such determination. Buyer may elect, by written notice delivered to Seller within 30 days after giving Seller notice of such determination, to terminate this Agreement in accordance with Section 8.6.1 if a material part of the Property has been damaged or if such taking has affected or will affect a material part of the Property. If Buyer does not so terminate, (i) in the case of damage to a material part of the Property, Seller shall assign to Buyer at the Closing its right to recover under any insurance policies covering such damage and shall pay Buyer at the Closing the amount of the deductible, if any, and (ii) in the case of a threatened or actual taking of a material part of the ROW Portion, Seller shall assign to Buyer at the Closing Seller’s entire right, title and interest in the proceeds thereof. If between the Effective Date and the Closing Date the ROW Portion suffers damage which is not material, Seller shall repair such damage at its expense prior to the Closing, and the Closing Date shall be extended for a reasonable period of time not to exceed 30 days to allow for completion of such repairs. The Closing Date shall be extended as necessary to permit Buyer to exercise its rights under this Article 9.

ARTICLE 10. REIMBURSEMENT AGREEMENT

10.1 Reimbursement Agreement. Concurrently with the consummation of this transaction, Seller and Buyer shall enter into that certain Reimbursement Agreement dated as of even date herewith (the “Reimbursement Agreement”), a copy of which is attached hereto as Exhibit “H” and incorporated herein by this reference. The parties acknowledge and agree that the Reimbursement Agreement sets forth the parties’ respective rights and obligations with respect to Seller’s reimbursement of costs for certain underground utilities associated with the expansion of Seller’s improvements located on the Property, and in connection with the Project. In the event of any conflict between the terms of this Agreement and the Reimbursement Agreement, the terms of this Agreement shall control with respect to the conveyance of the ROW Portion and the Parties’

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
17 rights and obligations relating thereto, and the terms of the Reimbursement Agreement shall control with respect to reimbursement matters.

ARTICLE 11. GENERAL.

11.1 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient’s address set forth below; (b) five business days after deposit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or (c) one business day after deposit with a recognized overnight courier or delivery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. Email notices may be used for convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one (1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8 am and 5 pm, and a duplicate shall be sent via USPS on the same day as the email.

The addresses for notice are:

SELLER: DIGNITY HEALTH
Attn: Ken Dalebout, Administrator
345 S Halcyon Road
Arroyo Grande, CA 93420
Phone:

Email: [email protected]
BUYER: CITY OF ARROYO GRANDE
Attn: Brian Pedrotti, Community Development Director
300 E. Branch Street
Arroyo Grande, CA 93420
Phone: (805) 473-5400
Email: [email protected]
With a copy to: Best Best & Krieger LLP
Attn: Isaac Rosen
300 S. Grand Avenue, 25th Floor
Los Angeles, CA
Telephone: (213) 787-2564
E-mail: [email protected]
Either party may change its address by written notice to the other given in the manner set forth above.

11.2 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersede all prior agreements, including any previous letter of intent or

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
18 terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the ROW Portion or the other matters which are the subject of this Agreement.

11.3 Amendments and Waivers. No addition to or modification of this Agreement shall be effective unless set forth in writing and signed by the party against whom the addition or modification is sought to be enforced. The party benefited by any condition or obligation may waive the same, but such waiver shall not be enforceable by another party unless made in writing and signed by the waiving party.

11.4 Invalidity of Provision. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by law) any other provision of this Agreement, the application of any such provision under circumstances different from those adjudicated by the court, or the validity or enforceability of this Agreement as a whole.

11.5 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.

11.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in California.

11.7 Confidentiality and Publicity. Buyer is a public entity and as such, this Agreement, upon its presentation for approval by City of Arroyo Grande’s City council at a duly called and agendized public meeting, shall be subject to the Public Records Act and the Freedom of Information Act. No press release or other public disclosure may be made by Seller or any of its agents regarding Buyer’s intent for this ROW Portion this transaction without the prior consent of Buyer.

11.8 Time. Time is of the essence in the performance of the parties’ respective obligations under this Agreement.

11.9 Attorneys’ Fees. In the event of any legal or equitable proceeding to enforce any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and costs of defense paid or incurred in good faith.

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SUBJECT TO FINAL NEGOTIATION
19 11.10 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. However, Seller shall not have the right to assign all or any portion of its interest in this Agreement without Buyer’s prior written consent.

Buyer shall have the right to assign all or any portion of its interest in this Agreement, or substitute for itself a nominee, upon notice to Seller not later than three days prior to the Closing Date.

11.11 Further Assurances. Seller, at any time before or after Closing, shall, at its own expense, execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Buyer and shall take any other action consistent with the terms of this Agreement that may reasonably be requested by Buyer for the purpose of transferring and confirming to Buyer, or reducing to Buyer’s possession, any or all of the ROW Portion or otherwise carrying out the terms of this Agreement.

