Arroyo Grande City Council
May 26, 2026

CITY COUNCIL MEETING

AGENDA SUMMARY

Tuesday, May 26, 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 P.M.:

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:

Meet with City-designated negotiators described below. Negotiation will include salary, compensation and benefits:

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: 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 meeting:

May 26, 2026
a) LABOR NEGOTIATION PURSUANT TO GOVERNMENT CODE SECTION 54957.6:

Meet with City-designated negotiators described below. Negotiation will include salary, compensation and benefits:

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: 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 Honorary Proclamation Declaring May 2026 as "National Foster Care Month"

6.b Honorary Proclamation Recognizing Shane Taylor Upon His Retirement from City Service

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

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

7. CITY COUNCIL REPORTS

7.a MAYOR RAY RUSSOM:

1. Audit Committee

2. California Joint Powers Insurance Authority (CJPIA)

3. Five Cities Fire Authority JPA Board

4. San Luis Obispo County Mayor's Meeting

5. South San Luis Obispo County Sanitation District (SSLOCSD)

6. Other

7.b MAYOR PRO TEM MARAVIGLIA:

1. Five Cities Fire Authority JPA Board

2. Visit SLO CAL Advisory Board

3. Other

7.c COUNCIL MEMBER GUTHRIE:

1. Integrated Waste Management Authority Board (IWMA)

2. REACH Economic Development Roundtable

3. Other

7.d COUNCIL MEMBER SECREST:

1. Air Pollution Control District (APCD)

2. Homeless Services Oversight Council (HSOC)

3. South County Chambers of Commerce Governmental Affairs Committee

4. Other

7.e COUNCIL MEMBER LOE:

1. Council of Governments/Regional Transit Authority (SLOCOG/SLORTA)

2. County Water Resources Advisory Committee (WRAC)

3. Zone 3 Water Advisory Board

4. Other

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 May 12, 2026, as submitted.

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

Review and ratify the attached listing of cash disbursements for the period of April 16 through April 30, 2026.

9.c Acceptance of the Annual Comprehensive Financial Report (VALENTINE)
Recommended Action:
1) Receive and file the Annual Comprehensive Financial Report (ACFR); and 2) Determine that receiving and filing the ACFR 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.)

9.d Fiscal Year 2025-26 Third Quarter Financial Status Report (VALENTINE)
Recommended Action:
1) Receive and file the Fiscal Year 2025-26 Third Quarter Financial Status Report; 2) Approve one Budget Adjustment Request; and
3) Receive an update from the Citizens’ Sales Tax Oversight Committee Meeting.

9.e Award Contract for Tourism Marketing Services for Fiscal Year 2026-29 (BOHLKEN)
Recommended Action:
1) Adopt a Resolution authorizing the City Manager to execute a three-year Professional Services Agreement with Commune Communication for Marketing Services for the Arroyo Grande Tourism and Business Improvement District (AGTBID); and 2) Find that approval of the Marketing Services Professional Services Agreement is exempt from CEQA on the basis that it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. (State CEQA Guidelines, § 15061, subd. (b)(3).)

9.f Engineer's Reports for Assessment Districts
(ROBESON)
Recommended Action:
1) Adopt Resolutions declaring the intention to levy and collect assessments for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No 1 within Tract 1769, for FY 2026-27; and 2) Approve the Engineer's Reports for FY 2026-27 for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No. 1 Tract 1769;
3) Set a public hearing for June 23, 2026, at 6:00 p.m. for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No. 1 within Tract 1769, to consider levying the property assessments; and
4) Find the proposed action is exempt from CEQA under State CEQA Guidelines § 15302 and State CEQA Guidelines § 15378(b)(5).

9.g Adopt Ordinance Amending the Municipal Code Regarding Cross-Connections (ROBESON)
Recommended Action:
1) Adopt an ordinance amending Chapter 13.16 of the Arroyo Grande Municipal Code (AGMC); and
2) Find that adopting the Ordinance is not subject to the California Environmental Quality Act (“CEQA”) because these efforts have no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §15060 (c)(2) and (3), 15378). Alternatively, the organizational or administrative activities of a government will not result in direct physical changes in the environment. (State CEQA Guidelines §15378(b)(5).)

9.h Purchase of Replacement Service Truck
(ROBESON)
Recommended Action:

Authorize the City Manager to sign the purchase agreement with Downtown Ford of

Sacramento for the purchase of a 2.5-ton Service Truck; and to sign the purchase agreement with Master Tech Automotives in Arroyo Grande to upfit the Service Truck.

9.i Quarterly Water Supply and Demand Update
(ROBESON)
Recommended Action:

Receive and file the Quarterly Water Supply and Demand Update.

9.j Grant of License Agreement with San Luis Obispo County Flood Control and Water Conservation District
(PEREZ)
Recommended Action:
1) Adopt a Resolution authorizing the City Manager to execute a Grant of License Agreement with the San Luis Obispo County Flood Control and Water Conservation District for the stream gauge in Arroyo Grande Creek;
2) Find that adopting a Resolution authorizing the City Manager to execute a license agreement is not a project subject to the California Environmental Quality Act (“CEQA”) because it merely formalizes existing use and 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.)

10. PUBLIC HEARINGS
None.

11. BUSINESS ITEMS

11.a Five Cities Fire Authority Community Risk Assessment / Standards of Cover Presentation (HALLETT)
Recommended Action:

Receive a presentation from the Five Cities Fire Authority (FCFA) on the Community Risk Assessment and Standards of Cover Deployment Analysis to assist in the development of an FCFA strategic plan that will support the emergency response needs in the member agency communities and provide input and direction to staff.

11.b Review Preliminary FY 2026-27 Mid-Cycle Budget Update Report (VALENTINE)
Recommended Action:

Review the preliminary Fiscal Year (FY) 2026-27 Mid-Cycle Budget Update Report, receive a presentation from staff, and provide feedback in preparation for the public hearing scheduled for June 9, 2026, to consider the FY 2026-27 Mid-Cycle Budget Update.

11.c General Plan Update Study Session
(PEREZ)
Recommended Action:

Receive an update on the implementation of the Council’s direction from the February 24, 2026, study session.

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.

Item 6.a.

Item 6.b.

Item 9.a.

ACTION MINUTES

REGULAR MEETING OF THE CITY COUNCIL
May 12, 2026, 6:00 p.m.

Hybrid City Council Chamber/Virtual Zoom Meeting
215 East Branch Street, Arroyo Grande
Council Members Present:

Council Members Absent:

Mayor Caren Ray Russom, Mayor Pro Tem
Jamie Maraviglia, Council Member Jim
Guthrie
Council Member Kate Secrest, 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, Interim Community
Development Director Andrew Perez, Utilities
Manager Shane Taylor, Police Chief David
Culver
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 6:01 p.m.

2. ROLL CALL
City Clerk Matson took roll call.

3. MOMENT OF REFLECTION

4. FLAG SALUTE
Mayor Ray Russom led the flag salute.

5. AGENDA REVIEW

5.a Closed Session Announcements
None.

5.b Ordinances read in title only

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2 Item 9.a.

Moved by Mayor Ray Russom
Seconded by Mayor Pro Tem Maraviglia
Move that all ordinances presented at the meeting shall be read by title only and all further readings be waived.

AYES (3): Mayor Ray Russom, Mayor Pro Tem Maraviglia, and Council Member Guthrie ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

6. SPECIAL PRESENTATIONS

6.a Honorary Proclamation Honoring the South County Historical Society for its 50th Anniversary
Mayor Ray Russom presented the Proclamation honoring the South County Historical Society for its 50th Anniversary. Jim Gregory, South County Historical Society, accepted the proclamation.

No action was taken on this Item.

6.b Honorary Proclamation Declaring June 2026 as "Pride Month" Mayor Ray Russom presented the Proclamation Declaring June 2026 as "Pride Month". Trevor Norcross, Gala Pride and Diversity Center, accepted the Proclamation.

No action was taken on this Item.

6.c City Manager Communications
City Manager Downing provided updates on the City's communications, the Police Department's participation in the local law enforcement memorial ceremony, Phase 2 of the East Branch Streetscape Project, bid posting for the Halcyon Complete Streets Project, and Thursday Night Music in the Park events at Rancho Grande Park.

No action was taken on this item.

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 Judy Ceccetti. No further public comments were received.

9. CONSENT AGENDA

CITY COUNCIL REGULAR MEETING MINUTES
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3 Item 9.a.

Mayor Ray Russom asked the Council if there were any questions or any items to be pulled from the consent agenda for further discussion. There were none.

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

Moved by Council Member Guthrie
Seconded by Mayor Pro Tem Maraviglia
Approve Consent Agenda Items 9.a. through 9.f., with the recommended courses of action.

AYES (3): Council Member Guthrie, Mayor Pro Tem Maraviglia, and Mayor Ray Russom ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

9.a Approval of Minutes
Approved the minutes of the Regular City Council Meeting of April 28, 2026, as submitted.

9.b Cash Disbursement Ratification
Reviewed and ratified the listing of cash disbursements for the period of April 1 through April 15, 2026.

9.c Statement of Investment Deposits for March 2026
Received and filed the report listing investment deposits of the City of Arroyo Grande as of March 31, 2026, as required by Government Code Section 53646(b).

9.d Appointment to the Citizens Transportation Advisory Committee 1) Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE APPOINTING CYNTHIA SHAHEEN TO THE SAN LUIS OBISPO COUNCIL OF GOVERNMENT’S CITIZENS TRANSPORTATION ADVISORY COMMITTEE"; and
2) Determined that approving the appointment 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.e San Luis Obispo County Regional Homelessness and Affordable Housing Compact 1) Adopted a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE APPROVING THE SAN LUIS OBISPO COUNTY REGIONAL HOMELESSNESS AND AFFORDABLE HOUSING COMPACT"; and
2) Found that approving the Resolution is not a project subject to the California Environmental Quality Act (“CEQA”) because it has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060,

CITY COUNCIL REGULAR MEETING MINUTES
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4 Item 9.a.
subd. (c)(2)-(3), 15378. Alternatively, the adoption of the Resolution is exempt from CEQA on the basis that it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. (State CEQA Guidelines, § 15061, subd. (b)(3).)

9.f Resolutions Ordering the Preparation of Annual Engineer’s Reports for Assessment Districts for FY 2026-27
1) Adopted Resolutions entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE ORDERING THE PREPARATION AND FILING OF THE ANNUAL ENGINEER’S REPORT FOR THE PARKSIDE VILLAGE ASSESSMENT DISTRICT FOR FISCAL YEAR 2026-2027"; "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE ORDERING THE PREPARATION AND FILING OF THE ANNUAL ENGINEER’S REPORT FOR THE GRACE LANE ASSESSMENT DISTRICT FOR FISCAL YEAR 2026-2027"; and "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE ORDERING THE PREPARATION AND FILING OF THE ANNUAL

ENGINEERS REPORT FOR THE ARROYO GRANDE LANDSCAPING AND LIGHTING ASSESSMENT DISTRICT NO. 1, WITHIN TRACT 1769, FOR FISCAL YEAR 2026-2027". 2) Determined that adopting the Resolutions ordering the Engineer's reports is exempt from the California Environmental Quality Act ("CEQA") because the activity is not a “project” subject to CEQA and 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 Architectural Review 25-004; Public Art on Private Property; Location – 227 East Branch Street
Interim Community Development Director Perez presented the Item.

Mayor Ray Russom opened the public hearing. Speaking from the public were Emily Zimmerman, Nan Fowler, Lisa Deblauw, and Christine Navolt. Upon hearing no further public comments, Mayor Ray Russom closed the public hearing. Interim Director Perez responded to questions from the public.

Moved by Mayor Pro Tem Maraviglia
Seconded by Council Member Guthrie
1) Adopt a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE APPROVING ARCHITECTURAL REVIEW 25-004 FOR A PROPOSED MURAL AT 227 EAST BRANCH STREET"; and
2) Find that the project is exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 for minor alterations to existing structures.

AYES (3): Mayor Pro Tem Maraviglia, Council Member Guthrie, and Mayor Ray Russom

CITY COUNCIL REGULAR MEETING MINUTES
MAY 12, 2026
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5 Item 9.a.

ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

10.b Amendments to the Comprehensive FY 2026-27 User Fee Schedule Administrative Services Director Valentine presented the Item and responded to questions from Council. City Manager Downing responded to questions from Council.

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

Moved by Mayor Ray Russom
Seconded by Council Member Guthrie
1) Adopt a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE ESTABLISHING ADDITIONAL USER FEES AND ADJUSTING THE

RATES AND CHARGES FOR ALL USER FEES FOR REGULATORY ACTIVITIES, PROGRAMS, AND SERVICES set forth IN THE COMPREHENSIVE FEE SCHEDULE EFFECTIVE JULY 1, 2026", and directed staff to evaluate adding a lost key fee; and 2) Determine that adopting amendments to the Comprehensive FY 2026-27 User Fee Schedule is exempt from the California Environmental Quality Act (“CEQA”) because the activity is not a “project” subject to CEQA and 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).

AYES (3): Mayor Ray Russom, Council Member Guthrie, and Mayor Pro Tem Maraviglia ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

11. BUSINESS ITEMS

11.a Amendments to the Municipal Code Regarding Cross-Connections Utilities Manager Taylor presented the Item.

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

Moved by Council Member Guthrie
Seconded by Mayor Pro Tem Maraviglia
1) Introduce an ordinance entitled: "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE AMENDING CHAPTER 13.16 OF TITLE 13 OF THE ARROYO GRANDE MUNICIPAL CODE REGARDING CROSS-CONNECTIONS"; and

CITY COUNCIL REGULAR MEETING MINUTES
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6 Item 9.a.
2) Find the Ordinance is not subject to the California Environmental Quality Act (“CEQA”) because amending Chapter 13.16 of the AGMC has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §15060 (c)(2) and (3), 15378). Alternatively, this organizational or administrative activity to amend Chapter 13.16 of the AGMC will not result in direct physical changes in the environment. (State CEQA Guidelines §15378(b)(5).)
AYES (3): Council Member Guthrie, Mayor Pro Tem Maraviglia, and Mayor Ray Russom ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

11.b Ten Year Capital Improvement Program, Measure E-24 Local Sales Tax Fund Expenditure Program, and Measure O-06 Local Sales Tax Fund Expenditure Program Administrative Services Director Valentine presented the Item and responded to questions from Council. Assistant City Manager/Public Works Director Robeson responded to questions from Council.

Mayor Ray Russom invited public comment. Speaking from the public was Lisa Deblauw. No further public comments were received. Assistant City Manager/Public Works Director Robeson responded to questions from the public.

Moved by Mayor Pro Tem Maraviglia
Seconded by Council Member Guthrie
1) Adopt a Resolution entitled: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE APPROVING THE 10-YEAR CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2026-27 THROUGH FISCAL YEAR 2035-36"; and
2) Find that the approval of the Resolution is statutorily exempt from the California Environmental Quality Act (CEQA) under State CEQA Guidelines, Section §15061(b)(3), as such approval does not have the potential to result in an effect on the environment. The approval does not commit the City to any of the identified projects in the CIP. Each individual project in the plan will be subject to CEQA review as required by law. Secondly, this action constitutes an organizational or administrative activity that will not result in a physical change in the environment and is therefore not subject to CEQA pursuant to Section §15378(b)(5).

AYES (3): Mayor Pro Tem Maraviglia, Council Member Guthrie, and Mayor Ray Russom ABSENT (2): Council Member Secrest, and Council Member Loe Passed (3 to 0)

12. COUNCIL COMMUNICATIONS
None.

CITY COUNCIL REGULAR MEETING MINUTES
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PAGE 7
7 Item 9.a.

13. ADJOURNMENT
There being no further business to come before the City Council, Mayor Ray Russom adjourned the meeting at 7:07 p.m.
_________________________
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: May 26, 2026
RECOMMENDATION:

Review and ratify the attached listing of cash disbursements for the period of April 16 through April 30, 2026.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There is a $2,743,087.29 fiscal impact for the period of April 16 through April 30, 2026, that includes the following items:
 Accounts Payable Checks $2,241,413.81
 Payroll & Benefit Checks $501,673.48
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 for 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
May 26, 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. April 16 through April 30, 2026 – Accounts Payable Check Register

2. April 17, 2026 – Payroll & Benefit Check Registers

Attachment 1

Attachment 1

Attachment 1

Attachment 1

Attachment 1

Attachment 1

Attachment 1

.

General Fund 442,757.04 5101 Salaries Full time 302,445.24 Streets Fund 21,121.93 5101 Volunteer Employee Retirement - Sewer Fund 14,203.14 5102 Salaries Part-Time - PPT 2,862.35 Water Fund 23,591.37 5103 Salaries Part-Time - TPT 8,563.09 501,673.48 5105 Salaries OverTime 12,874.63
5106 Salaries Strike Team OT -
5107 Salaries Standby 2,187.22
5108 Holiday Pay -
5109 Sick Pay 3,421.37
Administrative Services - 5110 Annual Leave Buyback -
Information Services - 5111 Vacation Buyback -
Community Development - 5112 Sick Leave Buyback -
Police 10,540.66 5113 Vacation Pay 8,325.93
Public Works - Maintenance 1,231.32 5114 Comp Pay 3,254.57 Public Works - Enterprise 796.14 5115 Annual Leave Pay 13,759.44 Recreation - Administration 306.51 5116 Salaries - Police FTO 225.08 Recreation - Special Events - 5121 PERS Retirement 40,799.85 12,874.63 5122 Social Security 26,739.87
5123 PARS Retirement 167.17
5126 State Disability Ins. 4,613.22
5127 Deferred Compensation 1,937.48
5131 Health Insurance 62,233.03
5132 Dental Insurance 3,109.44
5133 Vision Insurance 795.35
5134 Life Insurance 415.59
5135 Long Term Disability 463.50
5137 Leave Payouts -
5142 Unemployment Insurance -
5143 Uniform Allowance 134.56
5144 Car Allowance 918.00
5146 Council Expense -
5147 Employee Assistance -
5148 Boot Allowance -
5149 Motor Pay -
5150 Bi-Lingual Pay 175.00
5151 Cell Phone Allowance 1,252.50
501,673.48
OVERTIME BY DEPARTMENT:

CITY OF ARROYO GRANDE

DEPARTMENTAL LABOR DISTRIBUTION

PAY PERIOD
03/27/2026-04/09/2026
4/17/2026

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: Acceptance of the Annual Comprehensive Financial Report DATE: May 26, 2026
RECOMMENDATION:
1) Receive and file the Annual Comprehensive Financial Report (ACFR); and 2) Determine that receiving and filing the ACFR 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:

Preparation of the City’s financial reports requires approximately 250 hours per year of personnel resources and auditing services costing approximately $35,800 annually.

BACKGROUND:

State law requires that every general-purpose local government publish an annual comprehensive financial report (the “ACFR”) on its financial position and activity, and that the report be audited by an independent firm of certified public accountants. The goal of the independent audit is to provide a reasonable assurance that the City’s financial statements are free of material misstatements. In addition, the auditing firm is responsible for providing an independent review of the City’s internal financial controls. The City’s financial statements, internal documents, and financial controls have been audited by the certified public accountant firm of Moss, Levy & Hartzheim, LLP for the fiscal year ending June 30, 2025. A link to the City’s ACFR is included herein as Attachment 1.

ANALYSIS OF ISSUES:

Generally accepted accounting principles (GAAP) provide the criteria for judging whether a financial report is presented fairly. In defining the minimum standard of acceptable basic financial reporting for state and local governments, GAAP mandates a complete set of basic financial statements, including accompanying note disclosures, as well as the

Item 9.c.

City Council
Acceptance of the Annual Comprehensive Financial Report May 26, 2026

presentation of certain required supplementary information. GAAP encourages government agencies to present this information within the ACFR.

The ACFR provides a more detailed financial report beyond the basic financial statements. The ACFR is made up of three sections:
 The Introductory Section: provides general information on the City, which includes the letter of transmittal, list of principal officials, and organizational chart.  The Financial Section: provides the overall financial information of the City, which includes the report of the independent auditor, management’s discussion and analysis (a narrative of the City finances), the basic financial statements, required supplementary information and other supplementary schedules and statements.  The Statistical Section: provides a broad range of operational, economic, and historical data that provides a context for assessing the City’s economic condition.

This section provides information about the City’s general financial trends, revenue capacity, debt capacity, economic and demographic trends, and operating information.

The City’s external auditors at Moss, Levy & Hartzheim, LLP conducted testing of the City’s internal financial controls in October 2025, and December 2025. The testing included reviewing the City’s procedures for receiving and disbursing cash, the accounting methodology used to record transactions, the separation of duties to avert collusion, and the City’s asset securities. As a result of this testing, there were no internal control issues/events noted by the auditors.

An audit was also conducted on the net position of the City for the financial period ending June 30, 2025. Documentation in support of the assets, liabilities, and fund balance of all the funds in the City were examined and verified. This process assures an impartial review and substantiation of the City’s net position. The result of this review is documented in the City’s ACFR. The City’s ACFR complies with newly effective Government Accounting Standards Board pronouncements, as detailed in the Notes to the Financial Statements (see Page B-46 of Attachment 1).

Auditors may issue three different types of opinions at the conclusion of an audit; an unmodified, modified, or adverse opinion. An unmodified opinion assures the reader that the information presented in the ACFR fairly represents the financial position of the City.

A modified opinion states that the information is fairly presented except for a particular issue. An adverse opinion indicates that the agency has major accounting and/or internal control issues and no reliance may be placed on the financial statements.

The Administrative Services Department staff is proud to report that for the fiscal year ended June 30, 2025, the City of Arroyo Grande received an unmodified opinion, reflecting that the information presented in the ACFR fairly represents the financial position of the City.

Item 9.c.

City Council
Acceptance of the Annual Comprehensive Financial Report May 26, 2026

As presented in the ACFR, the City’s combined net position on June 30, 2025, increased by $2.3 million or 2.35% from $98.7 million to $101 million. This overall increase is due to an increase in governmental activities ($1.2 million) and an increase in business-type activities ($1.1 million). The largest portion of the City’s net position, $86.1 million, reflects investments in capital assets net of depreciation (e.g. land, buildings, infrastructure, and machinery & equipment). The City uses these capital assets to provide services to the public; consequently, these assets are not available for future spending.

Chart 1: Net Position
The description of the City’s net position of all funds reflects all the assets and liabilities of the City. It includes the City’s investment in capital assets such as parks, bridges, and roads as well as the liabilities or obligations to pay vendors, employees, and debt service payments. The net position is the mathematical difference between assets and liabilities, but it does not necessarily reflect the economic health of an organization. In the City’s case, about 85% of the total net position reflects capital assets. While these assets are important, they cannot be used to fund the day-to-day operations of the City and, therefore, may not be the most useful measure of the City’s liquidity.

For financial reporting purposes, the half percent Measure O-06 Local Sales Tax revenue, the one percent Measure E-24 Local Sales Tax revenue, and Other Post-Employee Benefits funds (OPEB) are combined with the General Fund in the ACFR. However, the City’s quarterly and year-end reporting is based on the General Fund exclusively and does not include the OPEB funds. The combined funds, as shown in Table 1, report total

Item 9.c.

City Council
Acceptance of the Annual Comprehensive Financial Report May 26, 2026

revenues of $28 million and expenditures of $28.4 million. As a result, there was an overall decrease in the fund balance of $2 million during the 2024-25 fiscal year.

