Agenda packet, regular meeting, fourth session — Citrus Heights City Council Meetings, June 27, 2024 (part 2 of 3)

• Remedial projects for major repairs or upgrading of facilities. Engineering services are provided by General Services Department staff or by consultant. • Installation of Highway Safety Lights for highway safety purposes only along major streets and at intersections. These Safety Lights are normally installed with new construction of signalized intersections, or as a condition of development. The capital costs are typically paid through the City’s Capital Improvement Program for newly signalized intersections and by the developer for new installations adjacent to new development construction. • Street light inventory database creation and maintenance, pole numbering, and mapping to establish and keep current the number of street lights that must be maintained, as well as the condition and location of these street lights as part of an effective maintenance program. • Acquisition of land, easements, and rights of way necessary to maintain the Street and Highway Safety Lighting system.
• Administration of the District.

Maintenance means the furnishing of services and materials for the ordinary and usual operation of the public lighting facilities. This includes repair, removal, or replacement of all or part of any of the improvements or appurtenant facilities necessary for the operation of the lighting improvements.

Service means the furnishing of all labor materials, equipment, and utilities necessary to maintain and operate all public facilities provided by the City.

Based upon current maintenance records, the combined number of Street Lights and Highway Safety Lights within the Citrus Heights Lighting District is 4,820.

Section III: District Budget
A. Proposed Fiscal Year Budget
Since taking over responsibility for the lighting district from the County in June 2006, the City has identified current revenue sources and developed a clear understanding of all District expenditures.

Additionally, the City has substantially improved the level of service related to street light and highway safety light maintenance and operations and refined the procedures guiding the annual maintenance contract to reduce expenditures to a minimum.

The 2024/2025 Fiscal Year funds collected through special assessments are projected to cover the majority of the District’s anticipated expenditures. However, as a result of the increased electrical power costs and ongoing repair related to aging equipment, there is a projected total shortfall of approximately $145,405.72. Costs for contract unscheduled maintenance work (materials & repairs for damages due to knockdowns and aging infrastructure) are difficult to predict each year. For FY 2024/2025, the estimated costs for unscheduled maintenance work is projected to be $95,000. Cost recovery related to insurance settlements on street light knockdowns will be pursued as appropriate.

In the past year, the City has converted existing street lights and added new energy efficient Light Emitting Diode (LED) fixtures with roadway projects; bringing the total to approximately 2,577 LED lights citywide (53.5% of the District’s total inventory).

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Staff continues to identify and evaluate additional measures to reduce District expenditures and offset rising electricity costs. In 2019, the City conducted a feasibility study evaluating the possibility to update various City-owned equipment and facilities with the goal of reducing energy costs. On April 8, 2020, the California Energy Commission (CEC) approved a low interest (1%) Energy Efficiency Loan for the implementation of an energy efficiency upgrade project consisting of a significant number of street light retrofits. In June 2021, a City-retained contractor began replacing existing street lights with LED fixtures, which was completed in October 2021. As a result of the LED upgrades, the City’s electrical bills from the Sacramento Municipal Utility District (SMUD) decreased on average by 9.6% for the six month period of December 2021 to May 2022 compared to the same timeframe the prior year.

In December 2022, the City began paying back the low interest loan from the CEC, which expense is included in Table 1.1 at the end of this report. The bi-annual loan payment of $11,577.86 is paid for utilizing the energy savings reflected in the lower utility bills. After the 20 year payback period, District expenditures will decrease by the yearly loan payment amount.

In addition, staff regularly work with SMUD to ensure accurate billings, including quantities, type, and wattages for the entire District inventory. As street light fixtures are updated, SMUD reflects these changes in monthly utility billings.

No major expansion of the existing system, except when included in major transportation projects funded by grants or new development projects, will be considered until additional revenues can be identified to cover the initial and ongoing costs associated with an expansion.

The proposed District budget is summarized in the Budget Analysis shown on Table 1.1, including the estimated costs to provide the improvements, the collection of administrative costs and the special benefit assessment (Balance to Levy).

B. Description of Budget Items
The following is a brief description of the various components of the District budget including the sources and uses of funds, which are included in Table 1.1.

Sources of Funds – This includes the sources of funds used by the District in maintaining and servicing lighting improvements. This may include interest on any fund balance, special assessments, cost recovery and other sources.
• Interest on Fund Balance – Includes any interest earned on the balances in the District’s fund. • Special Assessments – Revenue received from assessments levied on properties within the District that benefit from the street and highway safety lights. • Cost Recovery – Revenue from cost recovery efforts associated with insurance settlements on knockdowns and/or damage to street lights and highway safety lights. • Other Revenue – Contributions from the City’s General Fund or other source to offset excess expenditures.

Uses of Funds – This includes the costs of maintaining and servicing lighting improvements. This may include, but is not limited to, the costs for labor, utilities, equipment, supplies, repairs, replacements ITEM 8 Agenda Packet Page 154

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and upgrades that are required to properly maintain the items that provide a direct benefit to the District.
• Electrical Costs – Includes the cost of providing electricity to the lights. Additionally, some lights are maintained by SMUD, the cost for maintenance of these lights is also included on the utility bill.
• Professional Services – Includes costs for the City’s consultant to verify that all assessor information is correct for each parcel on the assessment role for the district. The consultant also incorporates all new parcels into the role, assessment collection fees charged by the Sacramento County Assessor’s office to collect the District assessments from property owners and disperse those proceeds to the City. Also includes costs charged by Sacramento County to levy each parcel with the approved assessment.
• Contract Maintenance (Scheduled) – Includes the contract labor associated with the monthly maintenance of the street lights and the cost of preparing and maintaining the light inventory. • Contract Maintenance (Unscheduled) – Includes work by the contractor for repairs & materials for aging infrastructure, knock-down repairs & replacements, and other work not included in the monthly scheduled maintenance program.
• Construction – Funds set aside for special projects to upgrade street and safety lights and related facilities.

Section IV: Method of Apportionment
A. General
The 1972 Act permits the establishment of assessment districts by agencies for the purpose of providing certain public improvements, which include the construction, maintenance, and servicing of street lights, traffic signals, landscaping, parks and drainage facilities.

Streets and Highways Code Section 22573 requires that maintenance assessments be levied according to benefit rather than the assessed value.
“The net amount to be assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the improvements.”
Section 22574 of the 1972 Act also allows the designation of zones of benefit within an assessment district if “by reason of variations in the nature, location, and extent of the improvements, the various areas will receive differing degrees of benefit from the improvements.” In addition, Article XIIID and the Implementation Act require that a parcel’s assessment may not exceed the reasonable cost for the proportional special benefit conferred to that parcel. Article XIIID and the Implementation Act further provides that only special benefits are assessable and the City must separate the general benefits from the special benefits. They also require that publicly owned properties which specifically benefit from the improvements be assessed.

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B. Special Benefit Analysis
All properties within the District benefit equally from the enhanced safety provided by Highway Safety Lights as roadways and major intersections are illuminated. This lighting assists drivers traveling to or from a property in seeing traffic controls (stop signs, yield signs), in reading street name signs, and identifying pedestrians that may be attempting to cross the street after dark. These features also assist emergency service providers (police, fire, etc.) to respond and locate properties within the District.

In addition to the Highway Safety Light special benefit, individual parcels may receive special benefit from the presence of a Street Light on or near the parcel which enhances safety/security in the area.

For a parcel to receive this safety/security benefit from street lighting, fifty percent or more of the property’s frontage must be illuminated (based on the road width and spacing of the lights found in the County of Sacramento Improvement Standards). The Street Lighting service charge is apportioned only to those parcels that benefit directly from street lighting. A distinction is made between residential benefit parcels and non-residential benefit parcels based on the zoning of the parcel. This results in a flat rate service charge on each residential benefit parcel and a service charge per front foot on each non-residential benefit parcel.

The formula used for calculating the District assessment reflects the composition of the parcels, the improvements and the services provided, and fairly proportions the costs based on special benefit to each parcel. Only parcels receiving benefit from Street Lights and Highway Safety Lights will be assessed.

General Benefits
There are no general benefits related to Highway Safety Lights or Street Lights.

C. Assessment Methodology
When the original CSA-1 was established the assessment methodology was as follows:

Highway Safety Lighting – All properties are considered to benefit equally from Safety Lighting, as defined above in Special Benefit Analysis. As such, all parcels within CSA-1 were levied a flat rate calculated by the following formula:

Safety Light Maintenance Cost/Total Parcels = Levy per parcel Street Lighting – Only properties that benefit from a street light are levied this assessment. Service charges for parcels that benefit from both safety and street lights are classified as residential parcels or non-residential parcels with separate services charges as follows:

Residential Parcels (Zoned RD1, RD2, RD3, RD4, RD5, RD7): The service charge for a residential parcel was levied utilizing the following formula:

Street Light Maintenance Cost * % of Residential lights / Residential Parcels = Levy per residential parcel
Non-Residential Parcels (all other zoning): The service charge for a residential parcel was levied utilizing the following formula:

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Street Light Maintenance Cost * % of Non-Residential lights / Non- Residential Front Footage of Parcels = Levy per linear feet of non-residential front footage Levy per linear feet of non-residential front footage * Non-Residential Parcel Front Footage = Levy per Parcel
The passage of Proposition 218 in 1996 mandated that assessment increases must be approved by a two-thirds vote of the assessed property owners. As a result, the assessment rates for the Sacramento County’s CSA-1 were essentially frozen at the levels in effect at that time. These same rates remained in place and were carried over in 2006 upon creation of the Citrus Heights Lighting District, and have not increased since then. The current assessment methodology is therefore:

Highway Safety Lighting – All properties are considered to benefit equally from Safety Lighting, as defined above in Special Benefit Analysis. The service charge per parcel is equal to $2.56 per year.

Street Lighting – Only properties that benefit from a street light are levied this assessment. Service charges for parcels that benefit from both safety and street lights are classified as residential parcels or non-residential parcels with separate services charges as follows:

Residential Parcels (Zoned RD1, RD2, RD3, RD4, RD5, RD7): The service charge for a residential parcel is equal to $15.32 per year.

Non-Residential Parcels (all other zoning): The service charge for a non-residential parcel is equal to $0.2519 per linear foot length of the parcel’s public street frontage.

Exempt – Exempt from the assessment would be the areas of public streets and other roadways (typically not assigned an APN by the County), dedicated public easements, open space areas and rights of ways including public greenbelts and parkways. Also exempt from assessment would be utility rights of ways, common areas (such as in condominium complexes), landlocked parcels, small parcels vacated by City/County, bifurcated lots, and any other property that cannot be developed.

These types of parcels have little or no value and therefore do not benefit from the improvements.

Land use classification for each parcel is based on the Sacramento County Assessor’s Roll. Zoning classification for each parcel is based on the City of Citrus Heights Zoning Map.

D. Rates
The Fiscal Year 2024/2025 assessment rates for the District are proposed to remain the same as Fiscal Year 2023/2024. The following shows the assessments proposed to be levied:

Street Lighting
Residential (Zoned RD1, RD2, RD3, RD4, RD5, RD7) $15.32 per parcel Non-Residential (all other zones) $0.2519 per front foot Highway Safety Lighting
All parcels (except ‘Exempt’) $2.56 per parcel
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Section V: Assessment Roll
Parcel identification, for each lot or parcel within the District, shall be the parcel as shown on the Sacramento County Assessor’s map for the year in which this Report is prepared.

Non-assessable lots or parcels include all developed non-residential parcels, vacant parcels, government-owned and public utility-owned parcels, land principally encumbered with public rights of way and other tax exempt parcels such as common areas or open space for which the County does not generate a tax bill. These parcels will not be assessed for the District improvements.

A listing of parcels assessed within this District, along with the proposed assessment amounts, is on file with the City Clerk, and by reference is made part of this Report. Said listing of parcels to be assessed shall be submitted to the County Auditor/Controller and included on the property tax roll for each parcel in FY 2024/2025. If any parcel submitted for collection is identified by the County Auditor/Controller to be an invalid parcel number for the current fiscal year, a corrected parcel number and/or new parcel numbers will be identified and resubmitted to the County Auditor/Controller. The assessment amount to be levied and collected for the resubmitted parcel(s) shall be based on the method of apportionment and the assessment rate approved in this Report. Therefore, if a single parcel has changed to multiple parcels, the assessment amount applied to each of the new parcels shall be recalculated and applied according to the approved method of apportionment and assessment rate rather than a proportionate share of the original assessment.

Section VI: Assessment Diagram
The boundaries of the District are coterminous with the boundaries of the City of Citrus Heights (see Figure 1.1).

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FIGURE 1.1
Lighting District Boundary
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TABLE 1.1
Citrus Heights Lighting District
Budget Analysis
DESCRIPTION FY 22/23
ACTUAL (5)
FY 23/24
ACTUAL
FY 24/25

PROPOSED
BUDGET
SOURCES OF FUNDS:

Interest on Fund Balance $0.00 $0.00 $0.00
Special Assessments $340,443.63 $332,883.89 $333,000.00 Shared Maintenance Cost Reimbursement (1) $383.82 $125.28 $130.00 Total Sources of Funds: $340,827.45 $333,009.17 $333,130.00 USES OF FUNDS:

Advertising $1,226.73 $790.00 $1,500.00
Utilities (2) $249,858.18 $245,551.96 $245,000.00
CEC Loan Repayment (3) $23,155.72 $23,155.72 $23,155.72 Professional Services $4,813.27 $5,066.60 $6,000.00
Contract Maintenance (Scheduled) $90,597.88 $90,517.44 $91,000.00 Membership Dues $6,021.40 $853.70 $3,500.00
Contract Maintenance (Unscheduled) (4) $65,797.34 $83,581.03 $95,000.00 Cost Allocations $12,611.00 $12,989.00 $13,380.00
Total Uses of Funds: $454,081.52 $462,505.45 $478,535.72 FUND BALANCE:

Beginning Fund Balance (July 1st) $0.00 $0.00 $0.00
Add Sources of Funds $340,827.45 $333,009.17 $333,130.00 Subtract Uses of Funds $454,081.52 $462,505.45 $478,535.72 Fund Shortfall: ($113,254.07) ($129,496.28) ($145,405.72)

OTHER FUNDING SOURCES
Measure A Maintenance Funds (Fund 210) to
cover District shortfall $113,254.07 $129,496.28 $145,405.72 Ending Fund Balance (June 30th) $0.00 $0.00 $0.00
(1) The costs for four streets lights located on Antelope Road, near the I-80 Ramps, are shared with Caltrans (Caltrans reimburses the City for 50% of associated costs). (2) Includes SMUD maintenance costs – Certain street lights are mounted on SMUD-owned power poles.

The District reimburses SMUD for the operation and maintenance of these lights. (3) The city received a low interest (1%) Energy Efficiency Loan from the California Energy Commission (CEC) to cover the capital costs to convert approximately 593 street lights to energy efficient models.

Actual energy cost savings will be used to repay the loan. (4) Contract Maintenance (unscheduled) work includes knock-downs, repairs & materials for aging infrastructure, etc.)
(5) Summary has been updated since the FY 23/24 Engineer’s Report was approved in July 2023. The updated numbers reflect additional expenditures and revenue received after FY 22/23 close.

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CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Regina Cave, General Services Director
Leslie Blomquist, City Engineer
SUBJECT: Citywide Crack Sealing Project 2024
Award of Construction Contract
Summary and Recommendation
On December 14, 2023, City Council approved a Three-Year Pavement Preservation Plan (PPP), which identifies 100 specific roadways for resurfacing during FY 24/25 along with a recommended treatment for each road. The recommended treatments for each of the 100 streets includes slurry seal and a multi-layer resurfacing treatment.

In order to prepare for the slurry seal application to be applied in 2025, it is recommended to perform a crack seal on the identified streets in the Summer/Fall of 2024 to allow proper cure time prior to placement of the PPP identified roadway slurry seal of approximately 78 streets.

The application of a multi-layer treatment does not first require a crack seal.

On June 13, 2024, the City opened bids for the Citywide Crack Sealing Project 2024 (Project) and after evaluating the bids, staff determined that Pavement Rehab Company submitted the lowest responsive and responsible bid.