11.12 Purchase in Lieu of Eminent Domain. Buyer is a California municipal corporation and has the powers of eminent domain pursuant to California Constitution Article 1, Section 19 and California Code of Civil Procedure 1230.010. Buyer has previously notified Seller in writing of Buyer’s desire, and approval by Buyer’s governing body for Buyer, to acquire the ROW Portion in connection with a contemplated public use. Buyer and Seller acknowledge that this Agreement constitutes an acquisition of the ROW Portion by Buyer in lieu of eminent domain, and that Seller is selling the ROW Portion to Buyer hereunder under threat of eminent domain within the meaning of Section 1033 of the Internal Revenue Code and California Board of Equalization Property Tax Rule 462.500. Seller acknowledges that execution of this Agreement does not constitute a waiver of Buyer’s constitutional and statutory right to commence and maintain an eminent domain proceeding in Superior Court: (1) to acquire the ROW Portion to address a defect in Seller’s ability to convey clear and unencumbered title to Buyer; (2) to clear any additional recorded or unrecorded encumbrances that may affect Buyer’s ability to own and possess the ROW Portion free of any encumbrance, license, easement, property right and/or lien; or (3) in the event Seller refuses to convey clear and unencumbered title to Buyer.

11.13 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right of subrogation or action over against any party to this Agreement.

11.14 Remedies Cumulative. The remedies set forth in this Agreement are cumulative and not exclusive to any other legal or equitable remedy available to a party.

11.15 Commissions, Indemnity, Disclosure. Each party represents to the other party that there is no broker representing such party in the current transaction, and that the representing party has incurred no liability for any brokerage commission or finder’s fee arising from or relating to the transactions contemplated by this Agreement. Seller shall be responsible for any broker commission associated with this purchase. Each party hereby indemnifies and agrees to protect, defend and hold harmless the other party from and against all liability, cost, damage or expense (including without limitation attorneys’ fees and costs incurred in connection therewith) on account of any brokerage commission or finder’s fee which the indemnifying party has agreed to pay or which is claimed to be due as a result of the actions of the indemnifying party. This Section

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
20 11.15 is intended to be solely for the benefit of the parties hereto and is not intended to benefit, nor may it be relied upon by, any person or entity not a party to this Agreement.

11.16 Mutual Negotiations. This Agreement and the other documents contemplated by this transaction are the product of mutual negotiations by the parties thereto and their counsel, and no party shall be deemed the draftsperson of this Agreement or any other document or any provision hereof or thereof or to have provided the same. Accordingly, in the event of any inconsistency or ambiguity of any provision of this Agreement or any other document contemplated by this Agreement, such inconsistency or ambiguity shall not be interpreted against any party because of such party’s involvement in the drafting thereof.

11.17 Counterparts/Facsimile/PDF Signatures. This Agreement may be executed in counterparts and when so executed by the parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the parties, notwithstanding that the parties may not be signatories to the same counterpart or counterparts. The parties may integrate their respective counterparts by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party will rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature.

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
21 IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

BUYER:

CITY OF ARROYO, a California municipal
corporation
Matthew Downing, City Manager
ATTEST:

By:

Jessica Matson, City Clerk
APPROVED AS TO FORM:

BEST BEST & KRIEGER LLP
By:

Isaac Rosen, City Attorney
SELLER:

DIGNITY HEALTH,
a California nonprofit public benefit corporation
By
Name:

Its

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
22 Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the instructions contained therein.

Dated: ______________, 20___
By:

Name:

Title:

65501.00115\44467391.3

EXHIBIT A

SUBJECT TO FINAL NEGOTIATION
Exhibit A-1

EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
Exhibit B-1

EXHIBIT B

LEGAL DESCRIPTION AND DEPICTION OF FEE INTERESTS

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
Exhibit B-2

65501.00115\44467391.3

EXHIBIT A

SUBJECT TO FINAL NEGOTIATION
Exhibit C-1

EXHIBIT C

LEGAL DESCRIPTION OF TCE INTEREST

65501.00115\44467391.3

SUBJECT TO FINAL NEGOTIATION
Exhibit C-2

65501.00115\44467391.3
Exhibit D-1

EXHIBIT D

LEGAL DESCRIPTION OF TAE INTEREST

65501.00115
\44467391.3
Exhibit D-2

65501.00115\44467391.3
Exhibit E-1

EXHIBIT E

FORM OF GRANT DEED

RECORDING REQUESTED BY
First American Title Company

AND WHEN RECORDED MAIL TO, AND
MAIL TAX STATEMENTS TO:

City of Arroyo Grande
300 E. Branch Street
Arroyo Grande, CA 93420
ATTN: City Clerk

EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383

SPACE ABOVE THIS LINE FOR RECORDER'S USE
APN: 006-391-046 (portion)
Grant Deed
The undersigned Grantor(s) declare(s): City of Arroyo Grande is exempt from property taxes Documentary transfer tax is $0.00
Computed on full value of property conveyed, or
Computed on full value less value of liens and encumbrances remaining at time of sale.

Unincorporated area City of Arroyo Grande and
[The undersigned declares that this Grant Deed is exempt from Recording Fees pursuant to California Government Code Section 27383. The undersigned declares that this Grant Deed is exempt from Documentary Transfer Tax pursuant to Revenue and Taxation Code Section 11922.] FOR VALUE RECEIVED, DIGNITY HEALTH, a California nonprofit public benefit corporation (“Grantor”), hereby grants to CITY OF ARROYO GRANDE, a California municipal corporation (“Grantee”), a perpetual right-of-way in that certain real property situated in the City of Arroyo Grande, County of San Luis Obispo, State of California, as described in Exhibit A, and depicted on Exhibit B, attached hereto and incorporated herein by reference (“Property”).

IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ______________.

GRANTOR:

DIGNITY HEALTH,
a California nonprofit public benefit corporation
By:

Name:

Its:

65501.00115\44467391.3
Exhibit E-2

ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

STATE OF CALIFORNIA )

COUNTY OF )
On _____________, 2025 before me,_________________________, Notary Public, personally appeared________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature: (seal)

65501.00115\44467391.3
Exhibit E-3
EXHIBIT “A”
TO

GRANT DEED
Legal Description

65501.00115
\44467391.3
Exhibit E-4

65501.00115
\44467391.3
Exhibit E-5

65501.00115\44467391.3
Exhibit E-6

CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the interest in real property conveyed by the GRANT DEED dated , 2025, from DIGNITY HEALTH, a California nonprofit public benefit corporation, as Grantor thereunder, to the CITY OF ARROYO GRANDE a California municipal corporation, as Grantee thereunder, is hereby accepted by the undersigned on behalf of the CITY OF ARROYO GRANDE, pursuant to the authority conferred by Resolution No. _______, adopted by the CITY OF ARROYO GRANDE City Council on ______________, and the Grantee consents to recordation thereof by its duly authorized officer.

Dated: CITY OF ARROYO GRANDE, a California
municipal corporation
By:

Name: Matthew Downing
Its: City Manager

65501.00115\44467391.3
Exhibit F-1

EXHIBIT F

FORM OF TEMPORARY CONSTRUCTION EASEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Arroyo Grande
300 E. Branch Street
Arroyo Grande, CA 93420
ATTN: City Clerk

EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APN: 006-391-046 (portion of)

SPACE ABOVE THIS LINE FOR RECORDER'S USE

TEMPORARY CONSTRUCTION EASEMENT
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, DIGNITY HEALTH, a California nonprofit public benefit corporation (“Grantor”) hereby grants to the CITY OF ARROYO GRANDE, a California municipal corporation (“Grantee”), its employees, agents, contractors, subcontractors, successors, and assigns, a temporary, nonexclusive construction easement (“TCE”) over, across, upon, under, and through a portion of Grantor’s real property described in Exhibit A and depicted in Exhibit B (together, the “Easement Area”), for the purpose of performing all work and activities necessary, incidental, or convenient to the Halcyon Complete Streets Capital Improvement Project (the “Project”). Such work includes, without limitation, the construction of a roundabout at the intersection of Halcyon Road and Fair Oaks Avenue (the “Improvements”).

1. Term of Easement; Termination; Quitclaim. The TCE shall commence on the date this instrument is recorded in the Official Records of the County of San Luis Obispo and shall remain in effect until the completion of the Project, which is estimated to be thirty-six (36) months from the recordation of this TCE, unless earlier terminated or extended by written agreement of the Parties. Grantee may, in its sole discretion, extend the term of this TCE by written notice to Grantor if Grantee determines that additional time is reasonably necessary to complete the Project.

Upon termination of this TCE, Grantee shall, upon Owner’s written request, execute and deliver a notice of abandonment, quitclaim or similar instrument suitable for recordation to release the TCE.

2. Scope of Easement Rights. Grantee, and its employees, agents, consultants, contractors, and subcontractors, shall have the right to enter upon and use the Easement Area for all activities reasonably necessary, incidental, or convenient to the construction of the Improvements in connection with the Project. Such activities include, without limitation:
i. temporary construction access;

65501.00115\44467391.3
Exhibit F-2
ii. construction, installation, operation, and maintenance of temporary facilities, staging and laydown areas, equipment, and material storage; iii. grading, excavation, shoring, compaction, backfilling, and installation of utilities and appurtenances;
iv. installation and maintenance of temporary fencing, signage, barricades, and traffic control measures; and
v. any other activities reasonably necessary to support the Project within or adjacent to the Easement Area.

3. Limitations on Use by Grantor. Grantor hereby covenants and agrees, by and for itself, and its successors and assigns, that Grantor shall keep the Easement Area clear from buildings, structures, fences, explosives, excessive tree growth and shrubs, and other materials or growths, whether permanent or temporary, and any other obstruction interfering or which may interfere with the Easement Area and right-of-way by Grantee (each, a “Prohibited Encroachment”). Grantee shall have the right to remove, at Grantor’s cost and expense, any Prohibited Encroachment the Grantee deems, in Grantee’s sole discretion, is interfering or may interfere with the use of the Easement Area or as Grantee deems necessary, in Grantee’s sole discretion, to comply with applicable local, state, or federal laws and regulations. In the event Grantee removes any Prohibited Encroachment as permitted in this Paragraph, Grantor shall pay the cost thereof to Grantee, plus an administrative charge within thirty (30) days of Grantee’s invoice therefor. As a condition of this grant of Easement and the Easement Area, Grantor’s use and enjoyment of the Easement Area shall not hinder, conflict, or interfere with the exercise of the Grantee’s rights hereunder. Grantor is expressly prohibited from adding, installing, or constructing to the surface or subsurface of the Easement Area any improvement that will impede the Project and Improvements.

