Agenda packet — California City City Council, November 4, 2024

NOVEMBER 4, 2024

AGENDA

CITY OF CALIFORNIA CITY

CITY COUNCIL/ HOUSING AUTHORITY/ SUCCESSOR AGENCY

SPECIAL MEETING
MONDAY NOVEMBER 4, 2024
SPECIAL MEETING @ 1:00 PM

COUNCIL CHAMBERS & VIA ZOOM
21000 HACIENDA BLVD., CALIFORNIA CITY, CA 93505
If you need special assistance to participate in this meeting, contact the City Clerk at (760) 373-7140 or via email at [email protected]. We request a 24-hour notification prior to the meeting in order for the City to make reasonable arrangements to ensure accessibility. (28 CFR 35.102-35.104 American Disabilities Act Title II)
Zoom instructions and notes:

Web Link: https://us06web.zoom.us/j/82657764722
Meeting ID: 82657764722

1.Public can dial into the Zoom line:

Kelly Kulikoff
MAYOR
Ronald Smith

MAYOR PRO TEM
Jim Creighton
LaShelle Cooper
Michael Kulikoff

COUNCIL MEMBERS
__________________
Latisha Lamberth

ACTING CITY MANAGER
NOVEMBER 4, 2024
a.One tap mobile: +16694449171,87254527178# US
b.Dial the following number: +1 564 217 2000 US

2.Comments
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Public is urged to listen to the meeting in a quiet place, to avoid background noise. We also request public to MUTE your audio device when not commenting to avoid disruption during meeting. ** At this time, please take a moment to turn off your cell phones ** 1:00 PM SPECIAL MEETING

CALL TO ORDER

ROLL CALL
Councilmembers: Cooper, Creighton, Kulikoff, Mayor Pro Tem Smith & Mayor Kulikoff

APPROVAL OF AGENDA

APPEAL HEARING
PH1. Public Hearing to Consider Regal Green Remedies, Inc.’s Appeal of City’s Revised Audit Determination Letter for Cannabis Business Tax
a. Open Public Hearing
b. Staff Report: Joaquin Vazquez, Special Outside Counsel (Hensley Law Group) c. Public Comment
d. Close Public Hearing
e. Discussion
f. Recommended Action: 1) Conduct a public hearing to consider Regal Green Remedies, Inc.’s (“Appellant”) appeal of the California City (“City”) Tax Administrator’s revised audit determination letter for Appellant’s cannabis business tax payment, pursuant to California City Municipal Code (“CCMC”) Title 3 (Finance), Chapter 2 (Revenue), Article 8 (Cannabis Business Tax). 2) Determine, by minute order, whether to uphold, modify, or reject the California City (“City”) Tax Administrator’s imposition of cannabis business tax, as set forth in the Tax Administrator’s September 7, 2023 revised audit determination letter. 3) Direct special counsel to memorialize the City Council’s determination and supporting findings in a resolution for the City Council’s consideration and approval at a future City Council meeting. 4) Alternatively, discuss and take other action related to this item.

NOVEMBER 4, 2024

NEW BUSINESS
NB 1. SUBJECT: Council approval of a Decommissioning License Agreement STAFF REPORT: Latisha Lamberth, Acting City Manager
RECOMMEDATION: Staff recommends that the City Council accept the Agreement. It is a critical document that ensures the decommissioning process is conducted responsibly, safely, timely, and in accordance with all applicable regulations and standards.

NB 2. SUBJECT: Council approval of a Decommissioning Bond STAFF REPORT: Latisha Lamberth, Acting City Manager
RECOMMENDATION: Staff recommends that the City Council approves the staff report for the decommissioning bond and proceeding with the project
NB 3. SUBJECT: Acceptance of a Community Benefit Funding Donation from AES Green Energy Corporation in the amount of $2,700,000.00
STAFF REPORT: Latisha Lamberth, Acting City Manager
RECOMMENDATION: Staff recommends that the City Council accept the restricted donation of funds towards the identified City projects and capital acquisition via attached resolution as requested by AES and to direct the City Manager fulfill the terms of the acceptance of these donated funds to enhance the level of service provided by the city and elevate the quality of life for the residents of California City
COUNCILMEMBER COMMENTS, AGENDA REQUESTS, AND AB1234 REPORTS This portion of the meeting is reserved for council members to present information, announcements, and items that have come to their attention. The Brown Act precludes Council, staff, or public discussion. Short staff responses are appropriate. The Council will take no formal action. A Council member may request the City Clerk to calendar an item for consideration at a future meeting or refer an item to staff.

ADJOURNMENT

AFFIDAVIT OF POSTING
I, Leanndrea Weible, Deputy City Clerk for the City of California City, California, DO HEREBY CERTIFY under penalty of perjury under the laws of the State of California, that the foregoing notice was posted at the City of California City, City Hall bulletin and all other official bulletin boards and the City’s website at least 24 hours prior to the meeting in compliance with the provisions of the Brown Act. board at 21000 Hacienda Boulevard, California City, CA and on all official City bulletin boards.

Dated: November 3, 2024
Leanndrea Weible, Deputy City Clerk
ITEM NO. PH 1

COUNCIL AGENDA ITEM
November 4, 2024
TO: Mayor and City Council
FROM: Joaquin Vazquez, Special Outside Counsel (Hensley Law Group) SUBJECT: Public Hearing to Consider Regal Green Remedies, Inc.’s Appeal of City’s Revised Audit Determination Letter for Cannabis Business Tax RECOMMENDATIONS:

1. Conduct a public hearing to consider Regal Green Remedies, Inc.’s (“Appellant”) appeal of the California City (“City”) Tax Administrator’s revised audit determination letter for Appellant’s cannabis business tax payment, pursuant to California City Municipal Code (“CCMC”) Title 3 (Finance), Chapter 2 (Revenue), Article 8 (Cannabis Business Tax).

2. Determine, by minute order, whether to uphold, modify, or reject the California City (“City”) Tax Administrator’s imposition of cannabis business tax, as set forth in the Tax Administrator’s September 7, 2023 revised audit determination letter.

3. Direct special counsel to memorialize the City Council’s determination and supporting findings in a resolution for the City Council’s consideration and approval at a future City Council meeting.

4. Alternatively, discuss and take other action related to this item.

BACKGROUND/DISCUSSION:

Regulatory Framework
At the June 6, 2017 municipal election, City voters approved Measure A, which established taxes for various cannabis business activities, such as commercial cannabis cultivation. The cannabis business tax rates are set forth in CMC Title 3 (Finance), Chapter 2 (Revenue), Article 8 (Cannabis Business Tax). Article 8 is attached to this report as Attachment 1.

Commercial cannabis cultivation is taxed at a rate based on canopy square footage of and the type of cultivation as follows:
• Artificial Lighting: $7.00 per square foot of canopy space annually. • Combination Lighting: $5.00 per square foot of canopy space annually. • No Artificial Lighting: $1.00 per square foot of canopy space annually. • Nurseries: $0.50 per square foot of canopy space annually. (CCMC §§ 3-

2.8.050(b) and 3-2.8.050(d)).

A cannabis business must remit payment for cannabis business taxes, in arrears, on a quarterly basis to the City’s Tax Administrator. The failure to timely remit payment deems the taxes delinquent and subjects the business to penalties and interest. (CCMC §§ 3-

2.8.060-3-2.8.100). For commercial cannabis cultivation, the tax due for each calendar quarter is based upon the cultivation business’s canopy square footage for the quarter and must be 25% of the applicable annual rate. (CCMC § 3-2.8.060(a)).

The City’s Tax Administrator can conduct an audit of a cannabis business’s books and records to determine the amount of cannabis taxes that the business owes. (CCMC §§ 3-2.8.190). The Tax Administrator may make a deficiency determination regarding taxes owe based upon a cannabis business statement or any information that may come into the Tax Administrator’s possession within three years the tax was originally due and payable and must send a deficiency notice to the business. (CCMC §§ 3-2.8.220 and 3-

2.8.240).

A cannabis business can appeal a Tax Administrator’s determination of taxes, interest, penalties, and fees owed to the City Council within 30 days of the tax determination. The City Council’s administrative determination of the appeal is final and conclusive and must be served upon the appealing business. Any amount found to be due must be immediately due and payable upon the service of the notice. (CCMC § 3-2.8.150).

Factual Background
The City conducted an audit of Appellant’s books and record, and issued an initial audit determination letter, dated August 29, 2023. The audit letter is attached to this report as Attachment 2. According to the this initial audit determination letter, Appellant owed the following to the City within 30 days: $282,756.25 (including $107,131.25 in penalties and interest).

After Appellant advised the City that Appellant had only obtained a state license for commercial cannabis operations as of February 18, 2022, the City issued a revised audit determination letter to Appellant with a revised tax payment demand of $102,705 (including $31,382.08 in penalties and interest). The September 7, 2023 revised audit determination letter is attached hereto as Attachment 3. Appellant appealed the revised audit determination letter. Its July 22, 2024 appeal is attached hereto as Attachment 4.

Conduct of Hearing/Due Process Obligations
To ensure fair and due process rights, a decision-making body must be fair and impartial for quasi-judicial or “administrative” hearings, including appeal hearings. This fairness and impartiality requirement extends to legal counsel for the enforcing agency and appellate body. Accordingly, the City Council approved the retention of the Hensley Law Group as special counsel, on September 17, 2024, to provide independent legal advice to the City Council for appeal hearings when the City Attorney’s office has provided legal advice to City staff in its enforcement capacity and is, consequently, precluded from advising the City Council.

To ensure legally sufficient due process, it is recommended that the City Council follow special counsel’s hearing procedures and protocols, as provided to the City and Appellant, which are attached as Attachment 5. Pursuant to such procedures, the Appellant and City have submitted written briefs, which are respectively attached to this report as Attachments 6 and 7.

Following the conduct of the hearing, the City Council will determine, by minute order, whether to uphold, modify, or reject the California City (“City”) Tax Administrator’s imposition of cannabis business tax upon Appellant, as set forth in the revised audit determination letter. Then, it will direct special counsel to memorialize the City Council’s determination and supporting findings in a resolution for the City Council’s consideration and approval at a future City Council meeting.

ENVIRONMENTAL REVIEW:

The actions contemplated in this report are exempt from further review under the California Environmental Quality Act, pursuant to CEQA Guidelines § 15061(b)(3)) as it can be seen with certainty that there is no possibility that the activities in question may have a significant effect on the environment.

FISCAL IMPACT:

The City Council’s consideration of the subject appeal will establish a final administrative determination of any amount of cannabis business tax that Appellant owes to the City.

ATTACHMENTS:

1. CCMC Title 3 (Finance), Chapter 2 (Revenue), Article 8 (Cannabis Business Tax)

2. City’s initial audit determination letter

3. City’s revised audit determination letter

4. Appellant’s Appeal

5. Special counsel protocols/ground rules

6. Appellant’s Written Brief

7. Deputy City Attorney’s Written Brief
ATTACHMENT 1
CCMC Title 3 (Finance), Chapter 2 (Revenue), Article 8
(Cannabis Business Tax)
- Code of Ordinances
TITLE 3 - FINANCE
CHAPTER 2. - REVENUE
ARTICLE 8. CANNABIS BUSINESS TAX
California City, California, Code of Ordinances Created: 2022-05-13 14:23:07 [EST] (Supp. No. 10)

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ARTICLE 8. CANNABIS BUSINESS TAX
Sec. 3-2.8.010. Title.

This article shall be known as the Cannabis Business Tax. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.020. Authority and Purpose.

The purpose of this article is to adopt a tax, for revenue purposes, pursuant to Sections 37101 and 37100.5 of the California Government Code, upon Cannabis Businesses that engage in business in the City. The Cannabis Business Tax is levied based upon business gross receipts and square footage of plant canopy. It is not a sales and use tax, a tax upon income, or a tax upon real property.

The Cannabis Business Tax is a general tax enacted solely for general governmental purposes of the City and not for specific purposes. All of the proceeds from the tax imposed by this article shall be placed in the City's general fund and be available for any legal municipal purpose. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.030. Intent.

The intent of this article is to levy a tax on all Cannabis Businesses that operate in the City, regardless of whether such business would have been legal at the time this article was adopted. Nothing in this article shall be interpreted to authorize or permit any business activity that would not otherwise be legal or permissible under laws applicable to the activity at the time the activity is undertaken. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.040. Definitions.

The following words and phrases shall have the meanings set forth below when used in this article:
(a) "Business" shall include all activities engaged in or caused to be engaged in within the City, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to his or her employer.
(b) "Cannabis" means all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified, obtained from cannabis. "Cannabis" also means marijuana as defined by Section 11018 of the California Health and Safety Code and is not limited to medical cannabis.

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(c) "Cannabis product" means raw cannabis that has undergone a process whereby the raw agricultural product has been transformed into a concentrate, an edible product, or a topical product. "Cannabis product" also means marijuana products as defined by Section 11018.1 of the California Health and Safety Code and is not limited to medical cannabis products. (d) "Canopy" means all areas occupied by any portion of a cannabis plant whether contiguous or noncontiguous on any one site. When plants occupy multiple horizontal planes (as when plants are placed on shelving above other plants) each plane shall be counted as a separate canopy area. (e) "Cannabis business" means any business activity involving cannabis, including but not limited to cultivating, transporting, distributing, manufacturing, compounding, converting, processing, preparing, storing, packaging, delivering, testing, dispensing, retailing and wholesaling of cannabis, of cannabis products or of ancillary products and accessories, whether or not carried on for gain or profit. (f) "Cannabis business tax" or "business tax," means the tax due pursuant to this article for engaging in cannabis business in the City.
(g) "Commercial cannabis cultivation" means cultivation in the course of conducting a cannabis business. (h) "City permit" means a permit issued by the City to a person to authorize that person to operate or engage in a cannabis business.
(i) "Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of cannabis and includes, but is not limited to, the operation of a nursery. (j) "Distribution" shall have the same definition as set forth in California Business and Professions Code § 26001, as may be amended from time to time.
(k) "Distributor" shall mean persons engaging in Distribution. (l) "Employee" means each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner's family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, commission, barter or any other form of compensation.
(m) "Engaged in business as a cannabis business" means the commencing, conducting, operating, managing or carrying on of a cannabis business, whether done as owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the City or coming into the City from an outside location to engage in such activities. A person shall be deemed engaged in business within the City if:

1. Such person or person's employee maintains a fixed place of business within the City for the benefit or partial benefit of such person;

2. Such person or person's employee owns or leases real property within the City for business purposes;

3. Such person or person's employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business;

4. Such person or person's employee regularly conducts solicitation of business within the City; or

5. Such person or person's employee performs work or renders services in the City.

The foregoing specified activities shall not be a limitation on the meaning of "engaged in business." (n) "Evidence of doing business" means evidence such as, without limitation, use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, or Created: 2022-05-13 14:23:07 [EST]
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representation to a government agency or to the public that such person is engaged in a cannabis business in the City.
(o) "Fiscal year" means July 1 through June 30 of the following calendar year. (p) "Gross receipts," except as otherwise specifically provided, means, whether designated a sales price, royalty, rent, commission, dividend, or other designation, the total amount (including all receipts, cash, credits and property of any kind or nature) received or payable for sales of goods, wares or merchandise or for the performance of any act or service of any nature for which a charge is made or credit allowed (whether such service, act or employment is done as part of or in connection with the sale of goods, wares, merchandise or not), without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, losses or any other expense whatsoever. However, the following shall be excluded from gross receipts:

1. Cash discounts where allowed and taken on sales;

2. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

3. Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts;

4. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business;

5. Cash value of sales, trades or transactions between departments or units of the same business;

6. Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the gross receipts in the year they prove to be uncollectible; provided, however, if the whole or portion of such amounts excluded as uncollectible are subsequently collected they shall be included in the amount of gross receipts for the period when they are recovered;

7. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded when in excess of one dollar;

8. Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the finance department with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees.
(q) "Lighting" means a source of light that is primarily used for promoting the biological process of plant growth. Lighting does not include sources of light that primarily exist for the safety or convenience of staff or visitors to the facility, such as emergency lighting, walkway lighting, or light admitted via small skylights, windows or ventilation openings.
(r) "Manufacture" shall have the same definition as set forth in California Business and Professions Code § 26001, as may be amended from time to time.
(s) "Manufacturer" shall have the same definition set forth in California Business and Professions Code § 26001, as may be amended from time to time.
(t) "Nursery" means a facility or part of a facility that is used only for producing clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis.

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(u) "Person" means an individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, whether organized as a nonprofit or for-profit entity, and includes the plural as well as the singular number.
(v) "Sale" means and includes any sale, exchange, or barter. (w) "State" means the State of California.
(x) "State license," "license," or "registration" means a state license issued pursuant to California Business & Professions Code Sections 19300, et seq. or other applicable state law. (y) "Tax Administrator" means the Finance Director of the City of California City or his or her designee. (z) "Testing Laboratory" means a cannabis business that (i) offers or performs tests of medical cannabis or medical cannabis products, (ii) offers no service other than such tests, (iii) sells no products, excepting only testing supplies and materials, (iv) is accredited by an accrediting body that is independent from all other persons involved in the medical cannabis industry in the state and (v) is registered with the State Department of Public Health.
( Ord. No. 17-748, § 1, 6-6-2017; Ord. No. 21-786 , § 2, 4-27-2021) Sec. 3-2.8.050. Tax Imposed.
(a) Beginning July 1, 2018, there is imposed upon each person who is engaged in business as a cannabis business a cannabis business tax.
(b) The initial rate of the cannabis business tax shall be as follows:

1. For every person who is engaged in commercial cannabis cultivation in the City:
a. Seven dollars ($7.00) annually per square foot of canopy space in facility that uses exclusively artificial lighting.
b. Five dollars ($5.00) annually per square foot of canopy space in a facility that uses a combination of natural and supplemental artificial lighting.
c. One dollar ($1.00) annually per square foot of canopy space in a facility that uses no artificial lighting.
d. Fifty cents ($0.50) annually per square foot of canopy space for any nursery.