Staff recommends the City Council adopt the following resolution:

1. Resolution No. 2024-_____ A Resolution of the City Council of the City of Citrus Heights, California, Authorizing the City Manager to Execute an Agreement with Pavement Rehab Company for the Citywide Crack Sealing Project 2024 and Finding the Project is Exempt from the California Environmental Quality Act (CEQA) Under Section 15301.

City Council Strategic Goal/Objective
This item aligns with the following Citrus Heights City Council Strategic Objectives:

ITEM 9 Agenda Packet Page 161
Subject: Citywide Crack Sealing Project 2024
Date: June 27, 2024

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Goal: Maintain Public Infrastructure and Enhance All Modes of Transportation Objective: Award a contract for a Crack Seal Project in preparation of the 2025 Street Resurfacing Project.

Fiscal Impact
Pavement Rehab Company’s bid for the Project is $278,887. This bid is based upon estimated quantities, which may vary due to actual field conditions. Ultimately, the Contractor is paid for actual work completed based upon the unit price bid, which may require the approval of a change order. Change orders for amounts less than 15% of the total contract price shall require prior written approval of the City Manager. Change orders for amounts equal to or greater than 15% of the total contract price shall require prior written approval of the City Council.

This recommended action results in no fiscal impact to the approved Two-Year budget, nor the 2023/2024-2027/2028 Capital Improvement Program (CIP). The full funding for the project is outlined in the tables below:

Table No 1. – Estimated Project Costs
Project Component Estimated Cost
Recommended Contract Award $278,887
15% Contingency $41,833
Total $320,770
Table No 2. – Project Funding
Source Fund Fund No. Amount
Senate Bill 1 (SB1) Road Maintenance and
Rehabilitation Account
206 $320,770
Background and Analysis
This project is a component of the City Council approved Three Year PPP. The scope of the Project includes crack sealing approximately 78 roadways in the Summer/Fall of 2024, in preparation for a slurry seal application in 2025. Approximately 22 streets originally planned for Type II Slurry application in 2025 have been amended to receive a 3-layer capes seal application, therefore removing the need for crack seal in advance of the resurfacing project.

On June 13, 2024, construction bids were received and read aloud. A total of four bids were received and after a thorough analysis, staff determined that Pavement Rehab Company’s bid of $278,887 is the lowest responsive and responsible bid.

The complete bid results are shown in the following table:

Bidder Bid Total
Pavement Rehabilitation Company $278,887
ITEM 9 Agenda Packet Page 162
Subject: Citywide Crack Sealing Project 2024
Date: June 27, 2024

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Bidder Bid Total
CR Contracting $358,560
Pavement Coatings Company $526,204
Global Road Sealing $555,760
The engineer’s estimate for this project was $276,900.

Environmental Review
The Project is Categorically Exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Section 15301, as the repair, maintenance or modification of existing facilities involve no or negligible expansion of use beyond that which currently exists.

Attachments

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RESOLUTION NO. 2024- ___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS HEIGHTS,

CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT

WITH PAVEMENT REHAB COMPANY FOR THE CITYWIDE CRACK SEALING PROJECT 2024 AND FINDING THE PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) UNDER SECTION 15301.

WHEREAS, in December 2023, City Council adopted the Citrus Heights Three-Year Pavement Preservation Plan;
WHEREAS, it is recommended that streets planned for Type II slurry treatment receive a crack fill application in advance of pavement resurfacing work to ensure a better product; WHEREAS, the City desires to construct the Citywide Crack Seal Project 2024 (Project) to prepare for the 2025 Pavement Resurfacing Project;
WHEREAS, the Project will apply crack sealant on approximately 78 residential, collector and arterial roadways;
WHEREAS, bids for the project were received, opened and read aloud on June 13, 2024, and Pavement Rehab Company was determined to be the lowest responsive, responsible bidder for the project; and
WHEREAS, sufficient Senate Bill 1 (SB1) Road Maintenance and Rehabilitation Account (Fund 206) to fund the Project.

NOW THEREFORE BE IT RESOLVED AND ORDERED that the City Council of the City of Citrus Heights does hereby as follows:

1. Finds the Citywide Crack Seal 2024 Project is Categorically Exempt from review under the California Environmental Quality Act (CEQA) pursuant to CEQA Section 15301, as the repair, maintenance or modification of existing facilities involve no or negligible expansion of use beyond that which currently exists.

2. Awards the Citywide Crack Seal Project 2024 to PAVEMENT REHAB COMPANY who is the lowest responsive and responsible bidder in the June 13, 2024, bid opening.

3. Authorize the City Manager to execute an agreement with PAVEMENT REHAB COMPANY in the amount of $278,887 for the Citywide Crack Seal Project 2024 and that a copy of the Agreement is available and on file in the City Clerk’s office and is incorporated herein by reference and made a part of this Resolution.

The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June, 2024 by the following vote, to wit:

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AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:

Bret Daniels, Mayor
ATTEST:

Amy Van, City Clerk
ITEM 9 Agenda Packet Page 165

CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Regina Cave, General Services Director
Leslie Blomquist, City Engineer
SUBJECT: 2024 Bridge Maintenance Project
Award of Construction Contract
Summary and Recommendation
The City of Citrus Heights owns and maintains numerous structures that are on the National Bridge Inventory (NBI) which are regularly inspected by the State of California Department of Transportations (Caltrans) Structure Maintenance Division. The City periodically receives bridge inspection reports from Caltrans which include work recommendations and required improvements to ensure the structure is compliant with Federal Highway Administration (FHWA) and National Bridge Inspection Standards (NBIS).

Recent reports from Caltrans identified repairs and maintenance related items at 19 bridges in various locations within the City. As feasible, a portion of the items included in the Caltrans inspection reports have been completed by City staff and/or existing City on-call contractors.

However, some repairs require additional equipment, expertise and/or permitting requirements beyond the scope of routine maintenance activities. Such activities include removing and clearing debris and sediment in creeks, repair slope/footing protections, applying bridge deck treatment, railing repairs and other minor concrete repairs.

The environmental permitting was completed in January 2024 and California Environmental Quality Act (CEQA) determinations were filed in April 2024. With the engineering design completed in March 2024, the Project is ready for construction.

On May 2, 2024 three bids were received by staff, the apparent low bidder (Designs-Build Inc.) has been determined to be non-responsive. Staff recommends that the City Council determine that Designs-Build Inc. has abandoned their bid, execute the bid surety (bidders bond) from Designs-Build Inc. and award the contract to the second lowest responsive and responsible bidder Coastline Water Resources, Inc.

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Subject: 2024 Bridge Maintenance Project – Award of Construction Contract Date: June 27, 2024

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Staff recommends the City Council adopt the following resolution:

1. Adopt Resolution No. 2024-_____ A Resolution of the City Council of the City of Citrus Heights, California, Authorizing the City Manager to Execute an Agreement with Coastline Water Resources, Inc. for the 2024 Bridge Maintenance Project.

City Council Strategic Goal/Objective
This item aligns with the Citrus Heights City Council Strategic Plan Objective to “Maintain Public Infrastructure and Enhance All Modes of Transportation.” Fiscal Impact
There is no fiscal impact to the Fiscal Year (FY) 2023/2024 or FY 2024/2025 budget. The full funding for the project is summarized in the following tables, consistent with the current 5-year Capital Improvement Program (CIP) and approved 2-year budget:

Table No 1. – Estimated Project Costs
Project Component Estimated Cost ($)
Recommended Contract Award 748,700.50
15% Contingency 112,305.50
Grand Total 861,006.00
Table No 2. – Project Funding
Source Fund Fund No. Amount ($)
Stormwater Utility Funds 209 463,548
Measure A- Maintenance 210 350,000
Bidder’s Bond 47,458
Totals 861,006
Coastline Water Resources, Inc.’s bid for the project is $748,700.50. This bid is based upon estimated quantities, which may vary due to actual field conditions. Ultimately, the Contractor is paid for actual work completed based upon the unit price bid, which may require the approval of a change order. Change orders for amounts totaling less than 15% of the contract price shall require prior written approval of the City Manager. Change orders for amounts equal to or greater than 15% of the total contract price shall require prior written approval of the City Council.

Background and Analysis
The City of Citrus Heights owns and maintains 31 structures on the NBI, which are regularly inspected by Caltrans Structure Maintenance Division. The City periodically receives bridge inspection reports from Caltrans which include work recommendations and/or required ITEM 10 Agenda Packet Page 167
Subject: 2024 Bridge Maintenance Project – Award of Construction Contract Date: June 27, 2024

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improvements to ensure the structure is safe and compliant with FHWA and NBIS (national standards for public structures).

A large portion of the routine maintenance items included in the Caltrans inspections are completed by City staff and/or on-call contractors, when feasible. However, some repairs identified require additional equipment, expertise and/or permitting requirements beyond the scope of routine maintenance activities. Such activities include removing and clearing debris and sediment in creeks, repair slope/footing protections, applying bridge deck treatment, railing repairs and other minor concrete repairs.

In September 2021, City staff issued a task order to Mark Thomas and Company, one of the City’s on-call structural engineering firms, to review the latest Caltrans bridge inspection reports and prepare all necessary environmental approvals, permits and construction bid documents to perform the repairs at 19 bridges within the City’s maintenance responsibilities. The structures that are scheduled to receive maintenance under this contract include:

1. 24C0084 Auburn Boulevard over Arcade Creek

2. 24C0085 Auburn Boulevard over Cripple Creek

3. 24C0207 Greenback Lane over Arcade Creek

4. 24C0216 Sunrise Boulevard over Arcade Creek

5. 24C0319 Van Maren Lane over Arcade Creek

6. 24C0321 Patton Avenue over Cripple Creek

7. 24C0322 Auburn Road over Cripple Creek

8. 24C0366 Antelope Road over Cripple Creek

9. 24C0367 Sylvan Road over Arcade Creek

10. 24C0392 Mariposa Avenue over Mariposa Creek

11. 24C0394 Fair Way over Cripple Creek

12. 24C0395 Matheny Way over Arcade Creek

13. 24C0396 Indian River Drive over Arcade Creek

14. 24C0397 Broken Bow Drive over Cripple Creek

15. 24C0399 Crosswoods Circle over Arcade Creek

16. 24C0400 Calvin Drive over Cripple Creek

17. 24C0437 Watson Way over Cripple Creek

18. 24C0455 Bridgemont Way over Cripple Creek

19. 24C0626 Woodside Drive over San Juan Creek
The environmental permitting was completed in January 2024, the engineering design completed in March 2024 and CEQA determinations were filed in April 2024.

The Project was advertised on March 22, 2024 and construction bids were received and read aloud on May 2, 2024. A total of three bids were received and after a thorough analysis, staff determined that Designs-Build Inc.’s bid of $474,583.50 was the lowest responsive bid based on the prices submitted. The complete bid results are shown in the following table:

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Subject: 2024 Bridge Maintenance Project – Award of Construction Contract Date: June 27, 2024

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Bidder Base Bid
Designs-Build Inc. $474,583.50
Coastline Water Resources Inc. $748,700.50
Pro Builders $758,960.00
The engineer’s estimate for the bid of this project was $392,000.

On May 7, 2024, City staff was notified that Designs-Build Inc. had concerns about their bid and were going to request bid relief per the Public Contracts Code (PCC) §5103. On May 8, 2024, Designs-Build Inc. submitted a formal letter requesting bid relief to General Services Staff. The letter was reviewed by staff and the City Attorney and it was determined that the information provided was not sufficient to meet the specific criteria for bid relief as defined in PCC §5103.

Additional discussions and correspondence was exchanged between City staff and Designs-Build Inc. regarding the City’s review and that the City intended to proceed with awarding the construction contract as outlined in the bid documents, Designs-Build Inc.’s bid submittal and provisions in the PCC that the City must comply with.

A Notice of Intent to Award was issued by the City Engineer on May 23, 2024. Designs-Build Inc. did not submit the required documents (contract, performance bond, payment and materials bond) for the contract within the required ten (10) days specified in the Notice of Intent to Award and project bid proposal documents; therefore, staff determined that Designs-Build Inc. was a non-responsive bidder. On June 10, 2024, staff sent Designs-Build Inc. a letter notifying them that the conditions to proceed with the contract have not been met and the bidder’s bond submitted with the bid would be pulled and become the property of the City of Citrus Heights, as defined in PCC §5106.

Staff then began contract preparation and issued a Notice of Intent to Award to the second lowest bidder, Coastline Water Resources, Inc. Coastline Water Resources, Inc. has submitted all necessary contracts and bonds within the specified timeframe and is now considered to be the lowest responsive and responsible bidder.

Staff recommends the City Council:
• determine that Designs-Build Inc. has abandoned their bid • execute the bid surety (bid bond) from Designs-Build Inc. to become the property of the City of Citrus Heights in conformance with the PCC §5106 • award the contract to Coastline Water Resources, Inc., the lowest responsive and responsible bidder
Environmental Review
On October 19th, 2022 the City of Citrus Heights, as Lead Agency, approved an amendment to the existing Initial Study/Mitigated Negative Declaration (IS/MND) and Mitigation Monitoring and Reporting Program (MMRP) for the Citrus Heights Bridge Prevention and Maintenance Program Project. The IS/MND found that all potential environmental impacts were reduced below a level of significance when considered with the MMRP. The MMRP identifies the ITEM 10 Agenda Packet Page 169
Subject: 2024 Bridge Maintenance Project – Award of Construction Contract Date: June 27, 2024

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mitigation measures required to reduce impacts and the MMRP has been incorporated into the construction specifications for the project. A Notice of Determination per the California Environmental Quality Act (CEQA) was filed for this project on April 19, 2024.

City staff, construction managers, and contractors are responsible for the monitoring of the construction project to ensure all mitigation measures are adhered to. No additional environmental review is required.

Attachments

ITEM 10 Agenda Packet Page 170
RESOLUTION NO. 2024-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS HEIGHTS,

CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT WITH COASTLINE WATER RESOURCES, INC. FOR CONSTRUCTION OF THE 2024 BRIDGE MAINTENANCE PROJECT
WHEREAS, the City Council of the City of Citrus Heights, California, desires to proceed with construction of the 2024 Bridge Maintenance Project (Project); WHEREAS, on October 19, 2022, City staff approved minor amendments to the Initial Study/Mitigated Negative Declaration (IS/MND) to Citrus Heights Routine Maintenance of Stream Channels and Drainage Facilities IS/MND;
WHEREAS, the Project has obtained all necessary permits and approvals from State regulatory agencies;
WHEREAS, on April 19, 2024, City staff submitted a Notice of Determination in compliance with the California Environmental Quality Act (CEQA); WHEREAS, the Project design is complete and will include debris removal, concrete repairs, identification signage and railing replacements at nineteen bridge locations; WHEREAS, bids for the project were received, opened and read aloud on May 2, 2024, and Designs-Build Inc. was determined to be the lowest bidder for the Project; WHEREAS, Designs-Build Inc. guaranteed their bid with a bidder’s bond provided by the Gray Casualty & Surety Company;
WHEREAS, the City Engineer issued a Notice of Intent to Award to Designs-Build Inc. for the 2024 Bridge Maintenance Project on May 23, 2024; WHEREAS, the low bidder, Designs-Build Inc., failed to execute the contract for the 2024 Bridge Maintenance Project or submit the required Performance and Labor and Materials Bonds within the required 10-working day timeframe specified in the notice of Intent to Award; WHEREAS, staff issued a Notice of Intent to Award to the second lowest bidder, Coastline Water Resources Inc., for the 2024 Bridge Maintenance Project on June 13, 2024; and

WHEREAS, Stormwater Utility (Fund 209) and Measure A Maintenance (Fund 210) have been budgeted for the Project.

NOW, THEREFORE, BE IT RESOLVED AND ORDERED that the City Council of the City of Citrus Heights does hereby as follows:

1. Declare Designs-Builds, Inc., the lowest responsive bidder in the May 2, 2024 bid has abandoned the contract.

ITEM 10 Agenda Packet Page 171

2. Authorize the Designs-Build Inc., bidder’s bond shall operate and become property of the City of Citrus Heights.

3. Award the 2024 Bridge Maintenance Project to Coastline Water Resources Inc., who is the second lowest responsive and responsible bidder in the May 2, 2024, bid opening.