4. Relocation. Grantor shall not relocate the Easement Area or any of the Improvements located thereon without Grantee’s consent, which may be withheld in Grantee’s sole discretion.

5. Binding Effect; Covenants Running with the Land. This TCE shall run with the land and shall be binding upon and inure to the benefit of Grantor and Grantee, and their respective successors and assigns.

6. Assignment. Grantee may assign or delegate its rights or obligations under this TCE, in whole or in part, to any contractor, consultant, or service provider engaged by the Grantee in connection with the Project, without notice to or consent of Grantor.

7. Execution in Counterparts. This TCE may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures may be delivered electronically or by PDF and shall be deemed effective as originals.

65501.00115\44467391.3
Exhibit F-3

8. No Waiver. No waiver of any provision of this TCE shall be effective unless in writing and signed by the waiving party. A party’s failure to enforce any provision shall not be deemed a waiver of the right to enforce it later.

9. No Possessory Interest; Not a Lease. This TCE does not grant Grantee any possessory interest in the Easement Area or constitute a lease, license, or transfer of fee title.

Grantee’s rights are limited to the temporary construction easement expressly granted herein, and such rights shall terminate automatically upon expiration or earlier termination of this Agreement.

10. Owner. Grantor covenants that it is the owner of the above-described Easement Area and has full right, power, and authority to grant this TCE, and that the Easement Area is free and clear of encumbrances and liens of whatsoever character except those recorded against the Easement Area.
[SIGNATURES ON FOLLOWING PAGES]

65501.00115\44467391.3
Exhibit F-4
IN WITNESS WHEREOF, the undersigned have executed this Temporary Construction Easement as of the date last written below.

GRANTOR:

DIGNITY HEALTH,
a California nonprofit public benefit corporation
Dated: _____________________
By:_______________________________________
Name: ____________________________________
Its: ______________________________________

65501.00115
\44467391.3
Exhibit F-5

65501.00115\44467391.3
Exhibit F-6

EXHIBIT A
Legal Description of Temporary Construction Easement

65501.00115
\44467391.3
Exhibit F-7

65501.00115\44467391.3
Exhibit F-8

EXHIBIT B
Depiction of Temporary Construction Easement

65501.00115\44467391.3
Exhibit F-9

CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the interest in real property conveyed by the TEMPORARY CONSTRUCTION EASEMENT dated , from DIGNITY HEALTH, a California nonprofit public benefit corporation, as Grantor thereunder, to the CITY OF ARROYO GRANDE a California municipal corporation, as Grantee thereunder, is hereby accepted by the undersigned on behalf of the CITY OF ARROYO GRANDE, pursuant to the authority conferred by Resolution No. _______, adopted by the CITY OF ARROYO GRANDE City Council on ______________, and the Grantee consents to recordation thereof by its duly authorized officer.

Dated: CITY OF ARROYO GRANDE, a California
municipal corporation
By:

Matthew Downing
City Manager

65501.00115\44467391.3
Exhibit G-1

EXHIBIT G

FORM OF TEMPORARY ACCESS EASEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of Arroyo Grande
300 E. Branch Street
Arroyo Grande, CA 93420
ATTN: City Clerk

EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APN: 006-391-046 (portion)

SPACE ABOVE THIS LINE FOR RECORDER'S USE

TEMPORARY ACCESS EASEMENT
For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, DIGNITY HEALTH, a California nonprofit public benefit corporation (“Grantor”) hereby grants to the CITY OF ARROYO GRANDE, a California municipal corporation (“Grantee”), its employees, agents, contractors, subcontractors, successors, and assigns, a temporary, nonexclusive access easement (“TAE”) over, across, upon, under, and through a portion of Grantor’s real property described in Exhibit A and depicted in Exhibit B (together, the “Easement Area”), for the purpose of performing all work and activities necessary, incidental, or convenient to the Halcyon Complete Streets Capital Improvement Project (the “Project”). Such work includes, without limitation, the construction of a roundabout at the intersection of Halcyon Road and Fair Oaks Avenue (the “Improvements”).

1. Term of Easement; Termination; Quitclaim. The TAE shall commence on the date this instrument is recorded in the Official Records of the County of San Luis Obispo and shall remain in effect until the completion of the Project, which is estimated to be thirty-six (36) months from the recordation of this TCE, unless earlier terminated or extended by written agreement of the Parties. Grantee may, in its sole discretion, extend the term of this TCE by written notice to Grantor if Grantee determines that additional time is reasonably necessary to complete the Project.

Upon termination of this TCE, Grantee shall, upon Owner’s written request, execute and deliver a notice of abandonment, quitclaim or similar instrument suitable for recordation to release the TCE.

2. Scope of Easement Rights. Grantor hereby grants to Grantee a temporary, nonexclusive access easement for ingress and egress over the Easement Area to conduct activities reasonably necessary, incidental, or convenient to the construction of the Improvements in connection with the Project.