Table 1: Change in Fund Balance
The ACFR reports a General Fund total fund balance of $15.9 million. However, a small amount of the fund balance is considered non-spendable because it is held as inventory and lease receivable ($1,063,999). Additionally, $4.8 million is designated for completing capital projects or meeting other commitments in the future, including post-employment benefits. This leaves an unassigned balance of $8.6 million in the General Fund and $169,261 in the Measure O-06 Local Sales Tax fund.

The City’s Fiscal Policy establishes the maintenance of a fund balance reserve goal of 20% of expenditures with a minimum of 15% in the General Fund. At the conclusion of Fiscal Year 2024-25, the reserve, based on available General Funds, was 37.3% and exceeded the City’s reserve goal.

ALTERNATIVES:

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

1. Staff’s recommendation; or

2. Provide other direction to staff.

ADVANTAGES:

By receiving and filing this report, the City will be accepting the auditors’ unmodified opinion. As discussed above, an unmodified opinion assures the reader that the information presented in the reports fairly represents the financial position of the City.

DISADVANTAGES:

There are no disadvantages in relation to the recommended action.

ENVIRONMENTAL REVIEW:

Receiving and filing the ACFR 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 General Fund
Measure O-06 Local
Sales Tax Fund
Measure E-24 Local
Sales Tax Fund OPEB Total
Beginning Fund Balance 7/1/24 $ 11,604,740 $ 5,017,872 $ - $ 1,288,901 $ 17,911,513 Revenues 23,227,799 3,191,022 1,412,063 169,234 28,000,118 Expenditures (25,365,466) (4,633,451) (3,035) - (30,001,952) Net Change in Fund Balance $ (2,137,667) $ (1,442,429) $ 1,409,028 $ 169,234 $ (2,001,834) Fund Balance:

Nonspendable $ 1,063,999 $ - $ - $ - $ 1,063,999
Assigned for capital projects - 3,406,182 1,409,028 - 4,815,210 Assigned for post employment benefits - - - 1,458,135 1,458,135 Unassigned 8,403,074 169,261 - - 8,572,335
Ending Fund Balance, 6/30/25 $ 9,467,073 $ 3,575,443 $ 1,409,028 $ 1,458,135 $ 15,909,679

Item 9.c.

City Council
Acceptance of the Annual Comprehensive Financial Report May 26, 2026

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. Annual Comprehensive Financial Report for the Fiscal Year Ending June 30, 2025

ATTACHMENT 1
Attachment 1 is available as a link: FY 2024-25 Annual Comprehensive Financial Report (PDF)

Item 9.d.

MEMORANDUM
TO: City Council
FROM: Nicole Valentine, Director of Administrative Services BY: Megan Schotborgh, Finance Manager
SUBJECT: Fiscal Year 2025-26 Third Quarter Financial Status Report DATE: May 26, 2026
RECOMMENDATION:
1) Receive and file the Fiscal Year 2025-26 Third Quarter Financial Status Report; 2) Approve one Budget Adjustment Request; and
3) Receive an update from the Citizens’ Sales Tax Oversight Committee Meeting.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

Preparation of the Fiscal Year (FY) 2025-26 Third Quarter Financial Status Report (the “Q3 Report”) requires staff time within the existing work plan and budget for the Administrative Services Department. At the end of Q3, FY 2025-26 revenues for the Consolidated General Fund were $1.5 million, or five percent (5%), higher than the Budget Target (“Target”). Actual Expenditures were $1,023,705, or three percent (3%), higher than the Budget Target (“Target”).

The City Council is asked to approve one budget adjustment. Sidewalk Repairs and Improvements project has received a grant from the Highway Safety Improvement Program (HSIP) in the amount of $340,500.

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 Q3 Report is the third of four financial performance reports that staff will present to Council during the 2025- 26 fiscal year. The purpose of the Q3 Report is to:
 Compare third quarter revenues received and expenditures incurred to the third quarter of the prior year and to the budgeted Target to evaluate the City’s financial performance;

Item 9.d.

City Council
Fiscal Year 2025-26 Third Quarter Financial Status Report May 26, 2026

 Provide explanations for key account variances and identify any potential trends that might impact financial planning; and
 Provide other key Q3 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 Q3 financial results will be compared to both the prior year’s third quarter and the budgeted Target. The Target for expenditures is calculated as three-fourths (75%) of the FY 2025-26 Budget and represents the 9-month period from July 2025 through March 2026. This is except for the Non-Departmental Annual Payments line, which has a Target of the full budget. This approach decreases the expenditure Target from 75% to 57% for the third quarter. The Target for revenues does not use the 75% Target but a Target of 63% that more accurately reflects the anticipated revenues to be received in the first half of the fiscal year. Using the Target as a comparator against actual results provides a simplified method to evaluate performance for the quarter.

The Q3 Report also includes a section regarding Budget Adjustment Requests. This section summarizes individual budget adjustments approved by the City Council during the third quarter, as well as administrative adjustments completed by City staff.

Additionally, this section of the report includes new Budget Adjustment Requests not otherwise addressed in past City Council agenda items. Approval will enable the City to complete important work items and meet the needs of the community.

The Citizens’ Sales Tax Oversight Committee (CSTOC) met on April 17, 2026, 1 to review
the Measure E-24 10 Year Revenue and Expenditure plan.

ANALYSIS OF ISSUES:

Current Year Q3 Revenue and Expenditures Compared to Prior Year Table 1: Current Year Q3 Actuals Compared to Prior Q3 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.

1https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=fbeb4aca-eda6-488d-aac6- 5d3afa82ddfe&Agenda=Agenda&lang=English
Third Quarter
FY 2025-26
Third Quarter
FY 2024-25 Variance
Revenue 21,604,279 16,069,810 5,534,469
Expenditures 22,349,725 19,020,978 3,328,747

Item 9.d.

City Council
Fiscal Year 2025-26 Third Quarter Financial Status Report May 26, 2026

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 Fund is from revenue received through a half-cent 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. To aid in the collection and reporting of this information, the City has accounted for this fund in a separate account.

The Measure E-24 Fund is from revenue received through a 1% sales tax approved by the City's voters in November 2024. Measure E-24 is intended to fund City services, such as fixing potholes, maintaining city streets, sidewalks, parks, aging infrastructure, and community facilities; providing local fire protection, police, and 9-1-1 emergency services; cleaning up litter/graffiti, and addressing homelessness. To aid in the collection and reporting of this information, the City has accounted for this fund in a separate account.

A more thorough explanation of Q3 variances is set forth in the attached financial report (Attachment 1).

Q3 Revenue and Expenditures Compared to Target
Table 2: Q3 Actuals Compared to Target
FY 2025-26 Q3
Target
FY 2025-26 Q3
Actuals Variance
Revenue 20,083,442 21,604,279 1,520,837
Expenditures 21,326,020 22,349,725 1,023,705
Table 2 above compares the FY 2025-26 third quarter actual results to the budgeted Target. Q3 actual revenue was over the Target by $1.5 million. Q3 actual expenditures were over the Target by approximately $1 million. A more thorough explanation of Q3 variances is set forth in the attached financial report.

Budget Adjustments
Staff identified one budget adjustment request described in more detail below:

Capital Improvement: The City was notified of its Highway Safety Improvement Program (HSIP) grant award in the amount of $340,560 on February 2, 2025, and received allocation confirmation on November 17, 2025. This grant is part of the 2026 Pedestrian Improvements Project awarded by the City Council on January

Item 9.d.

City Council
Fiscal Year 2025-26 Third Quarter Financial Status Report May 26, 2026

27, 2026, item 9.h. This budget adjustment will reflect the funding to increase revenues and expenditures of $340,500.

CSTOC Meeting Update
At the April 17, 2026, meeting, the Committee reviewed the Measure E-24 10-year Revenue and Expenditure Plan. In preparation for the adoption of the FY 2026-27 MidCycle Budget Update, the Committee recommended that the proposed use of Measure E-24 Local Sales Tax funds, as referenced in the report, are consistent with the accepted priorities of the Local Revenue Measure E-24 Local Sales Tax.

ALTERNATIVES:

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

1. Staff’s recommendation;

2. Receive and file the Fiscal Year 2025-26 Third Quarter Financial Status Report; do not approve the Budget Adjustment Request; and receive an update from the Citizens’ Sales Tax Oversight Committee Meeting; or

3. Provide other direction to staff.

ADVANTAGES:

The Q3 Financial Report provides City Council with timely and transparent information on the City’s financial performance for the third quarter of FY 2025-26. By comparing actual revenues and expenditures to both the prior year and the budgeted Target, the report allows for early identification of variances, emerging trends, and potential impacts to future financial planning. The report also supports informed decision-making by summarizing budget adjustment requests, staffing levels, and the status of capital improvement projects, while reinforcing fiscal accountability and ongoing monitoring of the City’s financial condition.

DISADVANTAGES:

The financial information presented reflects a single point in time and may change as additional revenues are received and expenditures occur later in the fiscal year.

Additionally, variances from the budgeted Target may be the result of timing differences rather than underlying financial performance, which can limit the conclusions that can be drawn from quarter-specific results.

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 Third Quarter Financial Status Report

ATTACHMENT 1

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

INTRODUCTION
The following report is an overview of the City’s fiscal position at the end of the third 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 third quarter and compare actual results to the prior year and the Adjusted Budget to determine the City’s performance. The Third Quarter report timeframe is July 1, 2025, through March 31, 2026.

The financial report is organized in the following sections:

Section 1 – an overview of City’s financial position after the end of the third quarter of FY 2025-26. This includes a comparison of third quarter results between the current and prior year. In addition, third 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 third 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 third quarter along with their final costs.

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

ENSURING FISCAL
STABILITY:

In Fall 2020, the City Council
established a goal to ensure
financial stability for the
organization throughout the
planning, budgeting, and
expenditure process, including
preparation and presentation
of year-end and quarterly
financial reports.

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 Fund is from revenue received through a half-cent 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. To aid in the collection and reporting of this information, the City has accounted for this fund in a separate account. The Measure E-24 Fund is from revenue received through a 1% sales tax approved by the City's voters in November 2024. Measure E-24 is intended to fund City services, such as fixing potholes, maintaining city streets, sidewalks, parks, aging infrastructure, and community facilities; providing local fire protection, police, and 9-1-1 emergency services; cleaning up litter/graffiti, and addressing homelessness. To aid in the collection and reporting of this information, the City has accounted for this fund in a separate account.

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

ATTACHMENT 1

within the boundaries of the Parking and Business Improvement Area for maintenance of the Village 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 third 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 third quarter’s 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 third 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 half 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 Third Quarter
FY 2025-26
Third Quarter
FY 2024-25 Variance
Revenue $ 24,074,041 $ 20,448,186 $ 3,625,855
Expenditures $ 24,292,294 $ 21,595,409 $ 2,696,885
Third Quarter
FY 2025-26
Third Quarter
FY 2024-25 Variance
Revenue $ 21,604,280 $ 16,069,810 $ 5,534,470
Expenditures $ 22,349,725 $ 19,020,978 $ 3,328,747
Governmental Funds
Consolidated General Fund Page 39 of 466
ATTACHMENT 1

Governmental Funds – At the end of the third quarter of FY 2025-26, Governmental Fund revenue was 17.7% or $3.6M higher than prior year, and expenditures were higher by 13.7% or $2.7M.

Most 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 third quarter was

34.4%, or $5.5M higher than the third quarter of the prior year. Expenditures increased by 18.9%, or $3.3M higher than the third quarter of the prior year. Most of the variance between the two fiscal years related to revenues is the new Measure E-24 funds. The increase in expenditures 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 third quarter actual expenditures compared to the Target (Table 3). Lastly, a discussion of Consolidated General Fund revenue is included, which compares third 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 third quarter
Consolidated General Fund revenue is
over the budgeted Target by $1.5M.

Likewise, actual expenditures through
third quarter totaled $22.3, or 60% of
the full year’s Budget, and are over the
Target by $$1M. A more detailed
discussion on Consolidated General
Fund revenue and expenditure
variances is included later in this
report.
$20.1 $21.6 $21.3 $22.3
Dollars (in millions)

REVENUES EXPENDITURES
FY 2025-26 Third Quarter
Target Actual

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 $22.6 million, 54.2% of the
City’s costs are associated with personnel, 42.8%
with operating and maintenance, 1.0% for the
City’s debt service, 0.8% for Capital Outlay, and

1.2% with transfers to other funds.

Table 3 reflects the second 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, third quarter expenditures were $1,023,705 over the Target. Majority of the City departments were under spent with the more significant savings under City Administration. A more detailed explanation of key expenditure variances by individual department/division is provided below.

City Administration $ 1,990,770 $ 1,493,077 $ 1,300,857 $ 192,220 10% Legislative & Information Services 491,675 368,756 392,477 (23,721) -5% Measure O-06 Sales Tax Fund 1,521,200 1,140,900 1,139,941 959 0% Measure O-06 CIP Allocation 3,916,557 - - - 0%
Measure E-24 Sales Tax Fund 32,500 24,375 - 24,375 75%
Measure E-24 CIP Allocation 5,952,640 - - - 0%
Administration Services 5,602,216 4,201,662 5,275,913 (1,074,251) -19% Non-Departmental Annual Payments 3,419,000 3,419,000 3,322,177 96,823 3% Community Development 2,143,940 1,607,955 1,616,404 (8,449) 0% Police Department 7,746,396 5,809,797 6,014,032 (204,235) -3% Recreation Services 980,550 735,413 794,694 (59,282) -6% Public Works 3,366,780 2,525,085 2,493,230 31,855 1%
TOTAL EXPEDITURES 37,164,224 21,326,020 22,349,725 (1,023,705) -3% %
Fav/(Unfav)
Consolidated General Fund Department Variances - Third Quarter Consolidated General Fund Department FY 2025-26
Budget
FY 2025-26
Actuals
Dollar
Fav/(Unfav)
FY 2025-26 Q3
Target
FY 2025-26 % of
Q3 Actuals Actuals
Personnel Costs $ 12,103,135 54.2%
Operating Costs 9,573,431 42.8%
Debt Service 213,203 1.0%
Capital Outlay 181,406 0.8%
Transfers Out 278,550 1.2%
Total $ 22,349,725
Expenditure Category

ATTACHMENT 1

KEY EXPENDITURE VARIANCES FOR INDIVIDUAL DIVISIONS/DEPARTMENTS FOR FISCAL YEAR 2025-26
City Administration includes the functions of City
Council, City Attorney, Retiree, City Manager’s Office, and Human Resources. Some of the more significant
variances include:
 The City Manager’s Office has salary savings of $37,000 related to the Management Analysis position being filled by a part-time employee.
 The Retirees benefits show a variance totaling $52,000 related to the allocation being completed at the end of the year.
 The Human Resources department had savings in contractual services of $20,000.  The Community Services Grant program is not allocated until the last quarter of the year creating a variance of $75,000.

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 third quarter shows this department over its budget target, even though this is simply due to where the placeholder was originally budgeted.

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 experienced multiple vacancies throughout the fiscal year providing salary savings; however, the vacancies required existing staff to work overtime to maintain adequate coverage. These overtime costs account for approximately $220,000 of the budget overage.

Department: City Administration
Division: Various (4001, 4003, 4099, 4101,
4110)
Issue: Overall savings in salaries and
benefits
Impact to Consolidated General Fund:
$192,220 savings
Department: Administrative Services
Division: Various (4120, 4140, 4145)
Issue: Overall overage due to Salary Savings
budget
Impact to Consolidated General Fund:
$1,074,251 overage
Department: Police Services
Division: Various (4201, 4203, 4204, 4207)
Issue: Overall overages in salaries and
benefits
Impact to Consolidated General Fund:
$204,235 overage

ATTACHMENT 1

KEY REVENUE VARIANCES BY ACCOUNT FOR THE SECOND QUARTER Table 4 – Consolidated General Fund Revenue
As reflected in Table 4, third-quarter revenue is below the Target by $1,520,837. This table uses a Target of 62.96% that more accurately reflects the anticipated revenues to be received through the third quarter of the fiscal year. Revenue realization is typically low at the end of the third 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 third 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 portion of property tax related to the first installment was 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 8 months of Property Tax revenue. Actual revenue received in this category was higher than this conservative Target
Sales Tax, Measure O-06 Fund, and Measure E-24 Fund – Sales tax, Measure O-06, and Measure E-24 Sales Tax realization through third quarter is on track. Actual sales tax revenue received through the third quarter was $3.3M, Measure O-06 is $1.9M, and Measure E-24 is $3.8M. The Target is based on seven months of revenue, taking into account the timing of anticipated payments.

Transient Occupancy Tax (TOT) – TOT revenue is reflecting a $79,131 favorable variance to the Target.

The Target and actual TOT revenue represents seven 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 $ 4,776,267 $ 5,119,702 $ 343,435 5% Sales Tax 5,206,800 3,037,300 3,359,802 322,502 6%
Measure O-06 Sales & Use Tax 2,942,500 1,716,458 1,925,457 208,999 7% Measure E-24 Sales & Use Tax 5,870,000 3,424,167 3,783,325 359,158 6% Transient Occ. Tax 1,493,500 871,208 950,339 79,131 5%
Property Tax in Lieu of VLF 2,322,600 1,161,300 1,157,693 (3,607) 0% Franchise Fees 921,100 614,067 826,807 212,740 23%
License & Permit Fees 576,000 432,000 389,043 (42,957) -7% User Fees 696,000 522,000 576,150 54,150 8%
Planning Fees 419,600 314,700 371,878 57,178 14%
Recreation Fees 364,800 273,600 313,129 39,529 11%
Transfers In 2,951,500 2,213,625 2,164,808 (48,817) -2% Other Revenue 969,000 726,750 666,146 (60,604) -6%
TOTAL $ 31,897,800 $ 20,083,442 $ 21,604,279 $ 1,520,837 5% %
Fav/(Unfav)
Consolidated General Fund Revenue Variances - Third Quarter REVENUE BY CATEGORY FY 2025-26
Budget
FY 2025-26
Q3 Actuals
Dollar
(Unfav)/Fav
FY 2025-26
Q3 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 50% at the end of the third quarter of the fiscal year.

Franchise Fees – Eight months of Waste Connection franchise fees were received through third quarter.

In addition, Charter Communications franchise fees earned in the third quarter will not be paid and received until the fourth quarter. In light of the timing of payments, the Target is based on eight months of revenue. The actual revenue at the end of the third quarter is higher than the Target by $212,740.

License & Permit Fees, User Fees, and Planning Fees – License and permit revenue is below the Target by $42,957. User fee revenue is above the Target by $54,150. Planning revenue exceeded the Target by $57,178. The Target is based on 75% or nine 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 $39,529. The Target is based on nine 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 nine 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 (3 rd 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 second quarter of FY 2025-26 was 8%. This equates to six (6) 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 who separated during the period, the vacancy rate only looks at vacancies at the end of period. The costs associated with turnover include the cost of advertising new positions, training, overtime, lowered productivity, and workload balance.

Department
Adopted Budget
Headcount (FTE’s)
Vacancies
(3rd Qtr)
% of Total
Staffing Vacant Positions
City Manager & Human Resources 3 - 4%
Administrative Services 7 - 9%
Community Development 7 1 9% Community Development Director Legislative & Info Services 2 - 3%
Police Department 31 4 38% Police Officer (4)
Public Works 27 1 33% Maintenance Worker I
Recreation Services 3 - 4%
Total 80 6 100%

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 Budget
Current
Status
Project Budget
Expended
New Play Structure - Parkside Park Parkside Assessment District $ 250,000 Completed $ 225,630 Replacement of Traffic Guardrails Measure O-06 Sales Tax $ 200,000 Completed $ 73,055 Bridge Street Bridge Habitat Mitigation HBP $ 48,628 Completed $ 22,906 Le Point Street Parking Lot Expansion Measure O-06 Sales Tax $ 39,205 Completed $ 4,446 Traffic Way Bridge Replacement
HBP/Sales Tax - Outreach/
Measure O-06 Sales Tax $ 9,785,916 In Progress $ 8,639,080 Pavement Management Program
SB1/Measure E-24/Measure O06 Sales Tax/General $ 4,630,376 In Progress $ 429,018 Water Main and Service Replacement related
to PMP Projects Water Fund/Water Facility $ 700,000 In Progress $ 213,078 Corrugated Metal Pipe (CMP) Investigation
and Repair Measure O-06 Sales Tax $ 95,800 In Progress $ 82,875 Sidewalk Repairs and Improvements
Measure E-24 Sales Tax,
CDBG, Measure O-06 Sales
Tax $ 783,535 In Progress $ 67,979
Halcyon Road Complete Streets
HSIP/RSHA/USHA/Safe
Routes to School/General/
Measure O-06 Sales Tax/ATP/
Transportation Facilities DIF $ 11,251,198 In Progress $ 242,508 SCADA Software/Electronics Design and
Upgrade Water Fund $ 170,000 In Progress $ 59,540
Software for Public Safety Camera System to
allow Traffic Counts Transportation Facilities DIF $ 50,000 In Progress $ 21,825 City Structure Roof Repairs (City Hall, Balcony
& Southern & Western Siding, Old City Hall,
Council Chambers, PD, Women's Club, Fire
Station 1)
Measure O-06 Sales Tax/Park
Improvement
$ 370,000 In Progress $ 15,185
Financial Management Software
Sewer/Water/Measure O-06
Sales Tax $ 215,662 In Progress $ 13,600
Wayfinding Measure O-06 Sales Tax $ 24,162 In Progress $ 11,970 Traffic Way Bridge Replacement Habitat
Mitigation HBP/Measure O-06 Sales Tax $ 50,000 In Progress $ 6,185 Water Master Plan Update Water Fund $ 10,000 In Progress $ 4,750 Safety Improvements Master Plan incl. ADA Access (Community Measure O-06 Sales Tax $ 25,000 In Progress $ 1,655 Center, Elm St. Park, Soto Sports Complex,
Don Roberts Field, Corp Yard) & Community
Survey Measure O-06 Sales Tax $ 344,815 In Progress $ 965 Replace Beach Volleyball Court at Rancho
Grande Park Measure O-06 Sales Tax $ 25,000 In Progress $ - Fire Station 1 HVAC Unit Replacement Measure O-06 Sales Tax $ 100,000 In Progress $ - Fire Station 1 Front Lobby Security Measure O-06 Sales Tax $ 22,000 In Progress $ - ADA Improvements Measure O-06 Sales Tax $ 75,000 In Progress $ - City Council Chambers Remodel Measure O-06 Sales Tax $ 50,000 In Progress $ - E. Grand (Halcyon to Elm) Economic
Development Master Plan Measure O-06 Sales Tax $ 250,000 In Progress $ - Huasna Road, Corbett Canyon, and E. Branch
Street Intersection Roundabout Transportation Facilities DIF $ 400,000 In Progress $ - City Hall Second Story Water Leak Repair Measure O-06 Sales Tax $ 20,000 In Progress $ - Old City Hall Building Repairs Measure O-06 Sales Tax $ 100,000 Not Started $ 17,828 Soto Basin #2 Reservoir Liner Repair Measure O-06 Sales Tax $ 200,000 Not Started $ - Digital Community Bulletin Board Project Measure O-06 Sales Tax $ 25,000 Not Started $ - Virginia Drive and S. Halcyon Road Curb
Ramp and Sidewalk Improvement CDBG $ 113,498 Not Started $ - Water Well #11 Facilities Water Availability $ 42,772 Not Started $ - Watershed Management Plan and Stormwater
Master Plan Measure O-06 Sales Tax $ 500,000 Not Started $ - ADA Bathrroms Elm St. Park Measure O-06 Sales Tax $ 235,000 Not Started $ - Wastewater Master Plan Update Sewer Fund $ 10,000 Not Started $ - Public Safety Video Cameras COPS $ 444,300 In Progress $ 43,908

ATTACHMENT 1

SECTION 4: APPROPRIATION TRANSFERS AND BUDGET ADJUSTMENTS Administrative and Previously Approved Third Quarter Budget Adjustments The following third quarter budget adjustments were previously approved by the City Council or are classified as administrative and not requiring City Council approval.  Water Enterprise Fund: Appropriate $100,000 from the Water Enterprise Fund to replace the Water Diesel Utility Truck that is no longer operational. This replacement was originally budgeted for FY 2026-27. The total cost of the vehicle will be $160,000, including $60,000 already budgeted for FY 2025-26, with the additional $100,000 requested now. The previously budgeted FY 2025- 26 service vehicle will be replaced next year. Approved at the February 10, 2026, City Council meeting, Item 9.d.
 Fire Protection Development Impact Fee Fund: Appropriate $25,000 from the Fire Protection Development Impact Fee Fund to partition a portion of the sleeping quarters at Fire Station 1, creating individual areas for all staff. Approved at the February 10, 2026, City Council meeting, Item 9.d.
 Measure O-06 Sales Tax Fund: Reallocate $60,000 from the Elm Street Park Master Plan to design ADA-compliant bathrooms in the repurposed Well 1 building. This project will install four restrooms to replace the two removed with the demolition of the Mark M. Millis Community Center. Starting the design now allows construction to begin early next fiscal year, which already has funding allocated. Approved at the February 10, 2026, City Council meeting, Item 9.d.  Transportation Facilities Development Impact Fee Fund: Reallocate $28,500 from the Software for Public Safety Camera System to the Traffic Count Data CIP project for Public Safety Camera System – Phase 2. The Traffic Count Data project is complete and under budget, and the remaining funds will be used to add more cameras to the public safety system. Approved at the February 10, 2026, City Council meeting, Item 9.d.
 General Fund: Reallocate $26,800 from Police Department Vehicle Maintenance to purchase a replacement vehicle for the Police Chief. The purchase will be an electric vehicle, meeting state electric fleet requirements and allowing the department to evaluate future electric fleet options.