4. Authorize the City Manager is to execute an agreement with Coastline Water Resources, Inc., in the amount of $748,700.50 for the 2024 Bridge Maintenance Project and that a copy of the Agreement is available and on file in the City Clerk’s office and is incorporated herein by reference and made a part of this Resolution.

The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June, 2024 by the following vote, to wit:

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:

Bret Daniels, Mayor
ATTEST:
_________________________________
Amy Van, City Clerk
ITEM 10 Agenda Packet Page 172
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CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Regina Cave, General Services Director
Leslie Blomquist, City Engineer
SUBJECT: On-Call Fence Repair Services for Auburn Blvd at Greenback Lane Award of Contract
Summary and Recommendation
In August 2023, the City Council authorized the City Engineer to file notice of completion of the City’s Various Signalized Intersections Safety Improvements Project which included the installation of new median fencing at the intersection of Greenback Lane and Auburn Boulevard.

The On-Call Fence Repair Services contract is intended to retain a contractor for maintenance and repairs of the fencing.

In March 2024, the General Services Department (GSD) circulated a Request for Proposals (RFP) for On-Call Fence Repair Services. One proposal was received and evaluated based on criteria specified in the RFP and Crusader Fence was selected as the top ranked contractor for the fence maintenance and repair services.

Staff recommends the City Council adopt the following resolution:

1. Resolution No. 2024-____, a Resolution of the City Council of the City of Citrus Heights, California, authorizing the City Manager to execute an agreement with Crusader Fence for On-Call Median Fence Repair and Maintenance Services for Auburn Boulevard at Greenback Lane and further authorizing the City Manager or his designee to execute any extensions and/or non-substantive amendments to this contract consistent with the City Manager’s general signing authority.

ITEM 11 Agenda Packet Page 173
Subject: On-Call Median Fence Repair Services for Auburn Blvd at Greenback Ln – Award of Contract Date: June 27, 2024

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The initial contract term will be for three fiscal years with provisions for two additional, one-year options to extend the contract, with a total contract term not to exceed six years.

Staff will recover costs to the maximum extent practicable from insurance claims resulting from any crashes that cause damage to the existing fencing. Any additional costs will be funded with sources established in the associated Fiscal Year maintenance budgets approved annually during the term of the contract.

Background and Analysis
In August 2023, the City completed construction of the Various Signalized Intersections Safety Improvements Project, including 2,495 linear feet of new green, mesh, curvilinear, median fencing at the intersection of Greenback Ln and Auburn Blvd. Since that time, GSD has issued two service agreements for maintenance and repairs of the median fencing and the contract terms within these agreements have expired.

Staff recommended establishing a multi-year on-call contract for maintenance and repair of the median fencing to allow for reduced unit costs, improved responsiveness and reliable contractor services.

On March 15th, 2024, staff released an RFP for On-Call Fence Repair Services for Auburn Blvd at Greenback Ln. On April 16th, 2024, staff received one proposal from Crusader Fence, who is also the contractor who initially installed the fence and has been performing the ongoing maintenance. After reviewing the proposal in accordance with the criteria described in the RFP, including unit pricing, financial stability, experience, and qualifications, staff recommends entering into a multi-year on-call contract with Crusader Fence for the maintenance of the median fencing at Greenback Ln and Auburn Blvd.

The proposed contract is for three fiscal years with provisions for an additional two one-year contract extensions. The contractor will hold firm the unit prices for the first two years of the contract, the following two years provide allowance for unit price increases based upon the Consumer Price Index (CPI) increases (limited to a maximum 3% increase). As outlined in the RFP and prior to completion of the initial contract term, the City and contractor may elect to extend the contract for an additional two one-year extensions, during which the unit prices will increase based upon the CPI with a maximum increase of 3-percent per year.

Attachments

1. Resolution 2024-___, a Resolution of the City Council of the City of Citrus Heights, California, Authorizing the City Manager to Execute an Agreement with Crusader Fence for Median Fence Repair and Maintenance Services for Auburn Boulevard at Greenback Lane and Further Authorizing the City Manager or Designee to Execute Any Extensions and/or Non-substantive Amendments to this Contract Consistent with the City Manager’s General Signing Authority.

ITEM 11 Agenda Packet Page 174
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RESOLUTION NO. 2024- ___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS HEIGHTS,

CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE AN

AGREEMENT WITH CRUSADER FENCE FOR MEDIAN FENCE REPAIR SERVICES FOR

AUBURN BOULEVARD AT GREENBACK LANE AND FURTHER AUTHORIZING THE CITY MANAGER OR DESIGNEE TO EXECUTE ANY EXTENSIONS AND/OR NONSUBSTANTIVE AMENDMENTS TO THIS CONTRACT CONSISTENT WITH THE CITY MANAGER’S GENERAL SIGNING AUTHORITY

WHEREAS, the City Council of the City of Citrus Heights, California, strives to provide high quality maintenance of its roadway infrastructure;
WHEREAS, in an effort to ensure committed long-term maintenance services consistent with the City’s expectations, the City circulated a request for proposals for Median Fence Repair and Maintenance Services for Auburn Boulevard at Greenback Lane; WHEREAS, on April 16th, 2024, one proposal was received; WHEREAS, in accordance with procedures for selection of the most qualified contractor, staff found Crusader Fence to be a qualified contractor to perform this work; WHEREAS, the City now desires to enter into a contract with Crusader Fence; WHEREAS, the City’s desired contract term is three years with the option of two one-year extensions;
WHEREAS, staff will attempt to recover costs, to the maximum extent practicable, from insurance claims resulting from any incidents that cause damage to the existing median fencing; and WHEREAS, Gas Tax Funds will be used to cover any additional maintenance costs.

NOW THEREFORE BE IT RESOLVED AND ORDERED that the City Council of the City of Citrus Heights does hereby authorize the following:

1. Authorize the City Manager to execute an agreement with Crusader Fence for striping and maintenance services in a form approved by the City Attorney.

2. Authorize the City Manager, or a designee, to execute any extensions and/or nonsubstantive amendments to this contract consistent with the City Manager’s general signing authority.

The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June, 2024 by the following vote, to wit:

ITEM 11 Agenda Packet Page 175

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:

Bret Daniels, Mayor
ATTEST:

Amy Van, City Clerk
ITEM 11 Agenda Packet Page 176
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CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Regina Cave, General Services Director
Leslie Blomquist, City Engineer
Daniel Kehrer, Senior Civil Engineer
SUBJECT: Review the Sacramento Stormwater Quality Partnership Program and Authorize FY 24/25 Expenditures
Summary and Recommendation
The Sacramento Stormwater Quality Partnership (SSQP) oversees and manages implementation of regional stormwater related activities including monitoring target pollutant programs, regional public outreach, regional commercial/industrial program, new development, and program management.

In 2012, the City entered into a Memorandum of Understanding (MOU) with the other partnership agencies in the Sacramento Region regarding administrative responsibilities and apportionment of costs regarding the region’s National Pollutant Discharge Elimination System (NPDES) permit specifying that the City of Citrus Heights is responsible for 5.9% of the annual costs associated with this partnership.

Staff recommends the City Council adopt the following resolution:

1. Resolution 2024-_______, a Resolution of the City Council of the City of Citrus Heights, California, authorizing the City Manager or designee to expend stormwater funds for the City of Citrus Heights’ shared cost of joint implemented Municipal Separate Storm Sewer System requirements with the Sacramento Stormwater Quality Partnership.

City Council Strategic Goal/Objective
This staff report aligns with the Citrus Heights City Council Strategic Plan Objective to “Maintain Public Infrastructure and Enhance All Modes of Transportation.” ITEM 12 Agenda Packet Page 177
Subject: Review the Sacramento Stormwater Quality Partnership Program and Authorize FY 24/25 Expenditures
Date: June 27, 2024

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Fiscal Impact
Funding for the proposed service agreement for $76,684.37 is included in the FY 2024/25 Storm Water Utility Fund (Fund 209) budget.

Background and Analysis
The City of Citrus Heights has a Municipal Separate Storm Sewer System (MS4) permit from the Regional Water Quality Control Board (RWQCB) and is one of seven agencies grouped together in Sacramento County. Citrus Heights shares the same requirements in the permit as all partnership agencies, though the requirements can be split into two basic categories - individual and joint compliance activities. The SSQP was established to coordinate the joint compliance activities.

In 2012, the City entered into an MOU with the SSQP regarding administrative responsibilities and cost apportionment. The cost apportionment is based on the relative population of each agency, and for the City of Citrus Heights the apportionment is currently 5.9%.

The compliance activities provided by the SSQP include the following:
• Monitoring and Target Pollutant Program
Stormwater monitoring and regulatory support services, Delta Regional Monitoring Program, and technical expertise on stormwater policy and regulations. • Regional Public Outreach Program
General and community based outreach.
• Regional Commercial/Industrial Program and New Development Design manual and updates to be used for construction documents and post-construction water quality compliance.
• Program Management
Administer and manage the Partnership’s Regional Stormwater Quality Program to ensure continued compliance with the MS4 General Permit.

The total anticipated cost for participation in the partnership for FY 2024/2025 is $76,684.37 (city’s 5.9% share of total costs). A summary of the City’s FY 2024/2025 contributions is included as Exhibit A.

Attachments

1. Resolution No. 2024-____, a Resolution of the City Council of the City of Citrus Heights, California, authorizing the City Manager or designee to expend stormwater funds for the City of Citrus Heights’ shared cost of joint implemented Municipal ITEM 12 Agenda Packet Page 178
Subject: Review the Sacramento Stormwater Quality Partnership Program and Authorize FY 24/25 Expenditures
Date: June 27, 2024

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Separate Storm Sewer System requirements with the Sacramento Stormwater Quality Partnership
Exhibit A - Sacramento Stormwater Quality Partnership, Summary of Joint Permittee Costs, Draft FY 2024/2025 Budget
ITEM 12 Agenda Packet Page 179
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RESOLUTION NO. 2024- ___

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS HEIGHTS,

CALIFORNIA, AUTHORIZING THE CITY MANAGER OR DESIGNEE TO EXPEND STORMWATER FUNDS FOR THE CITY OF CITRUS HEIGHTS’ SHARED COST OF

JOINT IMPLEMENTED MUNICIPAL SEPARATE STORM SEWER SYSTEM

REQUIREMENTS WITH THE SACRAMENTO STORMWATER QUALITY PARTNERSHIP WHEREAS, the City has a stormwater system within its limits; WHEREAS, the stormwater system is comprised of man-made features (Municipal Separate Storm Sewer System, MS4) as well as naturally occurring creeks and channels, including waters of the United States (WOTUS);
WHEREAS, the federal Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the WOTUS and regulating quality standards for surface waters; WHEREAS, under the CWA, Environmental Protection Agency (EPA) has implemented pollution control including National Pollutant Discharge Elimination System (NPDES); WHEREAS, NPDES Program has been delegated to the State of California for implementation through the State Water Resources Control Board (State Water Board) and the nine Regional Water Quality Control Boards (Regional Water Boards), collectively Water Boards; WHEREAS, the California Regional Water Quality Control Board, Central Valley Region ("CVRWQCB") has been charged by the State Water Board with the responsibility to issue NPDES permits within the Central Valley Region;
WHEREAS, the City of Citrus Heights is situated within the Central Valley Region; WHEREAS, the CVRWQCB has developed a single Region-wide MS4 Permit (Order) that promotes greater watershed/drainage shed coordination, water quality measure protections, and program implementation efficiencies;
WHEREAS, on June 23, 2016 the Regional Water Board issued an NPDES MS4 permit, NPDES No. CAS085324, Order No. R5-2016-0040, (Permit) for the County of Sacramento and the cities of Citrus Heights, Elk Grove, Folsom, Galt, Rancho Cordova and Sacramento (collectively the "Permittees" and individually the "Permittee");
WHEREAS, the Permit requires the Permittees to monitor stormwater discharges and implement multiple programs to reduce the level of pollutants discharged into receiving waters; WHEREAS, the Permittees have previously entered into an MOU to establish administrative responsibilities and apportionment of costs related to shared activities associated with Permit implementation;
WHEREAS, the MOU includes the responsibility for the timely payment of all monetary obligations by each Permittee for joint activities; and ITEM 12 Agenda Packet Page 180

WHEREAS, the attached Sacramento Stormwater Quality Partnership Summary of Joint Permittee Costs Draft FY 2024/2025 Budget has been submitted as an estimate of costs related to joint implemented MS4 requirements.

NOW THEREFORE BE IT RESOLVED AND ORDERED that the City Council of the City of Citrus Heights does hereby authorize the City Manager, or a designee, to expend stormwater funds for the City of Citrus Heights’ shared cost of joint implemented Municipal Separate Storm Sewer System requirements with the Sacramento Stormwater Quality Partnership.

The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June 2024 by the following vote, to wit:

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:

Bret Daniels, Mayor
ATTEST:

Amy Van, City Clerk
Exhibit
A. Sacramento Stormwater Quality Partnership Summary of Joint Permittee Costs Draft FY 2024/2025 Budget
ITEM 12 Agenda Packet Page 181
Sacramento Stormwater Quality Partnership
Summary of Joint Permittee Costs
DRAFT FY 2023/2024 BUDGET
Updated: April 24, 2024
County Citrus Hts Elk Grove Folsom Galt Rancho Sac
Program Element/Activity Lead Agency Consultant 38.4% 5.9% 10.9% 5.2% 1.7% 4.6% 33.3% Monitoring Program/Special Studies/TMDL
Monitoring & Regulatory Support Services
City-Bryan LWA 778,725.00 $ 697,389.00 $ 487,387.29 $ 684,946 $ 299,030.40 $ 45,944.78 $ 84,881.03 $ 40,493.70 $ 13,238.33 $ 35,821.35 $ 259,315.43 $ Delta Regional Monitoring Program (RMP)
County-Ken DRMP nonprofit $ 103,000.00 103,000.00 $ 103,000.00 $ 103,000.00 $ 39,552.00 $ 6,077.00 $ 11,227.00 $ 5,356.00 $ 1,751.00 $ 4,738.00 $ 34,299.00 $ Contingency (CEC, pyrethroid, bacteria ph2 or SSQP specific, etc.) County/City $ - - $ - $ - $ - $ - $ - $
$ 881,725.00 $ 800,389.00 $ 590,387.29 $ 787,946.14 $ 338,582.40 $ 52,021.78 $ 96,108.03 $ 45,849.70 $ 14,989.33 $ 40,559.35 $ 293,614.43 Target Pollutant Reduction
Pesticides: CASQA Pesticide Reduction Project
County-Ken CASQA 40,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 15,360.00 $ 2,360.00 $ 4,360.00 $ 2,080.00 $ 680.00 $ 1,840.00 $ 13,320.00 $ $ 40,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 15,360.00 $ 2,360.00 $ 4,360.00 $ 2,080.00 $ 680.00 $ 1,840.00 $ 13,320.00 Public Outreach
General Outreach:Public Opinion Survey City $ 40,000.00 $ 32,106.00 $ 15,360.00 $ 2,360.00 $ 4,360.00 $ 2,080.00 $ 680.00 $ 1,840.00 $ 13,320.00 Brochure printing/development (update business brochures) County/City $ 7,000.00 $ - $ - $ - $ - $ - $ - $ -
Outreach supplies City $ 10,000.00 $ 15,000.00 $ 9,417.50 $ 3,840.00 $ 590.00 $ 1,090.00 $ 520.00 $ 170.00 $ 460.00 $ 3,330.00 $ - $ - $ - $ - $ - $ - $ -
$ - $ - $ - $ - $ - $ - $ -
$ - $ - $ - $ - $ - $ - $ -
Trash/Litter Outreach
(community based)
$ 30,000.00 - $ 11,498.35 $ 40,000.00 $ - $ - $ - $ - $ - $ - $ - $ Stormwater Outreach/Media Placement
City Yes, 20% for
IPM only
$ 99,700.00 100,000.00 $ 94,166.00 $ 90,698.42 $ 38,400.00 $ 5,900.00 $ 10,900.00 $ 5,200.00 $ 1,700.00 $ 4,600.00 $ 33,300.00 $ Subtotal: General Public Outreach $ 150,000.00 $ 99,700.00 $ 140 137,770.35 $ ,115.92 $ 8 57,600.00 $ 16 ,850.00 $ 7 ,350.00 $ 2 ,800.00 $ 6 ,550.00 $ 49 ,900.00 $ ,950.00 IPM:

Alternative Landscaping Outreach County-Jeanette $ 65,000.00 $ 65,000.00 $ 31,250.00 $ 22,500.00 $ 24,960.00 $ 3,835.00 $ 7,085.00 $ 3,380.00 $ 1,105.00 $ 2,990.00 $ 21,645.00 IPM consultant (OWOW) City Plant Harmony Yes $ 40,000.00 $ 36,000.00 $ 29,229.22 $ 44,984.93 $ 15,360.00 $ 2,360.00 $ 4,360.00 $ 2,080.00 $ 680.00 $ 1,840.00 $ 13,320.00 CASQA OWOW Subscription Cost + Fact Sheet
City/County $ 13,010.00 $ 13,010.00 $ 8,010.00 $ 902.16 $ 4,995.84 $ 767.59 $ 1,418.09 $ 676.52 $ 221.17 $ 598.46 $ 4,332.33 Subtotal: IPM $ 118,010.00 $ 114,010.00 $ 68,489.22 $ 68,387.09 $ 45,315.84 $ 6,962.59 $ 12,863.09 $ 6,136.52 $ 2,006.17 $ 5,428.46 $ 39,297.33 School Education:

Splash in the Class - Classroom Presentations
City 60,000.00 $ 54,178.00 $ 45,928.00 $ 45,920.00 $ 23,040.00 $ 3,540.00 $ 6,540.00 $ 3,120.00 $ 1,020.00 $ 2,760.00 $ 19,980.00 $ Subtotal: School 60 $ ,000.00 $ 54,178.00 $ 45,928.00 $ 45,920.00 $ 3 23,040.00 $ 6 ,540.00 $ 3 ,540.00 $ 1 ,120.00 $ 2 ,020.00 $ 19 ,760.00 $ ,980.00 $ 328,010.00 $ 267,888.00 $ 252,187.57 $ 254,423.01 $ 125,955.84 $ 19,352.59 $ 35,753.09 $ 17,056.52 $ 5,576.17 $ 15,088.46 $ 109,227.33 New Development
Stormwater Quality Manual Training or Technical Work (LID, HMP, Trash, Construction General Training) City/County $ - - $ - $ - $ - $ - $ - $ - $ - $
$ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Program Management
CASQA Joint Membership County-Ken $ 31,815.00 $ 27,995.00 $ - $ 12,216.96 - $ $ 1,877.09 $ 3,467.84 $ 1,654.38 $ 540.86 $ 1,463.49 $ 10,594.40 Program contingency including outreach
County/City $ 50,000.00 $ 19,200.00 $ 2,950.00 $ 5,450.00 $ 2,600.00 $ 850.00 $ 2,300.00 $ 16,650.00 $ 81,815.00 $ 27,995.00 $ - $ 19,200.00 - $ $ 2,950.00 $ 5,450.00 $ 2,600.00 $ 850.00 $ 2,300.00 $ 16,650.00 TOTAL = $ 1,131,272.00 1,331,550.00 $ 877,574.86 $ 1,077,369.15 $ 499,098.24 $ 76,684.37 $ 141,671.12 $ 67,586.22 $ 22,095.50 $ 59,787.81 $ 432,811.76 $ FY24/25 Permittee Costs1
Program Management Subtotal =
FY24 Contract
Budget2
Monitoring and TMDL Subtotal =
Target Pollutant Subtotal =
Public Outreach Subtotal =
New Development Subtotal =
FY25 Proposed
Budget FY23 Actuals FY22 Actuals
Cost-Share with
SacSewer3
FY25 joint cost_Draft Version 2024.04.24 1 of 2 4/29/2024 ITEM 12
Agenda Packet Page 182
Sacramento Stormwater Quality Partnership
Summary of Joint Permittee Costs
DRAFT FY 2023/2024 BUDGET
Updated: April 24, 2024
County Citrus Hts Elk Grove Folsom Galt Rancho Sac
Program Element/Activity Lead Agency Consultant 38.4% 5.9% 10.9% 5.2% 1.7% 4.6% 33.3% FY24/25 Permittee Costs1
FY24 Contract
Budget2
FY25 Proposed
Budget FY23 Actuals FY22 Actuals
Cost-Share with
SacSewer3
Potential Contracts $ 52,000.00
Potential FY24 Total Contracts $ 1,183,272.00
Budget Actuals
FY25
Compared to
Previous FY
Budgets
TOTAL FY24 Budget (March 2023) = 1,298,946.00 $ $ 32,604.00 TOTAL FY23 Budget (Oct 2022) = 1,226,008.00 $ $ 105,542.00 TOTAL FY22 Budget (May 2021) = 1,347,322.00 $ $ (15,772.00) TOTAL FY21 Budget (July 2020) = 1,390,829.00 $ $ (59,279.00) TOTAL FY20 Budget (April 2020) = 1,220,272.00 $ $ 111,278.00 1 Cost share based on 2012 Permittee MOU cost share allocations.2 Items with gray text were budgeted but no FY24 JA has been established yet, and therefore are not included in the contracted total.3 IPM Media includes SRCSD contribution up to 20% of IPM media (up to $22,000 annually).

Note: Funding may be needed in FY27 to maintain Arcade Creek gauge. As of January 2024, USGS estimates cost for guage is $26,300.

FY25 joint cost_Draft Version 2024.04.24 2 of 2 4/29/2024 ITEM 12
Agenda Packet Page 183
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CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Regina Cave, General Services Director
Mary Poole, Operations Manager
Armando Velasquez, Construction Maintenance & Inspection Supervisor SUBJECT: Agreement with MCE Corporation for 2024 Vegetation Management Services for Channels and Open Space
Summary and Recommendation
The City is responsible for providing vegetation management services for various creeks, channels and open spaces throughout the community. In May 2024, staff issued a Request for Proposals (RFP) for qualified and experienced contractors that could provide the needed maintenance services. On June 3rd, one proposal was received. After the proposal evaluation and contractor interview process, staff finds that MCE Corporation is the most qualified to perform these services.

Staff recommends the City Council approve the attached resolution, authorizing the City Manager to execute a five-year agreement with an option for three (3) additional one-year extensions with MCE Corporation to perform Vegetation Management Services for Channels and Open Space.

City Council Strategic Goal/Objective
This item aligns with the Citrus Heights City Council Strategic Plan 3-Year Goal to “Maintain Public Infrastructure and Enhance All Modes of Transportation.” Fiscal Impact
The cost estimates for the contract services include fixed costs to clean creeks, channels, canals and open spaces each year. In addition, the scope of work includes clearing roadside ditches, litter removal, support at community service needs, and supplying personnel for standby and emergency storm response services. Storm water utility funds, Measure A Maintenance and Landscape Maintenance Assessment District (LMAD) funds have been programmed in the current approved Two-Year budget cycle to cover expenditures in this contract.

ITEM 13 Agenda Packet Page 184
Subject: Agreement for 2024 Vegetation Management Services for Channels and Open Space Date: June 27, 2024

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The total estimated cost of the five-year contract is $ 3,019,200.75.

Yearly projected expenditures for this contract are shown on the following table:

Contract Year Fiscal Year Projected
Annual Cost
1 24-25 $573,500.08
2 25-26 $588,168.04
3 26-27 $603,298.91
4 27-28 $618,765.50
5 28-29 $635,468.22
These projected costs are based on anticipated completed work; all payments to contractor shall be based on actual work performed. Should options for up to 3 one-year extensions be exercised, the annual adjustment will be based on the regional Consumer Price Index, with a maximum of 3% increase per year.

Background and Analysis
The City's Stormwater Program oversees the operation and management of a storm drain system consisting of 26 miles of creeks, 54 miles of open ditches, 5.5 miles of concrete-lined channels, 62 bridges, hundreds of miles of pipe, and thousands of catch basins and manholes. The goal of the program is to effectively manage stormwater runoff as a resource while improving water quality. Additionally, there are 84 miles of open spaces and other areas with vegetation that are maintained by the City.

To ensure the storm drain system and open spaces are properly maintained and managed, the City performs numerous functions in cleaning and maintaining the creeks, drainage systems, and open space areas throughout Citrus Heights. These services are contracted out and include the following tasks:
• Vegetation management
• Removal of debris and trash from public right-of-way
• Location and removal of blockages impeding water flow The proposed service agreement will provide the services referenced above as well as additional on-call staffing support for standby, emergency call outs, and storm response service.

Attachments
(1) Resolution No. 2024- ______ A Resolution of the City Council of the City of Citrus Heights, California, Authorizing the City Manager to Execute an Agreement with MCE Corporation for Vegetation Management Services for Channels and Open Space ITEM 13 Agenda Packet Page 185
RESOLUTION NO. 2024-___

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS HEIGHTS,

CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT

WITH MCE CORPORATION FOR VEGETATION MANAGEMENT SERVICES FOR

CHANNELS AND OPEN SPACE
WHEREAS, the City Council of the City of Citrus Heights, California, wishes to enter into an agreement with MCE Corporation (MCE) for vegetation management open spaces and other areas; WHEREAS, the agreement will allow the City to determine and assign priority projects to MCE; WHEREAS, the agreement will allow clearing and maintenance of 84 miles of open space and other areas, 26 miles of creeks, 54 miles of open ditches, 5.5 miles of concrete-lined channels and 45 miles of roadside ditches on an annual basis;
WHEREAS, additional funds are included in the contract for litter removal, on-call after hours standby support, emergency storm response and support at community events; WHEREAS, MCE Corporation possesses the expertise, equipment and personnel to provide said services to the City; and
WHEREAS, sufficient Stormwater Utility (209), Measure A Maintenance (210) and Landscape Maintenance Assessment District (various LMADs) funds have been budgeted for the duration of the contract.

NOW, THEREFORE, BE IT RESOLVED AND ORDERED by the City Council of the City of Citrus Heights that the Agreement with MCE Corporation for the provision of vegetation management services for channels and open spaces other areas identified by the City is hereby approved subject to minor changes which may be made by the City Attorney or City Manager and approval as to form by the City Attorney, and the City Manager is authorized to execute the Agreement.

The City Clerk shall certify the passage and adoption of this Resolution and enter it into the book of original resolutions.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June, 2024, by the following vote, to wit:

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:
____________________________________
Bret Daniels, Mayor
ATTEST:

Amy Van, City Clerk
ITEM 13 Agenda Packet Page 186

CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Susan Talwar, Administrative Services Director
Alberto Preciado, Finance Manager

SUBJECT: Approval of Investment Policy Updates

Summary and Recommendation
Staff recommends that the City Council adopt Resolution No. 2024-___, a Resolution of the City Council of the City of Citrus Heights approving the Investment Policy and delegating authority to the Administrative Services Director to invest funds in accordance with the Investment Policy.

Fiscal Impact
There is no fiscal impact associated with this action.

Background and Analysis
The investment of City funds is governed by California Government Code sections 53600-53610 and 53646. The City Council periodically reviews the City’s Investment Policy to ensure compliance with the provisions of the Government Code (Code). The Code was recently amended by Senate Bill 1489. The City’s Investment Policy was last updated by the City Council on March 9, 2023. Staff, City Attorney Ryan Jones and City Investment Services Firm Chandler completed an annual review of the City’s Investment Policy and is recommending the following modifications:

Main changes to the investment policy with a focus on best practice and legal updates:
o Delegation of Authority: Added in language addressing the City of Citrus Heights ability to engage external investment advisers. (BEST PRACTICE) o Authorized Financial Dealers and Institutions: Augmented existing language to include Code requirements and require competitive transactions. (LEGAL) o Investments Not Approved: Incorporated the prohibition on purchasing securities with forward settlement dates exceeding 45 days from the time of investment per Senate Bill 1489. (LEGAL)
o Investing Parameters, Maximum Maturities: Defined maximum maturity to be set from the date of trade settlement per Senate Bill 1489. (LEGAL) ITEM 14 Agenda Packet Page 187
Subject: Approval of Investment Policy for Fiscal Year 2021-22 Date: June 10, 2021

Page 2 of 2 ends

Printed on Recycled Paper
o Reporting: Reporting, Reporting to City Council: Included quarterly reports must be submitted to Council within 45 days after the end of the quarter end per Senate Bill 1489. (LEGAL)
o Performance Evaluation: Added language stating that benchmarks can change over time based on changes in market conditions or cash flow requirements. (BEST PRACTICE)
o Appendix, Glossary of Investment Terms: Defined additional terms that are used throughout the investment policy to provide further clarifications for those reviewing the policy. (BEST PRACTICE)
Finance Committee Review
The information presented in this report was reviewed by the City Council 2x2 Finance Committee on June 11, 2024
Attachments

1. Resolution Approving the Investment Policy

2. Proposed Investment Policy (final version)

3. Proposed Investment Policy (redline version)
ITEM 14 Agenda Packet Page 188
RESOLUTION NO. 2024 - ____

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS

HEIGHTS APPROVING THE INVESTMENT POLICY AND

DELEGATING AUTHORITY TO THE ADMINISTRATIVE SERVICES

DIRECTOR TO INVEST FUNDS IN ACCORDANCE WITH THE

INVESTMENT POLICY
WHEREAS, consistent with legal compliance to the California Government Code; and WHEREAS, the policy has been updated to reflect industry best practices.

NOW, THEREFORE, BE IT RESOLVED, the City Council finds that the City’s Investment Policy complies with California Government Code Sections 53600 et seq., which governs investment practices of local governments; and
BE IT FURTHER RESOLVED the City Council of the City of Citrus Heights adopts the attached City of Citrus Heights Investment Policy.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 27th day of June, 2024, by the following vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

Bret Daniels, Mayor
ATTEST:

Amy Van, City Clerk
ITEM 14 Agenda Packet Page 189
City of Citrus Heights
Investment Policy
June 27, 2024
ITEM 14 Agenda Packet Page 190

TABLE OF CONTENTS
I. PURPOSE .............................................................................................................. 3 II. POLICY ................................................................................................................. 3 III. SCOPE................................................................................................................... 3 IV. GENERAL OBJECTIVES .................................................................................. 3 A. Safety............................................................................................................... 3 B. Liquidity.......................................................................................................... 4 C. Yield (Return on Investment)........................................................................ 4 V. STANDARDS OF CARE..................................................................................... 4 A. Prudence ......................................................................................................... 4 B. Ethics and Conflicts of Interest..................................................................... 4 C. Delegation of Authority ................................................................................. 5 D. Internal Controls........................................................................................... 5 E. Review of Investment Portfolio..................................................................... 5 VI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS...................6 VII. SAFEKEEPING AND CUSTODY...................................................................... 7 VIII. SUITABLE AND AUTHORIZED INVESTMENTS ....................................... 7 A. Investment Types............................................................................................ 7 B. Collateralization ........................................................................................... 12 C. Investments Not Approved...........................................................................12 D. Risk Management and Diversification ....................................................... 13 IX. INVESTING PARAMETERS........................................................................... 14 X. REPORTING...................................................................................................... 14 XI. PERFORMANCE EVALUATION................................................................... 14 XII. PERFORMANCE STANDARDS .....................................................................14 XIII. INVESTMENT POLICY COMPLIANCE AND ADOPTION ......................15 A. Policy Compliance and Changes................................................................. 15 B. Annual Statement of Investment Policy ..................................................... 15 APPENDIX (Glossary of Investment Terms) ................................................... 16 City ofCitrus Heights Investment Policy June 2024
ITEM 14 Agenda Packet Page 191
City ofCitrus Heights Investment Policy 3 June 2024
I. PURPOSE
The purpose of this Investment Policy is to provide guidance and direction for the prudent investment of the City of Citrus Heights (“City”) funds and to foster the creation of a systematic and controlled investment process. The ultimate goal of this Investment Policy is to maximize the efficiency of the City's cash management system and to enhance the economic status of the City while protecting its invested funds.