3. Limitations on Use by Grantor. Grantor hereby covenants and agrees, by and for itself, and its successors and assigns, that Grantor shall keep the Easement Area clear from

65501.00115\44467391.3
Exhibit G-2
buildings, structures, fences, explosives, excessive tree growth and shrubs, and other materials or growths, whether permanent or temporary, and any other obstruction interfering or which may interfere with the Easement Area and right-of-way by Grantee (each, a “Prohibited Encroachment”). Grantee shall have the right to remove, at Grantor’s cost and expense, any Prohibited Encroachment the Grantee deems, in Grantee’s sole discretion, is interfering or may interfere with the use of the Easement Area or as Grantee deems necessary, in Grantee’s sole discretion, to comply with applicable local, state, or federal laws and regulations. In the event Grantee removes any Prohibited Encroachment as permitted in this Paragraph, Grantor shall pay the cost thereof to Grantee, plus an administrative charge within thirty (30) days of Grantee’s invoice therefor. As a condition of this grant of Easement and the Easement Area, Grantor’s use and enjoyment of the Easement Area shall not hinder, conflict, or interfere with the exercise of the Grantee’s rights hereunder. Grantor is expressly prohibited from adding, installing, or constructing to the surface or subsurface of the Easement Area any improvement that will impede the Project and Improvements.

4. Relocation. Grantor shall not relocate the Easement Area or any of the Improvements located thereon without Grantee’s consent, which may be withheld in Grantee’s sole discretion.

5. Binding Effect; Covenants Running with the Land. This TAE shall run with the land and shall be binding upon and inure to the benefit of Grantor and Grantee, and their respective successors and assigns.

6. Assignment. Grantee may assign or delegate its rights or obligations under this TAE, in whole or in part, to any contractor, consultant, or service provider engaged by the Grantee in connection with the Project, without notice to or consent of Grantor.

7. Execution in Counterparts. This TAE may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures may be delivered electronically or by PDF and shall be deemed effective as originals.

8. No Waiver. No waiver of any provision of this TAE shall be effective unless in writing and signed by the waiving party. A party’s failure to enforce any provision shall not be deemed a waiver of the right to enforce it later.

9. No Possessory Interest; Not a Lease. This TAE does not grant Grantee any possessory interest in the Easement Area or constitute a lease, license, or transfer of fee title.

Grantee’s rights are limited to the temporary construction easement expressly granted herein, and such rights shall terminate automatically upon expiration or earlier termination of this Agreement.

10. Owner. Grantor covenants that it is the owner of the above-described Easement Area and has full right, power, and authority to grant this TCE, and that the Easement Area is free and clear of encumbrances and liens of whatsoever character except those recorded against the Easement Area.

65501.00115\44467391.3
Exhibit G-3
IN WITNESS WHEREOF, the undersigned have executed this Temporary Construction Easement as of the date last written below.

GRANTOR:

DIGNITY HEALTH
a California nonprofit public benefit corporation
Dated: _____________________
By:_______________________________________
Name: ____________________________________
Its: ______________________________________

65501.00115
\44467391.3
Exhibit G-4

65501.00115\44467391.3
Exhibit G-5

EXHIBIT A
Legal Description of Temporary Construction Easement

65501.00115
\44467391.3
Exhibit G-6

65501.00115\44467391.3
Exhibit G-7

EXHIBIT B
Depiction of Temporary Access Easement

65501.00115\44467391.3
Exhibit G-8

CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the interest in real property conveyed by the TEMPORARY ACCESS EASEMENT dated , from DIGNITY HEALTH, a California nonprofit public benefit corporation, as Grantor thereunder, to the CITY OF ARROYO GRANDE a California municipal corporation, as Grantee thereunder, is hereby accepted by the undersigned on behalf of the CITY OF ARROYO GRANDE, pursuant to the authority conferred by Resolution No. _______, adopted by the CITY OF ARROYO GRANDE City Council on ______________, and the Grantee consents to recordation thereof by its duly authorized officer.

Dated: CITY OF ARROYO GRANDE, a California
municipal corporation
By:

Matthew Downing
City Manager

65501.00115\44467391.3
Exhibit H-1

EXHIBIT H

FORM OF REIMBURSEMENT AGREEMENT

CITY OF ARROYO GRANDE

REIMBURSEMENT AND INDEMNIFICATION AGREEMENT

FOR DEVELOPMENT PROJECT
(HALCYON COMPLETE STREETS CAPITAL IMPROVEMENT PROJECT)

1. PARTIES AND DATE.

This Reimbursement and Indemnification Agreement ("Agreement") is made this _______ day of ___________________, ____________, by and between the City of Arroyo Grande, a California municipal corporation ("City"), and DIGNITY HEALTH, a California nonprofit public benefit corporation (“Applicant”). City and Applicant are sometimes individually referred to as “Party” and collectively as “Parties” in this Agreement.

2. RECITALS.

2.1 The Applicant is the owner of that certain real property located within the City of Arroyo Grande, County of San Luis Obispo, California, and more particularly described in Exhibit “A” attached hereto and incorporated herein by reference (“Property”).