The total cost is $63,900, with an insurance payment of $37,100 covering the remaining balance.

Approved at the February 10, 2026, City Council meeting, Item 9.d.  Police Department: Increase the Police Department’s COPS Grant Fund 271 budget to add 2 line items, reflecting a total increase of $15,800. Approved at the February 10, 2026, City Council meeting, Item 9.d.
o Appropriate $8,000 from the COPS Grant Fund balance to purchase four additional drones, which are critical for officer safety and effective incident response by providing real-time aerial visibility during emergencies, while ensuring trained pilots and fully deployable equipment are available across all shifts.
o Appropriate $7,800 from the COPS Grant Fund balance to facilitate a Radio Request.

Public Works has an unused radio frequency with an expired FCC license that can be

ATTACHMENT 1

relicensed. While existing Motorola radios are functional, they are not encrypted and can be used by City staff for events to support staff communication.

Additional Requested Third Quarter Budget Adjustments
In addition to the adjustments previously approved by the City Council during the third quarter, one new budget adjustment is proposed for approval, along with the review and receipt of this report.

Capital Improvement: The City was notified of its Highway Safety Improvement Program (HSIP) grant award in the amount of $340,560 on February 2, 2025, and received allocation confirmation on November 17, 2025. This grant is part of the 2026 Pedestrian Improvements Project awarded by City Council on January 27, 2026 item 9.h. This budget adjustments will reflect the funding to increase revenues and expenditures of $340,500.

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, which includes progress towards completing Major City Goals and 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 Completed

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 Completed

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 Completed

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 Completed

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 No Longer Needed, due to Council Direction

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 No Longer Needed, due to Council Direction

1.3g Conduct public education regarding need for TOT New CMO/LIS 2Q FY 2025-26 2Q FY 2026-27 No Longer Needed, due to Council Direction

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 Completed

ATTACHMENT 1

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

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 No Longer Needed, due to Council Direction

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 No Longer Needed, due to Council Direction

2.1d Seek Council approval on placing a November Ballot Measure New CMO/PW/LIS 4Q FY 2025-26 4Q FY 2025-26 In Progress

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 Prioritize Key
Infrastructure Projects

3.1 Prioritize Key Infrastructure
Projects 3.1a 2025 Pavement Management Program Construction New PW 4Q FY 2025-26 1Q FY 2026-27 In Progress

3.1b Traffic Way Bridge Replacement Project Carryover PW In progress 3Q FY 2025-26 Completed

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 3Q FY 2025-26 Ongoing In Progress

3.1e CMP Lining Carryover CD/PW Completed 2Q FY 2025-26 Completed

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

ATTACHMENT 1

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

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 Completed

4.2b Administrative Draft Carryover CD Completed

4.3 EIR 4.3a Complete draft EIR Carryover CD 1Q FY 2025-26 3Q FY 2025-26 In Progress

4.3b Complete final EIR Carryover CD 3Q FY 2024-25 4Q FY 2025-26 In Progress

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 In Progress

4.5c Final CAP Carryover CD 2Q FY 2026-27 3Q FY 2026-27 In Progress

5.1 Scope of Work and RFP 5.1a Define scope, research other communities New CD 4Q FY 2024-25 3Q FY 2025-26 In Progress

5.2 Kick Off and Public Outreach 5.2a Kick Off New CD 1Q FY 2025-26 3Q 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 1Q FY 2026-27 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: Sheridan Bohlken, Director of Recreation Services SUBJECT: Award Contract for Tourism Marketing Services for Fiscal Year 2026- 29 DATE: May 26, 2026
RECOMMENDATION:
1) Adopt a Resolution authorizing the City Manager to execute a three-year Professional Services Agreement with Commune Communication for Marketing Services for the Arroyo Grande Tourism and Business Improvement District (AGTBID); and 2) Find that approval of the Marketing Services Professional Services Agreement is exempt from CEQA on the basis that it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. (State CEQA Guidelines, § 15061, subd. (b)(3).)
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

The Fiscal Year (FY) 2026–27 AGTBID Proposed Budget includes approximately $222,500 for Marketing Services within the Advertising category, in addition to related tourism promotion expenditures, including cooperative advertising, travel and trade shows, influencers, photo/video assets, and promotional initiatives supporting overnight visitation and destination marketing efforts. The annual professional services agreement for marketing services is anticipated at approximately $200,000 annually, with a City Council-approved not-to-exceed amount of $250,000 per FY, inclusive of professional fees, media buys, production expenses, and related campaign costs.

The proposed three-year agreement term for FY 2026-29 will be incorporated into future annual AGTBID budget development and remains subject to annual budget appropriation by the City Council. Funding for these services is derived from AGTBID assessment revenues collected from lodging businesses within the district. The FY 2026-27 Proposed AGTBID Budget anticipates approximately $298,700 in assessment revenue and total proposed expenditures of approximately $504,350, including destination marketing, tourism promotion, public relations, and district improvement activities.

Item 9.e.

City Council
Award Contract for Tourism Marketing Services for Fiscal Year 2026-29 May 26, 2026

BACKGROUND:

The AGTBID was formed in 2013 to support tourism promotion and lodging-based economic development through assessment revenues collected from Arroyo Grande lodging partners. The AGTBID operates as the City’s destination marketing organization under the Visit Arroyo Grande brand. The district’s primary purpose remains focused on increasing overnight visitation, supporting occupancy, enhancing tourism demand, and strengthening Arroyo Grande’s position as a visitor destination.

Professional marketing services are currently provided under contract through FY 2025-

26. In preparation for the next contract cycle, the AGTBID Advisory Board initiated a formal Request for Proposals (RFP) process for Marketing, Communications, Website Management, and Social Media Services for FY 2026-29.

On December 11, 2025, the AGTBID Advisory Board identified an Ad-hoc Committee to assist with RFP development, proposal evaluation, consultant interviews, and recommendation of a marketing services provider. The RFP process resulted in thirtynine (39) proposals submitted from firms throughout California and the United States.

Following review of proposals, the Ad-hoc Committee identified the following three finalist agencies for interviews:
 Commune Communication
 Volt Studios
 Percepture
Finalist interviews focused on each agency’s strategic approach to destination marketing, measurable overnight visitation strategies, data tracking capabilities, stakeholder collaboration, and overall compatibility with AGTBID goals and priorities.

On May 14, 2026, the AGTBID Advisory Board considered the recommendation of the Ad-hoc Committee and recommended that the City Council award the Marketing Services contract to Commune Communication.

ANALYSIS OF ISSUES:

Based on the review process, the Ad-hoc Committee determined that Commune Communication demonstrated the strongest overall combination of destination-specific knowledge, measurable tourism performance outcomes, strategic continuity, and implementation readiness.

Commune Communication currently serves as the AGTBID marketing agency and has developed an established understanding of Arroyo Grande’s tourism objectives, brand identity, stakeholder relationships, and regional tourism partnerships. Their proposal emphasized continued use of data-driven marketing strategies, location visitation reporting, feeder market targeting, lodging-focused campaigns, and collaboration with hotels, businesses, and event organizers to support overnight visitation.

Item 9.e.

City Council
Award Contract for Tourism Marketing Services for Fiscal Year 2026-29 May 26, 2026

The Committee also recognized the benefit of maintaining continuity with an agency already familiar with existing campaigns, reporting systems, website infrastructure, and AGTBID operational goals. Continued partnership is anticipated to minimize transition time while allowing ongoing marketing initiatives to continue without interruption.

The proposed agreement term would begin July 1, 2026, for a three-year period, subject to annual budget appropriation and City Council approval.

ALTERNATIVES:

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

1. Staff’s recommendation;

2. Direct staff to pursue negotiations with an alternate finalist agency; or

3. Reject all proposals and direct staff to reissue the RFP.

ADVANTAGES:

Awarding the contract to Commune Communication supports continuity of existing tourism marketing initiatives while maintaining an agency already familiar with Arroyo Grande, AGTBID operations, stakeholder relationships, and regional tourism dynamics.

The proposed approach continues emphasis on measurable tourism performance, overnight visitation strategies, and data-driven marketing efforts while minimizing transition delays associated with onboarding a new agency.

DISADVANTAGES:

Selection of the current marketing agency may limit opportunities for an entirely new marketing direction or alternative strategic approach that could be introduced by another firm. Additionally, tourism and advertising trends continue to evolve rapidly, requiring continued adaptability throughout the contract term to ensure marketing efforts remain effective and competitive.

ENVIRONMENTAL REVIEW:

Approval of the three-year agreement 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
Exhibit A - Professional Services Agreement with Commune Communication

ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE AUTHORIZING THE CITY MANAGER

TO EXECUTE A THREE-YEAR PROFESSIONAL

SERVICES AGREEMENT WITH COMMUNE

COMMUNICATION FOR MARKETING SERVICES FOR

THE ARROYO GRANDE TOURISM AND BUSINESS

IMPROVEMENT DISTRICT
WHEREAS, staff issued a formal Request for Proposals for Arroyo Grande Tourism Business Improvement District (AGTBID) Marketing Services on March 1, 2026, which closed on April 17, 2026, and received thirty-nine (39) responses; and WHEREAS, on May 14, 2026, the AGTBID Advisory Board reviewed the recommendation of the Ad-hoc Committee and recommended that the City Council approve a three-year agreement with Commune Communication for AGTBID Marketing Services; and
WHEREAS, the City previously entered into an agreement with Commune Communication for professional marketing services for the AGTBID, which is scheduled to expire on June 30, 2026;
WHEREAS, the agreement includes an annual amount not-to-exceed $250,000 per fiscal year inclusive of professional services, media buys, production expenses, and related campaign costs, subject to annual budget appropriation by the City Council; and WHEREAS, approval of the three-year agreement 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); and
WHEREAS, the three-year agreement term for FY 2026-29 will be incorporated into future annual AGTBID budget development and remains subject to annual budget appropriation by the City Council.

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

1. The recitals set forth herein are true, correct and incorporated herein by this reference.

2. The City Manager is authorized to execute the Professional Services Agreement (Exhibit A) with Commune Communication to provide AGTBID marketing services for a three-year term, subject to annual budget appropriation as to form, in substantially final form, subject to any minor, technical, or non-substantive changes as approved by the City Manager in consultation with the City Attorney.

RESOLUTION NO.

PAGE 2
On motion of Council Member , seconded by Council Member , and by the following roll call vote, to wit:

AYES:

NOES:

ABSENT:
the foregoing Resolution was passed and adopted this 26th day of May, 2026.

RESOLUTION NO.

PAGE 3

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

RESOLUTION NO.

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EXHIBIT A

PROFESSIONAL SERVICES AGREEMENT

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PROFESSIONAL SERVICES AGREEMENT
FY 2026-29

1. PARTIES AND DATE.

This Agreement is made and entered into this 26th day of May, 2026, by and between the City of Arroyo Grande, a municipal corporation organized under the laws of the State of California with its principal place of business at 300 E. Branch Street, Arroyo Grande, California 93420, County of San Luis Obispo, State of California ("City") and Commune Communication, a California Corporation (partnership based), with its principal place of business at 245 E Third Street Long Beach, CA 90802 ("Consultant"). City and Consultant are sometimes individually referred to herein as "Party" and collectively as "Parties."

2. RECITALS.

2.1 Consultant.

Consultant desires to perform and assume responsibility for the provision of certain professional services required by the City on the terms and conditions set forth in this Agreement.

Consultant represents that it is experienced in providing marketing services to public clients, is licensed in the State of California, and is familiar with the plans of City.

2.2 Project.

City desires to engage Consultant to render such professional services for the marketing services for the Arroyo Grande Tourism Business Improvement District (AGTBID) project ("Project") as set forth in this Agreement.

3. TERMS.

3.1 Scope of Services and Term.

3.1.1 General Scope of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment, services, and incidental and customary work necessary to fully and adequately supply the professional marketing consulting services necessary for the Project ("Services"). The Services are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations.

3.2 Term. The term of this Agreement shall be from July 1, 2026 to June 30, 2029, unless earlier terminated as provided herein. Consultant shall complete the Services within the term of this Agreement and shall meet any other established schedules and deadlines. The Parties may, by mutual, written consent, extend the term of this Agreement if necessary to complete the Services.

3.3 Compensation.

3.3.1 Compensation. Consultant shall receive compensation, including

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authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and incorporated herein by reference. The total compensation shall not exceed two hundred and fifty thousand dollars ($250,000) per fiscal year, and shall not exceed seven hundred and fifty thousand dollars ($750,000) over the Term, without written approval of the City Council or City Manager, as applicable. The annual professional services agreement for marketing services is anticipated at approximately $200,000 annually, with a City Council-approved not-to-exceed amount of $250,000 per fiscal year inclusive of professional fees, media buys, production expenses, and related campaign costs. Extra Work may be authorized, as described below, and if authorized, will be compensated at the rates and manner set forth in this Agreement.

3.3.2 Payment of Compensation. Consultant shall submit to City a monthly invoice which indicates work completed and hours of Services rendered by Consultant. The invoice shall describe the amount of Services provided since the initial commencement date, or since the start of the subsequent billing periods, as appropriate, through the date of the invoice.

City shall, within 30 days of receiving such invoice, review the invoice and pay all non-disputed and approved charges. If the City disputes any of Consultant's fees, the City shall give written notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth therein. Payment shall not constitute acceptance of any Services completed by Consultant. The making of final payment shall not constitute a waiver of any claims by the City for any reason whatsoever.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City or included in Exhibit "C" of this Agreement.

3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.

Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.

3.4 Responsibilities of Consultant.

3.4.1 Independent Contractor; Control and Payment of Subordinates. The Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee.

Any personnel performing the Services on behalf of Consultant shall not be employees of City and shall at all times be under Consultant's exclusive direction and control. Neither City, or any of its officials, officers, directors, employees or agents shall have control over the conduct of Consultant or any of Consultants officers, employees or agents, except as set forth in this Agreement. Consultant shall pay all wages, salaries, and other amounts due such personnel in connection with their performance of Services under this Agreement and as required by law.

Consultant shall be responsible for all reports and obligations respecting such additional personnel, including, but not limited to: social security taxes, income tax withholding, unemployment insurance, disability insurance, and workers' compensation insurance.

3.4.2 Schedule of Services. Consultant shall perform the Services in a prompt and timely manner and in accordance with the Schedule of Services set forth in Exhibit "B" attached

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hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services expeditiously. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services.

3.4.3 Conformance to Applicable Requirements. All work prepared by Consultant shall be subject to the approval of City.

3.4.4 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. The key personnel for performance of this Agreement are as follows:
• Ryan La Rosa - Co-Founder, COO
• James Whale - Co-Founder, CEO
• Richardson Reigart - EVP, Strategy
• Jenn Skelaney - Account Manager
• Michael Ziman - Creative Director
• Array Amano - Art Director
• Candice Wong - Graphic Designer
• Josh Slone - Web Developer

3.4.5 City's Representative. The City hereby designates Matthew Downing, City Manager, or his/her designee, to act as its representative in all matters pertaining to the administration and performance of this Agreement ("City's Representative"). City's Representative shall have the power to act on behalf of the City for review and approval of all products submitted by Consultant but not the authority to enlarge the Scope of Services or change the total compensation due to Consultant under this Agreement. The City Manager shall be authorized to act on City's behalf and to execute all necessary documents which enlarge the Scope of Services or change the Consultant's total compensation subject to the provisions contained in this Agreement. Consultant shall not accept direction or orders from any person other than the City Manager, City's Representative or his/her designee.

3.4.6 Consultant's Representative. Consultant hereby designates Ryan La Rosa, Co-Founder, COO, or his/her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). Consultant's Representative shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. The Consultant's Representative shall supervise and direct the Services, using his/her best skill and attention, and shall be responsible for all means, methods, techniques, sequences, andprocedures and for the satisfactory coordination of all portions of the Services under this Agreement.

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3.4.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times.

3.4.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement. Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its subconsultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project.

3.4.9 Period of Performance.

3.4.9.1 Consultant shall perform and complete all Services under this Agreement within the term set forth inSection 3.1.2 above ("Performance Time"). Consultant shall also perform the Services in strict accordance with any completion schedule or Project milestones described in Exhibits "A" or "B" attached hereto, or which may be separately agreed upon in writing by the City and Consultant ("Performance Milestones"). Consultant agrees that if the Services are not completed within the aforementioned Performance Time and/or pursuant to any such Performance Milestones developed pursuant to provisions of this Agreement, it is understood, acknowledged and agreed that the City will suffer damage.

3.4.9.2 Neither City nor Consultant shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non-performing Party. For purposes of this Agreement, such circumstances include a Force Majeure Event. A Force Majeure Event shall mean an event that materially affects a Party's performance and is one or more of the following: (1) Acts of God or other natural disasters; (2) terrorism or other acts of a public enemy; (3) orders of governmental authorities (including, without limitation, unreasonable and unforeseeable delay in the issuance of permits or approvals by governmental authorities that are required for the services); (4) strikes and other organized labor action occurring at the site and the effects thereof on the services, only to the extent such strikes and other organized labor action are beyond the control of Consultant and its subcontractors, and to the extent the effects thereof cannot be avoided by use of replacement workers; and (5) pandemics, epidemics or quarantine restrictions. For purposes of this section, "orders of governmental authorities," includes ordinances, emergency proclamations and orders, rules to protect the public health, welfare and safety, and other actions of a public agency applicable to the services and Agreement.

3.4.9.3 Should a Force Majeure Event occur, the non-performing Party shall, within a reasonable time of being prevented from performing, give written notice to the other Party

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describing the circumstances preventing continued performance and the efforts being made to resume performance of this Agreement. Force Majeure Events and/or delays, regardless of the Party responsible for the delay, shall not entitle Consultant to any additional compensation.

Notwithstanding the foregoing in this section, the City may still terminate this Agreement in accordance with the termination provisions of this Agreement.

3.4.10 Laws and Regulations; Employee/Labor Certification.

3.4.10.1 Compliance with Laws. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with the Services and this Agreement. All violations of such laws and regulations shall be grounds for the City to terminate the Agreement for cause.

3.4.10.2 Employment Eligibility; Consultant. Consultant certifies that it fully complies with all requirements and restrictions of state and federal law respecting the employment of undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time and shall require all subconsultants and subsubconsultants to comply with the same. Consultant certifies that it has not committed a violation of any such law within the five (5) years immediately preceding the date of execution of this Agreement, and shall not violate any such law at any time during the term of the Agreement.

3.4.10.3 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.4.10.4 Air Quality. To the extent applicable, Consultant must fully comply with all applicable laws, rules and regulations in furnishing or using equipment and/or providing services, including, but not limited to, emissions limits and permitting requirements imposed by the South Coast Air Quality Management District (SCAQMD) and/or California Air Resources Board (CARB). Consultant shall indemnify City against any fines or penalties imposed by SCAQMD, CARB, or any other governmental orregulatory agency for violations of applicable laws, rules and/or regulations by Consultant, its subconsultants, or others for whom Consultant is responsible under its indemnity obligations provided for in this Agreement.

3.4.10.5 Water Quality Management and Compliance. Consultant shall keep itself and all subcontractors, staff, and employees fully informed of and in compliance with all local, state and federal laws, rules and regulations that may impact, or be implicated by the performance of the Services including, without limitation, all applicable provisions of the City's ordinances regulating water quality and storm water; the Federal Water Pollution Control Act (33 U.S.C. § 1251, et seq.); the California Porter-Cologne Water Quality Control Act (Water Code § 13000 et seq.); and any and all regulations, policies, or permits issued pursuant to any such authority.

Consultant must additionally comply with the lawful requirements of the City, and any other municipality, drainage district, or other local agency with jurisdiction over the location where the Services are to be conducted, regulating water quality and storm water discharges. City may seek

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damages from Consultant for delay in completing the Services caused by Consultant's failure to comply with the laws, regulations and policies described in this Section, or any other relevant water quality law, regulation, or policy.

3.4.10.6 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed.

3.4.11 Insurance.

3.4.11.1 Time for Compliance. Consultant shall not commence work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section. In addition, Consultant shall not allow any subconsultant to commence work on any subcontract until it has provided evidence satisfactory to the City that the subconsultant has secured all insurance required under this section. Failure to provide and maintain all required insurance shall be grounds for the City to terminate this Agreement for cause.

3.4.11.2 Types of Insurance Required. As a condition precedent to the effectiveness of this Agreement for work to be performed hereunder, and without limiting the indemnity provisions of the Agreement, the Consultant, in partial performance of its obligations under such Agreement, shall procure and maintain in full force and effect during the term of the Agreement the following policies of insurance. If the existing policies do not meet the insurance requirements set forth herein, Consultant agrees to amend, supplement or endorse the policies to do so.

3.4.11.2.1 Commercial General Liability: Commercial General Liability Insurance which affords coverage at least as broad as Insurance Services Office "occurrence" form CG 00 01, or the exact equivalent, with limits of not less than $1,000,000 per occurrence and no less than $2,000,000 in the general aggregate. Defense costs shall be paid in addition to the limits.

The policy shall contain no endorsements or provisions (1) limiting coverage for contractual liability; (2) excluding coverage for claims or suits by one insured against another (cross-liability); (3) products/completed operations liability; or (4) containing any other exclusion(s) contrary to the terms or purposes of this Agreement.