2. For every person who engages in the operation of a testing laboratory: 2% of gross receipts.

3. For every person who engages in manufacturing: 1% of gross receipts.

4. For every person who engages in distribution: .5% of gross receipts.

5. For every person who engages in a cannabis business not identified in Subsection 1. through 4.: 6% of gross receipts.
(c) The City Council may, by resolution or ordinance, adjust the rate of the cannabis business tax. However, in no event may the City Council set any adjusted rate that exceeds the maximum rate calculated pursuant to subdivision (d) of this section for the date on which the adjusted rate will commence. (d) The maximum rate shall be calculated as follows:

1. For every person who is engaged in commercial cannabis cultivation in the City:
a. Through June 30, 2021, the maximum rate shall be:

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i. Seven dollars ($7.00) annually per square foot of canopy space in a facility that uses exclusively artificial lighting.
ii. Five dollars ($5.00) annually per square foot of canopy space in a facility that uses a combination of natural and supplemental artificial lighting. iii. One dollar ($1.00) annually per square foot of canopy space in a facility that uses no artificial lighting.
iv. Fifty cents ($.50) annually per square foot of canopy space for any nursery. b. On July 1, 2021 and on each July 1 thereafter, the maximum annual tax rate per square foot of each type of canopy space shall increase by the percentage change between January of the calendar year prior to such increase and January of the calendar year of the increase in the Consumer Price Index ("CPI") for all urban consumers in the Los-Angeles-Riverside-Orange County areas as published by the United States Government Bureau of Labor Statistics. However, no CPI adjustment resulting in a decrease of any tax imposed by this subsection shall be made.

2. For every person who engages in a cannabis business in the City other than commercial cannabis cultivation the maximum rate shall be the rate set forth in subdivision (b) of this section. ( Ord. No. 17-748, § 1, 6-6-2017; Ord. No. 21-786 , § 3, 4-27-2021) Sec. 3-2.8.060. Reporting and Remittance of Tax.
(a) The cannabis business tax imposed by this article shall be paid, in arrears, on a quarterly basis. For commercial cannabis cultivation, the tax due for each calendar quarter shall be based on the square footage of the business's canopy space during the quarter and the rate shall be 25% of the applicable annual rate. For all other cannabis businesses activities, the tax due for each calendar quarter shall be based on the gross receipts for the quarter.
(b) Each person owing cannabis business tax for a calendar quarter shall, no later than the last day of the month following the close of the calendar quarter, file with the Tax Administrator a statement of the tax owed for that calendar quarter and the basis for calculating that tax. The Tax Administrator may require that the statement be submitted on a form prescribed by the Tax Administrator. The tax for each calendar quarter shall be due and payable on that same date as the statement for the calendar quarter is due. (c) Upon cessation of a cannabis business, tax statements and payments shall be immediately due for all calendar quarters up to the calendar quarter during which cessation occurred. (d) The Tax Administrator may, at his or her discretion, establish shorter report and payment periods for any taxpayer as the Tax Administrator deems necessary to ensure collection of the tax. The Tax Administrator may also require that a deposit, to be applied against the taxes for a calendar quarter, be made by a taxpayer at the beginning that calendar quarter. In no event shall the deposit required by the Tax Administrator exceed the tax amount he or she projects will be owed by the taxpayer for the calendar quarter. The Tax Administrator may require that a taxpayer make payments via a cashier's check, money order, wire transfer, or similar instrument.
(e) For purposes of this section, the square feet of canopy space for a business shall be rebuttably presumed to be no less than the maximum square footage of canopy allowed by the business's City permit for commercial cannabis cultivation, or, in the absence of a City permit, the square footage shall be the maximum square footage of canopy for commercial cannabis cultivation allowed by the state license type. In no case shall canopy square footage which is authorized by the permit or license but not utilized for cultivation be excluded from taxation unless the Tax Administrator is informed in writing, prior to the period for which the space will not be used, that such space will not be used.

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( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.070. Payments and Communications—Timely Remittance.

Whenever any payment, statement, report, request or other communication is due, it must be received by the Tax Administrator on or before the final due date. A postmark will not be accepted as timely remittance. If the due date would fall on a Saturday, Sunday or a holiday, the due date shall be the next regular business day on which the City is open to the public.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.080. Payment—When Taxes Deemed Delinquent.

Unless otherwise specifically provided under other provisions of this article, the taxes required to be paid pursuant to this article shall be deemed delinquent if not received by the Tax Administrator on or before the due date as specified in Sections 3-2.8.060 and 3-2.8.070.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.090. Notice not Required by the City.

The City may as a courtesy send a tax notice to the business. However, the Tax Administrator is not required to send a delinquency or other notice or bill to any person subject to the provisions of this article. Failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this article. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.100. Penalties and Interest.
(a) Any person who fails or refuses to pay any cannabis business tax required to be paid pursuant to this article on or before the due date shall pay penalties and interest as follows:

1. A penalty equal to 10% of the amount of the tax, in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at the rate of 1.0% per month.

2. If the tax remains unpaid for a period exceeding one calendar month beyond the due date, an additional penalty equal to 25% of the amount of the tax, plus interest at the rate of 1.0% per month on the unpaid tax and on the unpaid penalties.

3. Interest shall be applied at the rate of 1.0% per month on the first day of the month for the full month, and will continue to accrue monthly on the tax and penalty until the balance is paid in full. (b) Whenever a check or electronic payment is submitted in payment of a cannabis business tax and the payment is subsequently returned unpaid by the bank for any reason, the taxpayer will be liable for the tax amount due plus any fees, penalties and interest as provided for in this section, and any other amount allowed under state law.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.110. Refunds and Credits.
(a) No refund shall be made of any tax collected pursuant to this article, except as provided in Section 3-2.8.120.

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(b) No refund of any tax collected pursuant to this article shall be made because of the discontinuation, dissolution, or other termination of a business.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.120. Refunds and Procedures.
(a) Whenever the amount of any cannabis business tax, penalty or interest has been overpaid, paid more than once, or has been erroneously collected or received by the City under this article, it may be refunded to the claimant who paid the tax provided that a written claim for refund is filed with the Tax Administrator within one year of the date the tax was originally due and payable. (b) The Tax Administrator, his or her designee or any other City officer charged with the administration of this article shall have the right to examine and audit all the books and business records of the claimant in order to determine the eligibility of the claimant to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of claimant's books and business records after request by the Tax Administrator to do so.
(c) In the event that the cannabis business tax was erroneously paid and the error is attributable to the City, the City shall refund the amount of tax erroneously paid up to one year from when the error was identified. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.130. Personal Cultivation not Taxed.

The provisions of this article shall not apply to personal cannabis cultivation as defined in the "California Control, Regulate and Tax Adult Use of Marijuana Initiative". This article shall not apply to personal use of cannabis that is specifically exempted from state licensing requirements, that meets the definition of personal use or equivalent terminology under state law, and for which the individual receives no compensation whatsoever related to that personal use.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.140. Administration of the Tax.
(a) It shall be the duty of the Tax Administrator to collect the taxes, penalties, fees, and perform the duties required by this article.
(b) For purposes of administration and enforcement of this article generally, the Tax Administrator may from time to time promulgate such administrative interpretations, rules, and procedures consistent with the purpose, intent, and express terms of this article as he or she deems necessary to implement or clarify such provisions or aid in enforcement.
(c) The Tax Administrator may take such administrative actions as needed to administer the tax, including but not limited to:

1. Provide to all cannabis business taxpayers forms for the reporting of the tax;

2. Provide information to any taxpayer concerning the provisions of this article;

3. Receive and record all taxes remitted to the City as provided in this article;

4. Maintain records of taxpayer reports and taxes collected pursuant to this article;

5. Assess penalties and interest to taxpayers pursuant to this article; Created: 2022-05-13 14:23:07 [EST]
(Supp. No. 10)

Page 8 of 12 ends

6. Determine amounts owed and enforce collection pursuant to this article. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.150. Appeal Procedure.

Any taxpayer aggrieved by any decision of the Tax Administrator with respect to the amount of tax, interest, penalties and fees, if any, due under this article may appeal to the City Council by filing a notice of appeal with the City Clerk within thirty (30) days of the serving or mailing of the determination of tax due. The City Clerk shall fix a time and place for hearing such appeal, and the City Clerk shall give notice in writing to such operator at the last known place of address. The finding of the City Council shall be final and conclusive and shall be served upon the appellant in the manner prescribed by this article for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.160. Enforcement—Action to Collect.

Any taxes, penalties and/or fees required to be paid under the provisions of this article shall be deemed a debt owed to the City. Any person owing money to the City under the provisions of this article shall be liable in an action brought in the name of the City for the recovery of such debt. The provisions of this section shall not be deemed a limitation upon the right of the City to bring any other action including criminal, civil and equitable actions, based upon the failure to pay the tax, penalties and/or fees imposed by this article or the failure to comply with any of the provisions of this article.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.170. Apportionment.

If a business subject to the tax is operating both within and outside the City, it is the intent of the City to apply the cannabis business tax so that the measure of the tax fairly reflects the proportion of the taxed activity actually carried on in the City. To the extent federal or state law requires that any tax due from any taxpayer be apportioned, the taxpayer may indicate said apportionment on his or her tax return. The Tax Administrator may promulgate administrative procedures for apportionment as he or she finds useful or necessary. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.180. Constitutionality and Legality.

This tax is intended to be applied in a manner consistent with the United States and California Constitutions and state law. None of the tax provided for by this article shall be applied in a manner that causes an undue burden upon interstate commerce, a violation of the equal protection or due process clauses of the Constitutions of the United States or the State of California or a violation of any other provision of the California Constitution or state law. If a person believes that the tax, as applied to him or her, is impermissible under applicable law, he or she may request that the Tax Administrator release him or her from the obligation to pay the impermissible portion of the tax.
( Ord. No. 17-748, § 1, 6-6-2017)
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(Supp. No. 10)

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Sec. 3-2.8.190. Audit and Examination of Premises and Records. (a) For the purpose of ascertaining the amount of cannabis business tax owed or verifying any representations made by any taxpayer to the City in support of his or her tax calculation, the Tax Administrator shall have the power to inspect any location where commercial cannabis cultivation occurs and to audit and examine all books and records (including, but not limited to bookkeeping records, state and federal income tax returns, and other records relating to the gross receipts of the business) of persons engaged in cannabis businesses.

In conducting such investigation, the Tax Administrator shall have the power to inspect any equipment, such as computers or point of sale machines, that may contain such records. (b) It shall be the duty of every person liable for the collection and payment to the City of any tax imposed by this article to keep and preserve, for a period of at least three (3) years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the City, which records the Tax Administrator or his/her designee shall have the right to inspect at all reasonable times.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.200. Other Licenses, Permits, Taxes, Fees or Charges. (a) Nothing contained in this article shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any permit or license required by, under or by virtue of any provision of any other article of this Code or any other ordinance or resolution of the City, nor be deemed to repeal, amend, be in lieu of, replace or in any way affect any tax, fee or other charge imposed, assessed or required by, under or by virtue of any other article of this Code or any other ordinance or resolution of the City. Any references made or contained in any other article of this Code to any licenses, license taxes, fees, or charges, or to any schedule of license fees, shall be deemed to refer to the licenses, license taxes, fees or charges, or schedule of license fees, provided for in other article of this Code. (b) Notwithstanding subdivision (a) of this section a cannabis business shall not be required to pay the license fee required by Division 2 of Article 3 of Chapter 2 of Title 3 of this Code so long as all of business's activities within the City that would require payment of a license fee are activities subject to the cannabis business tax. (c) The Tax Administrator may revoke or refuse to renew the license required by Section 3-3.2.201 of this Code for any business that is delinquent in the payment of any tax due pursuant to this article or that fails to make a deposit required by the Tax Administrator pursuant to Section 3-2.8.060. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.210. Payment of Tax does not Authorize Unlawful Business. (a) The payment of a cannabis business tax required by this article, and its acceptance by the City, shall not entitle any person to carry on any cannabis business unless the person has complied with all of the requirements of this Code and all other applicable state laws. (b) No tax paid under the provisions of this article shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any local or state law. ( Ord. No. 17-748, § 1, 6-6-2017)
Created: 2022-05-13 14:23:07 [EST]
(Supp. No. 10)

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Sec. 3-2.8.220. Deficiency Determinations.

If the Tax Administrator is not satisfied that any statement filed as required under the provisions of this article is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within three (3) years of the date the tax was originally due and payable. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Section 3-2.8.240. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.230. Failure to Report—Nonpayment, Fraud.
(a) Under any of the following circumstances, the Tax Administrator may make and give notice of an assessment of the amount of tax owed by a person under this article at any time:

1. If the person has not filed a complete statement required under the provisions of this article;

2. If the person has not paid the tax due under the provisions of this article;

3. If the person has not, after demand by the Tax Administrator, filed a corrected statement, or furnished to the Tax Administrator adequate substantiation of the information contained in a statement already filed, or paid any additional amount of tax due under the provisions of this article; or

4. If the Tax Administrator determines that the nonpayment of any business tax due under this article is due to fraud, a penalty of 25% of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this article and any other penalties allowed by law. (b) The notice of assessment shall separately set forth the amount of any tax known by the Tax Administrator to be due or estimated by the Tax Administrator, after consideration of all information within the Tax Administrator's knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this article, and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.240. Tax Assessment—Notice Requirements.

The notice of assessment shall be served upon the person either by personal delivery, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business or to such other address as he or she shall register with the Tax Administrator for the purpose of receiving notices provided under this article; or, should the person have no address registered with the Tax Administrator for such purpose, then to such person's last known address. For the purposes of this section, a service by mail is complete at the time of deposit in the United States mail. ( Ord. No. 17-748, § 1, 6-6-2017)
Created: 2022-05-13 14:23:07 [EST]
(Supp. No. 10)

Page 11 of 12 ends

Sec. 3-2.8.250. Tax Assessment—Hearing, Application and Determination.

Within thirty (30) days after the date of service the person may apply in writing to the Tax Administrator for a hearing on the assessment. If application for a hearing before the City is not made within the time herein prescribed, the tax assessed by the Tax Administrator shall become final and conclusive. Within thirty (30) days of the receipt of any such application for hearing, the Tax Administrator shall cause the matter to be set for hearing before him or her no later than thirty (30) days after the receipt of the application, unless a later date is agreed to by the Tax Administrator and the person requesting the hearing. Notice of such hearing shall be given by the Tax Administrator to the person requesting such hearing not later than five (5) days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Tax Administrator should not be confirmed and fixed as the tax due. After such hearing the Tax Administrator shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 3-2.8.240 for giving notice of assessment.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.260. Conviction for Violation—Taxes not Waived.

The conviction and punishment of any person for failure to pay the required tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions of this article or of any state law requiring the payment of all taxes.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.270. Violation Deemed Misdemeanor.

Any person violating any of the provisions of this article shall be guilty of a misdemeanor. ( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.280. Severability.

If any provision of this article, or its application to any person or circumstance, is determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this article or the application of this article to any other person or circumstance and, to that end, the provisions hereof are severable.
( Ord. No. 17-748, § 1, 6-6-2017)
Sec. 3-2.8.290. Remedies Cumulative.

All remedies and penalties prescribed by this article or which are available under Title 1 of the City Code and any other provision of law or equity are cumulative. The use of one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this article. ( Ord. No. 17-748, § 1, 6-6-2017)
Created: 2022-05-13 14:23:07 [EST]
(Supp. No. 10)

Page 12 of 12 ends

Sec. 3-2.8.300. Amendment or Repeal.

This article may be repealed or amended by the City Council without a vote of the people to the extent allowed by law. However, as required by Article XIII C of the California Constitution, voter approval is required for any amendment that would increase the rate of any tax levied pursuant to this article. The people of the City of California City affirm that the following actions shall not constitute an increase of the rate of a tax:
(a) The restoration of the rate of the tax to a rate that is no higher than that set by this article, if the City Council has acted to reduce the rate of the tax;
(b) An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this article; or
(c) The collection of the tax imposed by this article, even if the City had, for some period of time, failed to collect the tax.
( Ord. No. 17-748, § 1, 6-6-2017)
ATTACHMENT 2
Initial Audit Determination Letter
August 29, 2023
Regal Green Remedies
7865 Mendiburu Road
California City, CA 93505
SUBJECT: 2023 COMMERCIAL CANNABIS COMPLIANCE AUDIT

DETERMINATION
Dear David Massaband,
Thank you for your time and cooperation as part of the 2023 annual compliance assessment and audit for your commercial cannabis operations in California City. In accordance with the Municipal Code, we have completed our assessment and would like to deliver the following findings to you:

PURPOSE
The purpose of the audit is to ensure all commercial cannabis operators in the City of California City are operating in compliance with local and state regulations. This is to ensure public safety and equity at all levels of activities within the City.

PROCEDURES
Core Compliance staff who have been contracted by the City conducted an audit. An audit survey was emailed to you with a request to upload the businesses books and records. We received:
• Department of Cannabis Control Cultivation License
• Document stating withdrawal of Jonathan Lachman as a shareholder • Cannabis Renewal Notice from California City

CITY HALL
21000 Hacienda Blvd.

California City, CA 93505
______________________________________
760-373-8661
www.californiacity-ca.gov
Kelly Kulikoff
MAYOR
Ronald Smith

MAYOR PRO TEM
Jim Creighton
Michael Kulikoff
Karen Macedonio

COUNCIL MEMBERS
__________________
Inge Elmes

ACTING CITY MANAGER

RESULTS
After a thorough review of the records provided, inspection assessment, and a reconciliation of City and State records, it has been determined that the following needs to be corrected within 30 days of the date of this letter:
• Pay $282,756.25 to California City, including $107,131.25 of penalty and interest. • Obtain California City business license.
• Renew California City cannabis permit.