2.2 The Applicant is contemplating the development of the Property with an expansion of its emergency department and related on-site improvements (“Project”). In connection with the Project, the Applicant has submitted or covenants to submit applications for such discretionary land use approvals, permits, and conditions of approval as may be required for the Project, together with all related environmental review pursuant to the California Environmental Quality Act (“CEQA”) and other applicable laws, rules, and regulations.

2.3 Certain frontage and utility undergrounding improvements required in connection with the Project (the “Reimbursable Improvements”) are proposed to be designed and constructed by the City as part of the City’s “Halcyon Complete Streets Capital Improvement Project (PW 2023-15)” (the “City Project”), with the Applicant reimbursing the City for the costs reasonably allocable to the Reimbursable Improvements, as set forth in this Agreement.

2.4 Judicial challenges of projects requiring discretionary approvals, including, but not limited to, CEQA determinations, are costly and time consuming. Additionally, project opponents often seek an award of attorneys’ fees in such challenges.

2.5 Since applicants are the primary beneficiaries of such approvals, it is appropriate that such owners bear the expense of defending against any such judicial challenge, and bear the responsibility of any costs, attorneys’ fees and damages which may be awarded to a successful challenger.

2.6 In the event a judicial challenge is commenced against the Project, the City has requested and the Applicant has agreed to defend, indemnify and hold harmless the City, its agents, officers, or employees from any claim, action or proceeding against the City, its agents, officers,

65501.00115\44467391.3
Exhibit H-2
or employees to attack, set aside, void or annul any approval of the City, its advisory agencies, appeal boards, or legislative body concerning the Project or its associated environmental documentation, including but not limited to challenges brought under CEQA, Public Resources Code section 5097.98, AB 52, and other applicable laws, rules, and regulations (“Litigation”).

2.7 To provide the City with the needed expertise and information necessary for the City's review process concerning the Reimbursable Improvements, it is or may become necessary for the City to access the services of certain outside legal, environmental, planning and other experts for the Project ("Consultants").

2.8 As a condition to the City's completion of the Project review process, the Applicant has agreed to reimburse the City for the Consultants’ costs and expenses related to the City's Project review process, as well as any other out-of-pocket expenses incurred by the City, in the manner and amounts set forth in this Agreement. The Applicant's reimbursement of City under this Agreement will ensure that the City has the necessary resources to diligently and efficiently process the Applicant's Project.

2.9 This Agreement is entered into by the City and the Applicant to establish specific terms concerning Applicant’s reimbursement and indemnification obligations for the Project.

3. TERMS.

3.1 Incorporation of Recitals. The Parties agree that the Recitals constitute the factual basis upon which the City and the Applicant have entered into this Agreement. The City and the Applicant each acknowledge the accuracy of the Recitals and agree that the Recitals are incorporated into this Agreement as though fully set forth at length.

3.2 City Construction of Reimbursable Improvements. The City agrees to include the Reimbursable Improvements within the scope of the City Project, to bid and award a public works construction contract for the City Project in accordance with applicable law, and to cause the Reimbursable Improvements to be constructed as part of the City Project. The City shall retain full and exclusive control over the design, bidding, award, administration, and inspection of the City Project, including the Reimbursable Improvements, but shall use reasonable good faith efforts to coordinate the design of the Reimbursable Improvements with the Applicant so that they satisfy the conditions of approval for the Applicant’s Project. Nothing in this Agreement shall be construed to require the City to approve, fund, bid, or construct the City Project or any portion thereof, or to proceed with the City Project on any particular schedule.

3.3 City Selection of Consultants. As a necessary and indispensable part of its fact finding process relating to the review of the Applicant's proposed Project and uses of the Property, the City shall retain the services of Consultants to provide advice to the City, as the City may deem necessary in its reasonable and sole discretion. The City has thus far retained or is prepared to retain (either directly or as subconsultants) certain Consultants which Applicant may request disclosure of, but City shall have the right to retain any additional consultants or sub-consultants pursuant to this Agreement as are necessary for the City to exercise its independent judgment over the Applicant’s Project. The contemplated general scope of work of the Consultants for the Project may be disclosed upon request by Applicant, but the City reserves the right, in its reasonable and

65501.00115\44467391.3
Exhibit H-3
sole discretion, to amend the scope of work as it deems necessary and appropriate to the City's proper review and consideration of the Applicant's Project.

The Applicant agrees that, notwithstanding the Applicant's reimbursement obligations under this Agreement, Consultants shall be the contractors exclusively of the City and not of the Applicant. Except for those disclosures required by law, including, without limitation, the Public Records Act, all conversations, notes, memoranda, correspondence and other forms of communication by and between the City and its Consultants shall be, to the extent permissible by law, privileged and confidential and not subject to disclosure to the Applicant. The Applicant agrees that it shall have no claim to, nor shall it assert any right in any reports, correspondence, plans, maps, drawings, news releases or any and all other documents or work product produced by the Consultants.

3.4 Applicant to Cooperate with Consultants. The Applicant agrees to cooperate in good faith with the Consultants. The Applicant agrees that it will instruct its agents, employees, consultants, contractors and attorneys to reasonably cooperate with the Consultants and to provide all necessary documents or information reasonably requested of them by the City and/or the Consultants; provided, however, that the foregoing shall not require the disclosure of any documents or information of the Applicant which by law is privileged, proprietary, confidential, and exempt from disclosure under the Public Records Act.