3.4.11.2.2 Automobile Liability Insurance: Automobile Liability Insurance with coverage at least as broad as Insurance Services Office Form CA 00 01 covering "Any Auto" (Symbol 1), or the exact equivalent, covering bodily injury and property damage for all activities with limits of not less than $1,000,000 combined limit for each occurrence.

3.4.11.3 Workers' Compensation: Workers' Compensation Insurance, as required by the State of California and Employer's Liability Insurance with a limit of not less than $1,000,000 per accident for bodily injury and disease.

3.4.11.4 Insurance Endorsements. Required insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms approved by the City to add the following provisions to the insurance policies:

3.4.11.4.1 Commercial General Liability: (1) Additional Insured: The City, its officials, officers, employees, agents, and volunteers shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement. Additional

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Insured Endorsements shall not (1) be restricted to "ongoing operations"; (2) exclude "contractual liability"; (3) restrict coverage to "sole" liability of Consultant; or (4) contain any other exclusions contrary to the terms or purposes of this Agreement. For all policies of Commercial General Liability insurance, Consultant shall provide endorsements in the form of ISO CG 20 10 10 01 and 20 37 10 01 (or endorsements providing the exact same coverage) to effectuate this requirement. (2) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

3.4.11.4.2 Automobile Liability. (1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium.

3.4.11.4.3 Professional Liability (Errors & Omissions): (1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for nonpayment of premium. (2) Contractual Liability Exclusion Deleted: This insurance shall include contractual liability applicable to this Agreement. The policy must "pay on behalf of' the insured and include a provision establishing the insurer's duty to defend.

3.4.11.4.4 Workers' Compensation: (1) Cancellation: Required insurance policies shall not be canceled or the coverage reduced until a thirty (30) day written notice of cancellation has been served upon the City except ten (10) days shall be allowed for non-payment of premium. (2) Waiver of Subrogation: A waiver of subrogation stating that the insurer waives all rights of subrogation against the City, its officials, officers, employees, agents, and volunteers.

3.4.11.5 Primary and Non-Contributing Insurance. All policies of Commercial General Liability and Automobile Liability insurance shall be primary and any other insurance, deductible, or self-insurance maintained by the City, its officials, officers, employees, agents, or volunteers shall not contribute with this primary insurance. Policies shall contain or be endorsed to contain such provisions.

3.4.11.6 Waiver of Subrogation. All required insurance coverages, except for the professional liability coverage, shall contain or be endorsed to waiver of subrogation in favor of the City, its officials, officers, employees, agents, and volunteers or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against City, and shall require similar written express waivers and insurance clauses from each of its subconsultants.

3.4.11.7 Deductibles and Self-Insured Retentions. Any deductible or self-insured retention must be approved in writing by the City and shall protect the City, its officials, officers, employees, agents, and volunteers in the same manner and to the same extent as they would have been protected had the policy or policies not contained a deductible or self-insured retention.

3.4.11.8 Evidence of Insurance. The Consultant, concurrently with the execution of the Agreement, and as a condition precedent to the effectiveness thereof, shall deliver either certified copies of the required policies, or original certificates on forms approved by the City, together with all endorsements affecting each policy. Required insurance policies shall not be in compliance if they include any limiting provision or endorsement that has not been submitted to the City for approval. The certificates and endorsements for each insurance policy shall be signed

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by a person authorized by that insurer to bind coverage on its behalf. At least fifteen (15 days) prior to the expiration of any such policy, evidence of insurance showing that such insurance coverage has been renewed or extended shall be filed with the City. If such coverage is cancelled or reduced and not replaced immediately so as to avoid a lapse in the required coverage, Consultant shall, within ten (10) days after receipt of written notice of such cancellation or reduction of coverage, file with the City evidence of insurance showing that the required insurance has been reinstated or has been provided through another insurance company or companies.

3.4.11.9 Acceptability of Insurers. Each such policy shall be from a company or companies with a current A.M. Best's rating of no less than A:VII and authorized to transact business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.

3.4.11.10 Enforcement of Agreement Provisions (non estoppel). Consultant acknowledges and agrees that actual or alleged failure on the part of the City to inform Consultant of non-compliance with any requirement imposes no additional obligation on the City nor does it waive any rights hereunder.

3.4.11.11 Requirements Not Limiting. Requirement of specific coverage or minimum limits contained in this Section are not intended as a limitation on coverage, limits, or other requirement, or a waiver of any coverage normally provided by any insurance.

3.4.11.12 Additional Insurance Provisions

3.4.11.12.1 The foregoing requirements as to the types and limits of insurance coverage to be maintained by Consultant, and any approval of said insurance by the City, is not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Consultant pursuant to this Agreement, including but not limited to, the provisions concerning indemnification.

3.4.11.12.2 If at any time during the life of the Agreement, any policy of insurance required under this Agreement does not comply with these specifications or is canceled and not replaced, City has the right but not the duty to obtain the insurance it deems necessary and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may cancel this Agreement.

3.4.11.12.3 The City may require the Consultant to provide complete copies of all insurance policies in effect for the duration of the Project.

3.4.11.12.4 Neither the City nor any of its officials, officers, employees, agents or volunteers shall be personally responsible for any liability arising under or by virtue of this Agreement.

3.4.11.12.5 The limits set forth herein shall apply separately to each insured against whom claims are made or suits are brought, except with respect to the limits of liability.

Further the limits set forth herein shall not be construed to relieve the Consultant from liability in excess of such coverage, nor shall it limit the Consultant's indemnification obligations to the City and shall not preclude the City from taking such other actions available to the City under other provisions of the Agreement or law.

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3.4.11.12.6 Consultant shall report to the City, in addition to Consultant's insurer, any and all insurance claims submitted by Consultant in connection with the Services under this Agreement.

3.4.11.13 Insurance for Subconsultants. Consultant shall include all subconsultants engaged in any work for Consultant relating to this Agreement as additional insureds under the Consultant's policies, or the Consultant shall be responsible for causing subconsultants to purchase the appropriate insurance in compliance with the terms of these Insurance Requirements, including adding the City, its officials, officers, employees, agents, and volunteers as additional insureds to the subconsultant's policies. All policies of Commercial General Liability insurance provided by Consultant's subconsultants performing work relating to this Agreement shall be endorsed to name the City, its officials, officers, employees, agents and volunteers as additional insureds using endorsement form ISO CG 20 38 04 13 or an endorsement providing equivalent coverage. Consultant shall not allow any subconsultant to commence work on any subcontract relating to this Agreement until it has received satisfactory evidence of subconsultant's compliance with all insurance requirements under this Agreement, to the extent applicable. The Consultant shall provide satisfactory evidence of compliance with this section upon request of the City.

3.5 Labor Code Requirements.

3.5.1 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, and if the total compensation is $1,000 or more, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request, and shall post copies at the Consultant's principal place of business and at the project site. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Consultant shall therefore comply with such Labor Code sections to the fullest extent required by law. Consultant shall defend, indemnify and hold the City, its officials, officers, employees, agents, and volunteers free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.5.2 Registration/DIR Compliance. If the Services are being performed on a public works project of over $25,000 when the project is for construction, alteration, demolition, installation, or repair work, or a public works project of over $15,000 when the project is for maintenance work, in addition to the foregoing, then pursuant to Labor Code sections 1725.5 and 1771.1, the Consultant and all subconsultants must be registered with the Department of Industrial Relations ("DIR"). Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants.

3.5.3 Compliance Monitoring. This Project may also be subject to compliance monitoring and enforcement by the DIR. It shall be Consultant's sole responsibility to comply with all applicable registration and labor compliance requirements, including the submission of payroll records directly to the DIR. Any stop orders issued by the DIR against Consultant or any

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subconsultant that affect Consultant's performance of services, including any delay, shall be Consultant's sole responsibility. Any delay arising out of or resulting from such stop orders shall be considered Consultant caused delay and shall not be compensable by the City. Consultant shall defend, indemnify and hold the City, its officials, officers, employees and agents free and harmless from any claim or liability arising out of stop orders issued by the DIR against Consultant or any subconsultant.

3.5.4 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services.

3.6 Termination of Agreement.

3.6.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those Services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause. The rights and remedies of the City provided in this section shall not be exclusive and are in addition to any other rights and remedies provided by law, equity or under this Agreement.

3.6.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

3.6.1.3 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.7 Indemnification.

3.7.1 To the fullest extent permitted by law, Consultant shall defend (with counsel of City's choosing), indemnify and hold the City, its officials, officers, employees, volunteers, and agents free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subcontractors, consultants or agents in connection with the performance of the Consultant's Services, the Project or this Agreement, including without limitation the payment of all damages, expert witness fees and attorney's fees and other related costs and expenses except such loss or damage caused by the sole negligence or willful misconduct of the City. Consultant's obligation to indemnify shall survive expiration or termination of this Agreement and shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, or volunteers.

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3.7.2 If Consultant's obligation to defend, indemnify, and/or hold harmless arises out of Consultant's performance as a "design professional" (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant's indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant's liability for such claim, including the cost to defend, shall not exceed the Consultant's proportionate percentage of fault.

3.8 General Provisions.

3.8.1 Accounting Records. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement.

3.8.2 Independent Contractors and Subcontracting.

3.8.2.1 Use of Consultants. Consultant is aware of statutory and case law regarding classification of workers as independent contractors, including California Labor Code Section 2750.3 and Dynamex Operations West. Inc. v. Superior Court, 4 Cal. 5th 903 (2018). To ensure that Consultant is in compliance with the California Labor Code, Consultant shall only utilize its employees to provide the Services. Consultant may not provide the services through any independent contractor, subcontractor or subconsultant ("Subcontractor(s)") unless approved by the City as set forth in Section 3.7.2.2 below. Consultant represents and warrants that all personnel who perform the Services on Consultant's behalf are Consultant's employees, and that Consultant complies with all applicable laws, rules and regulations governing its employees, including, but not limited to, the California Labor Code, Unemployment Insurance Code and all applicable Industrial Welfare Commission Wage Orders.

3.8.2.2 Prior Approval Required. Consultant shall not use any Subcontractor to provide the Services, or any portion of the work required by this Agreement, without prior written approval of City. In the event that City authorizes Consultant to use a Subcontractor, Consultant shall enter into a written agreement with the Subcontractor, which must include all provisions of the Agreement, including a restriction on the Subcontractor's use of further independent contractors, subcontractors or subconsultants without the City's prior written consent.

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3.8.3 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:

Consultant:

City:

Commune Communication
245 E Third Street
Long Beach, CA 90802
ATTN: Ryan La Rosa
City of Arroyo Grande
300 E. Branch Street
Arroyo Grande, CA 93420
ATTN: Matthew Downing, City Manager
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.8.4 Ownership of Materials and Confidentiality.

3.8.4.1 Documents & Data; Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). All Documents & Data shall be and remain the property of City, and shall not be used in whole or in substantial part by Consultant on other projects without the City's express written permission. Within thirty (30) days following the completion, suspension, abandonment or termination of this Agreement, Consultant shall provide to City reproducible copies of all Documents & Data, in a form and amount required by City. City reserves the right to select the method of document reproduction and to establish where the reproduction will be accomplished. The reproduction expense shall be borne by City at the actual cost of duplication. In the event of a dispute regarding the amount of compensation to which the Consultant is entitled under the termination provisions of this Agreement, Consultant shall provide all Documents & Data to City upon payment of the undisputed amount. Consultant shall have no right to retain or fail to provide to City any such documents pending resolution of the dispute. In addition, Consultant shall retain copies of all Documents & Data on file for a minimum of fifteen (15) years following completion of the Project, and shall make copies available to City upon the payment of actual reasonable duplication costs. Before destroying the

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Documents & Data following this retention period, Consultant shall make a reasonable effort to notify City and provide City with the opportunity to obtain the documents.

3.8.4.2 Subconsultants. Consultant shall require all subconsultants to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or its subconsultants, or those provided to Consultant by the City.

3.8.4.3 Right to Use. City shall not be limited in any way in its use or reuse of the Documents and Data or any part of them at any time for purposes of this Project or another project, provided that any such use not within the purposes intended by this Agreement or on a project other than this Project without employing the services of Consultant shall be at City's sole risk. If City uses or reuses the Documents & Data on any project other than this Project, it shall remove the Consultant's seal from the Documents & Data and indemnify and hold harmless Consultant and its officers, directors, agents and employees from claims arising out of the negligent use or re-use of the Documents & Data on such other project. Consultant shall be responsible and liable for its Documents & Data, pursuant to the terms of this Agreement, only with respect to the condition of the Documents & Data at the time they are provided to the City upon completion, suspension, abandonment or termination. Consultant shall not be responsible or liable for any revisions to the Documents & Data made by any party other than Consultant, a party for whom the Consultant is legally responsible or liable, or anyone approved by the Consultant.

3.8.4.4 Indemnification. Consultant shall defend, indemnify and hold the City, its directors, officials, officers, employees, volunteers and agents free and harmless, pursuant to the indemnification provisions of this Agreement, for any alleged infringement of any patent, copyright, trade secret, trade name, trademark, or any other proprietary right of any person or entity in consequence of the use on the Project by City of the Documents & Data, including any method, process, product, or concept specified or depicted.

3.8.4.5 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

3.8.5 Cooperation: Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement.

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3.8.6 Entire Agreement. This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements.

3.8.7 Attorneys' Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorneys' fees and all costs of such action.

3.8.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in San Luis Obispo County. In addition to any and all contract requirements pertaining to notices of and requests for compensation or payment for extra work, disputed work, claims and/or changed conditions, Consultant must comply with the claim procedures set forth in Government Code sections 900 et seq. prior to filing any lawsuit against the City. Such Government Code claims and any subsequent lawsuit based upon the Government Code claims shall be limited to those matters that remain unresolved after all procedures pertaining to extra work, disputed work, claims, and/or changed conditions have been followed by Consultant. If no such Government Code claim is submitted, or if any prerequisite contractual requirements are not otherwise satisfied as specified herein, Consultant shall be barred from bringing and maintaining a valid lawsuit against the City.

3.8.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.8.10 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project.

3.8.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties.

3.8.12 Assignment or Transfer. Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City, which may be withheld for any reason. Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination.

Consultant shall not subcontract any portion of the Services required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement.

3.8.13 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

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3.8.14 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.8.15 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

3.8.16 No Third-Party Beneficiaries. There are no intended third party beneficiaries of any right or obligation assumed by the Parties.

3.8.17 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.8.18 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. Consultant further agrees to file, or shall cause its employees or subconsultants to file, a Statement of Economic Interest with the City's Filing Officer as required under state law in the performance of the Services. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.8.19 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.8.20 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.8.21 Survival. All rights and obligations hereunder that by their nature are to continue after any expiration or termination of this Agreement, including, but not limited to, the indemnification obligations, shall survive any such expiration or termination. [SIGNATURES ON NEXT PAGE]

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SIGNATURE PAGE TO PROFESSIONAL SERVICES

AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE
AND

COMMUNE COMMUNICATION
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on the day and year first above written.

CITY OF ARROYO GRANDE COMMUNE COMMUNICATION
Approved By: [If Corporation, TWO SIGNATURES,
President OR Vice President AND
Secretary OR Treasurer REQUIRED]

Matthew J. Downing,
City Manager
Approved as to Form:

Best Best & Krieger LLP
Isaac Rosen, City
Attorney
Attested By:

By:

Its: Co-Founder, COO
Printed Name: Ryan La Rosa
By:

Its: Co-Founder, CEO
Printed Name: James Whale
Jessica Matson, City
Clerk
By:

Its:

Printed Name:_

30 EXHIBIT “A”

SCOPE OF SERVICES

1. Scope of Services
Proposers shall distinguish between proposal-stage expectations and post-award contractual obligations.

The proposal should demonstrate the firm’s ability to deliver detailed strategy in the first contract year while presenting a scalable long-term vision appropriate for a three-year partnership.

1.1 Core Services (Required)
A. Strategic Marketing & Advertising
• Destination marketing strategy
• One-year implementation plan with 1–3 year outlook
• Creative campaigns supporting overnight stays
• Integrated media mix (digital, print, video, radio, outdoor, online, direct marketing, etc. • Data Tracking, Measurement, and Reporting
• KPIs and ROI measurement
• Recurring reporting aligned with AGTBID meetings
• Media and platforms used to track, analyze, and respond to brand/reputation monitoring B. Website Audit, Management, and Optimization
The firm will take responsibility for all aspects of the Visit Arroyo Grande website, content management system (CMS), and related hosting. The scope of services should include, but is not limited to, all software, hardware, administrator and end-user training, hosting, SEO programming, and other services required to implement and support the website and should include:
• Website audit and recommendations
• Competitive positioning and tourism trends
• ADA compliance, privacy, email capture
• Strategic changes and implementation plan to separate Arroyo Grande as a destination from competitors
 Measurable tracking mechanism for visits to site
 Include a privacy policy
 Be capable of capturing email addresses
 Include additional tools as appropriate in recommendation C. Social Media & Digital Presence
• Platform management and reporting
• Creative assets
• Copy and graphic examples

1.2 Optional / Add-On Services (if deemed appropriate)
• Blog content development
• Email newsletter development and analytics
 Other tools/services as deemed appropriate

31 EXHIBIT “B”

SCHEDULE OF SERVICES

PROJECTSCHEDULE
With a clear strategy, an active creative campaign, a tuned media system, and established relationships across the City, AGTBID, and local business communities, Commune starts the new fiscal years already in motion. The project schedule is organized to reflect where time and resources have the greatest impact on visitation and ToT performance.

Key activities include:

1. Planning & Meetings: Monthly check-ins with City staff, bi-monthly AGTBID meetings, quarterly presentations, and bi-annual City Council meetings ensure alignment at every level, providing consistent visibility into performance and strategic direction.

2. Strategy & Media: Ongoing campaign management, performance analysis, location visitation reporting, and regular strategic optimization recommendations drive media efficiency and efficacy. Performance updates are delivered across the fiscal year, culminating in a comprehensive annual report, ensuring that media investment is aligned with what is actually driving visits to lodging partners in Arroyo Grande.
• Location Visitation Reporting: Campaign exposure is continuously connected to real-world visits and overnight stays in Arroyo Grande through our proprietary location visitation reporting capability. This provides an ongoing view of which markets, channels, and audiences are translating to actual visits to Arroyo Grande hotels. • Ongoing Campaign Management: Active oversight of all paid media channels, including investment pacing, audience targeting, and creative performance. Adjustments are made in real time as insights emerge.
• Bi-Monthly performance updates and Optimization Recommendations: Formal reporting delivered to the AGTBID on a bi-monthly basis, covering visitation trends, cost per visit, channel performance, audience behavior, and specific recommendationsfor optimization. • Annual Marketing Report: A comprehensive review of annual performance including all location visitation reporting data, ToT context, campaign analysis, and strategic direction for the upcoming fiscal year.

3. Creative Development: Ongoing social media production, quarterly SEO blog content, quarterly e-newsletter development, and ad creative updates ensure that campaignsremain fresh and responsive to performance data. Creative assets are reviewed regularly and updated based on engagement and conversion signals.
• Paid + Organic Asset Development: Creative assets are continually reviewed and updated, informed by engagement rates, click-through performance, location visitation reporting, and conversion data. New assets are introduced on a rolling basis, ensuring consistency and preventing creative fatigue.

4. Website Maintenance &Content Updates: Monthly maintenance keeps the Visit Arroyo Grande website fast, accurate, functional, and compliant with evolving ADA standards.

32 The core of this schedule is a commitment to ongoing optimization with location visitation reporting, media management, and
strategic analysis built into every
month.

Content updates ensure that the site reflects current events, travel deals, and local offerings, supporting conversions to lodging partner Book Now buttons and every stage of the visitor journey.

5. Co-op Partnerships: Regional partnerships with Visit SLO CAL, Visit California, and the Central Coast Tourism Council are built into the schedule at key seasonal windows. Content submissions, magazine placements, visitor guide contributions, and co-op programs extend Arroyo Grande’s reach into audiences already in a travel-planning mindset. The South County Chamber of Commerce Visitor Guide and co-op opportunities are also incorporated throughout the schedule.

6. Contingency: Time is reserved for production, content capture, and special initiatives allowing for flexibility while not exceeding budget constraints. Thisincludes new photo and video content for campaigns, opportunities tied to seasonal events, and emerging needs that arise throughout the year.

The schedule below is designed to maximize that continuity while building on what the data has shown to be working.

Ensuring our media investment is always aligned with data about actual visits, creative is updated before it fatigues, and that audience targeting reflects current behaviors.

Proposed Project Details Interval
Planning & Meetings City Meetings Monthly
AGTBID Meetings Bi-Monthly
Quarterly Planning Quarterly
City Council Meetings Bi-Annually
Fiscal Planning Annually

33 Proposed Project Details Interval
Strategy & Media
[Planning, Management,
Optimizations, Reporting &
Insights]
Media Management Ongoing
Strategic Insights & Recommenda-tions Ongoing
Media Optimizations + Testing Ongoing
Location Visitation Reporting Bi-Monthly
Performance Updates Bi-Monthly
Annual Report Development Annually
Creative Development [Paid
Media Assets, Social Media,
Blog &E-Newslet-ter]
Campaign Development Ongoing
Social Media Development Ongoing
E-Newsletter Development Quarterly
SEO Blog Development Quarterly
Website
[Maintenance & Content
Updates]
Content Updates Ongoing
Maintenance Monthly
Co-Op Partnerships Visit SLO CAL Ongoing
Visit California Quarterly
Central Coast California Tourism Quarterly
South County Chamber of Com-merce Bi-Annually
Contingency [Photography,
Videogra-phy & Special
Projects]
Photo/Video Assets Bi-Annually
Merchandise Annually

34 EXHIBIT “C”

COMPENSATION
Hourly Rates for Proposed Team Members:

The following table outlines Year 1 proposed rates. All future years to be negotiated or outlined in line with contract demands and based on factors including inflation.

Budget Allocation:

Agency time and paid media are allocated to ensure the investment flows directly into the market, consistent with our approach in prior years. Time allocations are planned across the engagement, with hours tracked and the budget managed transparently throughout the engagement.

35 Time allocations are planned across the engagement, with hours tracked and the budget managed transparently throughout the engagement. Agency production hours are allocated across project categories per fiscal year.

Project Categories Agency Production Hours
Per Fiscal Year
Planning & Meetings 24
Strategy & Media
[Planning, Management, Optimizations, Report-ing &
Insights]
60 Creative Development
[Paid Media Assets, Social Media, Blog &E-News-letter]
112
Website
[Maintenance & Content Updates]
36 Co-Op Partnerships 20
Contingency
[Photography, Videography &Special Projects]
248
Total 500

Item 9.f.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Public Works Director BY: Theresa Wren, Capital Improvement Projects Manager
SUBJECT: Engineer's Reports for Assessment Districts
DATE: May 26, 2026
RECOMMENDATION:
1) Adopt Resolutions declaring the intention to levy and collect assessments for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No 1 within Tract 1769, for FY 2026-27; and
2) Approve the Engineer's Reports for FY 2026-27 for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No. 1 Tract 1769;
3) Set a public hearing for June 23, 2026, at 6:00 p.m. for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No. 1 within Tract 1769, to consider levying the property assessments; and
4) Find the proposed action is exempt from CEQA under State CEQA Guidelines § 15302 and State CEQA Guidelines § 15378(b)(5).

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

The City created three assessment districts that collect assessment fees to pay for landscaping and other specified maintenance for the respective districts. The assessments are placed on the affected property owner's tax roll each year. The total amount of revenue to be received from the assessment districts and used for specified maintenance and management projects in FY 2026-27 is approximately $56,298.