You may reach out to City Finance Manager at [email protected] to make arrangements for payment.

CONCLUSIONS
Please contact [email protected] with any questions regarding this letter and ensure the above referenced violations are resolved no later than September 29, 2023. Failure to resolve will result in a cease and desist order by compliance staff and any existing licenses will be recommended for revocation immediately.

Thank you in advance for your cooperation.

Sincerely,
Jaimie Lewis
Cannabis Compliance Unit
Core Compliance on behalf of California City
CC: Finance Manager
City Manager
City Clerk

City of California City Cannabis Compliance Audit Working Papers 1 Business information last updated 8/29/23
Date: 8/2/2023
Auditor: Andrew Levin
Business Name: Regal Green Remedies (Cult)
Audit Period 3Q 2020 - 2Q 2023
Local Permit#: 20230061 Operation Type: Cultivation
Local Permit Expiration Date: 6/30/2023
State License #: CCL21-0002190 11/18/2019
State License Expiration Date: 2024-03-29
Business Address: 7865 Mendiburu Road
Mailing Address (if different)
Tax Liability Yes
Amount due: $ 282,756.25 $ 107,131.25
Needs to Obtain Permit No
Needs to obtain Business License Yes
Audit Findings Summary:

Site Visit Date: 4/17/2023
Verified square footage : 15,000 (per operator)
$ 282,756.25
Confirmed Start Date
Total Penalty & Interest included in amount
No evidence of excise tax payment is available from California City or the operator. While the operator claims there were no plants in the facility until 2022, they couldn't provide any supporting documentation for this assertion and the State license was active during the entire audit period. Despite repeated requests, the operator failed to explain the absence of excise tax records from California City. The audit was conducted based on the operator's provided square footage: 2,500 square feet of nursery space taxed at $0.50 per square foot per year, and 12,500 square feet of mixed lighting taxed at $5.00 per square foot per year. This supports the squarefootage measured during recent inspections. The audit assumed a starting date of November 2019, the date of their earliest cultivation license, due to the operator's inability to furnish any documentation indicating non-operation during that time.

Operator must obtain a California CIty business license.

Total Amount Payable to the
City before due date on letter
Cannabis Compliance Audit Working Papers
1 Cultivation last updated 8/29/23
Cultivation Square Footage Analysis
…if applilcable
Business Name: Regal Green Remedies (Cult) LIGHTING TYPE Audit Period 3Q 2020 - 2Q 2023
Tax Quarter SWFT Quarterly Tx Rate Tax Due Taxes Paid Difference 3Q20 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
4Q20 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
1Q21 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
2Q21 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
3Q21 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
4Q21 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
1Q22 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
2Q22 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
3Q22 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
4Q22 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
1Q23 2,500 $ 0.13 $ 312.50 $ - $ 312.50
12,500 $ 1.25 $ 15,625.00 $ - $ 15,625.00
2Q23 2,500 $ 0.13 $ 312.50 $ - $ 312.50
$ 175,625.00 $ - $ 175,625.00
Auditor notes: Core Compliance measured
278.2 sq. ft. artificial and 10,170.0 sq. ft. mixed
light. Per operator their nursery is 2,500 sq. ft.
(taxed at $.50/sq. ft.) and flower benches are
12,500 sq. ft. (taxed at $5.00/sq. ft.).

Cannabis Tax Audit Working Papers
Penalty Calculation
Business Name: Regal Green Remedies (Cult)
State License Expiration Date: 3Q 2020 - 2Q 2023
Penalty and Interest Rate Tax Due Penalty & Interest
Penalty 1. < Month -10% 10% $ -
Penalty 2. > Month - 25% 25% $ 175,625.00 $ 43,906.25
Interest 1% per month 36% $ 175,625.00 $ 63,225.00
Liability Determination
Cannabis Compliance Audit Working Papers
1 Liability last updated 8/29/23
Laibility Determination
Business Name: Regal Green Remedies (Cult)
Audit Period 3Q 2020 - 2Q 2023
Taxes Due based on Audit $ 175,625.00 (pull from cultivation + other tab) Total Penalty $ 43,906.25
Total Interest $ 63,225.00
Total Liability $ 282,756.25
*Tax is due within 30 days of your receipt of these audit working papers.

ATTACHMENT 3
Revised Audit Determination Letter
September 6, 2023
Regal Green Remedies
7865 Mendiburu Road
California City, CA 93505
SUBJECT: 2023 COMMERCIAL CANNABIS COMPLIANCE AUDIT
DETERMINATION (Revised)
Dear David Massaband,
Thank you for your time and cooperation as part of the 2023 annual compliance assessment and audit for your commercial cannabis operations in California City. In accordance with the Municipal Code, we have completed our assessment and would like to deliver the following findings to you:

CITY HALL
21000 Hacienda Blvd.

California City, CA 93505
______________________________________
760-373-8661
www.californiacity-ca.gov
Kelly Kulikoff
MAYOR
Ronald Smith

MAYOR PRO TEM
Jim Creighton
Michael Kulikoff
Karen Macedonio

COUNCIL MEMBERS
__________________
Inge Elmes

ACTING CITY MANAGER

RESULTS
After a thorough review of the records provided, inspection assessment, and a reconciliation of City and State records, it has been determined that the following needs to be corrected within 30 days of the date of this letter:
• Pay $102,705 to California City, including $31,382.08 of penalty and interest. • Obtain California City business license.
• Renew California City cannabis permit.

You may reach out to City Finance Manager at [email protected] to make arrangements for payment.

CONCLUSIONS
Please contact [email protected] with any questions regarding this letter and ensure the above referenced violations are resolved no later than October 7, 2023. Failure to resolve will result in a cease and desist order by compliance staff and any existing licenses will be recommended for revocation immediately.

Thank you in advance for your cooperation.

Sincerely,
Jaimie Lewis
Cannabis Compliance Unit
Core Compliance on behalf of California City
CC: Finance Manager
City Manager
City Clerk

City of California City Cannabis Compliance Audit Working Papers 1 Business information last updated 9/7/2023
Date: 8/2/2023
Auditor: Andrew Levin
Business Name: Regal Green Remedies (Cult)
Audit Period 3Q 2020 - 2Q 2023
Local Permit#: 20230061 Operation Type: Cultivation
Local Permit Expiration Date: 6/30/2023
State License #: CCL21-0002190 Confirmed Start Date 2/18/2012 State License Expiration Date:2024-03-29
Business Address: 7865 Mendiburu Road
Mailing Address (if different)
Tax Liability Yes
Amount due: ($ 102,705.00) Total Penalty & Interest included in amount ($ 31,382.08) Needs to Obtain Permit No
Needs to obtain Business License Yes
Audit Findings Summary: No evidence of excise tax payment is available from California City or the operator. Operator provided CDTFA returns showing no sales until Q1 2022. Assessment start date is 2/18/2022 or 41 days for Q1 2022, reflected through 45% excise tax due for Q1 2022. The audit was conducted based on the operator's provided square footage: 2,500 square feet of nursery space taxed at $0.50 per square foot per year, and 12,500 square feet of mixed lighting taxed at $5.00 per square foot per year.

Operator must obtain a California CIty business license.

Site Visit Date: 4/17/2023
Verified square footage : 15,000 (per operator)
Total Amount Payable to the
City before due date on
letter
($ 102,705.00)
Cannabis Compliance Audit Working Papers
1 Cultivation last updated 9/7/2023
Cultivation Square Footage Analysis
…if applilcable
Business Name: Regal Green Remedies (Cult) LIGHTING TYPE Audit Period 3Q 2020 - 2Q 2023
Tax Quarter SWFT Quarterly Tx RateTax Due Taxes Paid Difference 3Q20 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
4Q20 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
1Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
2Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
3Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
4Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
1Q22 2,500 ($ 0.13 ( ) $ 142.36 ( ) $ - ) ($ 142.36)
12,500 ($ 1.25 ( ) $ 7,118.06 ( ) $ - ) ($ 7,118.06)
2Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 3Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 4Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 1Q23 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 2Q23 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
($ 71,322.92 ( ) $ - ) ($ 71,322.92)
Cannabis Compliance Audit Working Papers
2 Cultivation last updated 9/7/2023
ATTACHMENT 4
Appeal
Formal Request for Appeal
07/22/24
Regal Green Remedies, Inc.
7875 Mendiburu Rd.

California City, CA 93505
Dear California City Council,
Our cannabis company Regal Green Remedies, Inc. located at 7875 Mendiburu Rd., California City, CA 93505, would like to formally request an appeal with respect to the late fees/interest the City is trying to charge us based on our previous cannabis cultivation taxes that were owed but have since then all been paid in full.

We feel these fees should be waived based on multiple grievances and negligence on the part of the City in the past several years that have harmed us and caused us great damages and has cost us lots of valuable time. I would like to explain all this to the City Council in a private hearing. Thank you.

Sincerely,
David Massaband
CEO
Regal Green Remedies, Inc.

ATTACHMENT 5
Special Counsel Ground Rules

CITY ADMINISTRATIVE HEARING APPEAL BRIEFING SCHEDULE

1. Notice of Appeal

2. Scheduling of Hearing
• Date Hearing is Scheduled: November 4, 2024 at 1:00 p.m. in the California City City Council Chambers located at 21000 Hacienda Boulevard, California City, California 93505.

3. Brief by Appellant (Business/Operator)
• Deadline for Appellant's Brief and Proposed City Council Decision: October 30, 2024 at 12:00 p.m.
o The appellant submits a detailed written brief outlining arguments, evidence, and supporting documents and identification of any witnesses for the hearing.
o Appellant submits brief via email to special counsel, Joaquin Vazquez, at [email protected], and Deputy City Clerk, Leanndrea Weible, at [email protected] no later than October 30, 2024 at 12:00 p.m.

4. Brief by City Staff/City Attorney
• Deadline for Response Brief and Proposed City Council Decision: October 30, 2024 at 12:00 p.m.
o City staff/City Attorney submits their response, addressing the appellant's arguments and providing rebuttal evidence or documentation and identifying any witnesses for the hearing.
o Appellant submits brief via email to special counsel, Joaquin Vazquez, at [email protected], and Deputy City Clerk, Leanndrea Weible, at [email protected] no later than October 30, 2024 at 12:00 p.m.

5. City Council Hearing
• Date of Hearing: November 4, 2024 at 1:00 p.m. in the California City City Council Chambers located at 21000 Hacienda Boulevard, California City, California 93505.
o The hearing takes place before the City Council. Both the appellant and the City staff/legal counsel present their cases, call witnesses if necessary, and answer questions from the Council. The City Council’s decision is final.

PROCEDURAL RULES FOR CITY ADMINISTRATIVE HEARING APPEAL

1. Ex Parte Communications
• Definition: Ex parte communications are direct or indirect communications between any party involved in the appeal (appellant, City staff, witnesses, or legal counsel) and members of the City Council outside the formal hearing process.
• Prohibition:
o No party, representative, or witness may engage in ex parte communications with City Council members regarding the subject matter of the appeal.
o This includes emails, letters, phone calls, or informal conversations. • Disclosure:
o If any ex parte communication occurs, it must be disclosed on the record at the beginning of the hearing. The Council member involved must report the substance of the communication.
o Based on the nature of the communication, the Council may decide to recuse the member or take other corrective actions to ensure fairness.

2. Evidence Submissions
• General Rule of Evidence:
o The hearing will follow an informal evidentiary process. While the rules of evidence applicable in courts do not strictly apply, only relevant, reliable, and probative evidence will be admitted.
o All parties must submit any documentary evidence, exhibits, or reports by the deadline set in the briefing schedule.
• Witness Testimony:
o Witnesses may provide sworn testimony during the hearing. o The party calling the witness is responsible for providing an accurate summary of the witness’s anticipated testimony as part of their written submissions.
• Cross-Examination:
o Parties will have the opportunity to cross-examine witnesses presented by the opposing party.
o City Council members may also ask questions of witnesses to clarify evidence.

3. Hearsay
• Definition: Hearsay is a statement made outside the hearing, offered into evidence to prove the truth of the matter asserted.
• Admissibility:
o Hearsay evidence is admissible in the hearing but is generally given less weight than direct testimony or documentary evidence unless corroborated by other credible evidence.
o Parties should identify any hearsay evidence in their briefs and explain its relevance and reliability.
o The City Council may give little or no weight to hearsay that is not supported by other reliable evidence.

4. Relevance and Weight of Evidence
• Relevance:
o All evidence presented must relate to the issues on appeal. The City Council may exclude irrelevant evidence.
• Weight:
o The City Council has the discretion to determine the weight of the evidence presented. The credibility of witnesses, the consistency of documentary evidence, and the probative value of all evidence will be considered when determining the final decision.

5. Public Participation
• Public Testimony:
o The hearing will be open to the public. However, only parties to the appeal and any invited witnesses may testify or submit evidence. • Public Comment Period:
o There will be a public comment period during which members of the public may speak, in accordance with Brown Act requirements. This period will be limited in time, and public comments will not be considered as formal evidence unless corroborated by documentary evidence or testimony from involved parties.

6. Procedural Objections
• Raising Objections:
o Any party may raise procedural objections during the hearing, including objections to the admission of evidence or witness testimony. • Timeliness:
o Objections must be made promptly at the time of the alleged procedural error or at the earliest opportunity. Failure to object in a timely manner may result in a waiver of the objection.

7. Deliberations and Decision
• Deliberation:
o Following the presentation of evidence and arguments, the City Council will deliberate on the appeal.
• Decision:
o The City Council will issue a written decision based on the evidence presented during the hearing.

ORAL ARGUMENT/PRESENTATION SCHEDULE FOR APPEAL HEARING

1. Introduction and Opening Statements by City Council
o The Mayor, or designee, opens the hearing by outlining the procedural rules and the issues on appeal.
o Brief introductions of the appellant, City staff, legal representatives, and any other participants.

2. Appellant’s Opening Argument
o The appellant (or their attorney/representative) presents their case, focusing on the reasons the City’s decision should be overturned. o Summary of key arguments, evidence, and legal standards supporting the appeal.
o Presentation of any witnesses (if any), who may give brief testimony. o Visual aids or exhibits (e.g., maps, photos) may be used to enhance the argument.

3. City Staff/Legal Counsel Response
o The City staff/City Attorney presents their defense of the original decision, responding directly to the appellant’s arguments.
o Explanation of how the City’s decision was consistent with the law and the facts of the case.
o Presentation of supporting evidence, rebutting the appellant’s claims. o City may also present witnesses to support its position.

4. Cross-Examination of Witnesses (if any)
o The appellant and City staff may cross-examine any witnesses presented by the opposing party.
o Cross-examination should be limited to clarifying the testimony and challenging the credibility of witnesses if necessary.

5. Questions from City Council Members
o City Council members may ask questions of both the appellant and the City staff, seeking clarification on specific issues, evidence, or legal arguments.
o Questions may be directed to witnesses, if applicable. o Both parties must answer questions directly and succinctly, avoiding unnecessary repetition.

6. Public Comment Period
o Members of the public may briefly address the City Council regarding the appeal.
o Public comments will not be considered formal evidence unless supported by the parties involved.

7. Appellant’s Closing Argument
o The appellant presents a closing argument, summarizing the key points of their case and reinforcing why the City Council should reverse the original decision.

8. City Staff/Legal Counsel Closing Argument
o City staff/City Attorney presents a closing argument, summarizing the reasons why the original decision should be upheld.

10. City Council Deliberation and Decision
o After closing arguments, the City Council deliberates on the evidence and arguments presented.
o The Council may announce its decision immediately or take the matter under advisement and issue a written decision within a specified period.

ATTACHMENT 6
Appellant’s brief
with accompanying letter

High Desert Development
Jerry Heller – Contractor
10447 S. Loop Blvd.

California City, CA 93505
Dear City Council:

I have worked with Regal Green Remedies, Inc. and David Massaband for over 6 years now helping them build out a majority of their facility located at 7875 Mendiburu Rd.

California City, CA 93505 (previously addressed as 7800 Mendiburu Rd. originally before the city changed Regal’s address).

I was hired by their company to pour concrete slabs, build warehouses, assist with plumbing, electrical and a vast amount of other items. One major item was building the block wall around their entire 10 acre property. I built them the block wall around the first 5 acres several years ago (5-6 years ago). The first block wall is impeccable and sturdy and has no cracks or any sign that it was not build in an amazing fashion.

We got approved and permitted to build the rest of the block wall around the second 5 acres on their parcel a couple of years ago. I quoted them a price of $150,000 based on what the city had approved. However, the city had a very high turnover as you are aware, and kept changing who was in charging of building inspections. I started building Regal the block wall for the next 5 acres and then the new building inspector RON, said he is rejecting the prior approval and made us switch from 6 inch block to 8 inch block and we went from a 3 foot wide spread footing, to a 5 foot wide spread footing, and additional rebar required.

This was very unnecessary and not justified because we had plans and permits already approved. Because of this new undue burden, I had to tell Regal that my bid cannot be honored for $150,000 and now has to be $285,000 which was $135,000 more. We even HAD PERMITS ALREADY ISSUED. This caused a huge strain on myself and Regal and our relationship at the time.

Regal had to scramble around and take out more loans and debt to pay me to finish the block wall with the new unnecessary specs. Regal wanted to sue the city; However, I, Jerry Heller convinced and urged Regal not to sue and explained that Regal should try to have a long term nice relationship with the City.