3.5 Applicant's Reimbursement of Costs and Expenditures. The Applicant shall reimburse the City for one hundred percent (100%) of the actual fees, costs and other expenditures incurred by the City relative to the Reimbursable Costs, as well as any other out-of-pocket expenses incurred by the City ("Costs"). The City has preliminarily reviewed the scope of work required for the Reimbursable Improvements and has estimated the aggregate costs for all Reimbursable Costs to be approximately $100,000.00 ("Estimated Costs"). Within ten (10) calendar days of the execution of this Agreement, the Applicant shall submit a deposit in the amount of $100,000.00 ("Deposit Account"). City shall draw upon the Deposit Account for all fees, costs and expenses incurred unless and until the Deposit Account is depleted, in which case City shall then invoice Applicant for all additional fees, costs and expenses incurred and Applicant shall pay such invoice in full within thirty (30) days after receipt.

City shall not materially exceed the Estimated Costs without consulting with Applicant regarding the need for additional services which cause the Costs to exceed the Estimated Costs ("Excess Costs"). The City shall use reasonable good faith efforts to consult with the Applicant prior to amending any scope of services to be provided by the Consultants and incurring Excess Costs. The Applicant's obligation to reimburse the City for Excess Costs shall be contingent upon the City providing Applicant with written notice of the amendment of the scope of services to be performed by any Consultant and the estimated cost thereof prior to the commencement of work.

Once the City provides such notice, Applicant shall be obligated to pay the Excess Costs in the same manner as the Estimated Costs provided above, including, but not limited to, replenishing the Deposit Account.

For purposes of this Section 3.5, the City shall be deemed to have consulted with the Applicant when the City has provided written notice to the Applicant that the City reasonably anticipates that it will incur, or has incurred, Excess Costs. If, after consultation, the Applicant

65501.00115\44467391.3
Exhibit H-4
disagrees with the City's incurring of Excess Costs, then the Applicant's sole and exclusive remedy will be to terminate this Agreement pursuant to Section 3.10 of this Agreement, subject to the Applicant's obligation to reimburse the City for all Costs incurred by the City prior to the date of termination, whether or not yet paid by the City to any Consultants.

The City shall maintain accurate records of invoices received from, and payments made to, the Consultants resulting from the Reimbursable Improvements, and will provide a payment summary to Applicant within a reasonable time upon request. In the event that excess funds remain in the Deposit Account upon conclusion of the Reimbursable Improvements and after all final payments to the Consultants have been made, the City agrees to refund that excess amount, if any, to Applicant within fifteen (15) days of final payment to the Consultants. Alternatively, if the Costs of the services of the Consultants exceed the Estimated Costs and Excess Costs, if any, then Applicant shall remain obligated to pay for all such Costs. Applicant shall pay any such amount within ten (10) calendar days of demand for payment by City.

3.6 Discretionary Approvals. Applicant and the City understand and agree that Applicant’s application to the City concerning the Property are subject to the approval, conditional approval or disapproval of the Planning Commission and/or City Council of the City. Further, Applicant and the City understand and agree that some or all of the applications may require findings (including, without limitation, environmental determinations under CEQA) to be made by those legislative bodies, in some instances following duly noticed public hearings. Nothing set forth in this Agreement shall be deemed to require approval or conditional approval of any or all of such land use and other applications by those legislative bodies, notwithstanding Applicant’s undertaking and completion of its obligations under this Agreement.

3.7 Indemnification.

3.7.1 Indemnification. Applicant, at its own expense, shall defend, indemnify and hold harmless the City, its agents, officers, and employees from and against any claim, action or proceeding brought against the City, its agents, officers, and employees to attack, set aside, void or annul any approval of the Reimbursable Improvements including any associated costs, attorneys’ fees, damages, and expenses including, but not limited to, costs associated with Public Records Act requests submitted to the City related to the Reimbursable Improvements and an award of attorneys’ fees and costs incurred or arising out of the above-referenced claim, action or proceeding brought against the City (“Indemnification Obligation”). Applicant’s obligations under this Section 3.6 shall survive the termination or expiration of this Agreement.

3.7.2 Defense Cooperation. Applicant and the City shall reasonably cooperate in all aspects of the Litigation. Nothing contained in this Agreement, however, shall be construed to limit the discretion of the City, in the interest of the public welfare, to settle, defend, appeal or to decline to settle or to terminate or forego defense or appeal of the Litigation. It is also understood and agreed that all litigation pleadings are subject to review, revision and approval by the City Attorney.

3.7.3 Representation and Payment for Legal Services Rendered. The City shall have the absolute right to approve any and all counsel retained to defend the City in the Litigation. The Applicant shall pay the attorneys’ fees and costs of the legal firm retained by the

65501.00115\44467391.3
Exhibit H-5
City to represent the City and/or Applicant in the Litigation. Failure by the Applicant to pay such attorneys’ fees and costs may be treated as an abandonment of the Project and as a default of Applicant’s obligations under this Agreement.