II. POLICY
It is the policy of the City to invest public funds in a prudent manner that will provide maximum security, adequate liquidity, and sufficient yield while meeting the daily cash flow demands of the City and conforming to all statutes and regulations governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal Treasurers Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public Treasurers (APT).

III. SCOPE
This investment policy applies to all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., These funds are accounted for in the City's Annual Comprehensive Financial Report and include: the General Fund, Special Revenue Funds, Capital Project Funds, Enterprise Fund, Internal Service Funds and Fiduciary Funds. The following are not governed by this policy:
 Funds excluded from this policy include the City's Retiree Healthcare Plan which is administered and managed separately by the California Employers' Retiree Benefit Trust (CERBT) Fund under the California Government Code Section 53620-53622 and bond proceeds which are subject to the conditions and restrictions of bond documents and are not governed by this policy.
 Any other funds specifically exempted by the City Council.

Pooling of Funds
Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

IV. GENERAL OBJECTIVES
The primary objectives, in priority order, of the City's investment activities are safety, liquidity, and yield.

A. Safety
Preservation of principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective shall be to mitigate credit risk and market risk. To attain this objective, the City shall diversify its investments by investing funds among several financial institutions and a variety of securities offering independent returns.

ITEM 14 Agenda Packet Page 192
City ofCitrus Heights Investment Policy 4 June 2024
B. Liquidity
The City's investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated without requiring a sale of securities. Since all possible cash demands cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in money market mutual funds or LAIF, which offer same-day liquidity for short-term funds.

C. Yield (Return on Investment)
The City's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, commensurate with the City's investment risk constraints and the liquidity characteristics of the portfolio. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low-risk securities in anticipation of earning a fair return relative to the risk being assumed.

V. STANDARDS OF CARE
A. Prudence
The standard of prudence to be used by City investment officials in the management of City moneys shall be the Prudent Investor Standard as authorized under Section 53600.3 of the California Government Code, which shall be applied in the context of managing all aspects of the overall portfolio. Investments shall be made with the care, skill, prudence, and diligence, under circumstances then prevailing, including but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims to safeguard the principal and maintain the liquidity needs of the City. This standard shall be applied in the context of managing the overall portfolio.

City investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.

B. Ethics and Conflicts ofInterest
All participants in the investment process shall act as custodians of the public trust.

Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. Officers and employees involved in the City investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or that could impair their ability to make impartial investment decisions. City employees and investment officials shall disclose any material financial interests in financial institutions that conduct business within their jurisdiction, and they shall further disclose any personal financial/investment positions that could be related to the performance of the City immediately to the Citrus Heights City Manager and annually to the Fair Political Practices Commission. City employees and officers shall ITEM 14 Agenda Packet Page 193
City ofCitrus Heights Investment Policy 5 June 2024
refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City.

C. Delegation of Authority
Authority to manage the City’s investment program is derived from California Government Code, Sections 41006 and 53600 et seq. The City Council is responsible for the management of the City’s funds, including the administration of this investment policy, and delegates to the Administrative Services Director the authority to invest or to reinvest funds, or to sell or exchange securities. The Administrative Services Director shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires. The Finance Manager and Accounting Manager are authorized to conduct investment-related activities, under the supervision of the Administrative Services Director, on behalf of the City.

The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy. The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust.

The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.

D. Internal Controls
The Administrative Services Director is responsible for establishing and maintaining a system of written internal controls. The internal controls shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets, or imprudent action by City employees and officers. The internal structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management.

The internal controls shall address the following points: ■ Segregation of Duties ■ Custodial Safekeeping ■ Delivery versus Payment (DVP) ■ Delegation of Authority ■ Documentation of Transactions Periodically, as deemed appropriate by the Administrative Services Director and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity, and compliance with policies and procedures.

E. Review of Investment Portfolio
The securities held by the City must be in compliance with Section VIII (Suitable and Authorized Investments) at the time of purchase. Because some securities may not ITEM 14 Agenda Packet Page 194
City ofCitrus Heights Investment Policy 6 June 2024
comply with Section VIII subsequent to the date of purchase, the Administrative Services Director shall at least quarterly review the portfolio to identify those securities that do not comply. The Administrative Services Director shall establish procedures to report to the City Council, major and critical incidences of noncompliance identified through the review of the portfolio.

VI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Administrative Services Director shall endeavor to complete investment transactions using a competitive bid process whenever possible. The City’s Administrative Services Director will determine which financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.

The Administrative Services Director shall maintain procedures for establishing a list of authorized brokers/dealers and financial institutions which are approved for investment purposes and are selected through a process of due diligence as determined by the City. Due inquiry shall determine whether such authorized brokers/dealers, and the individuals covering the City are reputable and trustworthy, knowledgeable and experienced in Public City investing, and able to meet all of their financial obligations. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).

In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
 Institutions licensed by the state as broker-dealers.  Institutions that are members of a federally regulated securities exchange.  Primary government dealers as designated by the Federal Reserve Bank and non-primary government dealers.
 Nationally or state-chartered banks.
 The Federal Reserve Bank.
 Direct issuers of securities eligible for purchase.

Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.

All financial institutions that desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Administrative Services Director with audited financials and a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy. The Administrative Services Director will conduct an annual review of the financial condition and registrations of such qualified bidders.

Public deposits will be made only in qualified public depositories as established by State law.

Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.

ITEM 14 Agenda Packet Page 195
City ofCitrus Heights Investment Policy 7 June 2024
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with brokers/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price.

VII. SAFEKEEPING AND CUSTODY
All security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a delivery-versus-payment (DVP) basis, which will ensure that securities are deposited in an eligible financial institution prior to the release of funds. To protect against potential losses due to the failure of individual securities dealers, and to enhance access to securities, interest payments, and maturity proceeds, all cash and securities shall be held in safekeeping in the City’s name by a third-party custodian designated by the Administrative Services Director, acting for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information. The only exception to the foregoing shall be depository accounts and securities purchases made with: State of California Local Agency Investment Fund (LAIF), time certificates of deposit, and mutual funds and money market mutual funds since the purchased securities are not deliverable. The Administrative Services Director shall be bonded to protect the public against possible embezzlement and malfeasance.

VIII. SUITABLE AND AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq (“Code”). Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence.

Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy. Percentage limitations of surplus funds invested are noted for the various investment instruments. Where there is a specified percentage limitation or minimum credit quality requirement for a particular category of investments, these requirements are applicable only at the date of purchase. A later increase or decrease in a percentage resulting from a change in values or assets shall not constitute a violation of that restriction. The City's funds may not be invested in those prohibited funds described in California Government Code 53601.6, but must only be invested in any of the following instruments as permitted by law (California Government Code Section 53601):

The City is empowered by statute to invest in the following types of securities:

A. Investment Types

1. U.S. TREASURY BILLS, NOTES & BONDS. Allowable along with other government obligations for which the full faith and credit of the United States are ITEM 14 Agenda Packet Page 196
City ofCitrus Heights Investment Policy 8 June 2024
pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries, provided that the maximum maturity is five (5) years.

2. U.S. GOVERNMENT AGENCY ISSUES AND GOVERNMENT- SPONSORED ENTERPRISES. This includes obligations, participations, or other instruments of, or issued by, a federal government agency or a United States government-sponsored enterprise. No more than 30% of the portfolio may be invested in any single Agency/Government Sponsored Enterprise and there shall be no more than 20% of callable agency securities in the portfolio. The maximum maturity shall not exceed five (5) years.

3. LOCAL AGENCY INVESTMENT FUND (LAIF). As authorized in Government Code Section 16429.1, local agencies may invest in the Local Agency Investment Fund (LAIF), a pooled investment money market fund established by the State of California, and overseen by the State Treasurer, which allows local agencies to pool their investment resources. Principal may be withdrawn on a one-day notice. Interest earned is paid quarterly. The fees charged are limited to one-quarter of one percent of the earnings of the fund. Current policies of LAIF set minimum and maximum amounts of monies that may be invested as well as maximum numbers of transactions that are allowed per month. The City may invest up to the maximum amount permitted by LAIF.

LAIF is in trust in the custody of the State Treasurer. The City's right to withdraw its deposited monies from LAIF is not contingent upon the State's ability to adopt a State Budget by July 1st of each new fiscal year.

4. BANKER'S ACCEPTANCE. Otherwise known as bills of exchange or time drafts, are negotiable instruments with a maturity of six months or less drawn on and accepted by a commercial bank. These instruments must be rated "A-1" or its equivalent or better by at least one Nationally Recognized Statistical Rating Organization (NRSRO); or long-term debt obligations that are rated in a category of "A" or its equivalent or better by at least one NRSRO. Banker's Acceptances are usually created to finance the import or export of goods, or the shipment of goods within the United States. No more than 40% of the portfolio may be invested in Banker's Acceptances. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity may not exceed 180 days.

5. NON-NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). As authorized in Government Code Section 53601.8, local agencies may invest in Certificates of Deposit. These instruments must comply with Government Code Sections 16500 or 16600. This is a receipt for funds deposited in a Bank or Savings and Loan Association for a specified period at a specified rate of interest. No more than 20% of the portfolio may be invested in certificates of deposit.

Maturities may not exceed five (5) years.

6. NEGOTIABLE CERTIFICATE OF DEPOSIT (NCD). Allowable certificates of deposits must be issued by a nationally or state-chartered bank or a state or federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. The amount of the NCD insured up to the FDIC limit does ITEM 14 Agenda Packet Page 197
City ofCitrus Heights Investment Policy 9 June 2024
not require any credit ratings. Any amount above the FDIC-insured limit must be issued by institutions which has short-term debt obligations rated "A-1" or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of "A" or its equivalent or better by at least one NRSRO. The maturity period for this investment vehicle may not exceed five (5) years unless approved by the Council. No more than 30% of the total portfolio may be invested in these securities. No more than 5% of the portfolio may be invested in any single issuer.

7. COMMERCIAL PAPER. As authorized in Government Code Section 5360l(h), provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
 Securities issued by corporations:
 A corporation organized and operating in the United States with assets of more than $500 million.
 The securities are rated “A-1” or its equivalent or better by at least one NRSRO.  If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO.  Securities issued by other entities:
 The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
 The securities must have program-wide credit enhancements including, but not limited to, over-collateralization, letters of credit, or a surety bond.  The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
 No more than 10% of the outstanding commercial paper of any single issuer.  No more than 25% of the City’s investment assets under management may be invested in Commercial Paper.
 No more than 5% of the portfolio may be invested in any single issuer.  The maximum maturity does not exceed 270 days.

8. REPURCHASE AGREEMENTS. As authorized in Government Code Section 53601(j), repurchase agreements are agreements between the local agency and seller for the purchase of government securities to be resold at a specific date and for a specific amount. Repurchase agreements are generally used for short-term investments for the City's daily automatic sweep account and will generally not exceed 30 days.

Repurchase Agreements are subject to a Master Repurchase Agreement between the City and the provider of the repurchase agreement. The Master Repurchase Agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA). The legal limitation on the maturity period for a repurchase agreement is for one year with the required market value underlying the agreement at 102% of the funds borrowed with the value adjusted quarterly.

9. MUNICIPAL SECURITIES OF THE CITY, STATE OF CALIFORNIA, OR LOCAL AGENCIES. As authorized in Government Code Section 53601(e), local ITEM 14 Agenda Packet Page 198
City ofCitrus Heights Investment Policy 10 June 2024
agencies may invest in Bonds of the State of California and any local government in the State of California, which are rated in the "A" category or better by one NRSRO at the time of investment. In no event shall this classification of investment exceed 30% of the value of the portfolio. No more than 5% of the portfolio may be invested in any single issuer and the maximum maturity does not exceed five (5) years.

10. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS).

Any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. In no event shall this classification of investment exceed 30% of the value of the portfolio. No more than 5% of the portfolio may be invested in any single issuer and the maximum maturity does not exceed five (5) years.

11. COLLATERALIZED BANK DEPOSITS. The City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651. There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.

12. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS. Mutual Funds are referred to in California Government Code Section 53601(l)(1), as "shares of beneficial interest issued by diversified management companies." Mutual Funds and Money Market Mutual Funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940 are authorized investments for funds subject to the following provisions:
 Mutual Funds that invest in the securities and obligations as authorized under California Government Code Section 53601(a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
■ Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or ■ Have retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by California Government Code Section 53601 and with assets under management in excess of $500 million.
■ No more than 10% of the total portfolio may be invested in Mutual Funds. ■ Money Market Mutual Funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria: ■ Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or ■ Have retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years experience managing money market mutual funds with assets under management in excess of $500 million. ■ No more than 20% of the total portfolio may be invested in Money Market Mutual Funds.

ITEM 14 Agenda Packet Page 199
City ofCitrus Heights Investment Policy 11 June 2024
■ No more than 20% of the total portfolio may be invested in mutual funds and money market mutual funds combined.

13. CORPORATE MEDIUM TERM NOTES. As authorized in Government Code Section 53601(k), local agencies may invest in corporate medium-term notes issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any state and operating within the United States that are rated in the rating category of "A" or its equivalent or higher rating for the issuer's debt as provided by one NRSRO and having a maximum remaining maturity period of five years or less in an amount not to exceed 30% of the City's portfolio. Furthermore, the maximum principal amount in any one issuer will not exceed 5% of the City's portfolio.

14. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH

SECURITIES, AND COLLATERALIZED MORTGAGE OBLIGATION
FROM ISSUERS NOT DEFINED IN SECTIONS 1 AND 2 OF THE SUITABLE

AND AUTHORIZED INVESTMENTS SECTION OF THIS
POLICY. The securities must be rated in a rating category of “AA” or its equivalent or better by a NRSRO. No more than 20% of the total portfolio may be invested in these securities with no more than 5% of the portfolio may be invested in any single Asset-Backed or commercial Mortgage security issuer. The maximum legal final maturity does not exceed five (5) years.

15. SURPANATIONALS. Allowable, provided that Issues are US dollar-denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO. No more than 30% of the total portfolio may be invested in these securities and no more than 10% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.

16. GOVERNMENT INVESTMENT POOLS. Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in securities and obligations authorized in subdivisions (a) to (q), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that meets all of the following criteria:
 The advisor is registered or exempt from registration with the Securities and Exchange Commission.
 The advisor has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive.  The advisor has assets under management in excess of five hundred million dollars ($500,000,000).

While local government investment pools generally provide significant safety and ITEM 14 Agenda Packet Page 200
City ofCitrus Heights Investment Policy 12 June 2024
liquidity, the Administrative Services Director shall complete a thorough investigation prior to making any such investment. Due diligence in investigations shall generally include a review of written statements of investment policies, objectives, fees schedules, and reporting schedules, as well as issues related to (1) eligible investors and securities, (2) the permitted frequencies and sizes of deposits and withdrawals, (3) security safeguards, including settlement processes, (4) the frequency with which securities are priced and the program audited, (5) the treatment of gains and losses, including interest calculations and distribution, (6) whether and, if so, how reserves, retained earnings, and similar funds are utilized by the investment pool, and (7) whether the investment pool is eligible for and, if so, accepts bond proceeds. In addition, only local government investment pools with at least five years' experience providing similar services to other California municipalities may be utilized.

B. Collateralization Certificates of Deposit (CDs). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.

Collateralization of Bank Deposits. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.

Repurchase Agreements. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
 The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities.
 Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.  The City shall receive monthly statements of collateral.

C. Investments Not Approved
Any security type or structure not specifically approved by this policy is hereby prohibited.

In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage-derived interest-only strips is prohibited. Investment in any security that could result in a zero-interest accrual if held to maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Trading securities for the sole purpose of speculating on the future direction of ITEM 14 Agenda Packet Page 201
City ofCitrus Heights Investment Policy 13 June 2024
interestrates are prohibited. Purchasing or selling securities on margin is prohibited. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. The purchase of foreign currency-denominated securities is prohibited. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.