BACKGROUND:

Parkside Village Assessment District
On November 8, 2005, at the request of Parkside Village LLC, the sole owner and developer of the Parkside Village Subdivision (Tract 2310), the City Council approved the formation of the Parkside Village Assessment District. The improvements (maintenance and servicing) in the Parkside Village Assessment District include, but are not limited to:

Item 9.f.

City Council
Engineer's Reports for Assessment Districts
May 26, 2026

 Areas bordering Farroll Road, Bakeman Lane, entrances, behind and along Bakeman Lots 10, 11, 12 and 13 of Phase 1.
 Mini Park, pedestrian pathway easement, and drainage basin.  Fencing, gates, and walls bordering Farroll Road, Bakeman Lane entrances, behind and along Bakeman Lots 10, 11, 12 and 13, park and drainage basin.  Pathway easement, lighting, and all improvements between lots 1, 2, and 3 between Dixson Street and the mini park, the mini park and all improvements to include walkways, play area, benches and basketball court on Lot 24; and  Drainage retention basin, and all improvements, including the water separator on Lot 25 and French drains along the East boundary of Tract 2310-2.

Current status:
 Assessment income remains at $43,966 annually. Annual cost indexing of the maximum authorized assessments is tied to the region’s Consumer Price Index (CPI). A CPI Adjustment was not made for 2026/27 fiscal year.  Potential Annual Expenditures (work improvements) average $30,000 to $35,000 annually and do not exceed the annual income.
 Expenditures/Work Improvements are completed as needed and through a licensed landscape contractor.
 The work improvements to be financed and maintained through this assessment district are landscaping and irrigation of common areas, maintenance of fencing and block walls, maintenance of a detention basin and drainage facilities, and partial park maintenance. The expanded infrastructure (detention basin, surrounding metal fencing, and small park) requires a larger fund balance in anticipation of eventual replacement of these facilities.

Assessment income not spent on annual maintenance is accrued to cover these replacement costs in the future.
 Proposals were received from contractors for the replacement of playground equipment at Parkside Park, and the new playground equipment was accepted by City Council on October 28, 20251. The water fountain in Parkside Park was also replaced (photos in Engineer’s Report).

Grace Lane Assessment District
On November 28, 2006, at the request of Vista Robles LLC, the sole owner of the Grace Lane Subdivision (Tract 2236) at that time, the City Council approved the formation of the Grace Lane Assessment District. The annual assessments are $460 or $608 per parcel for a total annual assessment of $9,332. Maintenance and servicing of the improvements in the District include, but are not limited to:
 Pedestrian trail across the open space property (Lot B), including, but not limited to, the existing informal hiking trail currently passing through Lot B, signage, and fencing;

1https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=97615df6-f61a-4d51-a002- 8aaf1cd0dc7b&lang=English&Agenda=Agenda&Item=38&Tab=attachments

Item 9.f.

City Council
Engineer's Reports for Assessment Districts
May 26, 2026

 Common areas and facilities, including but not limited to, the open space parcels and drainage facilities;
 Open space maintenance in accordance with fuel modification specifications; and
 Common drive area (not within the parcel boundaries) and associated improvement for Lots 16 through 19.

Current status:
 Assessment income remains at $9,332 annually. A CPI Adjustment was not made for 2026/27 fiscal year.
 Potential Annual Expenditures (work improvements) average $10,000; however, the amount of annual vegetation management and drainageway maintenance can be achieved with current assessment income.  Contractual services costs through the California Men's Colony (CMC) inmate crews are steadily increasing, but have also kept the overall maintenance costs lower due to the routinely lower costs of labor versus a private contractor.  Expenditures/Work Improvements are completed as needed and through a 4- year contract with CMC.
 The work improvements to be financed and maintained through this assessment district are fuel modification in common areas and the adjacent large open space area; maintenance of drainage easement area and storm drain facilities; public trail maintenance; and a seal coat approximately every 5 years and a 2" A.C. overlay approximately every 20 years to the common driveway area to lots 16-19.
 The need for a seal coat application was evaluated last year. After a field evaluation, it was determined that the seal coat application could be delayed.

Staff will continue to monitor asphalt conditions in the common area of the driveway that accesses lots 16-19. This common driveway is located directly across the street from Grace Bible Church.
 Staff time associated with this assessment district has not historically been charged to the district. Staff is developing procedures to track time in its financial system to provide a more accurate representation of the district’s true operating costs.

Arroyo Grande Landscaping and Lighting Assessment District No.1 within Tract 1769 On June 9, 1992, Arroyo Grande Landscaping and Lighting Assessment District No. 1 within Tract 1769 was created to provide landscaping and lighting improvements and maintenance for Tract 1769. The total assessment was $100 per parcel located within Tract 1769 (a total of $3,000). Improvements in Landscaping and Lighting Assessment District No. 1 include but are not limited to landscaping and ornamental vegetation in the public rights of way.

Item 9.f.

City Council
Engineer's Reports for Assessment Districts
May 26, 2026

Current status:
 Assessment income remains at $3,000 annually. A CPI Adjustment was not made for 2026/27 fiscal year.
 Potential Annual Expenditures (work improvements), if done annually, would exceed the annual fund balance.
 Expenditures/Work Improvements are completed as funding accumulates to a point where costs can be covered. If no services are needed and/or the annual engineering report is less in scope, these fees are not expended and can be carried over to the next fiscal year fund balance.
 The work improvements to be financed and maintained through this assessment district are related to landscape maintenance and limited to the applicable parkways and median along Oak Park Boulevard only.  Staff time associated with this assessment district has not historically been charged to the district. Staff is developing procedures to track time in its financial system to provide a more accurate representation of the district’s true operating costs.

At its May 12, 20262meeting, the City Council ordered the preparation of the Annual Engineer's Reports for the Parkside Village Assessment District, Grace Lane Assessment District, and Arroyo Grande Landscaping and Lighting Assessment District No. 1, within Tract No. 1769. The Engineer's Report were prepared under the direction of the City Engineer.

ANALYSIS OF ISSUES:

The California Streets and Highways Code Sections 22500 et seq., (California Landscape and Lighting Act of 1972) (Act), contains the process by which local governmental agencies form assessment districts for the purpose of financing the costs and expenses of landscaping and lighting public areas. The Act requires the City to complete the following process each fiscal year in order to levy and collect assessments:
• Adopt a Resolution describing any proposed new improvements or any substantial changes in existing improvements and ordering preparation and filing of an engineer's report.

The City Council adopted Resolution Nos. 2026-025, 2025-026, and 2026-027 on May 12, 2026, ordering the preparation of engineer's reports for the three Assessment Districts. No new improvements or substantial changes in existing improvements are proposed for FY 2026-27.

2https://pub-arroyogrande.escribemeetings.com/Meeting.aspx?Id=e5a0bf5e-75e9-42d4-b921- 8a02b3f87315&lang=English&Agenda=Agenda&Item=38&Tab=attachments

Item 9.f.

City Council
Engineer's Reports for Assessment Districts
May 26, 2026

• Approve the Engineer's Report and adopt a Resolution of Intention declaring the City Council's intention to levy and collect assessments under the subject assessment districts for the upcoming fiscal year. The Resolution also states whether the assessment is proposed to change from the previous year and sets a date, hour, and place for a public hearing.

Attached are draft proposed resolutions accomplishing this task. No changes to the assessments are proposed.
• Conduct the public hearing affording all interested parties the opportunity to hear and be heard.

To be scheduled for June 23, 2026.
• Adopt a Resolution confirming the assessment, which constitutes the levy of the assessments for the 2026-27 fiscal year.

To be scheduled for June 23, 2026.

Upon fulfillment of these requirements, City staff must submit the assessments to the County of San Luis Obispo for inclusion on the FY 2026-27 property tax roll.

ALTERNATIVES:

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

Approve staff recommendations;
Request changes or clarification to the Engineers' Reports and/or Resolutions and approve as modified; or
Provide staff other direction.

ADVANTAGES:

Adoption of the Resolutions will allow the City to be in compliance with the Act and move forward with the process to levy assessments.

DISADVANTAGES:

Property owners within each district share in the cost of district maintenance and services through assessments.

ENVIRONMENTAL REVIEW:

Class 2 exemption: Replacement or reconstruction. The Consideration of Engineer's Reports and Resolutions Declaring the City's Intention to Levy and Collect Assessments 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

Item 9.f.

City Council
Engineer's Reports for Assessment Districts
May 26, 2026

structure replaced. (State CEQA Guidelines,§ 15302.). Alternatively, the proposed action is not a project, and is exempt from review under CEQA, because adoption of the engineer reports and resolutions declaring intention to levy assessments is an organizational or administrative activity of government that does not itself result in direct or indirect physical changes in the environment. (State CEQA Guidelines,§ 15378(b)(5)).

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 - Parkside Village Assessment District

2. Resolution - Grace Lane Assessment District

3. Resolution - Arroyo Grande Landscaping and Lighting District No. 1, Tract 1769

4. Engineer's Report FY 2026-27 - Parkside Village Assessment District

5. Engineer's Report FY 2026-27 - Grace Lane Assessment District

6. Engineer's Report FY 2026-27 - Arroyo Grande Landscaping and Lighting District No. 1, Tract 1769

ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF ARROYO GRANDE DECLARING ITS INTENTION TO

LEVY AND COLLECT ANNUAL ASSESSMENTS

RELATED TO THE PARKSIDE VILLAGE
ASSESSMENT DISTRICT FOR FISCAL YEAR 2026-
2027
WHEREAS, on November 8, 2005, the City Council of the City of Arroyo Grande adopted Resolution No. 3888 ordering the formation of the Parkside Village Assessment District ("District") under Part 2 of Division 15 of the California Streets and Highways Code sections 22500- 22679 (Landscaping and Lighting Act of 1972), which allows local governmental agencies to form assessment districts for the purpose of financing the costs and expenses of landscaping and lighting public areas; and WHEREAS, the said improvements in the District include but are not limited to : Landscaping bordering Farroll Road, Bakeman Road Entrances, behind and along Bakeman Lots 10, 11, 12 and 13 of Phase 1, mini park pedestrian pathway easement and drainage basin; fencing, gates and walls bordering Farroll Road, Bakeman Road Entrances, behind and along Bakeman Lots 10, 11, 12 and 13, park and drainage basin; the pathway easement, lighting and all improvements between lots 1, 2, and 3 between Dixson Street and the mini park, the mini park and all improvements to include walkways, play area, benches and basketball court on Lot 24; the drainage retention basin and all improvement including the water separator on Lot 25 and French drain)s) along the East boundary of Tract 2310-2; and
WHEREAS, the City Council, at its meeting of May 12, 2026, received a report from the Public Works Director advising the City Council that no new improvements or substantial changes in existing improvements are proposed for the District; and WHEREAS the City Council desires to levy and collect the annual assessments against lots and parcels of land within the District to pay the costs and expenses related to the aforementioned improvements described in this Resolution.

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

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

2. That the Engineer's Report entitled City of Arroyo Grande Parkside Village Assessment District Fiscal Year 2026-27, ("Engineer's Report") has been prepared and filed with the City Clerk and is hereby approved by the City Council. All interested parties are referred to the Engineer’s Report for a full and detailed description of the improvements, the boundaries of the District, and the proposed assessments upon assessable lots and parcels of land within the District.

3. That the City Council hereby declares that it is its intention to seek the annual levy of assessments for the District pursuant to Streets and Highways Code, Section 22624, over and including the land within the District boundary, and to levy and collect assessments on all such land to pay the costs of the maintenance and servicing of the landscaping improvements and all appurtenant facilities and operations related thereto

RESOLUTION NO.

PAGE 2
for Fiscal Year 2026-2027 within the boundaries of the District described herein and in more detail within the Engineer's Report.

4. That the improvements to be maintained are specified in the Engineer's Report, no substantial changes are proposed to be made to the existing improvements and the assessment is not proposed to increase from the prior year.

5. That the City Council hereby declares its intention to conduct a public hearing concerning the District and the levy of assessments for the improvements related thereto in accordance with the Landscaping and Lighting Act of 1972.

6. That notice is hereby given that a public hearing on these matters will be held by the City Council on Tuesday, June 23, 2026, at 6:00 p.m. or as soon thereafter as feasible at the City Council Chambers, 215 E. Branch Street, Arroyo Grande, California, 93420 or via teleconference as follows: Zoom Meeting: https://us02web.zoom.us/j/86752345420; or by Telephone: 1-669-900-6833; 1-346-248-7799.

7. That the City Clerk shall cause notice to be given of the time and place of the public hearing by causing the publishing of this Resolution once in the local paper not less than ten (10) days before the date of the hearing and by posting a copy of this Resolution on the official bulletin board customarily used by the City Council for the posting of notices.

8. That the action is categorically exempt from the California Environmental Quality Act 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. (State CEQA Guidelines § 15302.)

RESOLUTION NO.

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

NOES:

ABSENT:
the foregoing Resolution was passed and adopted this 26 th day of May 2026.

RESOLUTION NO.

PAGE 4

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

ATTACHMENT 2
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE DECLARING ITS INTENTION TO LEVY

AND COLLECT ANNUAL ASSESSMENTS RELATED TO

THE GRACE LANE ASSESSMENT DISTRICT FOR FISCAL
YEAR 2026-27
WHEREAS, on November 28, 2006, the City Council of the City of Arroyo Grande adopted Resolution No. 3976 ordering the formation of the Grace Lane Assessment District ("District") under Part 2 of Division 15 of the California Streets and Highways Code sections 22500-22679 (Landscaping and Lighting Act of 1972), which allows local governmental agencies to form assessment districts for the purpose of financing the costs and expenses of landscaping and lighting public areas; and
WHEREAS, the said improvements in the District include but are not limited to: 1) a pedestrian trail across the open space property (Lot B) including, but not limited to, the existing informal hiking trail currently passing through Lot B, signage, fencing; 2) common areas and facilities, including but not limited to the open space parcels and drainage facilities; 3) open space and maintenance thereof in accordance with fuel modification specifications as described in Mitigation Measure No. 15 in Resolution No. 3732 of the City Council of the City of Arroyo Grande; and 4) a private drive and associated improvement for Lots 16 through 19; and
WHEREAS, the City Council, at its meeting of May 12, 2026, received a report from the Public Works Director advising the City Council that no new improvements or substantial changes in existing improvements are proposed for the District; and WHEREAS, the City Council desires to levy and collect the annual assessments against lots and parcels of land within the District to pay the costs and expenses related to the aforementioned improvements described in this Resolution.

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

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

2. That the Engineer’s Report entitled City of Arroyo Grande Grace Lane Assessment District Fiscal Year 2026-27, (“Engineer’s Report”) has been prepared and filed with the City Clerk and is hereby approved by the City Council. All interested parties are referred to the Engineer’s Report for a full and detailed description of the improvements, the boundaries of the District, and the proposed assessments upon assessable lots and parcels of land within the District.

3. That the City Council hereby declares that it is its intention to seek the annual levy of assessments for the District pursuant to Streets and Highways Code section 22624, over and including the land within the District boundary, and to levy and collect assessments on all such land to pay the costs of the maintenance and servicing of the landscaping improvements and all appurtenant facilities and operations related thereto for Fiscal Year 2026-27 within the boundaries of the District described herein and in more detail within the Engineer's Report.

4. That the improvements to be maintained are specified in the Engineer's Report, no substantial changes are proposed to be made to the existing improvements and the assessment is not proposed to increase from the prior year.

RESOLUTION NO.

PAGE 2

5. That the City Council hereby declares its intention to conduct a public hearing concerning the District and the levy of proposed assessments for the improvements related thereto in accordance with the Landscaping and Lighting Act of 1972.

6. That notice is hereby given that a public hearing on these matters will be held by the City Council on Tuesday, June 23, 2026 at 6:00 p.m. or as soon thereafter as feasible at the City Council Chambers, 215 E. Branch Street, Arroyo Grande, California, 93420 or via teleconference as follows: Zoom Meeting: https://us02web.zoom.us/j/86752345420; or by Telephone: 1-669-900-6833; 1-346-248-7799.

7. That the City Clerk shall cause notice to be given of the time and place of the public hearing by causing the publishing of this Resolution once in the local paper not less than ten (10) days before the date of the hearing and by posting a copy of this Resolution on the official bulletin board customarily used by the City Council for the posting of notices.

8. That the action is categorically exempt from the California Environmental Quality Act 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. (State CEQA Guidelines, § 15302.)
On motion of to
wit:
, seconded by, and on the following roll call vote,
AYES:

NOES:

ABSENT:
the foregoing Resolution was passed and adopted this 26 th day of May, 2026.

RESOLUTION NO.

PAGE 3

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

ATTACHMENT 3
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

ARROYO GRANDE DECLARING ITS INTENTION TO LEVY

AND COLLECT ANNUAL ASSESSMENTS RELATED TO

THE ARROYO GRANDE LANDSCAPING AND LIGHTING
ASSESSMENT DISTRICT NO. 1, WITHIN TRACT 1769,
FOR FISCAL YEAR 2026-2027
WHEREAS, on May 12, 1992, the City Council of the City of Arroyo Grande adopted Resolution No. 2932 ordering the formation of Arroyo Grande Landscaping and Lighting Assessment District No. 1 ("District"), within Tract 1769, under Part 2 of Division 15 of the California Streets and Highways Code sections 22500-22679 (Landscaping and Lighting Act of 1972), which allows local governmental agencies to form assessment districts for the purpose of financing the costs and expenses of landscaping and lighting public areas; and
WHEREAS improvements in the District include but are not limited to: landscaping and ornamental vegetation in the public rights of way; and
WHEREAS, the City Council, at its meeting of May 12, 2026, received a report from the Public Works Director advising the City Council that no new improvements or substantial changes in existing improvements are proposed for District; and
WHEREAS the City Council desires to levy and collect the annual assessments against lots and parcels of land within the District to pay the costs and expenses related to the aforementioned improvements described in this Resolution.

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

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

2. That the Engineer’s Report entitled City of Arroyo Grande Parkview, Landscape District #1 Tract 1769 Fiscal Year 2026-27, (“Engineer’s Report”) has been prepared and filed with the City Clerk and is hereby approved by the City Council. All interested parties are referred to the Engineer’s Report for a full and detailed description of the improvements, the boundaries of the District, and the proposed assessments upon assessable lots and parcels of land within the District.

3. That the City Council hereby declares that it is its intention to seek the annual levy of assessments for the District pursuant to Streets and Highways Code section 22624, over and including the land within the District boundary, and to levy and collect assessments on all such land to pay the costs of the maintenance and servicing of the landscaping improvements and all appurtenant facilities and operations related thereto for Fiscal Year 2026-2027 within the boundaries of the District described herein and in more detail within the Engineer's Report.

4. The improvements to be maintained are specified in the Engineer's Report, no substantial changes are proposed to be made to the existing improvements and the assessment is not proposed to increase from the prior year.

5. That the City Council hereby declares its intention to conduct a public hearing concerning the District and the levy of proposed assessments for the improvements related thereto in accordance with the Landscaping and Lighting Act of 1972.

RESOLUTION NO.

PAGE 2

6. That notice is hereby given that a public hearing on these matters will be held by the City Council on Tuesday, June 23, 2026 at 6:00 p.m. or as soon thereafter as feasible at the City Council Chambers, 215 E. Branch Street, Arroyo Grande, California, 93420 or via teleconference as follows: Zoom Meeting: https://us02web.zoom.us/j/86752345420; or by Telephone: 1-669-900-6833; 1-346-248-7799.

7. That the City Clerk shall cause notice to be given of the time and place of the public hearing by causing the publishing of this Resolution once in the local paper not less than ten (10) days before the date of the hearing and by posting a copy of this Resolution on the official bulletin board customarily used by the City Council for the posting of notices.

8. That the action is categorically exempt from the California Environmental Quality Act 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. (State CEQA Guidelines,§ 15302.)
On motion of to
wit:
, seconded by, and on the following roll call vote,
AYES:

NOES:

ABSENT:
the foregoing Resolution was passed and adopted this 26th day of May, 2026.

RESOLUTION NO.

PAGE 3

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

ATTACHMENT 4

Engineer’s Report for
City of Arroyo Grande
Parkside Village Assessment District
Fiscal Year 2026-27
Prepared by:

Shannon Sweeney, City Engineer
1375 Ash St
Arroyo Grande, CA 93420
May 26, 2026

CITY OF

ARROYO GRANDE CALIFORNIA

Parkside Village Assessment
Fiscal Year 2026-27

Table of Contents
CERTIFICATES........................................................................................................................................................................3 INTRODUCTION ENGINEER’S REPORT..............................................................................................................................5 ENGINEER’S REPORT ...........................................................................................................................................................6 PART A: PLANS AND SPECIFICATIONS.............................................................................................................................7 PART B: ESTIMATE OF COST ..............................................................................................................................................8 PART C: ASSESSMENT DISTRICT DIAGRAM....................................................................................................................9 PART D: METHOD OF APPORTIONMENT OF ASSESSMENT........................................................................................10 PART E: ASSESSMENT ROLL............................................................................................................................................11 EXHIBIT “C” - Assessment Diagram ................................................................................................................................13 EXHIBIT “D” – Completed Improvements........................................................................................................................15

Parkside Village Assessment
Fiscal Year 2026-27

I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was approved and confirmed by the City Council of the City of Arroyo Grande, San Luis Obispo County, California on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________
I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was filed with the County Auditor of the County of San Luis Obispo, on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________

Parkside Village Assessment
Fiscal Year 2026-27

INTRODUCTION ENGINEER’S REPORT

CITY OF ARROYO GRANDE

PARKSIDE VILLAGE ASSESSMENT DISTRICT
FISCAL YEAR 2026-27
To ensure a flow of funds for the construction, operation, maintenance and servicing of specified improvements within the boundary of the subdivision known as Parkside (Tract Maps 2310-1 and 2310-2); the City Council will approve the City of Arroyo Grande’s Parkside Village Assessment District (“The District”) this fiscal year. As required by the Landscaping and Lighting Act of 1972 (“The Act”), this Engineer’s Report describes the improvements to be constructed, operated, maintained and serviced by the District for Fiscal Year 2026-27, provides an estimated budget for the District and lists the proposed assessments to be levied upon each assessable lot within the District. The boundaries of the District are shown on the Assessment Diagram and incorporated into this report as Part “C”.

The cost of operation, maintenance, and servicing of the improvements to be funded by the District will be apportioned to each lot within the District in proportion to the special benefit it receives. The method of assessment may be amended from time to time by the City Council, in order to apportion the costs in relation to the benefits being received. However, if the assessments are increased from the prior year, they will be subject to the noticing and balloting procedures referenced in Proposition 218.

Payment of the assessment for each lot will be made in the same manner and at the same time as payments are made for property taxes. All funds collected through the assessment must be placed in a special fund and can only be used for the purpose stated within this report.

The City will hold a Public Hearing on June 23, 2026, to provide an opportunity for any interested person to be heard. At the conclusion of the Public Hearing, the City Council may adopt a resolution confirming the levy of assessments as originally proposed or as modified.

Following the adoption of this resolution and recordation of the District’s Tract Maps, the final Assessor’s roll will be prepared and filed with the San Luis Obispo County Auditor’s Office to be included on the Fiscal Year 2026-27 tax roll.