Please call me if you have any questions regarding this: (760) 382-2658 Sincerely,
________________________
Jerry Heller
High Desert Development
Docusign Envelope ID: 65A2BE49-895A-4C6F-8E1B-9D2897DFE440 10/31/2024

ATTACHMENT 7
City Attorney/Staff’s Brief
1 Item No. ____
CALIFORNIA CITY’S STAFF REPORT AND

ADMINISTRATIVE APPEAL BRIEF
DATED: October 31, 2024
TO: Honorable Mayor and City Council
FROM: Brandon A. Sanchez, Attorney
SUBJECT: Appeal of Revised Audit Determination Letter dated September 7, 2023

SUMMARY
The appellant, Regal Green Remedies, Inc., is appealing the City’s Revised Audit Determination Letter dated September 7, 2023, which determined that Regal Green owed $102,705 in taxes, penalties, and interest related to cannabis cultivation in the City.

City staff recommends that Council deny the appeal and uphold the Revised Audit Determination Letter in its entirety.

BACKGROUND
A. Legal Background
Commercial cannabis cultivation is taxed at a given rate based on the square footage of canopy space and the type of cultivation (whether exclusively artificial lighting, combination of natural and supplemental artificial lighting, no artificial lighting, or a nursery).1 The tax rates for commercial cannabis cultivation in the City are as follows:
 Artificial Lighting: $7.00 per square foot of canopy space annually.  Combination Lighting: $5.00 per square foot of canopy space annually.  No Artificial Lighting: $1.00 per square foot of canopy space annually.  Nurseries: $0.50 per square foot of canopy space annually.

Taxes must be timely reported and remitted on a quarterly basis or they will be deemed delinquent.2 For commercial cannabis cultivation, the tax due for each calendar quarter shall 1 CCMC, §§ 3-2.8.050(b), 3-2.8.050(d).
2 CCMC, §§ 3-2.8.060, 3-2.8.070, 3-2.8.080.
2 be based on the square footage of the business’s canopy space during the quarter and the rate shall be 25% of the applicable annual rate.3
The taxable square footage is presumed to be the maximum allowed by the City's permit or, if no City permit exists, the maximum allowed by State license.4 Unused authorized space is still taxable unless the Tax Administrator is notified in writing beforehand.5 Audits of commercial cannabis taxes are authorized by Section 3-2.8.190(a):
“For the purpose of ascertaining the amount of cannabis business tax owed or verifying any representations made by any taxpayer to the City in support of his or her tax calculation, the Tax Administrator shall have the power to inspect any location where commercial cannabis cultivation occurs and to audit and examine all books and records (including, but not limited to bookkeeping records, state and federal income tax returns, and other records relating to the gross receipts of the business) of persons engaged in cannabis businesses. In conducting such investigation, the Tax Administrator shall have the power to inspect any equipment, such as computers or point of sale machines, that may contain such records. (Italics added.)
Section 3-2.8.220 describes what occurs after an audit results in a deficiency in taxes remitted:

If the Tax Administrator is not satisfied that any statement filed as required under the provisions of this article is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within three (3) years of the date the tax was originally due and payable. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Section 3-2.8.240.
6 (Italics added.)
So after an audit, the City may make a deficiency determination and provide notice of the deficiency determination.

Deficiency determinations may be appealed under Section 3-2.8.150 according to the following appeal procedure:

Any taxpayer aggrieved by any decision of the Tax Administrator with respect to the amount of tax, interest, penalties and fees, if any, due under this article may appeal to the City Council by filing a notice of appeal with the City Clerk within thirty (30) days of the serving or mailing of the determination of tax due. The City Clerk shall fix a time and place for hearing such appeal, and the City Clerk shall 3 CCMC, § 3-2.8.060(a).
4 CCMC, § 3-2.8.060(e).
5 CCMC, §
3-2.8.060(e).
6 Section 3-2.8.240 simply provides the manner of service (personal delivery or certified mail). 3 give notice in writing to such operator at the last known place of address. The finding of the City Council shall be final and conclusive and shall be served upon the appellant in the manner prescribed by this article for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of the notice.

Thus, there is 30 days to appeal the deficiency determination to the City Council.

B. Factual Background
In 2019, Regal Green obtained a State license for commercial cannabis activity to be conducted at the property located at 7865 Mendiburu Road, in California City.

In 2023, City staff completed an audit as authorized by Section 3-2.8.190. Specifically, on April 17, 2023, City staff inspected the Subject Property with the consent of Regal Green. City inspectors observed 2,500 square feet of nursery space and 12,500 square feet of mixed lighting.

Following conclusion of the audit, a deficiency determination was made under Section 3-

2.8.220. On August 29, 2023, the City issued a letter providing notice of the deficiency determination in a letter titled 2023 Commercial Cannabis Compliance Audit Determination (“Audit Determination Letter”). The Audit Determination Letter required the following amounts to be paid within 30 days: $282,756.25 to California City, including $107,131.25 of penalty and interest. This amount was calculated based on 2,500 square feet of nursery space taxed at $0.50 per square foot per year, and 12,500 square feet of mixed lighting taxed at $5.00 per square foot per year; and based on a start date in the third fiscal quarter of 2020.

In response, Regal Green informed the City that it only obtained a State license on February 18, 2022 (license no. CCL21-0002188) and as such should only be charged for that time and thereafter. This license is categorized as Cultivation - Small Mixed-Light Tier 2 Medicinal, under State regulations, which allows for 5,001 to 10,000 square feet of canopy. The City ultimately accepted the start date of February 18, 2022.

On September 7, 2023, the City issued a Revised Audit Determination Letter demanding payment of $102,705 to California City, including $31,382.08 of penalty and interest.

On June 23, 2024, Regal Green filed an appeal—nearly a year after issuance of the Revised Audit Determination Letter.

ANALYSIS
In this case, a number of these grounds are present and support upholding the September 7, 2023 Revised Audit Determination Letter. The audit was properly completed according to Section 3-2.8.190, and then a deficiency determination was made under Section 3-2.8.220.

The City gave notice of the deficiency in the form of the Audit Determination Letter on August 29, 2023. Based on the information provided by Regal Green, the City revised its deficiency determination on September 7, 2023 via the Revised Audit Determination Letter.

Each step was based on indisputable evidence and the requirements of the CCMC, all of which supports upholding the City’s determinations within the Revised Audit Determination Letter.

At the time of revision to the initial Audit Determination Letter, Regal Green made no objection to the measurements or categorization of the canopy space; only the start date. So the 4 measurements of 2,500 square feet of nursery space and 12,500 square feet of mixed lighting are not in dispute.

At the appropriate rates per the CCMC, Regal Green owes $102,705 to California City, including $31,382.08 of penalty and interest, for the 2,500 square feet of nursery space and 12,500 square feet of mixed lighting, based on the start date that Regal Green itself provided.

So the determinations within the Revised Audit Determination Letter are beyond dispute and are proper on the merits in every way.

Notably, this appeal is egregiously untimely. Section 3-2.8.150 provides only 30 days to appeal the Revised Audit Determination Letter. This appeal was filed nearly a year after the date of the Revised Audit Determination Letter. On this procedural appeal should be denied before the merits of the Revised Audit Determination Letter are even reached. That said, as discussed above, the Revised Audit Determination Letter is proper.

Though the burden of proof is not expressly stated in the City’s ordinance, the preponderance of the evidence standard generally applies to all administrative matters unless another higher degree of proof is imposed by statute. The preponderance-of-the-evidence standard requires that City staff must persuade City Council that, by the evidence presented in this Staff Report and any evidence presented at the hearing, that what City staff is required to prove is more likely to be true than not true.

This is a relatively low standard that the City has met with respect to the tax determination as shown above. The City physically inspected the property, measured the square footage, observed the applicably canopy type and lighting type, and followed the proper noticing procedure for determining and attempting to collect the unpaid/deficient taxes owed to the City.

FISCAL IMPACT
None.

ENVIRONMENTAL IMPACT
None. This proceeding constitutes regulatory activity exempt from CEQA.7

RECOMMENDATION
Staff recommends that City Council uphold the Revised Audit Determination Letter in its entirety, deny the appeal, and adopt the proposed resolution as presented.

ATTACHMENTS
Attachment No. 1 - Audit Determination Letter
Attachment No. 2 - Revised Audit Determination Letter
Attachment No. 3 - Applicable CCMC Provisions
7 See 14 Cal. Code Regs., § 15321(a).

EXHIBIT 1
August 29, 2023
Regal Green Remedies
7865 Mendiburu Road
California City, CA 93505
SUBJECT: 2023 COMMERCIAL CANNABIS COMPLIANCE AUDIT

CITY HALL
21000 Hacienda Blvd.

California City, CA 93505
______________________________________
760-373-8661
www.californiacity-ca.gov
Kelly Kulikoff
MAYOR
Ronald Smith

MAYOR PRO TEM
Jim Creighton
Michael Kulikoff
Karen Macedonio

COUNCIL MEMBERS
__________________
Inge Elmes

ACTING CITY MANAGER

You may reach out to City Finance Manager at [email protected] to make arrangements for payment.

Thank you in advance for your cooperation.

Sincerely,
Jaimie Lewis
Cannabis Compliance Unit
Core Compliance on behalf of California City
CC: Finance Manager
City Manager
City Clerk

Operator must obtain a California CIty business license.

EXHIBIT 2

September 6, 2023
Regal Green Remedies
7865 Mendiburu Road
California City, CA 93505
SUBJECT: 2023 COMMERCIAL CANNABIS COMPLIANCE AUDIT
DETERMINATION (Revised)
Dear David Massaband,
Thank you for your time and cooperation as part of the 2023 annual compliance assessment and audit for your commercial cannabis operations in California City. In accordance with the Municipal Code, we have completed our assessment and would like to deliver the following findings to you:

CITY HALL
21000 Hacienda Blvd.

California City, CA 93505
______________________________________
760-373-8661
www.californiacity-ca.gov
Kelly Kulikoff
MAYOR
Ronald Smith

MAYOR PRO TEM
Jim Creighton
Michael Kulikoff
Karen Macedonio

COUNCIL MEMBERS
__________________
Inge Elmes

ACTING CITY MANAGER

RESULTS
After a thorough review of the records provided, inspection assessment, and a reconciliation of City and State records, it has been determined that the following needs to be corrected within 30 days of the date of this letter:
• Pay $102,705 to California City, including $31,382.08 of penalty and interest. • Obtain California City business license.
• Renew California City cannabis permit.

You may reach out to City Finance Manager at [email protected] to make arrangements for payment.

Thank you in advance for your cooperation.

Sincerely,
Jaimie Lewis
Cannabis Compliance Unit
Core Compliance on behalf of California City
CC: Finance Manager
City Manager
City Clerk

Operator must obtain a California CIty business license.

Site Visit Date: 4/17/2023
Verified square footage : 15,000 (per operator)
Total Amount Payable to the
City before due date on
letter
($ 102,705.00)
Cannabis Compliance Audit Working Papers
1 Cultivation last updated 9/7/2023
Cultivation Square Footage Analysis
…if applilcable
Business Name: Regal Green Remedies (Cult) LIGHTING TYPE Audit Period 3Q 2020 - 2Q 2023
Tax Quarter SWFT Quarterly Tx RateTax Due Taxes Paid Difference 3Q20 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
4Q20 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
1Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
2Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
3Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
4Q21 0 ($ 0.13 ( ) $ ( - ) $ - ) ($ - )
0 ($ 1.25 ( ) $ ( - ) $ - ) ($ - )
1Q22 2,500 ($ 0.13 ( ) $ 142.36 ( ) $ - ) ($ 142.36)
12,500 ($ 1.25 ( ) $ 7,118.06 ( ) $ - ) ($ 7,118.06)
2Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 3Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 4Q22 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 1Q23 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
12,500 ($ 1.25 ( ) $ 15,625.00 ( ) $ - ) ($ 15,625.00) 2Q23 2,500 ($ 0.13 ( ) $ 312.50 ( ) $ - ) ($ 312.50)
($ 71,322.92 ( ) $ - ) ($ 71,322.92)
Cannabis Compliance Audit Working Papers
D . . o NY) to Adam, Cannabis, City, Kenny, Jeremy, me, Jaimie «w Hi Andrew,
Here is some information that is important which you may or may not have already We had no revenues or plants in in 2021 or prior. We did have plants in there in 202 to the IRS soon.

I have attempted on a couple of different occasions to pay the $9.445 business licen this pending excise tax situation. We have that money ready to go if you can let us Bay 1 is our nursery - so that is the cheaper square footage for bench space - the nu The other 5 bays are all flower bays. They each have 5 benches x 5 flower bays = 2 David Massaband
to Joe, Adam, Cannabis, Socorro, Jesse, Kenny, City, Kristy, Jeremy, Jaimie, me w Hello,
I am sorry for the delay but I have been feeling very ill and I am just finally feelin We did not have plants in during 2020 nor 2021. Please see the attached CDTFA close to being finished with construction. We applied for state licenses WAY TOO have applied that early in advance for the State license.

We had gotten State license CCL18-0001467 in November 18, 2019 with the adv:
constructed. We ended up having to let that license expire a year later because our We finally got licensed again on February 18, 2022 - which is State License # ( of the 1q of 2022. and then for any time thereafter.

Please see attachments.

Cultivation last updated 9/7/2023
Cannabis Compliance Audit Working Papers
2 Cultivation last updated 9/7/2023
EXHIBIT 3
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4867-1940-4789 v3
ITEM NO. NB 1

COUNCIL AGENDA ITEM
November 4, 2024
TO: Mayor and City Council
FROM: Latisha Lamberth, Acting City Manager
SUBJECT:

Council approval of a Decommissioning License Agreement.

BACKGROUND/ DISCUSSION:

The proposed Decommissioning License Agreement (“Agreement”) grants City permission to enter the portion of the Bellefield 2 Project (“Project”) within city limits (the “Site”) for purposes of decommissioning the facilities, structures, and equipment associated with the Project.

Decommissioning is often required when a project or installation has reached the end of its useful life and must be safely dismantled, removed, or rendered inoperative. The Project applicant or operator has primary responsibility for performing decommissioning. However, the Agreement gives the City the right to perform the decommissioning work if the project operator has abandoned the Site without starting or without finishing the decommissioning work. Here are the key components and considerations involved in the Agreement:

1. Purpose and Scope: The decommissioning plan attached to the Agreement as Exhibit D outlines the purpose of the decommissioning process and specifies the scope of the decommissioning work for the portion of the Project located within city limits. This includes identifying the structures, equipment, or facilities that will be decommissioned and the methods to be used. The decommissioning work also includes filling holes created by project equipment with soil and replanting vegetation.

The purpose of the Agreement is to implement Mitigation Measure 4.11-1CC in the Mitigation, Monitoring and Reporting Program for the Project (“MMRP”).

2. Regulatory Compliance: The Agreement requires the party performing the work to comply with all relevant laws, regulations, and standards. The Agreement also requires the party performing the work to comply with the mitigation measures in the MMRP, which will ensure that the decommissioning activities meet environmental, health, safety, and technical requirements set by regulatory bodies.

3. The Agreement requires the project applicant to provide and maintain a bond to cover the cost associated with the decommissioning process. This ensures that sufficient funds are available to complete the work safely and effectively. The proposed bond amount is $1 million, or the difference between the cost of the decommissioning work and the salvage value of the project equipment if that difference is more than $1 million.
4867-1940-4789 v3
The City cannot access the bond funds unless the applicant abandons the site without performing the decommissioning work, starts decommissioning work late, or starts and then stops decommissioning work. If the City draws the bond and does not need all of the funds, City must return unused funds to the applicant.

4. Timeline and Milestones: The decommissioning plan states that the decommissioning work can be completed in one (1) year. Consistent with Mitigation Measure 4.11-1CC, the decommissioning work must be completed four (4) years after the site is abandoned and decommissioning work begins. To be considered “abandoned”, the Project must have not been selling power to the grid for 2 years and the City must not have received an adequate response to the three (3) warning notices it sends the applicant.

6. Cost and reevaluation: The Agreement requires regular re-evaluation of the cost of the decommissioning work and salvage values of the Project equipment. The Agreement allows the City to hire a consultant to reevaluate the decommissioning costs and salvage values every 3 years. The Reimbursement Agreement Amendment requires the applicant to reimburse the City for the consultant’s fees. The applicant may also hire its own consultant to verify the City consultant’s conclusions are accurate, at the applicant’s own cost.

The first re-evaluation will happen 3 years after the Project begins selling power to the grid.

If the re-evaluation shows that the values have changed and the difference between the cost of the decommissioning work and the salvage values is more than $1 million, the applicant must update the bond amount.

FISCAL IMPACT:

No immediate fiscal impact. Even with a re-evaluation every 3 years, there is still some risk that the bond and salvage value of the Project equipment may not completely cover the cost of the decommissioning work if and when the applicant abandons the Site without performing the decommissioning work.

RECOMMENDATION:

Staff recommends that the City Council accept the Agreement. It is a critical document that ensures the decommissioning process is conducted responsibly, safely, timely, and in accordance with all applicable regulations and standards.
1 DECOMMISSIONING AGREEMENT
This DECOMMISSIONING AGREEMENT (this “Agreement”) is made on this 4th day of November, 2024 (the “Effective Date”), by and among THE CITY OF CALIFORNIA CITY, a California municipal corporation (the “City”), NEW SUSTAINABLE PROPERTY HOLDINGS, LLC, a Delaware limited liability company (“NSPH”), and 26SB 8ME LLC, a Delaware limited liability company (“BF2”). The foregoing parties may each individually be referred to herein as a “Party”, and collectively as the “Parties”.

RECITALS
A. BF2 is the developer of the Bellefield 2 project and its associated solar energy system and battery energy storage system (the “Project”), a portion of which is located in California City, California as more particularly described on the attached Exhibit A (the “Subject Project Area”).