D. Risk Management and Diversification, Mitigating Credit Risk in the Portfolio Credit risk is the risk that a security or a portfolio will lose some or all its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies:
 The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio.  No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy.  The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
 If a security owned by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
 Any actions taken related to the downgrade by the investment manager will be communicated to the Administrative Services Director in a timely manner.  If a decision is made to retain the security, the credit situation will be monitored and reported to the City Council.

Mitigating Market Risk in the Portfolio
Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cash flow purposes.

The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
 The City will maintain a minimum of six months of budgeted operating expenditures in short-term investments to provide sufficient liquidity for expected disbursements.  The maximum stated final maturity of individual securities in the portfolio will be five (5) years, except as otherwise stated in this policy.
 The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints, and risk tolerances.

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City ofCitrus Heights Investment Policy 14 June 2024
IX. INVESTING PARAMETERS
Maximum Maturities
To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements and known future liabilities. Where there is no specified maturity limitation on an investment, no investment shall be made in any security, which, at the time of the investment, has a term remaining to maturity in excess of five (5) years from the date of trade settlement, unless the City Council has granted express authority to make that investment no less than three months prior to the investment.

X. REPORTING
The Administrative Services Director shall submit investment reports to the City Council that provide a clear picture of the status of the current investment portfolio and shall contain sufficient information to permit an independent organization to evaluate the performance of the investment program.

Reporting to City Council
In accordance with California Government Code Sections 53607 and 53646, the Administrative Services Director shall submit to the City Council a monthly report of portfolio transactions and a quarterly investment report, which summarizes all securities in the portfolio. The quarterly report shall be provided to City Council within 45 days after the end of the quarter and include:
 Investment type
 Issuer
 Purchase date
 Maturity date
 Credit quality
 Coupon and yield
 Book value
 Market value
 Interest Earnings
 Average days to maturity
 Discussion of the current economic climate
 Statement that the portfolio is in compliance with this Investment Policy or the manner in which the portfolio is not in compliance.
 Statement of the City's ability to meet anticipated expenditure requirements for the next six months, or an explanation as to why sufficient money may not be available.

XI. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.

The Treasurer shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the Treasurer’s quarterly report. The Treasurer shall select an appropriate, readily available index to use as a market benchmark.

Benchmarks may change over time based on changes in market conditions or cash flow ITEM 14 Agenda Packet Page 203
City ofCitrus Heights Investment Policy 15 June 2024
requirements.

XII. PERFORMANCE STANDARDS
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.

The Administrative Services Director shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the Administrative Services Director’s quarterly report. The Administrative Services Director shall select an appropriate, readily available index to use as a market benchmark.

XIII. INVESTMENT POLICY COMPLIANCE AND ADOPTION
A. Policy Compliance and Changes
Any deviation from the policy shall be reported to City Council at the next scheduled meeting. The Administrative Services Director shall promptly notify the City Council of any material change in the policy, and any modifications to the policy must be approved by the City Council.

B. Annual Statement of Investment Policy
The Administrative Services Director shall render a written Investment Policy that shall be reviewed at least annually by the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity, and return, and its relevance to current law and financial and economic trends. The City Council shall consider the annual Investment Policy and any changes therein at a public meeting. The Investment Policy shall be adopted by resolution of the City Council.

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APPENDIX

GLOSSARY OF INVESTMENT TERMS
AGENCY: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government (i.e. Government National Mortgage Association). Federally sponsored agencies (FSA's) are backed by each particular agency with a market perception that there is an implicit government guarantee (i.e. Federal National Mortgage Association).
• FEDERAL FARM CREDIT BANK (FFCB): Provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds. • FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) that lend funds and provide correspondent banks services to member commercial banks, thrift institutions, credit unions and insurance companies. • FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC): Like FHLB, provides credit and liquidity in the housing market. FHLMC, also called “Freddie Mac” issues discount notes, bonds and mortgage pass-through securities. • FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages.
• GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions.

Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHA mortgages. The term "pass- throughs" is often used to describe Ginnie Maes.
• PRIVATE EXPORT FUNING CORPORATION (PEFCO): Assists exporters; obligations of PEFCO are not guaranteed by the full faith and credit of the US government. • TENNESSEE VALLEY AUTHORITY (TVA): Provides flood control and power and promotes development in portions of the Tennessee, Ohio, Mississippi River valleys. TVA currently issues discount notes and bonds.

ASSET-BACKED SECURITIES: Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

AVERAGE LIFE: In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.

BANKER’S ACCEPTANCE: A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor.

BENCHMARK: A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

BOOK VALUE: The value at which a debt security is shown on the holder's balance sheet. Book value is often acquisition cost plus/minus amortization and accretion, which may differ significantly from the security's current value in the market.

BROKER: Someone who brings buyers and sellers together and is compensated for his/her service.

CALLABLE: A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline, the issuer will likely call its current securities and reissue them at a lower rate of interest.

CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CDs are typically negotiable.

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COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

COLLATERALIZED BANK DEPOSIT: A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMO): Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

COLLATERALIZED TIME DEPOSIT: Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.

COMMERCIAL PAPER: The short-term unsecured debt of corporations.

COUPON: The rate of return at which interest is paid on a bond.

CREDIT QUALITY: The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by a Nationally Recognized Statistical-Rating Organization.

CREDIT RISK: The risk to an investor that an issuer will default in the payment of interest and/or principal on a security.

CUSTODIAN: A bank or other financial institution that keeps custody of stock certificates and other assets.

DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, by buying and selling for his/her own account.

DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.

DISCOUNT: The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

DIVERSIFICATION: Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.

DURATION: The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a security to changes interest rates.

FAIR VALUE: The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits currently up to $250,000 per deposit.

FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., twelve Regional Banks and about 5,700 commercial banks that are members of the system.

FIDUCIARY: A person or organization that acts on behalf of another person(s) or organization that puts their clients’ interest ahead of their own as they are bound both legally and ethically to act in the other’s best interests.

GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB): A standard-setting ITEM 14 Agenda Packet Page 206
body, associated with the Financial Accounting Foundation, which prescribes standard accounting practices for governmental units.

GOVERNMENT SECURITIES: An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds." INTERNAL CONTROLS: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:
■ Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer. ■ Separation of transaction authority from accounting and record keeping - By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. ■ Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping. ■ Avoidance of physical delivery securities - Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. ■ Clear delegation of authority to subordinate staff members - Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities. • Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.
• Development of a wire transfer agreement with the lead bank and third-party custodian - The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers.

LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.

LOCAL AGENCY INVESTMENT FUND (LAIF): Chapter 730, Statutes of 1976 of the State of California, established the Local Agency Investment Fund. This fund enables local governmental agencies to remit money not required for immediate needs to the State Treasurer for the purpose of investment. In order to derive the maximum rate of return possible, the State Treasurer has elected to invest these monies with State monies as a part of the Pooled Money Investment Account (PMIA). Each local governmental unit has the exclusive determination of the length of time its money will be on deposit with the State Treasurer. At the end of each calendar quarter, all earnings derived from investments are distributed by the State Controller to the participating government agencies in proportion to each agency's respective amounts deposited in the Fund and the length of time such amounts remained therein. Prior to the distribution, the State's costs of administering the program are deducted from the earnings.

LOCAL GOVERNMENT INVESTMENT POOL: Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers ITEM 14 Agenda Packet Page 207
Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

MAKE WHOLE CALL: A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." MARGIN: The difference between the market value of a security and the loan a broker makes using that security as collateral.

MARKET RISK: The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

MARK-TO-MARKET: The process whereby the book value or collateral value of a security is adjusted to reflect its current market value.

MARKET VALUE: The current price at which a security is trading and could presumably be purchased or sold at that particular point in time.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements that establish each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller- borrower.

MATURITY: The date upon which the principal or stated value of a financial obligation is due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.

MEDIUM TERM NOTES: Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

MODIFIED DURATION: The percent change in price for a 100-basis point change in yields.

Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.

MONEY MARKET: The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.

MONEY MARKET MUTUAL FUND: Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds).

MORTGAGE PASS-THROUGH SECURITIES: A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.

MUNICIPAL SECURITIES: Securities issued by state and local agencies to finance capital and operating expenses.

MUTUAL FUND: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by Securities and Exchange Commission (SEC) disclosure guidelines.

NATIONALLY RECOGNIZED STATISTICAL-RATING ORGANIZATION (NRSRO):

Standard and Poor's, Moody's, and Fitch Financial Services are examples of such organizations.

NEGOTIABLE CERTIFICATE OF DEPOSIT (CD): A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or statelicensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.

PAR VALUE: The amount of principal that must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond.

PAYDOWN: A reduction in the principal amount owed on a bond, loan, or other debt.

PORTFOLIO: Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification.

PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested ITEM 14 Agenda Packet Page 208
in a given security.

PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker/dealers, banks and a few unregulated firms.

PRINCIPAL: (1) The face amount or par value of a debt instrument. (2) One who acts as a dealer buying and selling for his own account.

PRUDENT PERSON (PRUDENT INVESTOR) (PRUDENT PERSON) RULE: A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.

REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate the buyer for this. Dealers use RP extensively to finance their positions.

Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves.

RISK: Degree of uncertainty of return on an asset.

RULE 2A-7 OF THE INVESTMENT COMPANY ACT: Applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13-month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).

SAFEKEEPING: A service to bank customers whereby securities are held by the bank in the customer’s name.

SECURITIES AND EXCHANGE COMMISSION (SEC): The U.S. Securities and Exchange Commission (SEC) is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets.

The SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.

STRUCTURED NOTE: A complex, fixed-income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.

SUPRANATIONAL: A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision-making to promote economic development in the member countries.

TOTAL RATE OF RETURN: A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio.

U.S. TREASURY OBLIGATIONS: Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. • TREASURY BILLS: Short-term U.S. government non-interest bearing discounted debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year ITEM 14 Agenda Packet Page 209
bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends.
• TREASURY NOTE: A medium-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of from one to ten years and issued in denominationsranging from $1,000 to $1 million or more. • TREASURY BOND: A long-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of more than 10 years and issued in minimum denominations of$1,000.

UNIFORM NET CAPITAL RULE: Securities and Exchange Commission (SEC) Rule 15C3- 1 outlining requirements that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash.

VOLATILITY: A degree of fluctuation in the price and valuation of securities.

YIELD: The current rate of return on an investment security generally expressed as a percentage of the security's current price. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

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City of Citrus Heights
Investment Policy
March 9, 2023June_27,_ 2024
ITEM 14 Agenda Packet Page 211

TABLE OF CONTENTS
I. PURPOSE .............................................................................................................. 3 II. POLICY ................................................................................................................. 3 III. SCOPE................................................................................................................... 3 IV. GENERAL OBJECTIVES .................................................................................. 3 A. Safety............................................................................................................... 3 B. Liquidity.......................................................................................................... 4 C. Yield (Return on Investment)........................................................................ 4 V. STANDARDS OF CARE..................................................................................... 4 A. Prudence ......................................................................................................... 4 B. Ethics and Conflicts of Interest..................................................................... 4 C. Delegation of Authority ................................................................................. 5 D. Internal Controls........................................................................................... 5 E. Review of Investment Portfolio..................................................................... 5 VI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS...................6 VII. SAFEKEEPING AND CUSTODY...................................................................... 7 VIII. SUITABLE AND AUTHORIZED INVESTMENTS ....................................... 7 A. Investment Types............................................................................................ 7 B. Collateralization ........................................................................................... 12 C. Investments Not Approved...........................................................................12 D. Risk Management and Diversification ....................................................... 13 IX. INVESTING PARAMETERS........................................................................... 14 X. REPORTING...................................................................................................... 14 XI. PERFORMANCE EVALUATION................................................................... 14 XII. PERFORMANCE STANDARDS .....................................................................14 XIII. INVESTMENT POLICY COMPLIANCE AND ADOPTION ......................15 A. Policy Compliance and Changes................................................................. 15 B. Annual Statement of Investment Policy ..................................................... 15 APPENDIX (Glossary of Investment Terms) ................................................... 16 City ofCitrus Heights Investment Policy March June
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20234
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City ofCitrus Heights Investment Policy 3 JuneMarch 20243 I. PURPOSE
The purpose of this Investment Policy is to provide guidance and direction for the prudent investment of the City of Citrus Heights (“City”) funds and to foster the creation of a systematic and controlled investment process. The ultimate goal of this Investment Policy is to maximize the efficiency of the City's cash management system and to enhance the economic status of the City while protecting its invested funds.

II. POLICY
It is the policy of the City to invest public funds in a prudent manner that will provide maximum security, adequate liquidity, and sufficient yield, while meeting the daily cash flow demands of the City and conforming to all statutes and regulations governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal Treasurers Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public Treasurers (APT).

IV. GENERAL OBJECTIVES
The primary objectives, in priority order, of the City's investment activities are safety, liquidity, and yield.

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City ofCitrus Heights Investment Policy 4 JuneMarch 20243 B. Liquidity
The City's investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated without requiring a sale of securities. Since all possible cash demands cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in money market mutual funds or LAIF, which offer same-day liquidity for short-term funds.

B. Ethics and Conflicts ofInterest
All participants in the investment process shall act as custodians of the public trust.

Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. Officers and employees involved in the City investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or that could impair their ability to make impartial investment decisions. City employees and investment officials shall disclose any material financial interests in financial institutions that conduct business within their jurisdiction, and they shall further disclose any personal financial/investment positions that could be related to the performance of the City immediately to the Citrus Heights City Manager and annually to the Fair Political Practices Commission. City employees and officers shall ITEM 14 Agenda Packet Page 215
City ofCitrus Heights Investment Policy 5 JuneMarch 20243 refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City.

C. Delegation of Authority
Authority to manage the City’s investment program is derived from California Government Code, Sections 41006 and 53600 et seq. The City Council is responsible for the management of the City’s funds, including the administration of this investment policy, and delegates to the Administrative Services Director the authority to invest or to reinvest funds, or to sell or exchange securities. The Administrative Services Director shall thereafter assume full responsibility for those transactions until the delegation of authority is revoked or expires. The Finance Manager and Accounting Manager are authorized to conduct investment investment-related activities, under the supervision of the Administrative Services Director, on behalf of the City.

D. Internal Controls
The Administrative Services Director is responsible for establishing and maintaining a system of written internal controls. The internal controls shall be designed to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, unanticipated changes in financial markets, or imprudent action by City employees and officers. The internal structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that ( 1) the cost of a control should not exceed the benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by management.

The internal controls shall address the following points: ■ Segregation of Duties ■ Custodial Safekeeping ■ Delivery versus Payment (DVP) ■ Delegation of Authority ■ Documentation of Transactions Periodically, as deemed appropriate by the Administrative Services Director City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity, and compliance with policies and procedures.

E. Review of Investment Portfolio
The securities held by the City must be in compliance with Section VIII (Suitable and Authorized Investments) at the time of purchase. Because some securities may not ITEM 14 Agenda Packet Page 216
City ofCitrus Heights Investment Policy 6 JuneMarch 20243 comply with Section VIII subsequent to the date of purchase, the Administrative Services Director shall at least quarterly review the portfolio to identify those securities that do not comply. The Administrative Services Director shall establish procedures to report to the City Council, major and critical incidences of noncompliance identified through the review of the portfolio.

Due inquiry shall determine whether such authorized brokers/dealers, and the individuals covering the City are reputable and trustworthy, knowledgeable and experienced in Public City investing, and able to meet all of their financial obligations. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).

In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
 Institutions licensed by the state as a broker-dealers.  Institutions that are members of a federally regulated securities exchange.  Primary government dealers as designated by the Federal Reserve Bank and non-primary government dealers.
 Nationally or state-chartered banks.
 The Federal Reserve Bank.
 Direct issuers of securities eligible for purchase.

All financial institutions whichthat desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Administrative Services Director with audited financials and a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy. The Administrative Services Director will conduct an annual review of the financial condition and registrations of such qualified bidders.

Public deposits will be made only in qualified public depositories as established by State law.

Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.

ITEM 14 Agenda Packet Page 217
City ofCitrus Heights Investment Policy 7 JuneMarch 20243 Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with brokers/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price.