Parkside Village Assessment
Fiscal Year 2026-27

ENGINEER’S REPORT

CITY OF ARROYO GRANDE

PARKSIDE VILLAGE ASSESSMENT DISTRICT
FISCAL YEAR 2026-27
This Engineer’s Report was prepared pursuant to the provisions of the Landscaping & Lighting Act of 1972, Section 22500 through 22679 of the California Streets and Highways Code. This Engineer’s Report was submitted to the City Clerk of the City of Arroyo Grande in connection with the proceedings of the City Council to consider the annual levy of the Parkside Village Assessment District. Shannon Sweeney, City Engineer of the City of Arroyo Grande, PE, submits this Engineer’s Report consisting of the following parts:

PART A: PLANS AND SPECIFICATIONS
This part describes the improvements of the District. Preliminary design documents for the improvements are set forth on the lists thereof, attached hereto, and are on file in the Office of the City Engineer of the City of Arroyo Grande, and are incorporated herein by reference.

Plans are incorporated into the assessment diagram, listed as Exhibit “C”, as allowed under Section 22568 of the Act. Exhibit “C” displays the District as consisting of 2 zones: one (1) and two (2) as shown in the original Engineer’s Report dated August 18, 2005, for formation of the District . The Plans and Specifications remain consistent with the approved Parkside Village Assessment District, as approved on December 19th, 2005.

PART B: ESTIMATE OF COST
This part contains an estimate of the cost of the proposal improvements for fiscal year 2026- 27, including incidental costs and expenses in connection therewith, as set forth on the lists thereof, attached hereto.

PART C: ASSESSMENT DISTRICT DIAGRAM
This part incorporates, by reference, a Diagram of the District showing the exterior boundaries of the District, the boundaries of any zones within the District, and the lines and dimensions of each lot or parcel of land within the District. This Diagram had been prepared for the approved Engineer’s Report approved December 19th, 2005. The lines and dimensions of each lot within the District are those lines and dimensions to be shown on the maps of the San Luis Obispo County Assessor following the recordation of Tract Maps 2310-1 and 2310-2.

PART D: METHOD OF APPORTIONMENT OF ASSESSMENT
This part describes the method of apportionment based upon the parcel classification of land within the District, and in proportion to the estimated benefits to be received.

PART E: ASSESSMENT ROLL
This part contains a description of each lot of property proposed to be subject to the assessment, including the amount of the assessment on each lot for Fiscal Year 2026-27.

Parkside Village Assessment
Fiscal Year 2026-27

PART A: PLANS AND SPECIFICATIONS
The Plans and Specifications are per the original adopted Engineer’s Report, dated December 19th, 2005. No changes in services are being made at this time.

Description of Improvements
The following improvements are proposed to be operated, maintained, and serviced in the Parkside Village Assessment District for Fiscal Year 2026-27.

Landscaping and Block Walls along Farroll Avenue and Bakeman North, a Park, a Detention Basin and Water Separator, a Sidewalk and Path to Parks, Fencing, and a French Drain.

Services include but are not limited to personnel; contractual services; grading; clearing; removal of debris; installation or reconstruction of said improvements at the end of their expected lifespan; and any other items necessary for the maintenance or servicing of the facilities.

Maintenance means the furnishing of services and materials for the ordinary and usual operations, maintenance and servicing of the landscaping, park or appurtenant facilities; providing for the life, growth, health and beauty of the landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, and treating for disease or injury; and the removal of trimmings, rubbish, debris and other solid waste.

Parkside Village Assessment
Fiscal Year 2026-27

PART B: ESTIMATE OF COST
The 1972 Act provides that the total cost of installation, construction, operation, maintenance and servicing, of landscaping and appurtenant facilities can be recovered by the District. Incidental expenses, including administration of the District, engineering fees, legal fees, printing, posting, and mailing of notices, and all other costs associated with the annual collection process can also be included. Annual levy reports will be prepared to update the District budget and assessments.

Annual cost indexing of the maximum authorized assessments will be tied to the region’s Consumer Price Index (CPI).

The proposed operation, maintenance and servicing costs for Fiscal Year 2026-27 are summarized below.
1 The estimated balance as of July 1, 2026, for Parkside Village Assessment District provided by City of Arroyo Grande Finance Department. 2 A CPI Adjustment was not made for 2026/27 fiscal year.

See original Engineer’s Report Exhibit “A” for details on costs of improvements.

The 1972 Act requires that a special fund be set up for revenues and expenditures of the District.

Funds raised by the assessments shall be used for the purpose as stated herein. Any balance remaining on July 1 must be carried over to the next Fiscal Year unless the funds are being accumulated for future capital improvements and operating reserves.

Approximate Fund Balance (07/01/2026)1
Estimated 2026-27 Assessment Income2
Less Estimated Expenditures
Estimated Fund Balance (06/30/2027)
$ (34,700.00)
$ 373,468.00
$ 364,202.00

PARKSIDE VILLAGE ASSESSMENT DISTRICT
FY 2026-27
$ 43,966.00

Parkside Village Assessment
Fiscal Year 2026-27

PART C: ASSESSMENT DISTRICT DIAGRAM
Properties located within the City of Arroyo Grande Parkside Village Assessment District within the subdivision known as Parkside (Tract Maps 2310-1 and 2310-2).

The lines and dimensions of each lot within the District are those lines and dimensions shown on the Tract Maps approved by the City of Arroyo Grande Department of Public Works for the year when the original Engineer’s Report was prepared. The Assessment District Diagram for the District is included in this report as Exhibit “C” and is the same Assessment Diagram as the Assessment Diagram approved in the original Engineer’s Report.

Parkside Village Assessment
Fiscal Year 2026-27

PART D: METHOD OF APPORTIONMENT OF ASSESSMENT
For more details on Method of Apportionment, please refer to the original adopted Engineer’s Report, dated December 19, 2005. No changes to the Benefit Zone Classification Assessment Methodology and Benefit determination have been made.

SUMMARY
The total operation, maintenance and servicing costs for the improvements were apportioned to each lot equally for the given zone. All improvement costs assessed in Zone 1 were apportioned equally amongst the lots within Zone 1. All improvement costs assessed in Zone 2 were apportioned equally amongst the lots within Zone 2.

Improvements provide special and direct benefits to both Zone 1 and Zone 2:
• Landscaping and hardscaping provide beautification, shade and enhancement of the desirability of the surroundings.
• The proposed park provides a place for recreation within the proposed subdivision (Tract 2310)
• Proposed block walls along Farroll Avenue and Bakeman North provide beautification of the surroundings.
• The proposed park pathways provide a pedestrian route to parks within or just outside the proposed subdivision (Tract 2310)
In addition to those improvements listed above, the improvements below provide special and direct benefit and are assessed to Zone 2 only:
• The detention basin collects storm drainage from Zone 2 of Tract 2310 • The French drain provides drainage to the easterly boundary of Zone 2 (Tract 2310-2)

Parkside Village Assessment
Fiscal Year 2026-27

PART E: ASSESSMENT ROLL
APN Lot # Assessment Amount
077255002 1 $ 446.00
077255003 2 $ 446.00
077255004 3 $ 446.00
077255005 4 $ 446.00
077255006 5 $ 446.00
077255007 6 $ 446.00
077255008 7 $ 446.00
077255009 8 $ 446.00
077255010 9 $ 446.00
077255011 10 $ 446.00
077255012 11 $ 446.00
077255013 12 $ 446.00
077255014 13 $ 446.00
Zone 1 Total: $ 5,798.00
APN Lot # Assessment Amount
077255015 14 $ 734.00
077255016 15 $ 734.00
077255017 16 $ 734.00
077255018 17 $ 734.00
077255019 18 $ 734.00
077255020 19 $ 734.00
077255021 20 $ 734.00
077255022 21 $ 734.00
077255023 22 $ 734.00
077255024 23 $ 734.00
077255027 26 $ 734.00
077255028 27 $ 734.00
077255029 28 $ 734.00
077255030 29 $ 734.00
077255031 30 $ 734.00
077255032 31 $ 734.00
077255033 32 $ 734.00
077255034 33 $ 734.00
077255035 34 $ 734.00
077255036 35 $ 734.00
ZONE 1 - FY 2026-27
ZONE 2 - FY 2026-27

Parkside Village Assessment
Fiscal Year 2026-27

APN Lot # Assessment Amount
077255037 36 $ 734.00
077255038 37 $ 734.00
077255039 38 $ 734.00
077255040 39 $ 734.00
077255041 40 $ 734.00
077255042 41 $ 734.00
077255043 42 $ 734.00
077255044 43 $ 734.00
077255045 44 $ 734.00
077255046 45 $ 734.00
077255047 46 $ 734.00
077255048 47 $ 734.00
077255049 48 $ 734.00
077255050 49 $ 734.00
077255051 50 $ 734.00
077255052 51 $ 734.00
077255053 52 $ 734.00
077255054 53 $ 734.00
077255055 54 $ 734.00
077255056 55 $ 734.00
077255057 56 $ 734.00
077255058 57 $ 734.00
077255059 58 $ 734.00
077255060 59 $ 734.00
077255061 60 $ 734.00
077255062 61 $ 734.00
077255063 62 $ 734.00
077255064 63 $ 734.00
077255065 64 $ 734.00
077255066 65 $ 734.00
077255067 66 $ 734.00
077255068 67 $ 734.00
Zone 2 Total: $ 38,168.00
Zone 1: $ 5,798.00
Zone 2: $ 38,168.00
Total Assessments: $ 43,966.00
ZONE 2 - FY 2026-27

EXHIBIT “C” - Assessment Diagram

EXHIBIT “D” – Recent Improvements
In need of replacement: playground equipment, surfacing, water fountain & unused space Old

Replaced 2025-26: New playground equipment, surfacing, water fountain including water bottle filling station, activity center added to under utilized space

ATTACHMENT 5

Engineer’s Report for
City of Arroyo Grande
Grace Lane Assessment District
Fiscal Year 2026-27
Prepared by:

Shannon Sweeney, City Engineer
1375 Ash St
Arroyo Grande, CA 93420
May 26, 2026

CITY OF

ARROYO GRANDE CALIFORNIA

Table of Contents
CERTIFICATES........................................................................................................................................................................3 INTRODUCTION ENGINEER’S REPORT..............................................................................................................................5 ENGINEER’S REPORT ...........................................................................................................................................................6 PART A: PLANS AND SPECIFICATIONS.............................................................................................................................8 PART B: ESTIMATE OF COST ..............................................................................................................................................9 PART C: ASSESSMENT DISTRICT DIAGRAM..................................................................................................................10 PART D: METHOD OF APPORTIONMENT OF ASSESSMENT........................................................................................11 PART E: ASSESSMENT ROLL............................................................................................................................................12 EXHIBIT “C” - Assessment Diagram..................................................................................................................................13 EXHIBIT “D” – Fuel Modification Specifications..............................................................................................................15 EXHIBIT “E” – Fuel Modification Zones ............................................................................................................................16 EXHIBIT “F” – Storm Drain Maintenance Exhibit.............................................................................................................17 EXHIBIT “G” – Slope / Road Maintenance ........................................................................................................................18

Grace Lane Assessment District
Fiscal Year 2026-27

I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was approved and confirmed by the City Council of the City of Arroyo Grande, San Luis Obispo County, California on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________
I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was filed with the County Auditor of the County of San Luis Obispo, on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________

Grace Lane Assessment District
Fiscal Year 2026-27

INTRODUCTION ENGINEER’S REPORT

CITY OF ARROYO GRANDE

GRACE LANE ASSESSMENT DISTRICT
FISCAL YEAR 2026-27
To ensure a flow of funds for the construction, operation, maintenance and servicing of specified improvements within the boundary of the subdivision known as Tract 2236 in the City of Arroyo Grande; the City Council approves the City of Arroyo Grande’s Grace Lane Assessment District (“The District”) this fiscal year. As required by the Landscaping and Lighting Act of 1972 (“The Act”), this Engineer’s Report describes the improvements to be constructed, operated, maintained, and serviced by the District for Fiscal Year 2026-27, provides a most probable estimated budget for the District, and lists the proposed assessments to be levied upon each assessable lot within the District. The boundaries of the District are reflective of Tract 2236, shown on the Assessment Diagram and incorporated into this report as Part “C”.

The cost of operation, maintenance, and servicing of the improvements to be funded by the District will be apportioned to each lot within the District in proportion to the special benefit it receives. The method of assessment may be amended from time to time by the City Council, in order to apportion the costs in relation to the benefits being received. However, if the assessments are increased from the prior year, they will be subject to the noticing and balloting procedures referenced in Proposition 218.

Payment of the assessment for each lot will be made in the same manner and at the same time as payments are made for property taxes. All funds collected through the assessment must be placed in a special fund and can only be used for the purpose stated within this report.

The City will hold a Public Hearing on June 23, 2026, to provide an opportunity for any interested person to be heard. At the conclusion of the Public Hearing, the City Council may adopt a resolution confirming the levy of assessments as originally proposed or as modified.

Following the adoption of this resolution and recordation of the District’s Tract Maps, the final Assessor’s roll will be prepared and filed with the San Luis Obispo County Auditor’s Office to be included on the Fiscal Year 2026-27 tax roll.

Grace Lane Assessment District
Fiscal Year 2026-27

ENGINEER’S REPORT

CITY OF ARROYO GRANDE

GRACE LANE ASSESSMENT DISTRICT
FISCAL YEAR 2026-27
This Engineer’s Report was prepared pursuant to the provisions of the Landscaping & Lighting Act of 1972, Section 22500 through 22679 of the California Streets and Highways Code. This Engineer’s Report was submitted to the City Clerk of the City of Arroyo Grande in connection with the proceedings of the City Council to consider the annual levy of the Grace Lane Assessment District. Shannon Sweeney, City Engineer of the City of Arroyo Grande, PE, submits this Engineer’s Report consisting of the following parts:

PART A: PLANS AND SPECIFICATIONS
This part describes the improvements of the District. Preliminary design documents for the improvements are as set forth on the lists thereof, attached hereto, and are on file in the Office of the City Engineer of the City of Arroyo Grande, and are incorporated herein by reference.

Plans are incorporated into the assessment diagram, listed as Exhibit “C”, Exhibit “D”, Exhibit “E”, Exhibit “F”, and Exhibit “G”, as allowed under section 22568 of the Act. Exhibit “C” shows the public trail to be maintained, Exhibit “D” explains The City of Arroyo Grande’s fuel modification specifications by zone and Exhibit “E” shows fuel modification Zones 1, 2, and 3 in Tract 2236. Exhibit “F” shows the storm drain maintenance and Exhibit “G” shows the slope maintenance and road maintenance for Tract 2236. All Exhibits are reflective of the Exhibits approved in the original Engineer’s Report dated November 28, 2006.

PART B: ESTIMATE OF COST
This part contains an estimate of the cost of the proposal improvements for fiscal year 2026- 27, including incidental costs and expenses in connection therewith, as set forth on the lists thereof, attached hereto.

PART C: ASSESSMENT DISTRICT DIAGRAM
This part incorporates, by reference, a Diagram of the District showing the exterior boundaries of the District, the boundaries of any zones within the District, and the lines and dimensions of each lot or parcel of land within the District (see Exhibits “C” “E” “F” and “G”). These Diagrams have been prepared for the approved Engineer’s Report approved November 28, 2006. The lines and dimensions of each lot within the District are those lines and dimensions to be shown on the maps of the San Luis Obispo County Assessor following the recordation of Tract Maps 2236.

Grace Lane Assessment District
Fiscal Year 2026-27

PART D: METHOD OF APPORTIONMENT OF ASSESSMENT
This part describes the method of apportionment based upon the parcel classification of land within the District, and in proportion to the estimated benefits to be received.

PART E: ASSESSMENT ROLL
This part contains a description of each lot of property proposed to be subject to the assessment, including the amount of the assessment on each lot for Fiscal Year 2026-27.

Grace Lane Assessment District
Fiscal Year 2026-27

PART A: PLANS AND SPECIFICATIONS
The Plans and Specifications are per the original adopted Engineer’s Report, dated November 28th, 2006. No changes in services are being made at this time.

Description of Improvements
The following improvements are proposed to be operated, maintained, and serviced within the Grace Lane Assessment District for Fiscal Year 2026-27.

Open space weed abatement, fire fuel suppression, and public trail maintenance.

Fire fuel suppression is to be completed on a continual basis per Tract 2236 Grace Lane, City of Arroyo Grande P.U.D. Fuel Modification Specifications. (See Exhibits D and E) Drainage easements and the facilities as specified shall be maintained on an annual basis. Storm drain lines shall be “jetted” and cleaned of any debris as necessary to maintain clear and operational lines prior to the rainy season. Manholes and catch basins shall be vacuumed and/or cleaned of any debris, as deemed necessary, by the City of Arroyo Grande Superintendent of streets and drainage. (See Exhibit F) Maintenance of the slopes outside public right of way not including private lots and drainage within two areas (Area “A”, benefits lots 1-15, and Area “B”, benefits lots 16-19 (See Exhibit G) are to be maintained by City of Arroyo Grande Streets Lead Worker.

Road maintenance for the private drive to lots 16-19, shall be seal coat/slurry seal at 5- year intervals, and 2” A.C. overlay at 20-year intervals if required, based on the City of Arroyo Grande road maintenance department recommendations. (See Exhibit G) Services included but are not limited to personnel; contractual services; grading; clearing; removal of debris; installation or reconstruction of said improvements at the end of their expected lifespan; and any other items necessary for the maintenance or serving of the facilities.

Maintenance means the furnishing of services and materials for the ordinary and usual operations, maintenance, and servicing of the landscaping, or appurtenant facilities; providing for the life, growth, health, and beauty of the landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, and treating for disease or injury; and the removal of trimmings, rubbish, debris, and other solid waste.

Grace Lane Assessment District
Fiscal Year 2026-27

PART B: ESTIMATE OF COST
The proposed operation, maintenance and servicing costs for Fiscal Year 2026-27 are summarized below. 1 The estimated balance as of July 1, 2026, for Grace Lane Assessment District provided by City of Arroyo Grande. 2 Assessment income based on 19 homes x $460 = $8,740 for Fire Suppression, 4 homes x $148 = $592 for seal coat. 3 Estimated expenditures provided by the Finance Department See original Engineer’s Report Appendix 1 and 2 for details on costs of improvements.

The 1972 Act requires that a special fund be set up for revenues and expenditures of the District. Funds raised by the assessments shall be used for the purpose as stated herein. Any balance remaining on July 1 must be carried over to the next Fiscal Year unless the funds are being accumulated for future capital improvements and operating reserves.

Approximate Fund Balance (07/01/2026)1
2026-27 Assessment Income(Fire Suppression)2
2026-27 Assessment Income (Seal Coat)2
Less Estimated Expenditures3
Estimated Fund Balance (06/30/2027) $ 24,152.00
$ 8,740.00

GRACE LANE ASSESSMENT DISTRICT
FY 2026-27
$ 30,920.00
$ 592.00
$ (16,100.00)

Grace Lane Assessment District
Fiscal Year 2026-27

PART C: ASSESSMENT DISTRICT DIAGRAM
Properties located within the proposed City of Arroyo Grande Grace Lane Assessment District are within the subdivision known as Grace Lane (Tract Map 2236).

The lines and dimensions of each lot within the District are those lines and dimensions shown on the Tract Map approved by the City of Arroyo Grande for the year when the original Engineer’s Report was prepared.

Grace Lane Assessment District
Fiscal Year 2026-27

PART D: METHOD OF APPORTIONMENT OF ASSESSMENT
For details on Method of Apportionment, please refer to the original adopted Engineer’s Report, dated December 19, 2005. No changes to the Benefit Zone Classification Assessment Methodology and Benefit determination have been made.

All 19 lots in this Assessment District benefit from and are assessed for Fire Suppression ($460 annually). Lots 16-19 benefit from and are additionally assessed $148 annually per lot for the road maintenance seal coat.

Grace Lane Assessment District
Fiscal Year 2026-27

PART E: ASSESSMENT ROLL
Lot# Assessor Parcel
Number (APN) FY 2065-27
1 007019002 $460.00
2 007019003 $460.00
3 007019004 $460.00
4 007019005 $460.00
5 007019006 $460.00
6 007019007 $460.00
7 007019008 $460.00
8 007019035 $460.00
9 007019036 $460.00
10 007019037 $460.00
11 007019012 $460.00
12 007019014 $460.00
13 007019015 $460.00
14 007019016 $460.00
15 007019017 $460.00
16 007019034 $608.00
17 007019033 $608.00
18 007019025 $608.00
19 007019030 $608.00
TOTAL: $9,332.00

Grace Lane Assessment District
Fiscal Year 2026-27

EXHIBIT “C” - Assessment Diagram
The following Exhibits “C” through “G” are reflective of the Exhibits approved in the original Engineer’s Report dated November 28, 2006.

Grace Lane Assessment District
Fiscal Year 2026-27

Grace Lane Assessment District
Fiscal Year 2026-27

EXHIBIT “D” – Fuel Modification Specifications
In accordance with Municipal Section 8.44.020 all grass, weeds, brush, and other combustibles will be maintained in a condition that will make it unlikely that it will become easily ignited or support the spread of fire. The Fire Department encourages the property owner to consider the use of livestock (goats, cattle, etc.) to ecologically maintain the fire safety of this land.

Zone 1
Grasses shall be cut down to a length of 4 inches or less yearly, or as required by the City of Arroyo Grande Fire Department. All brush and pampas grasses will also be cut down in this zone.

Zone 2
Shrubs under oaks and within 10 feet of tree canopies shall be removed. Brush in this area shall be thinned to the satisfaction of the Arroyo Grande Fire Department to allow for minimal spread of fire and to allow adequate access for firefighting suppression efforts. Grasses and brush shall be kept mowed in this zone as well.

Zone 3
To eliminate ladder fuels beneath oak trees, oak limbs to be considered for removal shall be less than 4 inches in diameter and within 4 feet of the ground. Branches must be chipped for mulch and spread on site.
• Grasses in this zone shall be kept mowed where practical. • Trees with shrubs adjacent to the canopy shall likewise have limbs 4 inches or less removed until clearance is achieved between canopy and shrubs. • Some shrubs in this area may be indicated in the field to be thinned. • Existing fallen branches located in treated zones shall be chipped and used as mulch. • Removal of larger limbs over 4 inches in diameter which pose a hazard or are within 4 feet of vertical clearance zone must be approved by an arborist and the Director of Parks, Recreation, and Facilities.
• All pruning work done on oak trees in this zone shall be done only after the issuance of a Pruning Permit by the Director of Parks, Recreation, and Facilities.

Notes
A site walk with the owner or Homeowners Association’s Representative and the City of Arroyo Grande Fire Marshall is required prior to the commencement of any work in the defined open space areas.

All work on and around existing oak trees shall conform to the conditions of the City of Arroyo Grande Community Tree Ordinance 431 C.S. All Pruning of oak trees shall be executed per documented recommendations by a certified arborist using ISA approved pruning standards. All contractors and subcontractors shall have read the community tree ordinance and be familiar with the conditions therein.

Grace Lane Assessment District
Fiscal Year 2026-27

EXHIBIT “E” – Fuel Modification Zones

Grace Lane Assessment District
Fiscal Year 2026-27

EXHIBIT “F” – Storm Drain Maintenance Exhibit

EXHIBIT “G” – Slope / Road Maintenance

ATTACHMENT 6

Engineer’s Report for
City of Arroyo Grande
Parkview, Landscape District #1
Tract 1769
Fiscal Year 2026-27
Prepared by:

Shannon Sweeney, City Engineer
1375 Ash St
Arroyo Grande, CA 93420
May 26, 2026

CITY OF

ARROYO GRANDE CALIFORNIA

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

Table of Contents
CERTIFICATES........................................................................................................................................................................3 ENGINEER’S REPORT ...........................................................................................................................................................5 PART I: PLANS AND SPECIFICATIONS ..............................................................................................................................7 PART II: ESTIMATE OF COST...............................................................................................................................................9 PART III: ASSESSMENT DISTRICT DIAGRAM..................................................................................................................10 PART IV: ASSESSMENT SCHEDULE.................................................................................................................................14

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was approved and confirmed by the City Council of the City of Arroyo Grande, San Luis Obispo County, California on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________
I HEREBY CERTIFY that the attached Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached, was filed with the County Auditor of the County of San Luis Obispo, on the___day of ____________ 2026.