B. BF2 leases the Subject Project Area from NSPH, SMY LAND LLC, a California limited liability company (“SMY”), and CA KERN L.P., a California limited partnership (“CA Kern”) pursuant to those certain lease agreements identified on the attached Exhibit B (the “Project Leases”). SMY, CA Kern and NSPH are each individually referred to as a “Lessor” and collectively as the “Lessors.”
C. The City authorized the construction and operation of the portion of the Project located in California City pursuant to that certain Conditional Use Permit (“CUP”) No. 19-03 approved by the City Planning Commission on April 5, 2022 after certifying the Bellefield Solar Environmental Impact Report and adopting a Mitigation Monitoring and Reporting Program and Statement of Overriding Considerations.

D. Mitigation Measure 4.11-1CC of the Mitigation Measure Monitoring Program for the Project (“MMRP”) adopted by the City Planning Commission on April 5, 2022 requires BF2 to prepare, and the City to adopt, a decommissioning plan prior to the issuance of any City building permit for the Project. The MMRP is summarized in Table 1-7: Summary of Impacts, Mitigation Measures, and Levels of Significance- California City included within the Draft Environmental Impact Report for the Project dated July 2, 2021 and revised by the Final Environmental Impact Report for the Project dated September 10, 2021, each of which are incorporated herein by reference. MM 4.11-1CC is attached as Exhibit C.

E. A decommissioning plan approved by the City concurrently with approval and execution of this Agreement in satisfaction of Mitigation Measure 4.11-1CC is attached as Exhibit D (the “Decommissioning Plan”).

F. The Parties desire to enter into this Agreement to implement Mitigation Measure

4.11-1CC.
2 AGREEMENT
NOW, THEREFORE, in exchange for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledge, the Parties agree as follows:

1. Definitions. Capitalized terms not defined in this Section are defined in the Recitals or the sections of this Agreement that follow.
a. “Abandoned” shall mean the Project was at one time Operational but (x) City believes the Project has ceased to be Operational for more than twenty-four (24) consecutive months, except in cases of planned non-operation that BF2 has notified City of or non-operation stemming from a Force Majeure Condition in accordance with Section 12; (y) the City has notified BF2 and the Lessors of its belief three (3) times in hard copy writing and three (3) times by email, at an interval of no less than thirty (30) days between each notice of a similar kind, and (z) thirty-five (35) days have passed since the last of the third notices and City has not received a response from BF2 or Lessors that either provides the City adequate written assurances that the Project is then Operational or will become Operational within ninety (90) days after BF2 or Lessors’ delivery of notice or that provides the City an anticipated date that Decommissioning Work will Commence and adequate written assurances that BF2 or Lessors will perform the Decommissioning Work timely.
b. “Commence,” means all permits and other approvals have been obtained by the governmental agencies with jurisdiction and disconnection, disassembly, or demolition of the Project equipment on the Subject Property has begun. c. “Decommissioning Costs” means the cost of the Decommissioning Work. d. “Decommissioning Work” means the work and other activities required to decommission the Project located on the Subject Property Area, and the timing of the same, as described in the Decommissioning Plan and Mitigation Measure Numbers 4.1-1CC through 4.16-1CC of the MMRP.
e. “Operational” means the Project equipment is generating and selling power. f. “Salvage Values” means the salvage value of all of the Project equipment. g. “Surety” means the surety, as may change from time to time, that provides the Decommissioning Bond.

2. Operational. BF2 shall provide City notice reasonably promptly after the Project has become Operational.
3 3. Bond Obligations.
a. BF2 shall provide and maintain a decommissioning bond in the amount of One Million Dollars ($1,000,000) in substantially the form attached as Exhibit E (the “Decommissioning Bond”).
b. After the third (3rd) anniversary of the first day that the Project is Operational the City shall specify in a contract with an appropriately qualified third-party consulting firm (the “City Review Consultant”) that the City Review Consultant shall reassess the Project’s Decommissioning Costs and Salvage Values and report its findings in writing to the City and BF2, on or before the April 15 after the third (3rd) anniversary of the date the Project is Operational and every three (3) years thereafter, unless extended by BF2 at City’s request. For the avoidance of doubt, it shall not be a Default if City fails to timely provide an assessment to Surety and BF2. In the event of such failure, BF2 may notify City of the missed deadline. If the City fails to provide the City Review Consultant’s analysis in accordance with this Section 3.b, BF2 will continue to maintain the existing Decommissioning Bond in the amount equal to the greater of (i) One Million Dollars ($1,000,000) or (ii) the last previously assessed value of the Decommissioning Costs less the Salvage Values determined in accordance with this Agreement.

BF2 shall reimburse the City for the cost of retaining the City Review Consultant in accordance with the terms of the Reimbursement Agreement dated March 12, 2024 by and between BF2 and City, as amended by that certain First Amendment to Reimbursement Agreement dated November 4, 2024 by and between BF2 and City (collectively, the “Reimbursement Agreement”). If BF2 fails to reimburse the City in accordance with this Section 3.b and the Reimbursement Agreement, the City shall have the remedies set forth in the Reimbursement Agreement. c. Within sixty (60) days after BF2’s receipt of the City Review Consultant’s assessment, BF2 shall either (i) amend or replace the Decommissioning Bond in an amount equal to the Decommissioning Costs less the Salvage Values as determined by the City Review Consultant’s latest assessment if that difference is greater than One Million Dollars ($1,000,000) or (ii) notify the City in writing of BF2’s decision to hire a different qualified third-party consulting firm (“BF2 Review Consultant”) at BF2’s sole cost and expense to prepare and provide to the City and BF2, within ninety (90) days after BF2’s receipt of the City Review Consultant’s assessment, a separate written determination of the then current Decommissioning Costs and Salvage Values.
d. If BF2 elects to hire a BF2 Review Consultant to prepare a separate assessment and its estimate of Decommissioning Costs less the updated Salvage Values differs by ten percent (10%) or less from the City Review Consultant’s assessment, then BF2 shall, within thirty (30) days after receipt of the second assessment, amend or replace the Decommissioning Bond in an amount equal to the average of the two assessments if such average is greater than One Million Dollars ($1,00,000). 4 If the BF2 Review Consultant’s assessment and the City Review Consultant’s assessment are more than ten percent (10%) apart, then BF2 shall, within thirty (30) days after receipt of the BF2 Review Consultant’s assessment, either (i) notify City and Surety that BF2 accepts the greater of the BF2 Review Consultant’s assessment and the City Review Consultant’s assessment or (ii) notify City that BF2 elects to require the City Review Consultant and the BF2 Review Consultant to mutually select a third qualified and impartial consultant to issue a conclusive, binding independent assessment of the Project’s updated Decommissioning Costs less the updated Salvage Values. The BF2 Review Consultant and City Review Consultant shall thereafter select a third qualified and impartial consultant within thirty (30) days after receipt of BF2’s notice. Within thirty (30) days after receipt of the third consultant’s assessment, BF2 shall amend or replace the Decommissioning Bond in an amount equal to the Decommissioning Costs less the Salvage Values as determined by the third consultant if such difference is greater than One Million Dollars ($1,000,000).
e. BF2 shall meet all reasonable requests of the City to assist it with identification, but not selection, of potential qualified third-party consulting firms to perform the assessment, both initially and as needed during the course of implementation of this Agreement.

4. Project Decommissioning.
a. The Decommissioning Work shall Commence upon the earlier of (i) sixty (60) days after the anticipated Decommissioning Work Commencement date as specified by BF2 in a written notice to City of its intent to decommission the Project (“BF2 Decommissioning Notice”) or (ii) sixty (60) days after the date that the Project is deemed Abandoned.
b. If BF2 has provided a BF2 Decommissioning Notice but has either (i) not Commenced the Decommissioning Work within ninety (90) days after the stated Decommissioning Work start date in the BF2 Decommissioning Notice or (ii) has Commenced Decommissioning Work but ceased Decommissioning Work for ninety (90) consecutive days and has not notified City of any Force Majeure Condition within sixty (60) days after providing City the BF2 Decommissioning Notice or at any time within the ninety (90) consecutive days in which Decommissioning Work has ceased, City shall have the right to seek specific performance or other injunctive relief. City shall also have the right to elect that the City Parties perform the Decommissioning Work and pay for the Decommissioning Work by selling the Project equipment and drawing upon the Decommissioning Bond if the City has notified BF2 and the Lessors three (3) times in hard copy writing and three (3) times by email, at an interval of no less than thirty (30) days between each notice of a similar kind, and thirty-five (35) days have passed since the last of the third notices and City has not received a response from BF2 or Lessors that either (x) provides the City adequate written assurances that 5 the Project is then Operational or will become Operational within ninety (90) days after delivery of BF2’s response notice or (y) that provides the City an anticipated date that Decommissioning Work will Commence and adequate written assurances that BF2 or Lessors will perform the Decommissioning Work timely. c. If the Project is Abandoned, the City Parties may perform the Decommissioning Work, sell the Project equipment, and draw upon the Decommissioning Bond to pay for the cost of the Decommissioning Work. Additionally, City shall have the right to seek specific performance or other injunctive relief if any Party interferes with, is unresponsive to City, or is uncooperative with City’s reasonable requests in connection with City’s exercise of its rights under this Section 4 and under Section 5.
d. In no case shall the Project remain in place more than forty-eight (48) months from the date on which the Decommissioning Work Commences pursuant to this Section 4 (“Outside Date”) provided, however, that the Outside Date will be extended with respect to City’s performance for each day that a Force Majeure Condition does not exist and BF2 delays completion of the Decommissioning Work after delivering a BF2 Decommissioning Notice.
e. If the City does not utilize the entire Decommissioning Bond amount for the Decommissioning Work, City shall pay the remaining balance to BF2 within sixty (60) days after City’s completion of the Decommissioning Work.

5. City Access to Subject Project Area.
a. Grant of License. Subject to BF2’s rights under the Project Leases, (i) BF2 grants to the City, its officers, agents, and employees, and by persons under contract with the City and their employees (collectively, “City Parties”), a limited, nonexclusive license in, on, over, and across the portion of the Subject Project Area leased to BF2 under the first Project Lease listed in Exhibit B and (ii) NSPH grants to the City Parties a limited, nonexclusive license in, on, over, and across the portion of the Subject Project Area leased to BF2 under the second Project Lease listed in Exhibit B solely for the purpose of performing Decommissioning Work pursuant to Section 4.b or 4.c (the “License”). The City shall only have the right to exercise its rights granted under this Agreement and to use the License if City Parties perform the Decommissioning Work.
b. Project Leases. The City acknowledges and agrees that BF2 is granting the License pursuant to and subject to those Project Leases with CA Kern and SMY and BF2 does not own fee simple title to the Subject Project Area. In the event the City exercises the City Parties’ right to use the License and enter the Subject Project Area in accordance with this Agreement, the City Parties shall only be obligated to comply with those provisions of the Project Leases that concern permitted uses of the Subject Property Area, performing the Decommissioning Work (but only to the extent consistent with the Decommissioning Plan and this Agreement), and 6 compliance with all applicable laws in connection with City Parties’ entry onto and performance of the Decommissioning Work on the Subject Property Area.

Notwithstanding anything to the contrary in the Project Leases, City shall not be responsible for operating, restoring or reconstructing the Project, providing any financial statements to Lessors, paying any Lessor any rent stated in any Project Lease or any other amount to Lessors for the rental value of City’s use rights under the License, providing any security deposit, or paying any portion of the property taxes or utilities for the Project equipment or Subject Property Area.

City Parties shall (i) obtain and maintain at all times during Decommissioning Work policies of workers’ compensation insurance and employment insurance with policy limits that comply with California law and commercial general liability and automobile liability insurance with policy limits that are substantially similar to the limits commonly maintained by municipalities of the same size as City and located in San Bernardino County or Kern County; (ii) deliver any Lessor certificates of insurance upon request; and (iii) indemnify, defend, and hold harmless Lessors from any claim, demand, lawsuit, or action of any kind for injury to or death of persons, including, but not limited to, employees, agents, or subcontractors of any City Party performing the Decommissioning Work, and damage or destruction of property, or other loss or damage incurred by Lessors, arising out of the active negligence or willful misconduct of any City Party in performing the Decommissioning Work.
c. Lessor Consent. BF2 provided City the fully executed, written consent of SMY and CA Kern to the License and this Agreement, attached hereto as Exhibit F. In the event that NSPH sells the portion of the Subject Property Area that it owns, NSPH shall disclose the License and this Agreement to prospective purchasers and require that the prospective purchaser provide written consent in substantially the form attached as Exhibit F.

6. Term. This Agreement and the License shall last until the final completion of the Decommissioning Work, whereupon, this Agreement and the License shall automatically terminate and be of no further force in effect. Notwithstanding the foregoing, City’s right to draw upon the Decommissioning Bond and sell the Project equipment set forth in Section 4.b and 4.c and BF2’s right to receive the remaining Decommissioning Bond balance as provided in Section

4.e, and BF2 and City’s right to enforce these provisions, shall survive for a period of two (2) years after termination of the Agreement pursuant to this Section.

7. No Partnership. Nothing contained in this Agreement is intended to create, nor shall anything contained in this Agreement be deemed or construed to create, the relationship of principal and agent, partnership, joint venture or any other association between the parties hereto.

8. Payment of Decommissioning Costs. Nothing contained in this Agreement is intended to relieve BF2 of any of its obligations under the CUP, including without limitation, the responsibility for the payment of all Decommissioning Costs, or impact City’s right to make a 7 claim in any bankruptcy proceeding to recover the Decommissioning Costs if the Decommissioning Bond and Salvage Values are insufficient to defray the Decommissioning Costs.

9. No Obligation on County. Nothing contained herein is intended to impose any liability or responsibility upon Kern County (the “County”) which is not expressly set forth in the CUP and this Agreement is not intended to limit or restrict any rights the County has under its own Project approvals.

10. No Dedication of Public Use. Nothing contained herein shall be deemed a gift or dedication of all or any portion of the Subject Project Area for the general public or for any public use or purpose whatsoever.

11. Notices. All notices under this Agreement shall be in writing and given by (i) reputable overnight carrier with delivery confirmation, (ii) certified mail with postage prepaid return receipt requested, (iii) courier service with electronic delivery confirmation and receipt signature, or (iv) email transmission (provided that a physical copy is post marked within twentyfour (24) hours of such email transmission), to the Party(s) entitled to such notice at the address set forth below.

If to the City:

City of California City
Attn: City Manager
21000 Hacienda Blvd.

California City, CA 93505; and
City of California City
Attn: Planning Department
21000 Hacienda Blvd.

California City, CA 93505
With a copy to:

City of California City
Attn: City Attorney
21000 Hacienda Blvd.

California City, CA 93505
If to BF2:
26SB 8me LLC
c/o AES Clean Energy
Attn: Operations
2180 South 1300 East, Suite 500
Salt Lake City, UT 84106
email: [email protected]
8 If to the SMY Lessor and CA Kern Lessor:

Pacific Land Company
1925 Century Park East, Suite 1700
Los Angeles, CA 90067
Attn: Sherry Saleh
Phone: (310) 201-0262
E-mail: [email protected]
With a copy to:

York Enterprises Inc.
1650 Westwood Blvd, Suite 300
Los Angeles, CA 90024
Attention: David York
Phone: (310) 442-1460
E-mail: [email protected]
If to NSPH Lessor:

New Sustainable Property Holdings, LLC
c/o AES Clean Energy
2180 South 1300 East, Suite 500
Salt Lake City, UT 84106
Email: [email protected]
With a copy to: [email protected]
Any notice shall be deemed received on the date of delivery or refused delivery as shown by the return receipt if sent by certified mail, and on the date of delivery or refused delivery as shown by the records of the overnight courier if sent via nationally recognized overnight courier.

Notices sent via email shall be deemed received on the day that the physical copy of the notice is delivered. A Party may change its address for notices by delivering notice in the manner required by this Section 11.

12. Force Majeure. For the purposes of this Agreement, “Force Majeure Condition” shall mean the occurrence of any unforeseeable act or event that prevents a Party from timely performing obligations under this Agreement or from complying with conditions required under this Agreement if such act or event, despite the exercise of reasonable efforts, cannot be avoided by, and is beyond the reasonable control of and the Party relying thereon as justification for such delay, nonperformance, or noncompliance, which includes, to the extent that the foregoing conditions are satisfied, an act of God, explosion, fire, epidemic, pandemic, landslide, mudslide, sabotage, terrorism, lightning damage, earthquake, flood, hurricane, volcanic eruption or similar cataclysmic event, an act of public enemy, war, blockade, civil insurrection, riot, civil disturbance, strike or other labor difficulty and labor disputes that are national or regional in scope, or actions or failures to act of any governmental authority that are national or regional in scope. However, economic recessions or financial cost or difficulties alone or as the principal factor shall not 9 constitute a Force Majeure Condition. An extension of time for any Force Majeure Condition shall be for the period that the Force Majeure Condition persists and shall commence to run from the time of the commencement of the Force Majeure Condition, if notice by the party claiming such extension is sent to the other party within thirty (30) days of the commencement of the Force Majeure Condition. Notwithstanding the foregoing, a Force Majeure Condition shall not extend the Outside Date and neither Party’s cumulative total of extensions due to Force Majeure Conditions shall exceed twelve (12) months.

13. Default. Any Party’s failure to perform any action or covenant required by this Agreement within thirty (30) days following receipt of written notice from any other party specifying the failure shall constitute a “Default” under this Agreement. Notwithstanding the foregoing, (a) if the failure to perform cannot be reasonably cured in thirty (30) days, a Party shall be allowed additional time as is reasonably necessary to cure the failure so long as such Party begins to cure the failure within thirty (30) days after receipt of notice and thereafter diligently prosecutes the cure to completion and (b) Section 4.b and 4.c set forth separate notice processes and remedies in the event of certain Defaults under those sections which shall apply instead of this Section 13. Upon a Default, the Party that claimed the Default shall have the right to seek specific performance or monetary damages.