VII. SAFEKEEPING AND CUSTODY
All security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a delivery-versus-payment (DVP) basis, which will ensure that securities are deposited in an eligible financial institution prior to the release of funds. To protect against potential losses due to the failure of individual securities dealers, and to enhance access to securities, interest payments, and maturity proceeds, all cash and securities shall be held in safekeeping in the City’s name by a third-party custodian designated by the Administrative Services Director, acting for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information. The only exception to the foregoing shall be depository accounts and securities purchases made with: State of California Local Agency Investment Fund (LAIF), time certificates of deposit, and mutual funds and money market mutual funds, since the purchased securities are not deliverable. The Administrative Services Director shall be bonded to protect the public against possible embezzlement and malfeasance.

The City is empowered by statute to invest in the following types of securities:

A. Investment Types

1. U.S. TREASURY BILLS, NOTES & BONDS. Allowable along with other government obligations for which the full faith and credit of the United States are ITEM 14 Agenda Packet Page 218
City ofCitrus Heights Investment Policy 8 JuneMarch 20243 pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries, provided that the maximum maturity is five (5) years.

2. U.S. GOVERNMENT AGENCY ISSUES AND GOVERNMENT

GOVERNMENT- SPONSORED
ENTERPRISES. This includes obligations, participations, or other instruments of, or issued by, a federal government agency or a United States government-sponsored enterprise. No more than 30% of the portfolio may be invested in any single Agency/Government Sponsored Enterprise and there shall be no more than 20% of agency callable agency securities in the portfolio. The maximum maturity shall not exceed five
(5) years.

3. LOCAL AGENCY INVESTMENT FUND (LAIF). As authorized in Government Code Section 16429.1, local agencies may invest in the Local Agency Investment Fund (LAIF), a pooled investment money market fund established by the State of California, and overseen by the State Treasurer, which allows local agencies to pool their investment resources. Principal may be withdrawn on a one-day notice. Interest earned is paid quarterly. The fees charged are limited to one- quarter of one percent of the earnings of the fund. Current policies of LAIF set minimum and maximum amounts of monies that may be invested as well as maximum numbers of transactions that are allowed per month. The City may invest up to the maximum amount permitted by LAIF.

4. BANKER'S ACCEPTANCE. Otherwise known as bills of exchange or time drafts, are negotiable instruments with a maturity of six months or less drawn on and accepted by a commercial bank. These instruments must be rated "A-1" or its equivalent or better by at least one Nationally Recognized Statistical Rating Organization (NRSRO); or long-term debt obligations which that are rated in a category of "A" or its equivalent or better by at least one NRSRO. Banker's Acceptances are usually created to finance the import or export of goods, or the shipment of goods within the United States. No more than 40% of the portfolio may be invested in Banker's Acceptances. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity may not exceed 180 days.

5. NON-NEGTIABLE CERTIFICATENEGOTIABLE OFCERTIFICATE
DEPOSITOF (DEPOSIT (CD). As authorized in

6. Government Code Section 53601.8, local agencies may invest in Certificates of Deposit. These instruments must comply with Government Code Sections 16500 or 16600. This is a receipt for funds deposited in a Bank or Savings and Loan Association for a specified period at a specified rate of interest. No more than 20% of the portfolio may be invested in certificates of deposit.

Maturities may not exceed five

7.5.(5) years.

8.6.NEGOTIABLE CERTIFICATE OF DEPOSIT (NCD). Allowable certificates of ITEM 14 Agenda Packet Page 219
City ofCitrus Heights Investment Policy 9 JuneMarch 20243 deposits must be issued by a nationally or state-chartered bank or a state or federal association, a state or federal credit union, or by a federally licensed or state statelicensed branch of a foreign bank. The amount of the NCD insured up to the FDIC limit does
ITEM 14 Agenda Packet Page 220
City ofCitrus Heights Investment Policy 10 JuneMarch 20243 not require any credit ratings. Any amount above the FDIC FDIC-insured limit must be issued by institutions which have has short-term debt obligations rated "A-1" or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of "A" or its equivalent or better by at least one NRSRO. The maturity period for this investment vehicle may not exceed five (5) years unless approved by the Council. No more than 30% of the total portfolio may be invested in these securities.

No more than 5% of the portfolio may be invested in any single issuer.

9.7.COMMERCIAL PAPER. As authorized in Government Code Section 5360l(h), provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
 Securities issued by corporations:
 A corporation organized and operating in the United States with assets of more than $500 million.
 The securities are rated “A-1” or its equivalent or better by at least one NRSRO.  If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO.  Securities issued by other entities:
 The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
 The securities must have program-wide credit enhancements including, but not limited to, over-collateralization, letters of credit, or a surety bond.  The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
 No more than 10% of the outstanding commercial paper of any single issuer.  No more than 25% of the City’s investment assets under management may be invested in Commercial Paper.
 No more than 5% of the portfolio may be invested in any single issuer.  The maximum maturity does not exceed 270 days.

10.8. REPURCHASE AGREEMENTS. As authorized in Government Code Section 53601(j)G), repurchase agreements are agreements between the local agency and seller for the purchase of government securities to be resold at a specific date and for a specific amount. Repurchase agreements are generally used for short-term investments for the City's daily automatic sweep account and will generally not exceed 30 days.

11.9. MUNICIPAL SECURITIES OF THE CITY, STATE OF CALIFORNIA, OR LOCAL AGENCIES. As authorized in Government Code Section 53601(e), local ITEM 14 Agenda Packet Page 221
City ofCitrus Heights Investment Policy 11 JuneMarch 20243 agencies may invest in Bonds of the State of California and any local government in the State of California, which are rated in the "A" category or better by one NRSRO at the time of investment. In no event shall this classification of investment exceed 30% of the value of the portfolio. No more than 5% of the portfolio may be invested in any single issuer and the maximum maturity does not exceed five (5) years.

12.10. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS).

13.11. COLLATERALIZED BANK DEPOSITS. The City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651. There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.

14.12. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS. Mutual Funds
are referred to in California Government Code Section 53601(l)(1), as "shares of beneficial interest issued by diversified management companies." Mutual Funds and Money Market Mutual Funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940 are authorized investments for funds subject to the following provisions:
 Mutual Funds that invest in the securities and obligations as authorized under California Government Code Section 53601(a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
■ Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or ■ Have retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by California Government Code Section 53601 and with assets under management in excess of $500 million.
■ No more than 10% of the total portfolio may be invested in Mutual Funds. ■ Money Market Mutual Funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria: ■ Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or ■ Have retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of $500 million.

ITEM 14 Agenda Packet Page 222
City ofCitrus Heights Investment Policy 12 JuneMarch 20243 ■ No more than 20% of the total portfolio may be invested in Money Market Mutual Funds.

ITEM 14 Agenda Packet Page 223
City ofCitrus Heights Investment Policy 13 JuneMarch 20243 ■ No more than 20% of the total portfolio may be invested in mutual funds and money market mutual funds combined.

15.13. CORPORATE MEDIUM TERM NOTES. As authorized in Government Code Section 53601(k), local agencies may invest in corporate medium medium-term notes issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any state and operating within the United States that are rated in the rating category of "A" or its equivalent or higher rating for the issuer's debt as provided by one NRSRO and having a maximum remaining maturity period of five years or less in an amount not to exceed 30% of the City's portfolio. Furthermore, the maximum principal amount in any one issuer will not exceed 5% of the City's portfolio.

16.14. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASSTHROUGH SECURITIES, AND COLLATERALIZED MORTGAGE OBLIGATION FROM ISSUERS NOT DEFINED IN SECTIONS 1 AND 2 OF

THE SUITABLE AND AUTHORIZED INVESTMENTS SECTION OF
THIS
POLICY. The securities must be rated in a rating category of “AA” or its equivalent or better by a NRSRO. No more than 20% of the total portfolio may be invested in these securities with no more than 5% of the portfolio may be invested in any single Asset-Backed or commercial Mortgage security issuer. The maximum legal final maturity does not exceed five (5) years.

17.15. SURPANATIONALS. Allowable, provided that Issues are US dollar dollardenominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.

No more than 30% of the total portfolio may be invested in these securities and no more than 10% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.

18.16. GOVERNMENT INVESTMENT POOLS. Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in securities and obligations authorized in subdivisions (a) to (q), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that meets all of the following criteria:
 The advisor is registered or exempt from registration with the Securities and Exchange Commission.
 The advisor has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive.  The advisor has assets under management in excess of five hundred million dollars ($500,000,000).

ITEM 14 Agenda Packet Page 224
City ofCitrus Heights Investment Policy 14 JuneMarch 20243 While local government investment pools generally provide significant safety and ITEM 14 Agenda Packet Page 225
City ofCitrus Heights Investment Policy 15 JuneMarch 20243 liquidity, the Administrative Services Director shall complete a thorough investigation prior to making any such investment. Due diligence in investigations shall generally include a review of written statements of investment policies, objectives, fees schedules, and reporting schedules, as well as issues related to (1) eligible investors and securities, (2) the permitted frequencies and sizes of deposits and withdrawals, (3) security safeguards, including settlement processes, (4) the frequency with which securities are priced and the program audited, (5) the treatment of gains and losses, including interest calculations and distribution, (6) whether and, if so, how reserves, retained earnings, and similar funds are utilized by the investment pool, and (7) whether the investment pool is eligible for and, if so, accepts bond proceeds. In addition, only local government investment pools with at least five years' experience providing similar services to other California municipalities may be utilized.

B. Collateralization
C.B. Certificates of Deposit (CDs). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an City agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.

D.C. Investments Not Approved
Any security type or structure not specifically approved by this policy is hereby prohibited.

In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage mortgage-derived interest-only strips is prohibited. Investment in any security that could result in a zero zero-interest accrual if held to maturity is prohibited.

Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted.

Trading securities for the sole purpose of speculating on the future direction of ITEM 14 Agenda Packet Page 226
City ofCitrus Heights Investment Policy 16 JuneMarch 20243 interest rates isare prohibited. Purchasing or selling securities on margin is prohibited. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. The purchase of foreign currency currency-denominated securities is prohibited. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.

E.D. Risk Management and Diversification, Mitigating Credit Risk in the Portfolio Credit risk is the risk that a security or a portfolio will lose some or all its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies:
 The diversification requirements included in the “Authorized Investments” section of this policy are designed to mitigate credit risk in the portfolio.  No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy.  The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
 If a security owned by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
 Any actions taken related to the downgrade by the investment manager will be communicated to the Administrative Services Director in a timely manner.  If a decision is made to retain the security, the credit situation will be monitored and reported to the City Council.

The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
 The City will maintain a minimum of six months of budgeted operating expenditures in short short-term investments to provide sufficient liquidity for expected disbursements.
 The maximum stated final maturity of individual securities in the portfolio will be five (5) years, except as otherwise stated in this policy.
 The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints, and risk tolerances.

ITEM 14 Agenda Packet Page 227
City ofCitrus Heights Investment Policy 17 JuneMarch 20243 IX. INVESTING PARAMETERS
Maximum Maturities
To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements and known future liabilities. Where there is no specified maturity limitation on an investment, no investment shall be made in any security, which, at the time of the investment, has a term remaining to maturity in excess of five (5) years from the date of trade settlement, unless the City Council has granted express authority to make that investment no less than three months prior to the investment.

Benchmarks may change over time based on changes in market conditions or cash flow ITEM 14 Agenda Packet Page 228
City ofCitrus Heights Investment Policy 18 JuneMarch 20243 requirements.

XII. PERFORMANCE STANDARDS
The investment portfolio shall be designed to attain a market-average rate of return tn ITEM 14 Agenda Packet Page 229
City ofCitrus Heights Investment Policy 19 JuneMarch 20243 throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.

ITEM 14 Agenda Packet Page 230

APPENDIX

ASSET -BACKED SECURITIES: Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

AVERAGE LIFE: In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected.

BENCHMARK: A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy.

BROKER: Someone who brings buyers and sellers together and is compensated for his/her service.

CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large Large-denomination CDs are typically negotiable.

ITEM 14 Agenda Packet Page 231
COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

COMMERCIAL PAPER: The short-term unsecured debt of corporations.

COUPON: The rate of return at which interest is paid on a bond.

CREDIT RISK: The risk to an investor that an issuer will default in the payment of interest and/or principal on a security.

CUSTODIAN: A bank or other financial institution that keeps custody of stock certificates and other assets.

ITEM 14 Agenda Packet Page 232
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, by buying and selling for his/her own account.

DIVERSIFICATION: Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk.

FAIR VALUE: The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits currently up to $250,000 per deposit.

GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB): A standard-setting body, associated with the Financial Accounting Foundation, which prescribes standard accounting practices for governmental units.

GOVERNMENT SECURITIES: An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds." INTERNAL CONTROLS: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:
■ Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer. ■ Separation of transaction authority from accounting and record keeping - By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. ■ Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping. ■ Avoidance of physical delivery securities - Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. ■ Clear delegation of authority to subordinate staff members - Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper ITEM 14 Agenda Packet Page 233
actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities. • Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.
• Development of a wire transfer agreement with the lead bank and third-party custodian - The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers.

LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a ITEM 14 Agenda Packet Page 234
substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.

LOCAL GOVERNMENT INVESTMENT POOL: Investment pools that range from the State Treasurer’s Office Local Agency Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.

MARKET RISK: The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.

MARK-TO-MARKET: The process whereby the book value or collateral value of a security is adjusted to reflect its current market value.

MARKET VALUE: The current price at which a security is trading and could presumably be purchased or sold at that particular point in time.

MODIFIED DURATION: The percent change in price for a 100-basis point change in yields.

Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk.

MONEY MARKET: The market in which short-term debt instruments (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.

MUNICIPAL SECURITIES: Securities issued by state and local agencies to finance capital and operating expenses.

MUTUAL FUND: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are ITEM 14 Agenda Packet Page 235
regulated by the Investment Company Act of 1940 and must abide by Securities and Exchange Commission (SEC) disclosure guidelines.

NATIONALLY RECOGNIZED STATISTICAL-RATING ORGANIZATION (NRSRO):

Standard and Poor's, Moody's, and Fitch Financial Services are examples of such organizations.

PAR VALUE: The amount of principal that must be paid at maturity. Also referred to as the face amount of a bond, normally quoted in $1,000 increments per bond.

PAYDOWN: A reduction in the principal amount owed on a bond, loan, or other debt.

PORTFOLIO: Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent, or other asset. The purpose of a portfolio is to reduce risk by diversification.

PRINCIPAL: The face value or par value of a debt instrument, or the amount of capital invested in a given security.

PRINCIPAL: (1) The face amount or par value of a debt instrument. (2) One who acts as a dealer buying and selling for his own account.

REPURCHASE AGREEMENT (RP OR REPO): A holder of securitiessellsthese securitiesto an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate the buyer for this. Dealers use RP extensively to finance their positions.

Exception: When the Fed is said to be doing RP, it is lending money that is ITEM 14 Agenda Packet Page 236
increasing bank reserves.

RISK: Degree of uncertainty of return on an asset.

SAFEKEEPING: A service to bank customers whereby securities are held by the bank in the customer’s name.

The SEC promotes full public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.

STRUCTURED NOTE: A complex, fixed -income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements.

SUPRANATIONAL: A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision -making to promote economic development in the member countries.

U.S. TREASURY OBLIGATIONS: Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. • TREASURY BILLS: Short-term U.S. government non-interest bearing discounted debt securities with maturities of no longer than one year and issued in minimum denominations of
• $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends.
• TREASURY NOTE: A medium-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of from one to ten years and issued in denominationsranging from $1,000 to $1 million or more. • TREASURY BOND: A long-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of more than 10 years and issued in minimum denominations of$1,000.
• TREASURY NOTE: A medium-term coupon-bearing U.S. Treasury security issued as a direct obligation of the U.S. Government and having an initial maturity of from one to ten years and issued in denominationsranging from $1,000 to $1 million or more.

VOLATILITY: A degree of fluctuation in the price and valuation of securities.