3.7.4 Payment for City Litigation Costs. Payment for the City’s costs related to the Litigation shall be made on a deposit basis. Litigation costs include any associated costs, fees, damages, and expenses as further described herein as an Indemnification Obligation. Within thirty (30) days of receipt of notice from the City that Litigation has been initiated against the Project, Applicant shall initially deposit with the City’s Community Development Department the total amount of One Hundred and Twenty Thousand Dollars ($120,000.00). Applicant shall deposit with the City such additional amounts as the City reasonably and in good faith determines, from time to time, are necessary to cover costs and expenses incurred by the City associated with the Litigation. Within ten (10) days of written notice from the City, Applicant shall make such additional deposits. Collectively, the initial deposit and additional deposits shall be referred to herein as the “Deposit.”

3.7.5 Return of Deposit. The City shall return to Applicant any funds remaining on deposit after ninety (90) days have passed since final adjudication of the Litigation.

3.8 Survival of Indemnification. The Parties agree that this Agreement shall constitute a separate agreement from any Project approval, and if the Project, in part or in whole, is invalidated, rendered null or set aside by a court of competent jurisdiction, the Parties agree to be bound by the terms of this Agreement, which shall survive such invalidation, nullification or setting aside.

3.9 Term. The term of this Agreement shall commence on the date that this Agreement is fully executed by the Parties, and shall terminate when all services required for the Applicant’s Project by Consultants have been completed to the City's reasonable satisfaction and the Applicant has satisfied all of its obligations under this Agreement including its obligations to reimburse the City for Reimbursable Costs. For purposes of this section, Applicant's obligations shall include, but shall not be limited to, its obligation to reimburse the City for Estimated Costs and Excess Costs, whether or not paid by the City to Consultants prior to the date of termination. The Applicant's obligation to reimburse the City as provided in this Agreement shall survive the natural expiration of this Agreement pursuant to this section, as well as the termination of this Agreement pursuant to Section 3.10.

3.10 Early Termination.

3.10.1 By City. The City may, in its reasonable and sole discretion, terminate this Agreement prior to the term set forth in Section 3.9 above, without cost or liability to the City, upon thirty (30) days prior written notice to the Applicant in the event that Applicant either: (1) fails to satisfy any obligation of this Agreement; or (2) fails to reasonably prosecute its application(s) for the Project.

3.10.2 By Applicant. The Applicant may, in its reasonable and sole discretion, terminate this Agreement prior to the end of the term set forth in Section 3.9 above, upon thirty (30) days' prior written notice to the City; provided, however, that Applicant's right to so terminate

65501.00115\44467391.3
Exhibit H-6
this Agreement is expressly contingent upon Applicant satisfying both of the following: (1) Applicant shall give City written notice withdrawing its application(s) for the Project; and (2) Applicant shall satisfy all of its obligations under this Agreement up through the proposed effective date of termination. For purposes of this section, Applicant's obligations shall include, but shall not be limited to, its obligation to reimburse the City for Estimated Costs and Excess Costs, and Reimbursable Costs, whether or not paid by the City to Consultants prior to the date of termination.

3.10.3 Notice to Consultants. Within two (2) working days following either the City's decision to terminate this Agreement or the City's receipt of written notice indicating the Applicant's decision to terminate this Agreement, the City shall notify all Consultants and instruct them to cease work on the Project. Consultants shall also be instructed to bill the City for any services completed prior to the date of termination.

3.11 Assignability. This Agreement may not be assigned by either Party without the prior and express written consent of the other Party, which consent shall not be unreasonably withheld. In determining whether to approve a request by the Applicant to assign this Agreement, the City may consider, among other things, the proposed assignee's financial status and commitment to the Project. Any attempted assignment of this Agreement not in compliance with the terms of this Agreement shall be null and void and shall confer no rights or benefits upon the assignee.

3.12 No Oral Modifications. This Agreement represents the entire understanding of the City and the Applicant and supersedes all other prior or contemporaneous written or oral agreements pertaining to the subject matter of this Agreement. This Agreement may be modified, only by a writing signed by both the authorized representatives of both the City and the Applicant.

All modifications to this Agreement must be approved by the City Council.

3.13 Binding Upon Successors. This Agreement and each of its terms shall be binding upon the City, the Applicant and their respective officers, elected officials, employees, agents, contractors, and permitted successors and assigns.

3.14 Attorneys' Fees. In the event that any action or proceeding, including arbitration, is commenced by either the City or the Applicant against the other to establish the validity of this Agreement or to enforce any one or more of its terms, the prevailing Party in any such action or proceeding shall be entitled to recover from the other, in addition to all other legal and equitable remedies available to it, its actual attorneys' fees and costs of litigation, including, without limitation, filing fees, service fees, deposition costs, arbitration costs and expert witness fees, including actual costs and attorneys' fees on appeal.

3.15 Jurisdiction and Venue. This Agreement is executed and is to be performed in the City of Arroyo Grande, San Luis Obispo County, California, and any action or proceeding brought relative to this Agreement shall be heard in the appropriate court in the County of San Bernardino, California. The City and the Applicant each consent to the personal jurisdiction of the court in any such action or proceeding.

3.16 Severability. If any term or provision of this Agreement is found to be invalid or unenforceable, the City and the Applicant both agree that they would have executed this