14. Miscellaneous.
a. The City shall have the right to record this Agreement. The Parties shall, within a reasonable period of time after the termination of this Agreement, record an instrument confirming the termination of this Agreement. b. This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to its conflicts of laws principles. In the event that an action or proceeding is brought by either party hereunder, the parties agree that venue of such action is exclusively in a state court in Kern County, California. c. In the event any Party initiates a lawsuit to enforce its rights under this Agreement, the losing Party shall pay the prevailing Party’s litigation costs and expenses, including without limitation reasonable attorneys’ fees. In no event shall any Party be entitled to recover consequential damages, special damages, or punitive damages against any Party.
d. All of the terms, covenants and conditions of this Agreement shall be binding upon BF2 and City and their respective successors and assigns. Whenever the term “BF2” is used in this Agreement, such term shall include any permitted successors and assigns as herein provided. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding for the benefit and in favor of City, and its successors and assigns. City is deemed the beneficiary of the terms and provisions of this Agreement and of the covenants running with the land for and in its own right and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Agreement and the covenants running with the land have been provided. 10 e. The words “include” and “including” shall be construed as if followed by the words “without limitation.” The parties acknowledge that each party and its respective counsel have reviewed and revised this Agreement and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any document executed and delivered by either party in connection herewith. The captions in this Agreement are for convenience of reference only and shall not be used to interpret this Agreement. Reference to section numbers are to sections in this Agreement, unless expressly stated otherwise. References to specific section numbers shall include all subsections which precede and follow the referenced section. To the extent that there is any inconsistency between any of the exhibits to this Agreement and the text of this Agreement, this Agreement shall control. f. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made in writing and in each instance approved and signed on behalf of each party.
g. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law.
h. Time is of the essence for each condition, term, obligation and provision of this Agreement. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is not a business day, in which event the period shall run until the next business day. The final day of any such period shall be deemed to end at 5:00 p.m., local time at the Subject Property Area. If any deadline specified in this Agreement is a calendar date that does not fall on a business day in any year, the deadline shall be deemed to be the immediately following business day. For purposes of this Agreement, a “business day” means a day that is not a Saturday, Sunday, a federal holiday or a state holiday under the laws of the State of California.
i. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which, when taken together shall constitute one and the same instrument.
[Signatures on following page]
11 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.

BF2:
26SB 8ME LLC,
a Delaware limited liability company
By:
[signature must be notarized]
Name:

Title:

THE CITY:

CITY OF CALIFORNIA CITY,
a California municipal corporation
By:
[signature must be notarized]
Name:

Title:

ATTESTED:

By:

Name:

Title:

Approved as to form:

By:

Name:

Title:
12 NSPH LESSOR:

NEW SUSTAINABLE PROPERTY

HOLDINGS, LLC,
a Delaware limited liability company
By:
[signature must be notarized]
Name:

Title:

EXHIBIT A
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EXBIBIT A
Legal Description of the Subject Project Area
PARCEL 1:

ALL OF SECTION 21, TOWNSHIP 11 NORTH, RANGE 11 WEST, SAN BERNARDINO

MERIDIAN, IN THE CITY OF CALIFORNIA CITY, COUNTY OF KERN, STATE OF

CALIFORNIA, AS PER THE OFFICIAL PLAT THEREOF ON FILE IN THE OFFICE OF THE SURVEYOR GENERAL.

APN: 235-061-02-00
PARCEL 2:

ALL OF SECTION 27, TOWNSHIP 11 NORTH, RANGE 11 WEST, IN THE COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.

EXCEPTING THEREFROM THOSE PORTIONS CONVEYED TO THE STATE OF CALIFORNIA BY DEEDS RECORDED SEPTEMBER 13, 1930 IN BOOK 365, PAGE 228; FEBRUARY 23, 1939 IN BOOK 849, PAGE 479; AUGUST 7, 1963 IN BOOK 3632, PAGE 521 AND SEPTEMBER 9, 1975 IN BOOK 4915, PAGE 772, ALL OFFICIAL RECORDS.

ALSO EXCEPTING THEREFROM, THAT PORTION OF SAID LAND AS CONTAINED IN THAT CERTAIN AMENDED FINAL ORDER OF CONDEMNATION RECORDED JUNE 10, 2008 AS INSTRUMENT NO. 0208092311, OF OFFICIAL RECORDS OF KERN COUNTY, STATE OF CALIFORNIA.

TOGETHER WITH THAT PORTION VACATED BY THE STATE OF CALIFORNIA IN DEED RECORDED OCTOBER 19, 1981 IN BOOK 5411, PAGE 229, OF OFFICIAL RECORDS.

APN: 235-101-45 & 235-101-51
PARCEL 3:

THE WEST HALF OF SECTION 26, TOWNSHIP 11 NORTH, RANGE 11 WEST, SAN

BERNARDINO BASE AND MERIDIAN, IN THE CITY OF CALIFORNIA CITY, COUNTY

OF KERN, STATE OF CALIFORNIA, AS PER THE OFFICIAL PLAT THEREOF ON FILE IN THE OFFICE OF THE SURVEYOR GENERAL.

EXCEPTING THEREFROM THAT PORTION WHICH LIES NORTH OF THE SOUTHERLY LINE OF THE LAND DESCRIBED AS “PART C” IN THAT CERTAIN DEED TO THE STATE

EXHIBIT A
4881-1741-5150 v12
OF CALIFORNIA RECORDED OCTOBER 30, 1973 IN BOOK 4810, PAGE 1488, OF OFFICIAL RECORDS.

APN:235-101-46-00
PARCEL 4:

THE WEST HALF OF SECTION 26, TOWNSHIP 11 NORTH, RANGE 11 WEST, SAN

BERNARDINO BASE AND MERIDIAN, IN THE CITY OF CALIFORNIA CITY, COUNTY

OF KERN, STATE OF CALIFORNIA, AS PER THE OFFICIAL PLAT THEREOF ON FILE IN THE OFFICE OF THE SURVEYOR GENERAL.

EXCEPTING THEREFROM THAT PORTION THEREOF CONVEYED TO THE PACIFIC

TELEPHONE AND TELEGRAPH COMPANY, A CALIFORNIA CORPORATION, IN DEED RECORDED DECEMBER 6, 1962 IN BOOK 3552, PAGE 471 OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:

COMMENCING AT THE NORTHWEST CORNER OF SECTION 28 OF SAID TOWNSHIP AND RANGE; THENCE SOUTH 79° 23’ 25” EAST, A DISTANCE OF 10,956.41 FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE NORTH 0° 05’ 00” WEST, A DISTANCE OF 990.00 FEET; THENCE AT RIGHT ANGLES EASTERLY 990.00 FEET; THENCE AT RIGHT ANGLES SOUTHERLY 990.00 FEET; THENCE AT RIGHT ANGLES WESTERLY 990.00 FEET, TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION.

ALSO EXCEPTING THEREFROM THAT PORTION THEREOF WHICH LIES SOUTH OF THE NORTHERLY LINES OF THE LAND DESCRIBED AS “PART A” AND “PART B” IN THAT CERTAIN DEED TO THE STATE OF CALIFORNIA RECORDED OCTOBER 30, 1973 IN BOOK 4810, PAGE 1488 OFFICIAL RECORDS.

APN: 235-101-47-00
PARCEL 5:

THE SOUTH HALF OF THE WEST HALF OF THE WEST HALF OF THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 22, TOWNSHIP 11 NORTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN,

IN THE CITY OF CALIFORNIA CITY, COUNTY OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.

EXCEPTING THEREFROM AN UNDIVIDED ONE-HALF INTEREST IN ALL OIL, GAS,

AND OTHER HYDROCARBONS AND MINERALS NOW OR AT ANY TIME HEREAFTER

SITUATED THEREIN AND THEREUNDER, BUT WITH NO RIGHT OF SURFACE ENTRY, AS EXCEPTED AND RESERVED BY CLIFTON D. HURLEY AND MARILOUISE HURLEY,

EXHIBIT A
4881-1741-5150 v12
HUSBAND AND WIFE, IN DEED RECORDED AUGUST 18, 1961 IN BOOK 3406, PAGE 805 OFFICIAL RECORDS.

APN: 235-282-22-00
PARCEL 6:

THAT PORTION OF SECTION 25, TOWNSHIP 11 NORTH, RANGE 11 WEST, SAN

BERNARDINO MERIDIAN, IN THE COUNTY OF KERN, STATE OF CALIFORNIA,

ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING SOUTHERLY OF THE SOUTHERLY LINE OF STATE HIGHWAY ROUTE 58.

APN: 235-101-48

EXHIBIT B
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EXBIBIT B
Project Leases

1. That certain Solar Generating Facility Lease and Easement Agreement dated June 1, 2024, executed by and between, SMY LAND LLC, a California limited liability company, CA KERN L.P., a California limited partnership, and 26SB 8ME LLC, a Delaware limited liability company, as evidenced by that certain Memorandum of Solar Generating Facility Lease and Easement Agreement dated June 1, 2024, and recorded on June 27, 2024 as Document No. 224074081 of the Official Records of Kern County, California.

2. That certain Land Lease Agreement dated August 23, 2024, executed by and between, NEW SUSTAINABLE PROPERTY HOLDINGS, LLC, a Delaware limited liability company, and 26SB 8ME LLC, a Delaware limited liability company, as evidenced by that certain Memorandum of Land Lease Agreement dated August 23, 2024, and August 23, 2024 as Document No. 224100184 of the Official Records of Kern County, California.

EXHIBIT C
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EXHIBIT C
MM 4.11-1CC
Prior to the issuance of any building permit, the project proponent/operator shall provide the California City Community Development Department with a Decommissioning Plan for review and approval. The plan shall be carried out by the proposed operator or a City- contracted consulting firm(s) at a cost to be borne by the project proponent/operator. a. The Decommissioning Plan shall include, but is not limited to, the following:

1. Factor in the cost to remove the solar panels and support structures, replacement of any disturbed soil from the removal of support structures (including all underground equipment), and control of fugitive dust on the remaining undeveloped land.

2. Salvage value for the solar panels and support structures shall be included in the financial assurance calculations.

3. The assumption, when preparing the estimate, is that the project proponent/operator is incapable of performing the work or has abandoned the solar facility, thereby resulting in the City hiring an independent contractor to perform the decommission work.
b. In addition to submittal of a Decommissioning Plan, the project proponent/operator shall post or establish and maintain with California City financial assurances related to the deconstruction of the site as identified on the approved Decommissioning Plan should at any point in time the project proponent/operator determine it is not in their best interest to operate the facility. The financial assurances required prior to issuance of any building permit shall be established using one of the following:

1. An irrevocable letter of credit;

2. A surety bond;

3. A trust fund in accordance with the approved financial assurances to guarantee the deconstruction work will be completed in accordance with the approved decommissioning plan; or

4. Other financial assurances as reviewed and approved by the California City Community Development Department.
c. The financial assurances documents shall include the following verbiage, including any required verbiage through California City Community Development Department’s consultation and review with City Counsel:

EXHIBIT C
4881-1741-5150 v12

1. Financial institution or surety company shall give the California City a minimum of 120 days’ notice of intent to terminate the letter of credit or bond.

2. Financial assurances shall be reviewed annually by the respective Citycontracted consulting firm(s) at a cost to be borne by the project proponent/operator to substantiate that those adequate funds exist to ensure deconstruction of all solar panels and support structures identified on the approved Decommissioning Plan.

3. Should the project proponent/operator deconstruct the site on their own, the City will not pursue forfeiture of the financial assurance.

4. Financial institution or surety company shall be licensed to conduct business in the state of California.
d. Once deconstruction has occurred, financial assurances for that portion of the site will no longer be required and any financial assurance posted will be adjusted or returned accordingly. Any funds not utilized through decommissioning of the site by California City shall be returned to the project proponent/operator. e. Should any portion of the solar field not be in operational condition for a consecutive period of twenty-four (24) months, that portion of the site shall be deemed abandoned and shall be removed within sixty (60) days from the date a written notice is sent to the property owner and solar field owner, as well as the project proponent/operator, by California City. Within this sixty (60) day period, the property owner, solar field owner, or project proponent/operator may provide California City a written request and justification for an extension for an additional twelve (12) months. f. In no case shall a solar field which has been deemed abandoned be permitted to remain in place for more than forty-eight (48) months from the date the solar facility was first deemed abandoned.

EXHIBIT D
4881-1741-5150 v12

EXHIBIT D
Decommissioning Plan
[attached]
4881-1741-5150 v12
Safety First
Bellefield 2
Decommissioning
Plan and Cost
Estimate –
California City
26SB 8me LLC

SECTION HEADER
4881-1741-5150 v12
Bellefield 2 Decommissioning Plan and Cost Estimate 1
Bellefield 2 Decommissioning Plan and Cost Estimate
CUP 19-03

1.0 Introduction/Project Description
The Bellefield 2 Facility (or “Facility”) is approximately 500-Megawatt (MW) alternating current solar/642 MW direct current power generation and battery energy storage (BESS) project by 26SB 8me LLC (“Applicant”) in unincorporated Kern County and California City, California (the “City”). Upon completion of constructing the project, the Facility will comprise solar arrays, consisting of ground mounted photovoltaic panels and electrical support equipment, under/aboveground collection lines, a substation, access roads, and fencing.

The fence-enclosed acreage of the Facility is approximately 1,637 acres in California City and 2,155 acres in unincorporated Kern County. The useful life of solar panels is generally considered to be 35+ years. At that time, the project will either be decommissioned or repowered with newer technology.

This Decommissioning Plan (“Plan”) has been prepared for Bellefield 2 relating to the removal of solar power facilities in California City. Applicant has obtained County approval of a separate plan for the portion of the project in unincorporated Kern County. The purpose of the Plan is to describe the means and methods that can be used to remove all structures, foundations, underground/ aboveground cables, and equipment, and reclaim the land altered during the construction and operation of the solar project. The decommissioning plan does not address the removal of the BESS facility or substation as they are in unincorporated Kern County. The Plan identifies components that may be removed and the areas that may be restored under the conditions required by MMMP measure 4.11-1CC.

2.0 Proposed Future Land Use
Prior to the development of the Facility, the land use of the project area was primarily undeveloped shrubland. After all equipment and infrastructure are removed during decommissioning, any holes or voids created by poles, concrete pads, and other equipment will be filled in with native soil to the surrounding grade. Access roads created by the project and other areas compacted by equipment will be decompacted to a depth necessary to ensure drainage of the soil and root penetration prior to fine grading and revegetation in accordance with the Stormwater Pollution Prevention Plan (“SWPPP”) and/or construction stormwater permit. Please refer to Section 3.2 for a detailed description of reclamation activities.

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Bellefield 2 Decommissioning Plan and Cost Estimate 2

3.0 Decommissioning Activities
Decommissioning of the solar facility will include removing the solar panels, solar panel racking, steel foundation posts and beams, inverters, transformers, overhead and underground cables and lines, equipment pads and foundations, equipment cabinets, and ancillary equipment. The civil facilities, access road, security fence, and drainage structures are included in the scope. Standard decommissioning practices would be utilized, including dismantling and repurposing, salvaging, recycling, or disposing of the solar energy improvements.

During decommissioning, some Facility infrastructure, such as the access roads, may be left in place.

Underground utility lines, if deeper than 3 feet below ground surface elevation, are anticipated to be left in place to minimize land disturbance and associated impacts to future land use.

Decommissioning will include the removal and transportation of all project components from the Facility site. All dismantling, removal, recycling, and disposal of materials generated during decommissioning will comply with applicable rules, regulations, and prevailing Federal, State, and local laws at the time decommissioning is initiated, and will use approved local or regional disposal or recycling sites as available.

Recyclable materials will be recycled to the furthest extent practicable. Non-recyclable materials will be disposed of in accordance with State and Federal law.

3.1 Decommissioning of Project Components

3.1.1 Modules
Modules will be inspected for physical damage, tested for functionality, and disconnected and removed from racking. Functioning modules will be packed, palletized, and shipped to an offsite facility for reuse or resale.

Non-functioning modules will be shipped to the manufacturer or a third party for recycling or disposal.

3.1.2 Racking
Racking and racking components will be disassembled and removed from the steel foundation posts, processed to appropriate size, and sent to a metal recycling facility.

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Bellefield 2 Decommissioning Plan and Cost Estimate 3

3.1.3 Steel Foundation Posts
All structural foundation steel posts will be pulled out to full depth, removed, processed to appropriate size, and shipped to a recycling facility. The posts can be removed using backhoes or similar equipment. During decommissioning, the area around the foundation posts may be compacted by equipment and, if compacted, the area will be de- compacted in a manner to adequately restore the topsoil and sub-grade material to a density consistent for vegetation.

3.1.4 Overhead and Underground Cables and Lines
All underground cables and conduits will be removed to a depth of at least 3 feet. Topsoil will be segregated and stockpiled for later use prior to any excavation and the subsurface soils will be staged next to the excavation. The subgrade will be compacted per standards. Topsoil will be redistributed across the disturbed area. Because the majority of cables are assumed to be installed greater than 3 feet below the surface, only cables running to surficial equipment have been included for removal.

3.1.5 Inverters, Transformers, and Ancillary Equipment
All electrical equipment will be disconnected and disassembled. All parts will be removed from the site and reconditioned and reused, sold as scrap, recycled, or disposed of appropriately, at the Applicant’s sole discretion, consistent with applicable regulations and industry standards.

3.1.6 Equipment Foundations and Ancillary Foundations
The ancillary foundations are pile foundations for the equipment pads. As with the solar array steel foundation posts, the foundation piles will be pulled out completely. Duct banks will be excavated to 3 feet.

All unexcavated areas compacted by equipment used in decommissioning will be de-compacted in a manner to adequately restore the topsoil and sub-grade material to a density similar to the surrounding soils.

All material will be removed from the site and reconditioned and reused, sold as scrap, recycled, or disposed of appropriately, at the owner’s sole discretion, consistent with applicable regulations and industry standards.