Jessica Matson, City Clerk
City of Arroyo Grande
By:____________________________

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

ENGINEER’S REPORT

CITY OF ARROYO GRANDE
PARKVIEW, LANDSCAPE DISTRICT No. 1
FISCAL YEAR 2026-27
This Engineer’s Report was prepared pursuant to the provisions of the Landscaping & Lighting Act of 1972, Section 22500 through 22679 of the California Streets and Highways Code. This Engineer’s Report was submitted to the City Clerk of the City of Arroyo Grande in connection with the proceedings of the City Council to consider the annual levy of the Parkview, Landscape District #1, Tract 1769.. Shannon Sweeney, City Engineer of the City of Arroyo Grande, PE, submits this Engineer’s Report consisting of the following parts:

PART I: PLANS AND SPECIFICATIONS
The plans and specifications describe the general nature, location and extent of the proposed improvements, and said plans and specifications, as applicable, indicate the classes and types of improvement for each zone within the District. The Plans and Specifications remain consistent with the approved Parkview, Landscape District #1, which was approved on June 9th, 1992.

PART II: COST ESTIMATE
The cost estimate includes all costs relating to installing and maintaining of the improvements for the next fiscal year, including appropriate incidental expenses, as well as providing for surpluses or credits and contributions from any source as applicable.

PART III: ASSESSMENT DIAGRAM
The Assessment Diagram indicates the exterior boundaries of the District, the boundaries of any zones within the District, as well as setting forth each individual lot or parcel. Each parcel is identified by a distinctive number or letter and the lines and dimensions of each lot shall conform to those as shown on the latest County Assessor’s map.

PART IV: ASSESSMENT SCHEDULE
The Assessment Schedule sets forth the net amount to be assessed upon all parcels and lands within the District, describing each assessable lot or parcel by reference to a specific number, and assessing the net amount upon the lots in proportion to the benefits to be received by each lot or parcel as shown on the above-referenced Diagram. The Assessment Schedule remains consistent with the approved Parkview, Landscape District #1 approved on June 9th, 1992.

All lots and parcels of land known as public property, as defined under Section 22663 of said “Landscaping and Lighting Act of 1972”: have been omitted and are exempt from any assessment under these proceedings.

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

This “Report” is applicable for the maintenance of improvements within the District for the fiscal year 2026-27.

The City Council will hold a meeting on June 23, 2026, to provide an opportunity for any interested person to be heard. At the conclusion of the meeting, the City Council may adopt a resolution confirming the levy of assessments as originally proposed or as modified. Following the adoption of this resolution and recordation of the District’s Tract Maps, the Final Assessor’s Roll will be prepared and filed with the San Luis Obispo County Auditor’s office to be included on the Fiscal Year 2026-27 tax roll.

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

PART I: PLANS AND SPECIFICATIONS
The Plans and Specifications are per the original adopted Engineer’s Report, dated June 9th , 1992. No changes in services are being made at this time.

Description of Improvements
A description of the works of improvements to be maintained under these proceedings for Parkview, Landscape District #1, Tract 1769, are generally described as follows:
• The Installation and maintenance of landscaping improvements and ornamental vegetation in public rights-of-way to serve and benefit properties within the boundaries of the District as well as any subsequent annexations.
• No annexations have been made into or out of Parkview, Landscape District #1 since the adoption on June 9th, 1992.
• See Attached Conceptual Landscape Planting Plan, prepared by Landplans for the Parkview, Landscape District #1 adopted June 9th, 1992.

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

PART II: ESTIMATE OF COST
The total costs for installation and maintenance of the improvements are those as hereinafter set forth. Said cost estimate will also set forth the amount of any surplus or deficit in the Improvement Fund to be carried over, as well as the amount of any contributions to be made from any other sources.

The proposed operation, maintenance and servicing costs for Fiscal Year 2026-27 are summarized below.
1 The estimated balance and expenses for Parkview, Landscape District #1, provided by the Finance Department, City of Arroyo Grande.

Approximate Fund Balance (07/01/2026)1
Estimated 2026-27 Assessment Income
Less Estimated Expenditures
Estimated Fund Balance (06/30/2027) $ 3,887.00
PARKVIEW, LANDSCAPE DISTRICT #1, TRACT 1769
FY 2026-27
$ 4,487.00
$ 3,000.00
$ (3,600.00)

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

PART III: ASSESSMENT DISTRICT DIAGRAM
The assessment diagram sets forth (a) the exterior boundaries of the District, (b) the boundaries of any zones within the District, and (c) the lines of each lot or parcel of land within the District. The assessment diagram further identifies each lot or parcel by a distinctive number or letter, and for a detailed description of the lines and dimensions of any lot or parcel, reference is made to the County Assessor’s map applicable for the next fiscal year, which map shall govern for all details concerning the lines and dimensions of such lots or parcels. A copy of the assessment diagram is attached hereto, referenced, and incorporated

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

.

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

PART IV: ASSESSMENT SCHEDULE
By order of the legislative body, the following assessment are recommended to cover the estimates costs and expenses for the improvements and maintenance within the District for the next fiscal year. Said costs and expenses are as noted in Part II.

The net amount of the costs and expenses are apportioned and assessed upon the several parcels of land within the District liable therefore and benefited thereby, in proportion to the estimated benefits that each parcel receives, respectively, from said works of improvement and appurtenances, and said parcels are hereinafter numbered and set forth to correspond with the numbers as they appear on the attached assessment Diagram and the County Assessment Roll.

The Assessment Schedule refers to the County Assessment Roll for a description of the lots or parcels and said Roll shall govern for all details concerning the description of the lots or parcels.

The net amount to be assessed upon the lands has been spread and apportioned by any formula in accordance with the benefits received from each parcel, and in my opinion, said costs and expenses have been apportioned in direct relationship to the benefits received from the works of improvement.

For a more specific statement as to the method and formula for the spread of the assessments, reference is made to the following list of annual assessments:

Parkview, AD #1 Tract 1769
Fiscal Year 2026-27

PARKVIEW, LANDSCAPE DISTRICT #1, TRACT 1769
APN Lot # Assessment Amount
077253001 1 $ 100.00
077253002 2 $ 100.00
077253003 3 $ 100.00
077253004 4 $ 100.00
077253005 5 $ 100.00
077253006 6 $ 100.00
077253007 7 $ 100.00
077253008 8 $ 100.00
077253009 9 $ 100.00
077253010 10 $ 100.00
077253011 11 $ 100.00
077253012 12 $ 100.00
077253013 13 $ 100.00
077253014 14 $ 100.00
077253015 15 $ 100.00
077253016 16 $ 100.00
077253017 17 $ 100.00
077253018 18 $ 100.00
077253019 19 $ 100.00
077253020 20 $ 100.00
077253021 21 $ 100.00
077253022 22 $ 100.00
077253023 23 $ 100.00
077253024 24 $ 100.00
077253025 25 $ 100.00
077253026 26 $ 100.00
077253027 27 $ 100.00
077253028 28 $ 100.00
077253029 29 $ 100.00
077253030 30 $ 100.00
Total: $ 3,000.00

Item 9.g.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Director of Public Works BY: Shane Taylor, Utilities Manager
SUBJECT: Adopt Ordinance Amending the Municipal Code Regarding CrossConnections DATE: May 26, 2026
RECOMMENDATION:
1) Adopt an ordinance amending Chapter 13.16 of the Arroyo Grande Municipal Code (AGMC); and
2) Find that adopting the Ordinance is not subject to the California Environmental Quality Act (“CEQA”) because these efforts have no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §15060 (c)(2) and (3), 15378). Alternatively, the organizational or administrative activities of a government will not result in direct physical changes in the environment. (State CEQA Guidelines §15378(b)(5).)
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

The City has a 10-year agreement for Cross-Connection Inspection Services with the County of San Luis Obispo approved by the Council on September 23, 2025. Currently, the budgeted amount for the services for FY 2025-26 and FY 2026-27 is $14,500. In addition, an estimated 50 hours of staff time per year is required to administer the Cross Connection Control Plan (CCCP).

Customer Impacts
There is no cost increase for residential or commercial customers associated with the CCCP. The program has a commercial building evaluation process that surveys all commercial buildings over a 10-year period to validate the need and function of a backflow device. There will be a cost to the commercial property owner if an upgrade to its backflow systems is required. The number of upgrades to commercial backflow system is anticipated to be low and required only if a hazard is found. A hazardous condition finding can be a business that has expanded into chemical/higher-risk use and/or high-water use.

These use changes typically require a building permit, and though that permit process a backflow would be required.

Item 9.g.

City Council
Adopt Ordinance Amending the Municipal Code Regarding Cross-Connections May 26, 2026

BACKGROUND AND ANALYSIS:

Pursuant to Government Code sections 36934 and 36937, ordinances are “introduced” by first reading at a City Council meeting, “passed”. (i.e., approved) at a later City Council meeting by conducting a second reading, and then taking effect 30 days after passage.

On May 12, 20261, the City Council introduced the Ordinance as proposed. The Ordinance amendments are now ready for adoption. The Ordinance amendments will become effective thirty (30) days after adoption.

The overall purpose of cross-connection and backflow rules and regulations is to protect the public water supply from contamination by isolating, within customer systems, contaminants or pollutants that could backflow or back-siphon into the City’s system.

Many commercial structures are required to have backflow prevention, particularly those with higher-risk and/or high-water usage:
 Food Service: Restaurants, breweries, and commercial kitchens due to grease traps, dishwashers, and soda machines.
 Medical Facilities: Hospitals, dental offices, medical clinics, and veterinary offices.  Service Businesses: Car washes, salons, laundromats, and radiator repair shops.  Industrial Plants: Manufacturing facilities, chemical processing plants, and bottling plants.
 High Water Use Businesses: Laundromats, hair salons, large-scale retail, and mixed-use buildings.

Existing individual general retail buildings, such as bookstores or clothing stores, typically do not require a backflow device. As new commercial buildings are permitted and constructed, a backflow device is required due to the possibility of a change of use.

The City’s Cross-Connection and Backflow Prevention Program currently exists in Chapter 13.16 of the Arroyo Grande Municipal Code (AGMC). AGMC Chapter 13.16 was designed to comply with Title 17 of the California Code of Regulations (“Title 17”), which contained State standards for cross-connection and backflow prevention.

Title 17 has recently been replaced by the State Water Resource Control Board’s CrossConnection Control Policy Handbook (“CCCPH*), which brings significant updates to State requirements for cross-connection control. The CCCPH was adopted on December 19, 2023, and took effect on July 1, 2024. As such, the City must now implement compliant cross-connection control regulations.

In conformance with the CCCPH, the attached Ordinance will update and amend Chapter

13.16 of the AGMC to ensure the City’s regulations conform to the CCCPH. These

1 https://pub-arroyogrande.escribemeetings.com/filestream.ashx?DocumentId=18931

Item 9.g.

City Council
Adopt Ordinance Amending the Municipal Code Regarding Cross-Connections May 26, 2026

updates include conforming all definitions to the definitions set forth in the CCCPH, and conforming backflow prevention requirements and installation criteria to those set forth in the CCCPH.

The attached Ordinance is necessary to meet the cross-connection and backflow prevention standards required by applicable State law and regulations set forth in the CCCPH.

ALTERNATIVES:

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

1. Adopt an ordinance amending Chapter 13.16 of Title 13 of the Arroyo Grande Municipal Code regarding cross-connections;

2. Modify the ordinance with amendments and direct staff to return at a future public hearing to introduce modified amendments; or

3. Provide other directions to staff.

ADVANTAGES:

The proposed Ordinance ensures Code consistency with the approved CCCPH and the approved CCCP, which provide rules and regulations that protect the City’s public water supply.

DISADVANTAGES:

No disadvantages are identified.

ENVIRONMENTAL REVIEW:

The Ordinance is not subject to the California Environmental Quality Act (“DEQA”) because amending Chapter 13.16 of the AGMC has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §15060 (c)(2) and (3), 15378). Alternatively, this organizational or administrative activity to amend Chapter 13.16 of the AGMC will not result in direct physical changes in the environment. (State CEQA Guidelines §15378(b)(5).

PUBLIC NOTIFICATION AND COMMENTS:

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

ATTACHMENTS:

1. Ordinance

ATTACHMENT 1
ORDINANCE NO.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE AMENDING CHAPTER 13.16 OF TITLE 13 OF THE ARROYO

GRANDE MUNICIPAL CODE REGARDING CROSS-CONNECTIONS
WHEREAS, the City of Arroyo Grande (“City”) currently has cross-connection control regulations contained in Chapter 13.16 of the Arroyo Grande Municipal Code (“AGMC”); and
WHEREAS, on December 19, 2023, the State Water Resources Control Board adopted a Cross-Connection Control Policy Handbook, which updated state regulations governing cross-connection control; and
WHEREAS, in order to comply with the updated state regulations contained in the Cross-Connection Control Policy Handbook, the City Council now desires to update and amend AGMC Chapter 13.16; and
WHEREAS, all prerequisites to the adoption of this Ordinance have occurred.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES ORDAIN AS FOLLOWS:

SECTION 1. Recitals. The recitals above are true and correct and are incorporated herein by reference and adopted as findings by the City Council.

SECTION 2. CEQA Compliance. The City Council finds that the recommended actions to amend Chapter 13.16 of the AGMC are not subject to the California Environmental Quality Act (“CEQA”) because these efforts have no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060 (c)(2) and (3), 15378). Alternatively, the amendments to Chapter

13.16 of the AGMC by this Ordinance are not a project under CEQA because such changes constitute organizational or administrative activities of a government that will not result in direct or indirect physical changes in the environment. (State CEQA Guidelines § 15378(b)(5).)
SECTION 3. Code Amendment. Chapter 13.16 - Cross-Connections of Title 13 of the AGMC is hereby repealed and replaced as shown in the attached Exhibit “A,” and incorporated by reference.

SECTION 4. Savings Clause. Neither the adoption of this Ordinance nor the repeal of any other ordinance of this City shall in any manner affect the prosecution for violations of ordinances, which violations were committed prior to the effective date hereof, nor be

ORDINANCE NO.

PAGE 2
construed as a waiver of any penalty or the penal provisions applicable to any violation thereof.

SECTION 5. Severability. If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance is, for any reason, held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions thereof be declared invalid or unconstitutional.

SECTION 6: Effective Date. This Ordinance shall take effect and be in full force and effect thirty (30) days after its passage.

SECTION 7: City Clerk’s Certification. The City Clerk shall certify to the adoption of this Ordinance and cause the same to be posted at the duly designated posting places within the City and published once within fifteen (15) days after passage and adoption as required by law; or, in the alternative, the City Clerk may cause to be published a summary of this Ordinance and post a certified copy of the text of this Ordinance in the Office of the City Clerk five (5) days prior to the date of adoption of this Ordinance, and, within fifteen (15) days after adoption, the City Clerk shall cause to be published the aforementioned summary and shall post a certified copy of this Ordinance, together with the vote for and against the same, in the Office of the City Clerk.

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

AYES:

NOES:

ABSENT:
the foregoing Ordinance was adopted this ___ day of ___, 2026.

ORDINANCE NO.

PAGE 3
___________________________________

CAREN RAY RUSSOM, MAYOR
ATTEST:
___________________________________

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
___________________________________

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
___________________________________

ISAAC ROSEN, CITY ATTORNEY

ORDINANCE NO.

PAGE 4

EXHIBIT A
Chapter 13.16 - CROSS-CONNECTIONS

13.16.010 - - Rules and Regulations
A. State and Local Regulations. This cross-connection control policy (“Policy”) contained in Chapter 13.16 of the Municipal Code of the City of Arroyo Grande (“City”), together with the City’s approved cross-connection control plan (“Plan”), are intended to comply with the State Water Resources Control Board (“SWRCB”) Cross-Connection Control Policy Handbook (“CCCPH”) and implement a crossconnection control program (“Program”). The provisions and requirements of the CCCPH, as part of this Program, are enforceable against water users by the City. To the extent anything in this Policy conflicts with applicable laws or regulations, including without limitation the provisions of the CCCPH, as may be amended from time to time, the provisions of the such laws or regulations, including the CCCPH, shall control.

If any section, subsection, sentence, clause, or phrase of this Policy is for any reason held to be invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this Policy. The City Council hereby declares that it would have adopted this Policy and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases shall be declared invalid.

B. Purpose. This Policy, as well as the Program and CCCPH, are intended to protect the City’s water system from the possibility of contamination or pollution, by isolating within customer systems such contaminants or pollutants which could backflow or back-siphonage into the City system. This Policy and the Program are also intended to provide for the maintenance of a continuing program of crossconnection control which will systematically and effectively prevent the contamination or pollution of the City system.

C. City Agent. Pursuant to CCCPH Section 3.1.3(a), the City may implement aspects of its Program either directly or by contract or agreement with another party. For informational purposes, the City currently has a contract for implementation with the County of San Luis Obispo (“County”). Water users shall comply with any and all cross-connection related notices or orders issued by the County, or other Citycontracted agent, on the City’s behalf for Program implementation.

13.16.020 - - Definitions
Except as otherwise specified herein, the terms used in this Policy shall have the meanings ascribed to them in Section 3.1.1. of the CCCPH.

ORDINANCE NO.

PAGE 5

13.16.030 - - Failure to Comply
A. Compliance. Failure to comply with this Policy or the CCCPH shall constitute a violation of the City’s rules and regulations for service. The City may implement corrective actions in the event a water user fails to comply in a timely manner with the City’s provisions regarding installation, inspection, field testing, or maintenance of BPAs required by this Policy and the CCCPH. Such corrective actions include, but are not limited to: (1) denial or discontinuation of water service; (2) installation, inspection, field testing, or maintenance of a BPA at a water user’s premises at the water user’s cost; and (3) instituting legal action to require compliance.

Additionally, the willful failure to comply with the requirements of this Policy or the CCCPH, or the alteration, bypassing, or rendering inoperative a BPA, will result in penalties pursuant to Chapter 1.16 of the Municipal Code.

B. Denial and Discontinuation of Service. Proper installation, inspection, and testing of an approved BPA is a condition for receiving water service to a new connection, and service will be denied until applicable installation and testing requirements have been complied with to the City’s satisfaction. If an approved BPA required by this Policy and applicable State law or regulation (including the CCCPH) is not installed, tested and maintained as required, or if it is found that a BPA has been removed, by-passed, or if an unprotected cross-connection exists on the premises, service of water to any premises shall be discontinued by the City. Without limiting the generality of the foregoing or other provisions of this Policy, water service shall be discontinued if City or County Health Department personnel determine that any of the following have occurred:

1. The City’s water system is being polluted or is in immediate danger of contamination from a cross-connection;

2. The BPA has not been installed after due notice has been given;

3. A defect found in the BPA has not been corrected after due notice has been given to make repairs; or

4. The owner of the property has failed to submit written test results after receipt of the City’s letter requesting annual certification of the backflow prevention device.

The City may discontinue or terminate water service for violations of this Policy that do not create an immediate health risk to the public water system after providing 48 hours’ notice of the scheduled discontinuance. The City will post such notice in a conspicuous location on the property and make a good faith effort to contact an adult person at the property by telephone or in person. Notwithstanding the above, the City may discontinue or terminate water service without advanced notice

ORDINANCE NO.

PAGE 6
anytime a condition exists which creates an immediate health risk to the public water system.

C. Restoration of Service. Service will not be restored until the BPA has been installed or repaired at the customer’s expense and is in good working order, the cross-connection is abated to the satisfaction of the City, or the violation is otherwise corrected or remediated. The City may require a fee to reinstate service after such a turnoff.

13.16.040 - Backflow Prevention
A. Backflow Prohibited. No person is permitted to cause, permit, facilitate or maintain an actual or potential cross-connection or any type of connection that permits an actual or potential backflow of water to the City’s system. All installations are subject to inspection and regulation by the City for the purpose of avoiding the possibility of backflow. Backflow prevention devices shall be installed by customers when required by State law or regulation, the State Health Department, or by the City, in accordance with this Policy and State law or regulation (including the CCCPH). The cost thereof shall be borne by the customer.

B. Installation of Approved BPA. No person is permitted to install, maintain, or allow a metered water service connection to any premises served by the City unless the City system is protected in conformance with applicable State law or regulation (including the CCCPH) and this Policy. Any person who is required to install an approved BPA pursuant must install, maintain, inspect and test such assembly in accordance with applicable State law or regulation (including the CCCPH) and this Policy at the customer’s own expense and within the time specified for installation, which is generally no more than 60 days from the initial notification to the customer.

Every BPA required by law, regulation, or this Policy must be of model and size approved by the City. Failure, refusal or inability on the part of the customer to install said assembly or assemblies constitutes grounds for discontinuing water service to such metered or non-metered water service connections until such assembly or assemblies have been properly installed.

C. Entry and Inspection. All customer systems and premises shall be open for inspection at all reasonable times to authorized representatives of the City to enable the City to inspect BPAs and ascertain the existence of cross-connections or other structural or sanitary hazards, including violations of the cross-connection rules and regulations in this Policy. When such a condition or violation becomes known, the Director of Public Works or designee shall deny or discontinue service to the premises, in accordance with this Policy. Water service will be discontinued until the customer has corrected the condition(s) in conformance with State laws and City requirements relating to plumbing and water supplies, and with regulations adopted pursuant thereto.

D. Levels of Protection Required

ORDINANCE NO.

PAGE 7

1. Customers shall install BPAs as required in this Section. BPAs installed must be no less protective than that which is commensurate with the degree of hazard at a user premises, as specified in this Policy and the CCCPH (see CCCPH Appendix D) and as determined based on the results of the hazard assessment conducted pursuant to CCCPH section 3.2.1. The hazard assessment conducted pursuant to CCCPH Section 3.2.1, once complete, is incorporated herein by reference to establish hazard levels customers must account for.

2. Customers shall at all times protect the City system from high hazard crossconnections through premises containment, through the use of AG(s) or RP(s). For temporary service connections to fire hydrants, and for water outlets used for supplying ships and vessels at piers or waterfronts, customers shall utilize RP protection. Customers shall comply with any additional requirements or degrees of protection for particular high hazard cross-connections set forth in CCCPH Appendix D.

3. A swivel-ell may be appropriate for use instead of an AG, subject to City approval at City’s discretion, if all of the criteria listed in CCCPH section

3.2.2(d) are met.

4. Unless an exception applies, customers shall protect the City system with no less than DC protection for a user premises with a fire protection system, within 10 years of adoption of the CCCPH. Exceptions are as follows:
a. A high hazard cross-connection fire protection system (including those that may utilize chemical additions or an auxiliary water supply) must have at least RP protection.
b. A BPA is not needed for a low hazard fire protection system on a residential user premises if the City determines all of the criteria listed in CCCPH section 3.2.2(e)(3) are satisfied.
c. If the City identifies alternatives in its Plan, pursuant to CCCPH section 3.2.2(e)(2), for existing premises that cannot timely comply with DC protection requirements, such alternatives may apply unless the SWRCB disapproves.