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Bellefield 2 Decommissioning Plan and Cost Estimate 4

3.1.7 Fence
All fence parts and foundations will be removed from the site and reconditioned and reused, sold as scrap, recycled, or disposed of appropriately, at the Owner’s sole discretion, consistent with applicable regulations and industry standards.

3.1.8 Access Roads
Facility access roads will be used for decommissioning purposes, after which removal of roads will be discussed with the Landowner, using the following process:
1) After final clean-up, roads may be left intact through mutual agreement of the landowner and the owner unless otherwise restricted by federal, state, or local regulations. 2) If a road is to be removed, aggregate will be removed and shipped from the site to be reused, sold, or disposed of appropriately, at the Owner’s sole discretion, consistent with applicable regulations and industry standards. Clean aggregate can often be used as “daily cover” at landfills for no disposal cost. Any ditch crossing connecting access roads to public roads will be removed unless the landowner requests it remain. The subgrade will be de-compacted using a chisel plow or other appropriate subsoiling equipment. All rocks larger than four inches will be removed. Topsoil that was stockpiled during the original construction will be distributed across the open area. The access roads and adjacent areas that are compacted by equipment will be de-compacted.

3.2 Reclamation
The Project Owner will restore and reclaim the site consistent with the site lease agreement. The Owner assumes that most of the site will be returned to shrubland after decommissioning and will implement appropriate measures to facilitate such uses. The project doesn’t require extensive grading and therefore will not alter the natural hydrology of the site. After decommissioning the project, the site will maintain the same hydrology and plant communities to the greatest extent practicable while minimizing new disturbance and removal of native vegetation.

In addition to the reclamation activities described above for each decommissioning activity, all unexcavated areas compacted by equipment and activity during the decommissioning will be decompacted to a depth of 18 inches or a depth as needed to ensure proper density of topsoil consistent and compatible with the surrounding area and associated land use. All materials and debris associated with the Facility decommissioning will be removed and properly recycled or disposed of at off-site facilities.

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Bellefield 2 Decommissioning Plan and Cost Estimate 5

4.0 Best Management Practices (BMPs)
During decommissioning, erosion and sediment control BMPs will be implemented to minimize potential for erosion of site soils and sedimentation of surface waters and waters of the state.

Because decommissioning will entail disturbance of more than one acre of soil, the Applicant will prepare a stormwater pollution prevention plan (SWPPP) and obtain coverage under the state-specific National Pollutant Discharge Elimination System (NPDES) permit prior to initiating soil disturbing activities.

Pre-construction, the site consists of desert shrubland sloping gently to the southeast. During construction, large areas of anomalous topography will be graded with even contours. As a result, the majority of stormwater runoff will flow as uniform sheet flow to the southeast.

Potential BMPs to be implemented during decommissioning activities are described below and will be evaluated at the time of decommissioning and will be refined as necessary in the SWPPP. The decommissioning team will review the permitting requirements at the time of decommissioning and obtain any other necessary permits.

4.1 Erosion Control
The erosion control measures below are recommended based on the decommissioning scope and site setting. These erosion control measures may be refined based on the standard of practice current at the time the SWPPP is developed for decommissioning. Disturbed areas without permanent impermeable or gravel surfaces will be revegetated for final stabilization in accordance with the California State Water Resources Control Board-approved SWPPP.

Project Phasing/Design BMP: Time periods during which disturbed soils are exposed should be minimized to the degree possible. Stabilization of soils will generally be accomplished immediately following decommissioning activities. Where this is not possible, temporarily exposed soils will be temporarily stabilized with vegetation in accordance with the SWPPP for decommissioning.

Erosion Control Blankets and Seed BMP: Erosion control blanket (double-sided netting with wood fiber or weed-free straw fiber blanket) will be used as temporary stabilization for areas of slopes steeper than 4:1 (not anticipated on this project) and for areas of concentrated flow, such as ditches, swales, and similar areas around culverts. Seed will be applied in these areas with the blanket for temporary and/or permanent vegetative growth as necessary.

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Bellefield 2 Decommissioning Plan and Cost Estimate 6
Ditch/Channel Protection: Where new channels are formed, as in the case of culverts removed from access roads and the removal of low water crossings, the resulting channel will be protected with erosion control blankets as described in the section above.

Temporary Mulch Cover and Seed BMP: Temporary mulch cover (wood fiber to resist loss from grazing by wildlife or domestic animals) will be applied at a rate of two tons per acre to provide temporary erosion protection of exposed soils areas with slopes flatter than or equal to 3:1 without concentrated flows. Seed will be applied with the mulch for temporary and/or permanent vegetative growth as called for in the SWPPP.

Due to sandy site soils, tackifier may be used to assist the disc anchoring if the mulch cannot be secured to the sandy soils.

Soil Stockpiles: Topsoil that is stripped from the construction site and base materials will be stockpiled on site. Stockpile areas will be located in areas that will not interfere with the decommissioning activities, and be located away from pavement, site drainage routes, or other areas of concentrated flow. Perimeter controls, such as silt fence, will be installed around all stockpiles. Soils that are stockpiled for longer durations will be temporarily seeded and mulched or stabilized with a bonded fiber polymer emulsion.

Permanent seed and temporary mulch and/or erosion control blanket BMP: Permanent seed will be applied to promote vegetative cover for permanent erosion control in accordance with the SWPPP and/or construction stormwater permit. Temporary mulch and/or erosion control blanket will be applied as appropriate in areas to provide temporary erosion protection until the permanent seed is established.

4.2 Sediment Control
Removal of Ditch Crossing BMP: Temporary ditch crossings may be needed to accommodate the movements of heavy equipment. Perimeter controls such as silt fence will be used at crossing locations to minimize runoff from exposed soils. Crossings will occur during dry conditions, if possible. If a stream is wet at the time of the crossing, alternative BMPs will be applied. These could include a temporary dam and bypass pump to install the crossing in dry conditions. Timber construction mats will be used as needed to prevent compaction and rutting at crossing locations. All temporary fills and construction mats will be removed immediately after the crossing is successfully completed and the temporarily disturbed area restored using the appropriate BMPs as described above.

Dewatering: Dewatering is not anticipated at the site due to a significant depth to groundwater, and high infiltration, type A soils. In the event dewatering is required, all water should be discharged through

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Bellefield 2 Decommissioning Plan and Cost Estimate 7
discharge/settling devices and allowed to flow through vegetation or other scour protection before entering surface waters.

Silt Fence BMP or Fiber Logs: Silt fences or fiber logs will be used as perimeter controls downgradient of exposed soils during construction to capture suspended sediment particles on-site, to the extent possible.

The standard silt fence or fiber logs will also be used in smaller watershed areas where the contributing areas are typically less than 1/4 acre of drainage per 100 feet of standard silt fence or fiber logs. Standard silt fence or fiber logs will also be used for stockpiles 8 feet high or higher which have slopes of 3:1 or steeper. Standard silt fence or fiber logs should not be used in areas of highly erodible soils which are found within streams, slopes, or banks of creeks and streams within the Facility’s site.

Rock Entrance/Exit Tracking Control BMP: Rock construction entrances will be installed where access to a construction area is needed from adjacent paved surfaces.

Street Scraping/Sweeping BMP: Street scraping and sweeping will be used to retrieve sediment tracked or washed onto paved surfaces at the end of each working day, or as needed.

4.3 Stormwater Run-on and Run-off
Given the low gradient of the slopes in the project area, controlling stormwater flow that enters the project area will likely require minimal effort during decommissioning activities. Only newly disturbed areas may require new, temporary stormwater control. The temporary stormwater control measures will be installed in accordance with the SWPPP and/or construction stormwater permit. Some of the measures are listed below:

Diversion Berms/Swales/Ditches: It may be necessary to direct diverted flow toward temporary settling basins via berms, swales, or ditches. If diversion controls are deemed necessary for decommissioning activities, these must be stabilized by temporary mulch and seeding, erosion control blankets, or by installing riprap to protect the channel from erosive forces.

Rock Check Dams: It may be necessary to install temporary check dams within swales or ditches that convey stormwater from areas disturbed by decommissioning activities.

Rock check dams are effective for velocity control, sediment control, and augment temporary stabilization of channels. Filter fabric can be utilized to help filter the flow, minimize the scour of the soil under the rock, and facilitate removal of the check dams once permanent stabilization is achieved. The height of check

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Bellefield 2 Decommissioning Plan and Cost Estimate 8
dams should be at least two feet. Spacing depends upon slope. Downgradient rock checks should have the top elevation at the same elevation as the bottom of the previous (upgradient) rock check.

Temporary Sedimentation Basins: Sedimentation basins may be required for large areas of contiguous disturbance draining to a single point. Due to the nature of sheet flow across the site, temporary sediment basins are not anticipated during decommissioning activities at this site.

4.4 Permitting
All decommissioning and reclamation activities will comply with Federal and State permit requirements.

Decommissioning activities that will disturb more than one acre of soil will require coverage under the state specific NPDES permit for construction stormwater. The permits will be applied for and received prior to decommissioning construction activities commencing. A SWPPP will be developed prior to filing for construction stormwater permit coverage.

If necessary for decommissioning activities, wetlands and waters permits will be obtained as needed from CDFW. A Spill Prevention, Control, and Countermeasures (SPCC) Plan for decommissioning may be required for decommissioning work as well.

4.5 Health and Safety Standards
Work will be conducted in strict accordance with the contractor’s health and safety plan. The construction contractor hired to perform the decommissioning will also be required to prepare a site-specific health and safety plan. All site workers, including subcontractors, will be required to read, understand, and abide by the Plans. A site safety office will be designated by the construction contractor to ensure compliance. This official will have stop-work authority over all activities on the site should unsafe conditions or lapses in the safety plan be observed.

5.0 Timeline
It is anticipated that the decommissioning activities for the project can be completed in 52 weeks from the start of decommissioning activities. The estimated costs for decommissioning are tied to assumptions about the amount of equipment mobilized, the crew sizes, weather and climate conditions, and the productivity of the equipment and crews.

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Bellefield 2 Decommissioning Plan and Cost Estimate 9
Decommissioning Costs
The decommissioning costs are calculated (See Appendix A) using current pricing. Applicant and the City will update the estimate of net costs as provided in the Decommissioning Agreement by and between Applicant and City to recognize price trends and inflation for both decommissioning costs and the salvage and resale values of the components.

There are currently active markets for scrap steel, aluminum, and copper, used transformers and electrical equipment and used solar panels. Scrap metal prices have been discounted from posted spot prices found on www.scrapmonster.com. Pricing for used panels has been discounted from prices received from We Recycle Solar for a similar project. The pricing of the used panels has incorporated the degradation from five years of use as warrantied by the manufacturer (not more than 0.5 percent per year).

The current total estimated cost of the decommissioning of the Bellefield 2 Solar Project in California City is approximately $26,018,763.80. The estimated salvage/scrap value of the steel posts, racking, modules, and electrical equipment and cables is approximately $25,903,623.36. The estimated net decommissioning costs after accounting for resale and salvage values is $115,140.44. 4881-1741-5150 v12
Appendix A
Decommissioning Estimate
4881-1741-5150 v12
Decommission Proposal – California City
Description Qty U/M Unit Price Total Cost Comments
Remove AC Collection Equipment 510,417 LF $ 2.61 $ 1,332,392.54 This is to remove AC Collection
cable including homeruns from
PV field, along with associated
MV junction boxes.

Remove Communication Equipment 53 EA $ 1,250.45 $ 66,273.90 Remove and haul of MET station.

Remove Panels 521,150 EA $ 21.65 $ 11,283,210.19
Remove and haul off solar
panels.

Remove Inverters 53 EA $ 31,510.79 $ 1,670,071.87
Remove inverters, transformers
and haul off site. Foundation
removal is included
Remove Piers 2,251 EA $ 14.16 $ 31,879.79 Scrap value excluded.

Remove Tracking System 5,827 EA $ 423.18 $ 2,465,843.64 Scrap value excluded.

Remove DC Collection System 7,617,501 LF $ 0.81 $ 6,198,360.56 Removal of DC Feeders Site Preparations 1,272 ACRES $ 354.75 $ 451,245.31
This includes dust control,
discing the site.

Remove Project Roads 153,180 LF $ 2.21 $ 339,217.11
Disc native roads and compact
subgrade
Remove Fencing and Gates 101,500 LF $ 8.67 $ 880,268.90 Remove project fence. No scrap
value included.

Remove BESS Containers 0 EA $ $ - BESS is in Kern County General Conditions LS $ 1,300,000.00
Assumed 12 months
construction with onsite offices
and security during non-working
hours.

Subtotal $ $ 26,018,763.80
Salvage/Scrap Qty U/M Unit Price
Posts 2,258 tn $ (375.00) $ (846,576.00)
Trackers 11,288 tn $ (375.00) $ (4,232,880.00)
Module 500,060 EA $ (40.00) $ (20,002,400.00)
DC Collection Lines CU 119,835 LBS $ (1.23) $ (147,397.66) AC Collection AL 2,552 LBS $ (1.08) $ (2,753.70)
Inverters and MVT 2,098,800 LBS $ (0.32) $ (671,616.00) BESS Container Salvage 0 EA $ -
Lithium-Ion Battery 0 LBS $ -
Subtotal $ (25,903,623.36) Assumed scrap and salvage value

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Bellefield 2 Decommissioning Plan and Cost Estimate 1
Project Total $ 115,140.44
MWDC 276.77
Cost per MWDC $ 416.01
Assumptions:

To develop a cost estimate for the decommissioning of the Project the following assumptions were made and used for pricing reference. Costs were estimated based on current pricing, means and methods, and regulatory requirements.

1. Cost estimate is based on quantities and initial project data from the 60% Design Set.

2. Removal of Piers includes removal of structural trusses or helical piles with specialized. equipment.

3. Post removal is at a similar rate to Fence removal includes loading, hauling, and recycling.

4. Solar panels are anticipated to be removed by a 3-person crew to allow for disconnecting, removal, and storage.

5. Post, tracker, and electrical equipment (including Lithium-Ion Batteries) salvage values are based on the estimated weight of the steel and other materials and current rates from scrapmonster.com.

6. Solar Module salvage value is based on historical quotes adjusted for equipment degradation. 4881-1741-5150 v12
Exhibit E
Decommissioning Bond
[attached]

DECOMMISSIONING BOND
Bond No: _________________
KNOW ALL MEN BY THESE PRESENTS:

That we 26SB 8me LLC as “Principal” and Philadelphia Indemnity Insurance Company, an admitted surety in the State of California and a corporation of the State of Pennsylvania, as “Surety”, are held and firmly bound unto City of California City, County of Kern, State of California (the “City”) as “Obligee”, in the full and just sum of one million dollars and zero cents ($1,000,000.000) in lawful money of the United States of America (the “Bond Value”), to the payment of which sum, well and truly to be made, the Principal and Surety bind themselves, and each of their heirs, administrators, executors and assigns, jointly and severally, firmly by these presents.

WHEREAS, the City authorized the construction, operation and decommissioning of the portion of the Bellefield 2 Solar Project (the “Project”) pursuant to that certain Conditional Use Permit 19-03, PC Resolution 22-002, approved by the City Planning Commission on April 5, 2022, the Mitigation Measure Monitoring Program included within the Environmental Impact Report for the Bellefield Solar Project (“MMRP”) and the Decommissioning Agreement between City and Principal and Decommissioning Plan attached thereto (collectively, the “Agreement”), which is hereby referred to and made a part hereof. The Agreement requires decommissioning activities to occur and that Principal provide this surety bond (the “Bond”) in order to guarantee the decommissioning of the Project, which will initially be located at APN#235-061-02, 235-101-45, 235-101-46, 235-101-47, 235-101-48, 235-101-51, 235-282-22.

NOW, THEREFORE THE CONDITION OF THIS OBLIGATION IS SUCH, that it will remain in full force and effect until, the Principal fully performs the decommissioning activities described in said Agreement and the Principal reimburses the City for all loss and damages which the City may sustain by reason of failure or default on the part of said Principal.

PROVIDED, HOWEVER, that this Bond is executed by the Principal and Surety and accepted by the City subject to the following express conditions:

1. This Bond shall be effective on November 4, 2024 and it shall remain in full force and effect until decommissioning activities are fully completed in accordance with the Agreement.

2. The liability of the Surety pursuant to the conditions of this Bond shall not exceed the Bond Value. Notwithstanding the forgoing, the City shall contract with an appropriately qualified third-party consulting firm to periodically reassess the Project’s decommissioning costs and salvage values as more particularly described in the Agreement and report its findings in writing to the City, Surety, and Principal. Principal shall amend or replace this Bond in accordance with the Agreement.

3. A primary purpose of this Bond is to protect the City and its citizens from the financial insolvency of the Principal and the failure or inability of the Principal to meets its decommissioning obligations under the Agreement and MMRP. Accordingly, Principal and Surety agree that this Bond shall remain in full force and effect for the full period of the Agreement, and that the obligation of the Surety may not be terminated for any reason whatsoever unless written notice is provided to the City at least 180 days prior to said termination event via certified mail with receipt signature required, or overnight courier with receipt signature required. Because a primary purpose of this Bond is to protect the City and its citizens from the financial insolvency of the Principal, the failure to provide a replacement bond, in a form approved by the City, within 90 days of said notice, shall constitute a loss to the City recoverable under this Bond.

4. In the event of a default by the Principal in the performance of the Agreement during the term of this Bond with respect to performance of the decommissioning activities, the Surety shall be liable for payment of the loss to the City due to its incurred cost to complete the Principal's obligation under the Agreement, reasonable attorney's fees and enforcement costs, which occurred during the effective period of this Bond.

5. The venue for any dispute or action on or related to this Bond shall be Kern County, California.

Signed and sealed this 4th day of November, 2024.
26SB 8me LLC
Principal
By ______________________________________
Name: James Marshall
Title: Chief Financial Officer
Philadelphia Indemnity Insurance Company
Surety
By
Elizabeth Harmon, Attorney-in-Fact
Obligee has accepted this bond
BY: , date
4881-1741-5150 v12
Exhibit F
Consent
[attached]
John Makhani
Managing Partner

4880-6125-4389 v3
ITEM NO. NB 2

COUNCIL AGENDA ITEM
November 4, 2024
TO: Mayor and City Council
FROM: Latisha Lamberth, Acting City Manager
SUBJECT:

Council approval of a Decommissioning Bond.

BACKGROUND/ DISCUSSION:

Staff report for the decommissioning bond for the portion of the Bellefield 2 Project (the “Project”) that is located within city limits. As you are aware, the decommissioning bond plays a crucial role in ensuring the proper closure and rehabilitation of the project site after the completion of operations. It serves as a financial security to cover any potential costs and liabilities that may arise during the decommissioning process. If BF2 can no longer operate the solar facility, BF2 must pay the bond money to California City. This money will only be issued if California City needs to decommission the site, in the unlikely event BF2 is unable to. Project equipment is typically sold to cover some of the cost of the decommissioning work.

Staff has carefully reviewed and evaluated all the necessary requirements for the decommissioning bond, including the estimated costs for site clearing, dismantling of structures, and restoration of the site to its original condition. Based on our assessment, and to account for the risk that salvage values could change over time, we have determined that the total amount of the bond should be 1 million dollars or the difference between the cost of the decommissioning work and the salvage value of the Project equipment if that difference is more than 1 million dollars.

1. Salvage Value: This is the estimated residual value of solar panels at the end of their useful life. It can fluctuate due to several factors such as technological advancements, market demand for used panels, and changes in material prices.

2. Decommissioning Cost: This refers to the expenses incurred in safely dismantling and disposing of or recycling solar panels and other Project equipment once they are no longer in use.

3. Difference Between Decommissioning Cost and Salvage Value: This difference is currently $115,140.44, represents the net cost of decommissioning after accounting for any value recouped from selling or recycling the panels. Because the difference is currently less than $1 million, the proposed bond will be the minimum $1 million amount. In future years as salvage values decrease and labor costs increase, the difference could exceed $1 million. 4880-6125-4389 v3

4. Bond for Risk Protection: A financial bond is often used to ensure that funds are available to cover decommissioning costs, regardless of changes in salvage value. This bond protects against the risk that the salvage value may decrease or that decommissioning costs may increase in the future. The $1 million bond amount and reevaluation are safeguards to help the city make sure it has enough money to pay for the decommissioning costs if the salvage value of the equipment is more than $100,000. The city can draw on the bond and perform the work if the conditions outlined in the Decommissioning License Agreement are met.

This financial planning is crucial to ensure that solar panel projects remain economically viable and environmentally responsible over their entire lifecycle. Adjustments may be needed over time to account for changes in market conditions and technological advancements.

FISCAL IMPACT:

None
RECOMMENDATION:

Staff recommends that the City Council approves the staff report for the decommissioning bond and proceeding with the project.

ATTACHMENTS:

Exhibit A
1 Surety Bond Is a Legally Binding Agreement Between Three Parties

PRINCIPAL
The party required to obtain the surety bond
(Bellefield 2 Solar - 26SB 8me LLC, an AES affiliate)

OBLIGEE
The party requiring the principal to
obtain the surety bond
(City of California City)
SURETY
A neutral party that guarantees the principal’s
obligation
(Philadelphia Indemnity Insurance Company)
BOND
If AES can no longer operate the solar facility, AES must pay the bond money to California City. This money will only be issued if California City needs to decommission the site, in the unlikely event AES is unable to.

Decommissioning Bond Value Methodology
Provided by
construction
contractor
Unit prices
obtained from
Bellefield 1 Plan
and adjusted for
inflation
Unit prices
obtained from
scrapmonster.com
Total cost is the net
cost after
accounting for
salvage value
4868-0179-9920 v6 1
2024

FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT
(Description of Engagement: Reimbursement of City Costs Associated With the Bellefield Solar and Storage Project)
(Parties: The City of California City and 26SB 8ME LLC) THIS FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT (“Agreement”) is made and entered into this day of November 4, 2024 (hereinafter, the “Amendment Date”), by and between the CITY OF CALIFORNIA CITY, a municipal corporation (hereinafter, "CITY") and 26SB 8ME LLC, a Delaware limited liability company (hereinafter, “26SB 8ME”). For purposes of this Agreement, the capitalized term “Parties” shall be a collective reference to both CITY and 26SB 8ME. The capitalized term “Party” may refer to either CITY or 26SB 8ME interchangeably as reasonably appropriate.

RECITALS
WHEREAS, in addition to processing a Site Plan Review, determining compliance with the Bellefield Solar and Storage Project (“Project”) obligations, and activities required prior to and during construction of the Project, CITY intends to hire a third-party consultant to review the decommissioning costs and salvage value of the Project equipment as frequently as annually; and
WHEREAS, 26SB 8ME desires and agrees to reimburse CITY for all direct costs associated with providing the services and performing the tasks described above, including costs for City staff and City consultant efforts; and WHEREAS, the execution of this Amendment was approved by CITY at its Regular Meeting of City Council on October 22, 2024.

NOW THEREFORE, in consideration of mutual covenants and conditions herein contained, CITY and 26SB 8ME agree as follows:

1. Section 1.1.A of the Agreement is amended as follows, with deletions shown in strikethrough and additions shown in double underline:

A. CITY intends to provide professional services related to the processing, review and permitting of the Project, and to hire a consultant to analyze the costs of decommissioning the Project and salvage values of the Project equipment to verify the sufficiency of the amount of the security that 26SB 8ME must provide for decommissioning the Project as detailed in the Decommissioning Agreement dated November 4, 2024 by and between CITY and 26SB 8ME, subject to 26SB 8ME’s reimbursement to CITY of all direct costs and charges associated with the provision of such services.

2. Section 1.2.B, 1.2.C, and 1.2.D are revised as follows, with deletions shown in strikethrough and additions shown in double underline:
4868-0179-9920 v6 2
A. CITY shall use funds deposited by 26SB 8ME to reimburse all direct costs associated with the labor required to review, process and permit the Project and to hire and supervise the consultant specified in Section 1.1A. 26SB 8ME shall maintain a minimum balance of Twenty-Five Thousand Dollars ($25,000) in the reimbursement account. 26SB 8ME shall provide additional funding as necessary and within thirty (30) calendar days of receipt of request for additional funding from CITY. Failure of 26SB 8ME to provide additional funding in a timely manner could result in the delay of work efforts on the Project.

B. Until completion of the Project construction (defined as satisfaction of both a final inspection for final phase of construction and issuance of a certificate of occupancy), CITY shall provide 26SB 8ME a monthly statement noting the costs incurred for services in the preceding month. After completion of the Project construction, CITY shall provide 26SB 8ME a statement in January and July of each year noting the costs incurred for services in the preceding six (6) months. CITY shall also monitor reimbursement account fund levels and provide 26SB 8ME with low balance notices should the account balance approach or reach the minimum balance of Twenty-Five Thousand Dollars ($25,000).

C. Upon completion of the Project, as defined by satisfaction of both a final inspection for final phase of construction and issuance of a certificate of occupancy. Within thirty (30) days of after Project completion of decommissioning of the Project in accordance with the Decommissioning Agreement for the Project, CITY shall refund to 26SB 8ME any unexpended funds remaining in the reimbursement account at the time of the completion of decommissioning of the Project at time of Project completion. CITY shall also provide final accounting to 26SB 8ME within thirty (30) days after completion of decommissioning of the Project.

3. NOTICES. Notices under this Agreement shall be provided to each Party at the address set forth below:

CITY: City of California City
Attn: City Manager
21000 Hacienda Blvd.

California City, CA 93505
(760) 373-8661
26SB 8ME: 26SB 8ME LLC
Attn: Bellefield 2 Operations & Maintenance
2180 S 1300 E #500
Salt Lake City, UT 84106
With a copy to: [email protected]
4868-0179-9920 v6 3

4. MISCELLANEOUS.

A. AGREEMENT IN FULL FORCE AND EFFECT. Except as specifically revised herein, the terms and conditions of the Agreement shall remain in full force and effect. In the event of any conflict or inconsistency between any provision of this Amendment and the agreement, the provisions of this Amendment shall control.

B. COUNTERPARTS: This Amendment shall be executed in two (2) original counterparts each of which shall be of equal force and effect. One counterpart shall be delivered to 26SB 8ME and the other counterpart shall be delivered to the CITY. No handwritten or typewritten amendment, modification or supplement to any one counterpart shall be valid or binding unless made to all counterparts in conformity with Section 4.12 of the Agreement.

C. ELECTRONIC OR PDF SIGNATURES. This Amendment shall be binding upon receipt of signatures e-mailed by PDF or signatures by DocuSign or other electronic similar means.

D. SIGNATURE AUTHORITY. The person signing this Amendment on behalf of each Party hereby represents and warrants that he or she is fully authorized to sign this Amendment on behalf of that Party. [SIGNATURE PAGE TO FOLLOW]
4868-0179-9920 v6 4
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed the day and year first appearing in this Amendment, above.

CITY OF CALIFORNIA CITY
By:

City Manager

Date:
26SB 8ME LLC
By:

Date:

APPROVED AS TO FORM:

By:

Victor Ponto
City Attorney
Date:

ITEM NO. NB 3

COUNCIL AGENDA ITEM
November 4, 2024
TO: Mayor and City Council
FROM: Latisha Lamberth, Acting City Manager
SUBJECT:

Acceptance of a Community Benefit Funding Donation from AES Green Energy Corporation in the amount of $2,700,000.00
BACKGROUND/ DISCUSSION:

AES Green Energy Corporation is currently building a large green energy solar project in the Southern portion of the California City limits known as Bellefield 2. As part of their business model and organizational values, AES always strives to become an active member of every community that they come into and work hard to make lasting positive community impacts through involvement and donations to both local non-profits and local government. Their company values encourage the organization to not only develop infrastructure and businesses within communities but to become an active member in their community through local partnerships and donations where applicable.

Since AES began their project in California City, they have been active partner, seeking out opportunities to positively impact the lives of California City residents. They have already donated to the California City local non-profit, Safe Haven. AES provided a donation to their Back-toSchool Backpack, Job Fair, and Community Resources Giveaway. They have already pledged to donate to their 2nd Annual Resource Spectacular (Thanksgiving) Event in November 2024 and to their Annual Holiday Toy Giveaway in December 2024. Since coming to Kern County, AES has also made major financial donations to Goodr Foundation Pop-up Market Food Activation in Mojave, the East Kern Family Resource Center, the Kern Economic Development Foundation, and the Kern County Superintendent of Schools for East Kern Career Expo. AES has now approached the City of California City to identify projects and capital needs across all of the city departments to determine where and how they can enhance local services through a fiscal donation.

After identifying requests and needs from the city departments, AES selected several worthy projects and capital items to donate funds towards to make a positive community impact and bring a community benefit to California City. In total, AES is requesting to donate $2,700,000.00 toward city projects and purchases in the Parks Department, City Hall, Code Enforcement, Police Department, Fire Department, Planning Department, and Public Works. The list of AES approved projects and capital items, along with associated funding costs through a restricted donation to the city is listed below.

Dept Qty Description Cost
Parks 1 Replace site lights on Major/minor league field 95,000 Parks 1 New Site light lights at Softball Little League Field 175,000 Parks 1 New Site lights at Junior little league field 175,000 PW 1 Site lights at Public Works yard 125,000
PW 1 Security Camera system at Public Works 25,000
PW 1 Commercial grade forklift (used) 60,000
Building 1 Ford Ranger truck 45,000
City Hall 1 Security Camera system at City Hall 25,000
City Hall 1 Covered Solar Parking at City Hall 58,000
City Hall 1 Flooring 10,000
City Hall 1 Ceiling tile replacement 150,000
CE 2 Ford Ranger Truck with graphics and amber light package 100,000 PD 1 Housing 220,000
PD 1 Air Conditioning 95,000
PD 2 Ford F150 Pursuit package w/ graphics and upfit 160,000 PD 2 Chevy Tahoe Pursuit Package w/ graphics and upfit 180,000 PD 3 Ford Explorers Pursuit package w/ graphics and upfit 228,000 PD 30 Badge redesign to reflect California City 7,000
PD 15 Helmets 10,000
PD 15 Gas masks 6,000
FD 1 Fire Training tower 650,000
FD 2 Thermal Imaging Cameras 21,000
FD 1 SCBA Fill Station 60,000
FD 4 Radios 20,000
It is AES’s intention that their donation be restricted to the above projects and acquisitions.

AES has agreed that any additional unused donated funds may be utilized to support any of the above approved projects by way of funding, maintenance, warranty, supporting equipment, upfitting, or training that may be required to fulfill the project or capital acquisition goals for the above approved donation.

As a community and as a city, it is vital that we continue to foster strong working partnerships with our developers to continue to grow our community. AES has proven that they intend to not only bring development projects to California City, but that they intend to be part of our community and support our city as we work to grow and prosper. Staff is extremely humbled by the generosity of AES and fully recommends that the city council accept this donation of funds to provide an otherwise unattainable community benefit for the City of California City.

FISCAL IMPACT:

This restricted donation of funds to the city would be accounted for in GL 10-3613 (General Fund Donations). The fiscal impact of the city accepting this donation would be a reduction of general fund liability across most city departments through the replacement of aging and costly capital items, an overall reduction in maintenance costs for the city, and a potential reduction in city risk and liability.

RECOMMENDATION:

Staff recommends that the City Council accept the restricted donation of funds towards the identified City projects and capital acquisition via attached resolution as requested by AES and to direct the City Manager fulfill the terms of the acceptance of these donated funds to enhance the level of service provided by the city and elevate the quality of life for the residents of California City.

ATTACHMENTS:

Resolution # 24-3061
RESOLUTION NO. 24-3061

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CALIFORNIA

CITY, CALIFORNIA, ACCEPTING A DONATION OF RESTRICTED FUNDS

FROM AES CLEAN ENERGY CORPORATION FOR SPECIFIED COMMUNITY

BENEFIT PROJECTS AND CAPITAL PURCHASES FOR THE CITY OF
CALIFORNIA CITY.

The City Council of the City of California City (hereafter referred to as the “City Council”) does resolve as follows:

WHEREAS, AES Clean Energy Corporation has become a partner in developing California City with the development of a green energy solar field project within the City of California City; and,
WHEREAS, the City has received a request from AES Clean Energy Corporation to make a positive community impact by supporting multiple City of California City projects and capital improvements through a fiscal donation to the City; and, WHEREAS, at the request of AES Clean Energy Corporation, these funds must be used solely for the City projects and City capital outlined in their donation request; and, WHEREAS, AES intends to make a lasting impact on the community through supporting both local government and local non-profits in California City to demonstrate their desire to be a part of our developing and growing community; and, WHEREAS, at the request of AES Clean Energy Corporation these funds must be used solely for the projects and capital outlined below; and, Dept Qty Description Cost
Parks 1 Replace site lights on Major/minor league field 95,000 Parks 1 New Site light lights at Softball Little League Field 175,000 Parks 1 New Site lights at Junior little league field 175,000 PW 1 Site lights at Public Works yard 125,000
PW 1 Security Camera system at Public Works 25,000
PW 1 Commercial grade forklift (used) 60,000
Building 1 Ford Ranger truck 45,000
City Hall 1 Security Camera system at City Hall 25,000
City Hall 1 Covered Solar Parking at City Hall 58,000
City Hall 1 Flooring 10,000
City Hall 1 Ceiling tile replacement 150,000
CE 2 Ford Ranger Truck with graphics and amber light package 100,000 PD 1 Housing 220,000
PD 1 Air Conditioning 95,000
PD 2 Ford F150 Pursuit package w/ graphics and upfit 160,000 PD 2 Chevy Tahoe Pursuit Package w/ graphics and upfit 180,000 PD 3 Ford Explorers Pursuit package w/ graphics and upfit 228,000 PD 30 Badge redesign to reflect California City 7,000
PD 15 Helmets 10,000
PD 15 Gas masks 6,000
FD 1 Fire Training tower 650,000
FD 2 Thermal Imaging Cameras 21,000
FD 1 SCBA Fill Station 60,000
FD 4 Radios 20,000

WHEREAS, any additional unused donated funds may be utilized to support any of the above approved projects by way of maintenance, warranty, supporting equipment, upfitting, or training required to fulfill the project or capital acquisition goals for the above approved donation; and,
WHEREAS, the council has determined to approve the city manager to accept these donated funds for the purpose of a community benefit to be utilized for the outlined projects and capital acquisition in the total amount of $2,700,000.

NOW, THEREFORE BE IT RESOLVED, DETERMINED, AND ORDERED BY THE

CITY COUNCIL OF THE CITY OF CALIFORNIA CITY, CALIFORNIA THAT THE CITY

MANAGER IS AUTHORIZED TO ACCEPT AND ALLOCATE THE ABOVE OUTLINED

DONATION FOR THE BENEFIT OF THE COMMUNITY AND THE CITY OF CALIFORNIA CITY.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of California City, this 4th day of November 2024.
__________________________
Kelly Kulikoff,
Mayor
ATTEST: APPROVED AS TO FORM:
___________________________ __________________________
Leanndrea Weible Victor M. Ponto,
Acting City Clerk City Attorney

CERTIFICATION
I, Leanndrea Weible, Acting City Clerk of the City of California City, California, hereby certify that the foregoing resolution was duly adopted at a meeting of the City Council of said City at its meeting held on the 4th of November, by the following vote, to wit:

AYES:

NOES:

ABSENT:

ABSTAIN:

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of California City, California, this 4th day of November 2024.

__________________________
Leanndrea Weible
Acting City Clerk

California City City CouncilNovember 4, 2024

California City City Council
November 4, 2024