E. Backflow Prevention Assembly Standards.

1. Each AG must meet the requirements in Table 1, Minimum Air Gaps for Generally used Plumbing Fixtures, page 4 of the American Society of Mechanical Engineers (ASME) A112.1.2- 2012(R2017) (See Appendix B of CCCPH).

2. Each replaced or newly installed PVB, SVB, DC, and RP must be approved through both laboratory and field evaluation tests performed in accordance with at least one of the following: (1) Standards found in Chapter 10 of the

ORDINANCE NO.

PAGE 8
Manual of Cross-Connection Control, Tenth Edition, published by the University of Southern California Foundation for Cross-Connection Control and Hydraulic Research; or (2) certification requirements for BPAs in the Standards of ASSE International current as of 2022 that include ASSE 1015- 2021 for the DC, ASSE 1048-2021 for the DCDA & DCDA-II, ASSE 1013- 2021 for the RP, and ASSE 1047-2021 for the RPDA & RPDA-II and must have the 1YT mark. BPAs must not be modified following approval. A BPA tester shall notify the City if a BPA has been modified from the CCCPH section 3.3.1(b) approval.

3. BPAs shall comply with any additional City construction and installation standards that are more stringent than State law.

F. Backflow Prevention Assembly Installation Criteria.

1. BPAs must be installed in accordance with any and all criteria and requirements set forth in CCCPH Section 3.3.2.

2. Except as otherwise provided and required by the CCCPH, approved BPAs shall be installed and located as close as practical to the customer’s service connection, or at a location approved by the Director of Public Works or designee, and all approved BPAs shall be installed before the first branch line leading off the service.

3. All BPAs shall be installed in the orientation for which they are designed.

4. All BPAs shall be installed in a manner and location that facilitates their proper operation, maintenance, testing, and inspection.

5. All BPAs shall be installed in a manner that will protect them from weatherrelated conditions such as flooding and freezing.

6. All BPAs shall be installed at locations that are readily accessible.

7. All BPAs shall be installed in compliance with applicable safety regulations.

13.16.050 - Certification of Specialists and Testers
All BPA testers and cross-connection control specialists shall be certified per CCCPH Chapter 3, Article 4.

13.16.060 - Backflow Prevention Assembly Testing
A. General Provisions. Through implementation of this section, the City will ensure compliance with CCCPH section 3.3.3, governing field testing and repair of BPAs and inspection of air-gap separations. The City will also comply with and ensure compliance with the procedures for testing identified in its Plan.

ORDINANCE NO.

PAGE 9
B. Customer Testing

1. Testing by Customer. The customer will own the approved BPA and will have full responsibility for annual testing (or more often if required by the City) and other testing in compliance with this Policy and CCCPH section

3.3.3, as well as maintenance, repair and retesting, and for providing the City with proper records and test data. The customer shall also field test all BPAs following installation, repair, depressurization for winterizing, or permanent relocation. Air-gap separations must be visually inspected at least annually.

All costs are the customer’s responsibility as owner of the BPA. Testers must use the County’s designated online testing portal to submit test results and must comply with applicable County requirements for submitting test results.

2. Service is Contingent. The City will not provide continuous water service to a water user with a newly installed BPA until the City (or City’s agent) has inspected the BPA to determine compliance and until the City receives passing field tests. The water user is responsible for providing the City and its agents with access to the property and with passing field tests to receive service.

3. Annual Testing Notices. Annual testing/inspection notices will be mailed to the City’s customers giving them 30 days to test/inspect, and repair if necessary, their assembly and furnish the test/inspection and repair data to the City and County. If customers fail to furnish adequate test/inspection data within the 30 day period, the City will commence proceedings to terminate water service in accordance with this Policy. Nothing in this section precludes the City from terminating service without notice, where the City determines that a condition exists that creates an immediate health risk to the public water system.

4. Certified Testers. Air-gap separations must be visually inspected by certified backflow prevention assembly testers or certified cross-connection control specialists. Other tests required by this section must be conducted by certified BPA testers approved by the City.

5. Additional Tests. Additional tests shall be conducted as frequently as necessary to ensure the effectiveness of the BPAs and in any event not less frequently than once a year.

6. Failed Tests. In the event a BPA is found to be unsatisfactory, the Director of Public Works or his/her designee shall take immediate steps to ensure that corrective measures are accomplished and/or service terminated in accordance with the provisions of this Policy. BPAs that fail field tests/inspections must be repaired or replaced by the customer within 30 days of notification from the tester of the failure. The City may allow extensions if included as part of the City’s Plan.

ORDINANCE NO.

PAGE 10

7. Backflow Incidents. BPA testers shall notify the City and County as soon as possible (within 24 hours maximum) if a backflow incident or an unprotected cross-connection is observed at the BPA or prior to the user premises during field testing. The City will immediately conduct an investigation and discontinue service to the user premises pursuant to this Policy if a backflow incident is confirmed, and water service will not be restored to that user premises until the City receives a confirmation of a passing BPA field test from a BPA tester and the City determines the BPA is protecting the City.

C. Approved Testers. The City shall maintain copies of the County of San Luis Obispo’s list of approved certified BPA testers (“Approved Tester List”). Only testers from the Approved Tester List may be used for any testing and inspection.

Only test results received from testers on the Approved Tester List will be considered valid.

D. Testing, Inspection and Repair Records. Each customer who is required to install, test, inspect, maintain, or repair an approved backflow prevention device must maintain records of such tests, inspections, repairs and overhaul for three years and must provide a copy of the records to the City on request.

Item 9.h.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Director of Public Works BY: Shane Taylor, Utilities Manager
Hailie Hix, Utilities Manager
SUBJECT: Purchase of Replacement Service Truck
DATE: May 26, 2026
RECOMMENDATION:

Authorize the City Manager to sign the purchase agreement with Downtown Ford of Sacramento for the purchase of a 2.5-ton Service Truck; and to sign the purchase agreement with Master Tech Automotives in Arroyo Grande to upfit the Service Truck.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

The purchase cost of the truck cab and chassis, and custom service body totals $148,853.39. Approximately ten (10) hours of staff time were required to specify and obtain price quotes. The State of California Department of General Services creates a Statewide Contract Fleet Vehicles pricing list that can satisfy the Purchasing Policy Exception to Competitive Solicitations by using the State and Federal Multiple Award Schedules under Section 4.6 subsection 2 of the City of Arroyo Grande’s Purchasing Policies and Procedures Manual. This Service Truck is going to be purchased under the State of California Contract 1-22-23-20F CLIN: 50.

BACKGROUND:

Service truck MS-5 is a fully equipped 2009 2.5-ton Ford F-450 utility service truck. This truck was budgeted to be replaced in Fiscal Year (FY) 2026-27 for the amount of $160,000. The MS-5 service truck broke down in the fall of 2025. Repairs to the vehicle were estimated to exceed $10,000. In addition, the truck is equipped with a diesel Tier 0 engine that does not comply with current San Luis Obispo County Air Pollution Control District and California Air Resources Board emissions standards. Current regulations prohibit the addition of Tier 0 equipment to fleets and require the gradual removal of Tier 0 engines from operation in California. A budget amendment request was approved to transfer funds to support the purchase of a replacement service truck in the current FY.

The current overall two-year budget is the same for vehicle replacements. Service truck PW-10 was scheduled for replacement in FY 2025-26 at a cost of $60,000. The

Item 9.h.

City Council
Purchase of Replacement Service Truck
May 26, 2026

replacement for PW-10, along with the amount, has been moved and budgeted for FY 2026-27. The amendment is a zero-dollar budget impact on the two-year vehicle replacement account in the Water fund.

ANALYSIS OF ISSUES:

Price quotes were obtained for the new service truck cab and chassis and utility service body by direct solicitation of local dealers and use of the Statewide Contract Fleet Vehicle Purchasing. Price quote results are attached. The Utilities Division within the Public Works Department depends on this replacement service truck to maintain the City’s utility systems and respond to emergencies such as water main breaks and vehicle collisions involving fire hydrants. The new service truck will transport the personnel, tools, and equipment necessary to support emergency response and infrastructure repairs. The custom utility service body to be installed on the chassis includes several specialized features designed to support field operations, including a heavy-duty crane, work bench, hydraulic tool circuit, pipe rack, and traffic safety arrow board. Detailed quotes of the service body are attached.

ALTERNATIVES:

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

1. Staff’s recommendation;

2. Do not authorize the purchase as presented;

3. Modify the purchase; or

4. Provide other directions for staff.

ADVANTAGES:

The purchase of this replacement vehicle will provide the necessary equipment to respond to emergencies, operate, and maintain the City’s water system.

DISADVANTAGES:

Not purchasing this service truck will increase the Utilities Division's emergency response time and reduce its ability to repair and maintain the City’s water and sewer system. The current 2009 service truck will be expensive to repair and will likely continue to have mechanical issues, further reducing reliability.

ENVIRONMENTAL REVIEW:

No environmental review is required for this item. Approval of the purchase of the service truck is not a project under CEQA because such action constitutes an organizational or administrative activity of a government that will not result in a direct or indirect physical change in the environment. (State CEQA Guidelines § 15378(b)(5).) 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.

Item 9.h.

City Council
Purchase of Replacement Service Truck
May 26, 2026

ATTACHMENTS:

1. Service Truck and Body Quotation Summary Sheet

2. Utility Service Truck Upfitting Summary

ATTACHMENT 1
Service Truck Quotations
Downtown Ford Sacramento $67,315.48
Santa Maria Ford $70, 197.56
Mullahey Ford $74,134.31
Mullahey Chrysler Dodge Jeep Ram $77,909.59
Arroyo Grande Chevrolet No Quote
Service Body Quotations
Master Tech Automotive $81,537.91
Douglass Truck Bodies $83,134.15
Industrial Truck Bodies $89,153.82
Total Purchase Including Tax: $148,853.39
Total
Budget: $160,000.00

Utility Service Truck Upfitting Summary
Vehicle: 2024 Ford F-450 Super Cab
MasterTech Upfit Overview
Douglas Truck Bodies Upfit Overview
Industrial Truck Bodies Uplift Overview
Part Description Price
11FT Crane Body
3200LB Auto Crane
$43,811.44
Hydraulic PTO Tool Circuit $13,585.00
Service Body and Labor $22,840.59
Subtotal (Parts/Equipment) $65,781.99
Sales Tax $5,755.92
Total Cost $81,537.91
Part Description Price
11FT Crane Body
3200LB Auto Crane
$16,342.04
Hydraulic PTO Tool Circuit $17,258.59
Service Body and Labor $43,201.32
Subtotal (Parts/Equipment) $76,801.95
Sales Tax $6,332.20
Total Cost $83,134.15
Part Description Price
11FT Crane Body
3200LB Auto Crane
$18,500.00
Hydraulic PTO Tool Circuit $23,700.00
Service Body and Labor $40,494.60
Subtotal (Parts/Equipment) $82,694.60
Sales Tax $6,459.22
Total Cost $89,153.82
ATTACHMENT 2

Item 9.i.

MEMORANDUM
TO: City Council
FROM: Bill Robeson, Assistant City Manager/Director of Public Works BY: Shane Taylor, Utilities Manager
Hailie Hix, Utilities Manager
SUBJECT: Quarterly Water Supply and Demand Update
DATE: May 26, 2026
RECOMMENDATION:

Receive and file the Quarterly Water Supply and Demand Update.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

Approximately two (2) hours of staff time are required to prepare the report.

BACKGROUND:

The City of Arroyo Grande’s water entitlements are calculated on a water year that begins April 1, 2026. The current water supply for water year 2026-27 includes;  2,290 Acre Feet (AF) from Lopez Lake Reservoir/Lopez contract entitlement.  The current modeled safe yield is 357 AF of groundwater from the Santa Maria River Groundwater Basin, with an entitlement of 1,323 AF.

In addition to the annual Lopez Lake Reservoir contract entitlement, the City will have 1567 AF of stored Lopez water, which is unused entitlement from water year 2025-26.

There will be no surplus water available for purchase as was done in previous water years due to the downstream release made in water year 2025-26 of 5.290 AF, which is 1,090 AF above the contract amount.

The total supply from Lopez Lake Reservoir for this water year is 3,857 AF. The predicted water use for the 2026-27 water year is 2,200 AF.

In April 2026, the City’s water use was 192.7 AF. The overall per capita use was 116 gallons per day. The residential per capita use was 89 gallons per day. There has been a total of 18.1 inches of rain since July 2025 at the Corp Yard gauge.

Item 9.i.

City Council
Quarterly Water Supply and Demand Update
May 26, 2026

ANALYSIS OF ISSUES:

As of May 14, 2026, the USDA Drought Monitor reports San Luis Obispo County as normal. Lopez Lake is at 86.8% (42,962 acre feet). The deep well index for the second quarter of 2026 was completed on April 14, 2026. The index level was 11.87 feet above sea level, which is 4.27 feet above the threshold value. The current deep well index is 0.4 feet lower than February 2026, and 0.2 feet lower than April 2025.

On January 15, 2025, in response to a preliminary injunction issued by the United States District Court to the County of San Luis Obispo, Lopez Lake downstream release rate was in place until December 29, 2025.

The 9th District Court of Appeals overturned the preliminary injunction and returned the water releases to the interim downstream release schedule. The current release rate on May 13, 2026, was 3.4 cubic feet per second (cfs) or 2.2 million gallons per day.

The City and all other Zone 3 contractors will continue to work with the County to assess and report on the impact on our water supply from Lopez Lake until the litigation is resolved. However, the significant costs of the ongoing litigation and future improvements will be shared by the ratepayers of the City and other Zone 3 member agencies.

To keep the community informed of the status of the litigation and the City’s water system, staff have developed a webpage where updates will be published. The webpage can be accessed at www.arroyogrande.org/lopezlakelitigation.

Council Goals Workplan
In the current Council Goals workplan for Fiscal Year 2025-27, under the Council Goal of “Achieve Water Resilience”, the Council has directed staff to Pursue 2026 State Water Ballot Measure, with the specific subtask to Seek Council approval placing a November Ballot Measure. On March 10, 2026, the Council provided direction to bring back final ballot language for consideration to place the item on the ballot for the November 2026 General Election.

ALTERNATIVES:

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

1. Receive and file the report, or

2. Provide other directions for staff.

ADVANTAGES:

The report provides the City Council and the public with the current and projected water supply and demand conditions.

ENVIRONMENTAL REVIEW:

No environmental review is required for this item.

Item 9.i.

City Council
Quarterly Water Supply and Demand Update
May 26, 2026

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. Operation Report for April 2026

2. Lopez Lake Reservoir Storage Projections

3. Previous Use Comparison

4. Deep Well Index Levels for 2nd Quarter

Item 9.j.

MEMORANDUM
TO: City Council
FROM: Andrew Perez, Interim Director of Community Development BY: Natalie Riddering, Planning/Engineering Permit Technician SUBJECT: Grant of License Agreement with San Luis Obispo County Flood Control and Water Conservation District
DATE: May 26, 2026
RECOMMENDATION:
1) Adopt a Resolution authorizing the City Manager to execute a Grant of License Agreement with the San Luis Obispo County Flood Control and Water Conservation District for the stream gauge in Arroyo Grande Creek;
2) Find that adopting a Resolution authorizing the City Manager to execute a license agreement is not a project subject to the California Environmental Quality Act (“CEQA”) because it merely formalizes existing use and has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. (State CEQA Guidelines, §§ 15060, subd. (b)(2)-(3), 15378.)
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There are no financial impacts associated with authorizing the City Manager to execute the Grant of License Agreement.

BACKGROUND:

The Arroyo Grande Creek Stream and Rain Gauge Station is located along the south bank of Arroyo Grande Creek, within a portion of the Stanley Avenue right-of-way, 0.7 miles upstream of U.S. Highway 101, and north of Myrtle Street. The United States Geologic Survey (USGS) established the Gauge Station on December 18, 1939 in cooperation with the U.S. Army Corps of Engineers. On September 30, 1986, USGS discontinued its operations of the Gauge Station, and on the following day, October 1, 1986, the San Luis Obispo County Flood Control and Water Conservation District (District) assumed operations and maintenance of the Gauge Station. At the time, no documentation of the transfer from USGS to the District was recorded by either party. To cleanup and formalize the transfer, the District is currently working with USGS to formally transfer ownership of the Gauge Station to the District through the USGS Agreement for

Item 9.j.

City Council
Grant of License Agreement with San Luis Obispo County Flood Control and Water Conservation District
May 26, 2026

Gauge Transfer. To complete this, a signed agreement between the District and City granting the District permission to continue operating and maintaining the station.

ANALYSIS OF ISSUES:

The proposed Grant of License Agreement (Attachment 1 Exhibit A, the “Agreement”) formalizes the District’s longstanding operation and maintenance of the Arroyo Grande Creek Stream and Rain Gauge Station located on City property. The Agreement benefits the City by clearly establishing the District’s responsibility for operation, maintenance, repair, relocation, and removal of the Gauge Station and associated infrastructure. The Agreement also requires the District to maintain insurance coverage and indemnify, defend, and hold harmless the City from claims or liabilities arising from the District’s use or maintenance of the facility. The Agreement grants a revocable license, and does not create any permanent property interest. Formalizing these responsibilities reduces ambiguity, protects the City’s interests, and ensures the continued operation of important regional flood monitoring infrastructure.

ALTERNATIVES:

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

1. Adopt the Resolution authorizing the City Manager to execute the Grant of License and Agreement;

2. Modify and adopt the Resolution;

3. Do not adopt the Resolution; or

4. Provide other direction to staff.

ADVANTAGES:

The recommended action formalizes a longstanding arrangement for the Arroyo Grande Creek Stream and Rain Gauge Station and provides the City with clear documentation of the District’s responsibilities for the facility. The agreement protects the City through insurance and indemnification requirements, preserves the City’s authority over the right of way, and supports the continued operation of important regional flood monitoring infrastructure.

DISADVANTAGES:

The proposed agreement allows continued use of City property for the operation of infrastructure owned and operated by another public agency. While the agreement preserves the City’s ability to require relocation or removal of the facility, future City projects or maintenance activities within the area could require coordination with the District and potential relocation of the structure.

ENVIRONMENTAL REVIEW:

Authorizing the City Manager to execute this Grant of License Agreement is not a project subject to the California Environmental Quality Act (“CEQA”) because it merely formalizes existing use and has no potential to result in either a direct, or reasonably foreseeable

Item 9.j.

City Council
Grant of License Agreement with San Luis Obispo County Flood Control and Water Conservation District
May 26, 2026

indirect, physical change in the environment pursuant to CEQA Guidelines Sections 15060, subd. (b)(2)-(3), and 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
Exhibit A – Grant of License Agreement

ATTACHMENT 1
RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO

GRANDE AUTHORIZING THE CITY MANAGER TO EXECUTE A GRANT

OF LICENSE AGREEMENT WITH THE SAN LUIS OBISPO COUNTY

FLOOD CONTROL AND WATER CONSERVATION DISTRICT FOR THE

STREAM GAUGE IN ARROYO GRANDE CREEK
WHEREAS, the Arroyo Grande Creek Stream and Rain Gauge Station (“Gauge Station”) is located along the south bank of Arroyo Grande Creek on property owned by the City of Arroyo Grande (“City”); and
WHEREAS, the United States Geological Survey (USGS), in coordination with the U.S.

Army Corps of Engineers, established the Gauge Station in 1939 and maintained the station until 1986, when the San Luis Obispo County Flood Control and Water Conservation District (“District”) assumed responsibility for operation and maintenance of the Gauge Station; and
WHEREAS, no formal documentation memorializing the transfer of operation and maintenance responsibilities from the USGS to the District was recorded by either party; and
WHEREAS, in order to formalize the transfer, the District requires a license agreement with the City, authorizing the District to continue operating and maintaining the Gauge Station on the property; and
WHEREAS, the City desires to assist the District in formalizing the operation and maintenance responsibilities for the Gauge Station by executing the License Agreement attached hereto as Exhibit “A.”
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arroyo Grande does hereby resolve as follows:

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

2. License Agreement. The City Manager is authorized to execute the License Agreement attached hereto as Exhibit “A”, with San Luis Obispo County Flood Control and Water Conservation District on behalf of the City.

3. Certification and Recordation. The City Clerk shall certify to the adoption of this Resolution and cause the License Agreement, to be recorded in San Luis Obispo County’s Office of the Clerk-Recorder.

4. CEQA. The City Council finds that authorizing the City Manager to execute this Grant of License Agreement is not a project subject to the California Environmental Quality

RESOLUTION NO.

PAGE 2
Act (“CEQA”) because it merely formalizes existing use and has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment pursuant to CEQA Guidelines Sections 15060, subd. (b)(2)-(3), and 15378.

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 26th day of May, 2026.

RESOLUTION NO.

PAGE 3

CAREN RAY RUSSOM, MAYOR
ATTEST:

JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:

MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:

ISAAC ROSEN, CITY ATTORNEY

EXHIBIT A Page 178 of 466
EXHIBIT A Page 179 of 466
EXHIBIT A Page 180 of 466
EXHIBIT A Page 181 of 466

EXHIBIT A
IN WITNESS WHEREOF, the parties have executed this agreement on the day and year first written above.

CITY OF ARROYO GRANDE
Matthew Downing, City Manager
ATTEST:

Jessica Matson, City Clerk APPROVED AS TO FORM:

Isaac Rosen, City Attorney

SAN LUIS OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT� John DiodatiuDirector
Dated: ----'--+-'1 1I��, I �/Z:v
APPROVED AS TO FORM AND LEGAL EFFECT:

JON ANSOLABEHERE
County Counsel
Dated: April 20, 2026
65501.0000 I \44883442.2

EXHIBIT A Page 183 of 466
EXHIBIT A Page 184 of 466
Item 11.a.

MEMORANDUM
TO: City Council
FROM: Scott Hallett, Fire Chief
SUBJECT: Five Cities Fire Authority Community Risk Assessment / Standards of Cover Presentation
DATE: May 26, 2026
RECOMMENDATION:

Receive a presentation from the Five Cities Fire Authority (FCFA) on the Community Risk Assessment and Standards of Cover Deployment Analysis to assist in the development of an FCFA strategic plan that will support the emergency response needs in the member agency communities and provide input and direction to staff.

IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:

There is no fiscal impact from receiving this presentation. Subsequent policy decisions by the Board and the respective member agency Councils in the implementation of recommendations would have identifiable fiscal impacts.

BACKGROUND:

As communities grow, it is imperative that fire service and community leaders define appropriate service levels. Although many industry standards recommend specific service levels, each community is unique and has different challenges and funding abilities. The community risks and deployment of fire department resources require that each department conduct a self-assessment to develop an all-hazards response system that will meet the needs of the community in a safe, efficient, and effective manner.

In October 2022, the cities of Arroyo Grande and Grover Beach engaged an outside consultant (Baker Tilly) to conduct an analysis of fire services provided by the FCFA. This analysis was initiated in the wake of the Oceano Community Services District’s withdrawal from the FCFA to identify near-term and longer-term service priorities for FCFA and determine budgetary implications. One of the recommendations from this analysis was “Conduct a Community Risk Assessment and Standards of Cover and adjust staffing to meet service area, community, and call volume.” Following the adoption of a new FCFA Joint Powers Authority Memorandum of Understanding by both cities in June 2023, subsequent increase in FCFA funding, along with the hiring of a new Fire Chief in April 2024, funding for this Community Risk Assessment and Standards of Cover was included in the FCFA FY 2024-25 budget.