ITEM 14 Agenda Packet Page 237
YIELD: The current rate of return on an investment security generally expressed as a percentage of the security's current price. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

ITEM 14 Agenda Packet Page 238
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CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Casey Kempenaar, Community Development Director
Meghan Huber, Economic Development & Community Engagement Director
SUBJECT: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Summary and Recommendation
In November 2021, the City Council adopted the Sunrise Tomorrow Specific Plan (STSP) and associated Environmental Impact Report (EIR). The STSP is intended to guide the redevelopment of the Sunrise Mall site into a mix of uses including hotel, residential, retail, and office uses.

The Specific Plan lays the groundwork for Sunrise Mall to become a vibrant mixed-use destination and economic engine for the City with numerous benefits for the entire Citrus Heights community. The overall purpose of the Specific Plan is to provide a comprehensive direction for the development of the project site while implementing community feedback and the goals and policies of the Citrus Heights General Plan.

In May 2024, the Planning Commission considered an application for the northwest corner of the STSP site which includes the proposed subdivision of the existing 2.8-acre US Bank parcel into three parcels, 1.48-acres, 0.93-acres, and 0.38-acres in size respectively.

The proposed subdivision would allow the existing US Bank to remain on an existing 0.93-acre parcel while allocating 1.48 acres for a future hotel development as well as a 0.38-acre parcel anticipated as retail or restaurant use.

The application includes consideration of a Development Agreement to memorialize key infrastructure obligations as well as future hotel design and operation considerations in conjunction with the proposed parcel map.

The Planning Commission reviewed the proposed project and recommended the City Council make the following motions:

ITEM 15 Agenda Packet Page 239
Subject: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Date: June 27, 2024

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Motion 1: Move to determine the previously adopted Sunrise Tomorrow Specific Plan EIR is the appropriate Environmental Document For this Project and no further review is required.

Motion 2: Move to Approve a Tentative Parcel Map to allow the division of an existing 2.8- acre parcel into three parcels, 1.48-acres, 0.93-acres, and 0.38-acres in size subject to the findings and conditions contained in the staff report.

Motion 3: Move to introduce for first reading, read by title only and waive the full reading of Ordinance No. 2024- _____, as shown in Exhibit B, an Ordinance of the City Council of the City of Citrus Heights California, adopting and approving the Sunrise Tomorrow Hotel Development Agreement.

City Council Strategic Goal/Objective
This staff report aligns with the following Citrus Heights City Council Strategic Plan Objectives:

Goals: Maintain and Enhance Fiscal Stability
Diversify for a Vibrant Economy
Fiscal Impact
There is no fiscal impact with this action. A future hotel would result in a significant contribution to Transient Occupancy Tax (TOT) revenues; however, the magnitude of revenue generated is unknown at this time. Preliminary estimates project TOT revenues being more than $400,000 per year based upon the current development program1
. Revenue projection refinements will be
provided in conjunction with any future development application.

Background and Analysis
Project Description
The applicant proposes to create three (3) parcels from one existing parcel, as shown in Exhibit A. There is no further development proposed for the site in conjunction with the proposed Parcel Map at this time. The existing US Bank will continue to operate in its current fashion moving forward. The Parcel Map will allow the property owner to convey (sell) any of the three parcels to another interested party to construct future projects on the resulting parcels. The future development would need to be consistent with the proposed/allowed uses.

This Site is located in Sub Area 1-B of the Sunrise Tomorrow Specific Plan and is identified as a likely candidate for a hotel development. The Specific Plan and EIR anticipates a 120-room hotel and supporting retail uses to occur on the site in a future date.

No physical changes are proposed to the property at this time; however, the property owner has indicated that separate legal parcels are necessary to support development interest in the site as envisioned by the STSP. The proposed Parcel Map will allow the property owner to advance 1 This estimate is based upon 120 rooms at 65% occupancy (78 rooms) and a nightly rate of $140.00 with the current 12% TOT ($16.80). $16.80 x 78 x 365 = $478,296.

ITEM 15 Agenda Packet Page 240
Subject: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Date: June 27, 2024

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conversations with development partners to pursue a future hotel and retail/restaurant development.

Figure 1: STSP Sub Area 1-B Conceptual Plan
In addition to the Tentative Parcel Map, a Development Agreement is proposed to memorialize key infrastructure obligations and future hotel design and operation considerations in conjunction with the proposed parcel map. Specific permitted hotel brands are identified to ensure the hotel is of a quality that enhances community image and the Sunrise MarketPlace. The Tentative Parcel Map and Development Agreement are each summarized below.

Tentative Parcel Map
The proposal would involve splitting the existing 2.8-acre US Bank parcel into three parcels,

1.48-acres, 0.93-acres, and 0.38-acres in size respectively. The proposed subdivision would allow the existing US Bank to remain on an existing 0.93-acre parcel while allocating 1.48 acres for a future hotel development as well as a 0.38-acre parcel anticipated as retail or restaurant use.

Access to the new parcels will be provided through the existing Reciprocal Access Agreement (REA) for the site.

ITEM 15 Agenda Packet Page 241
Subject: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Date: June 27, 2024

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Figure 2- Proposed Parcel Map
Development Agreement
The City and the Property Owner have proposed to enter into a Development Agreement (Exhibit B-1). By entering into a Development Agreement (DA), the City will obtain a legally binding promise that the developer will deliver a project as spelled out in the agreement, including potential hotel brands and design, as well as infrastructure necessary to implement the STSP. In exchange, the developer gets a legally binding promise that he will be able to build the project. The DA has an initial term of seven (7) years with the ability for the term to be extended with City Council approval.

Due to complexities of the improvements required for this site related to the ultimate development of the broader Sunrise Tomorrow site, provisions are included in the Development Agreement to ensure the future development of the site is consistent with the STSP and the ultimate needs for site infrastructure. This Development Agreement defines the obligations of the developer as required by the Specific Plan.

ITEM 15 Agenda Packet Page 242
Subject: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Date: June 27, 2024

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• Infrastructure Facilities. The anticipated buildout of the Sunrise Tomorrow property will necessitate future trunk line infrastructure improvements to enable the full buildout.

The timing, location, and ownership of these future improvements are unknown at this time. The Development Agreement includes provisions to allow new infrastructure to be installed across the proposed parcels that benefit other property owners within the mall site. The Development Agreement includes provisions to require participation in infrastructure financing necessary to serve the full buildout of the site including roadway and utility infrastructure.
• Hotel Operating Standards. A potential footprint of a future hotel is shown on the Parcel Map to demonstrate feasibility of the parcel to accommodate a future hotel. The Development Agreement includes operating requirements for any future hotel development on this site. While any future hotel will require Development Review by the Planning Commission, the Development Agreement includes a streamlined approval process for any hotel brand pre-approved in the Development Agreement. Any nonapproved brand would require approval from both the Planning Commission and City Council.

Analysis
As discussed in the May 22, 2024, Planning Commission Staff Report (Attachment 2), the proposed Tentative Parcel Map (Exhibit A) and Development Agreement (Exhibit B-1) are consistent with the City’s General Plan, Sunrise Tomorrow Specific Plan, and Zoning Code. As a result, the Planning Commission recommends approval of the project.

Community Engagement
Property owners within 500 feet of the project site were mailed a meeting notice as required and a notice of this hearing was published in the Citrus Heights Messenger. In addition, the nearby Neighborhood Area 11 was notified of the project. To date, no comments have been received on the project.

May 22 Planning Commission Meeting
The proposed Tentative Parcel Map and Development Agreement was presented to the Planning Commission at the May 22, 2024, Planning Commission meeting. The Planning Commission reviewed the proposed project and provided minor wording changes to the Development Agreement and Conditions of Approval. The Planning Commission voted unanimously to recommend that the City Council approve the Tentative Parcel Map and Development Agreement.

ITEM 15 Agenda Packet Page 243
Subject: Sunrise Tomorrow Hotel Parcel Map and Development Agreement Date: June 27, 2024

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Environmental Review
An Environmental Impact Report (EIR) was certified in conjunction with adoption of the Sunrise Tomorrow Specific Plan to satisfy the California Environmental Quality Act (CEQA). The proposed parcel map and Development Agreement are consistent with the EIR. In addition, the project is consistent with the General Plan, Specific Plan, and therefore also exempt from CEQA as a Minor Land Division per Section 15315. Therefore, no further environmental review is required.

Any future construction on the proposed parcels resulting from this action are subject to CEQA as well. The project is conditioned (Condition of Approval #4) to demonstrate consistency with the Sunrise Tomorrow EIR prior to issuance of any future construction permits.

Attachments

1. Vicinity Map

2. May 22, 2024 Planning Commission Staff Report

3. Conditions of Approval
Exhibits
A. Proposed Tentative Map
B. Ordinance 2024-___ an Ordinance of the City Council of the City of Citrus Heights California, Approving a Development Agreement between the City of Citrus Heights and Antioch Street LP Governing the Use and Development of the Sunrise Tomorrow Hotel Project
B-1 – Sunrise Tomorrow Hotel Development Agreement
ITEM 15 Agenda Packet Page 244
Sunrise Tomorrow Hotel Parcel Map
6100 Sunrise Boulevard
PLN 22-27
Attachment 1
ITEM 15 Agenda Packet Page 245
Community Development Department
Planning Division
6360 Fountain Square Dr.

Citrus Heights, CA 95621
www.citrusheights.net
(916) 727-4740
STAFF
REPORT
Hearing Date:

May 22, 2024
File Number:

PLN-22-27
Application Type:

Tentative Parcel Map, Development Agreement
Assessor’s Parcel Number:
243-0192-016-0000
Prepared by:

Casey Kempenaar, Community Development
Director
Project Name: Sunrise Tomorrow Hotel Parcel Map
Project Address: 6100 Sunrise Boulevard
Current Zoning: SPA (Sunrise
Tomorrow)
Proposed Zoning: SPA Neighborhood Association: 11
Surrounding Zoning: Surrounding Land Use
Designation
Actual Use:

On-site: SPA (Sunrise
Tomorrow)
Marketplace Mixed Use (MU) US Bank/Parking
North: Shopping Center (SC) General Commercial (GC) Commercial Retail Center South: SPA (Sunrise
Tomorrow)
Marketplace Mixed Use (MU) Sunrise Mall
West: Shopping Center (SC) General Commercial Birdcage Marketplace East: SPA (Sunrise
Tomorrow)
Marketplace Mixed Use (MU) Sunrise Mall Tire Center
Environmental Status:
( ) Exempt Section
( ) Negative Declaration
( ) Mitigated Negative Declaration
( ) Previous Negative Declaration
( ) Environmental Impact Report
(X) Previous Environmental Impact Report
Planning Department Recommendations:
( ) Approve
(X) Approve with conditions (Attachment 2)
( ) Denial
Applicant: Antioch Street, LP
Care of Patrick Ellwood
PO Box 2000
Orinda, CA 94563
Property
Owner:

Same as applicant
ITEM 15 Agenda Packet Page 246
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 2

SUMMARY RECOMMENDATION
The Planning Division recommends the Planning Commission make the following recommendations to the City Council:

1. Determine the previously adopted Sunrise Tomorrow Specific Plan EIR is the appropriate Environmental Document For this Project and no further review is required

2. Approve a Tentative Parcel Map to allow the division of an existing 2.8-acre parcel into three parcels, 1.48-acres, 0.93-acres, and 0.38-acres in size subject to the findings and conditions contained in the staff report and Attachment 2.

3. Approve Ordinance 24- ___ an Ordinance of the City Council of the City of Citrus Heights California, adopting and approving the Sunrise Tomorrow Hotel Development Agreement

BACKGROUND
The subject site is a 2.8-acre parcel fronting Greenback Lane to the north and Sunrise Boulevard to the west. The site is home to an existing US Bank and large areas of parking.

The parcel is located within the Sunrise Tomorrow Specific Plan (STSP), which adopted in 2021, is intended to guide the redevelopment of the Sunrise Mall site into a mix of uses including hotel, residential, retail, and office uses. The Specific Plan lays the groundwork for Sunrise Mall to become a vibrant mixed-use village and showcase for the City with numerous benefits for the entire Citrus Heights community. The overall purpose of the Specific Plan is to provide a comprehensive direction for the development of the project site while implementing the goals and policies of the Citrus Heights General Plan.

This Site is located in Sub Area 1-B of the Sunrise Tomorrow Specific Plan and is identified as a likely candidate for a Hotel development. The Specific Plan and EIR anticipates a 120-room hotel and supporting retail uses to occur on the site in a future date.

Figure 1: STSP Sub Area 1-B Conceptual Plan
ITEM 15 Agenda Packet Page 247
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 3

PROJECT DESCRIPTION
The proposal would involve splitting the existing 2.8-acre US Bank parcel into three parcels, 1.48- acres, 0.93-acres, and 0.38-acres in size respectively. The proposed subdivision would allow the existing US Bank to remain on an existing 0.93-acre parcel while allocating 1.48 acres for a future hotel development as well as a 0.38-acre parcel anticipated as a retail or restaurant use. Access to the new parcels will be provided through the existing Reciprocal Access Agreement (REA) for the site.

No physical changes are proposed to the property at this time; however, the property owner has indicated that separate legal parcels are necessary to support development interest in the site as envisioned by the STSP. The proposed Parcel Map will allow the property owner to advance conversations with development partners to pursue a future hotel and retail/restaurant development.

Figure 2: Proposed Parcel Map
In addition, the City and the Property Owner have proposed a Development Agreement to guide the development of the future hotel site (Parcel C) to ensure the hotel is designed in a manner as envisioned by the Specific Plan. The Development Agreement also clarifies the responsibility of both the City and the property owner for future infrastructure needs for both the existing site and future development plans for the broader STSP. The Development Agreement is discussed in more detail later in this staff report.

TENTATIVE PARCEL MAP (FILE # PLN-22-14)
Tentative Parcel Map – Description of Request
The Tentative Parcel Map proposes to create three (3) parcels from one existing parcel. There is no further development proposed for the site in conjunction with the proposed Parcel Map at this time.

The existing US Bank will continue to operate in its current fashion moving forward. The Parcel Map ITEM 15 Agenda Packet Page 248
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 4
will allow the property owner to convey (sell) any of the three parcels to another interested party to construct future projects on the resulting parcels.

Tentative Parcel Map – Analysis of Request
Title 22 of the Citrus Heights Municipal Code and the California Subdivision Map Act require that findings be made in order to approve a Tentative Parcel Map. The required findings are listed below in italicized bold print and are followed by an evaluation of the tentative parcel map in relation to each finding.
• The proposed tentative parcel map is consistent with the General Plan and the design or improvement of the proposed subdivision is consistent with the General Plan and any applicable Specific Plan.

The site has a General Plan Designation of Marketplace Mixed Use (MU). The proposed tentative map is consistent with the General Plan and the creation of two additional parcels is consistent with the General Plan and Zoning Ordinance.

In September 2018, the City Council adopted General Plan Policy 9.5 which states:
• Discourage the creation of any new parcels within existing commercial centers, if such creation might hinder the viability and/or future redevelopment of the center.

The intent of this policy is to ensure that subdivisions in commercial developments do not hinder future redevelopment opportunities. The proposed subdivision is consistent with the proposed redevelopment of the site as considered by the STSP. The creation of additional parcels including reciprocal access will advance the goals of the STSP by creating parcels that are developable for the uses intended by the plan.

Due to the fact that the subdivision is limited to parcels that are consistent with the envisioned redevelopment of the STSP and reciprocal access is provided to new parcels, the project is advancing the STSP’s proposed redevelopment of the site. Further, the project includes a Development Agreement to ensure that adequate infrastructure and associated improvements will be provided as the site is redeveloped.

The property is fully developed with landscaping, parking and site improvements. No new physical improvements are proposed at this time. Any subsequent development application for a hotel or other use will require additional development review including any necessary improvements. A building footprint is shown on Parcels B and C to demonstrate the resulting parcels are capable of accommodating the uses envisioned in the future; however, these are conceptual in nature and subject to modification in conjunction with any future development application.

Site parking is shared across all existing and proposed parcels. The project is conditioned to ensure the new parcels will maintain existing access and parking for the complex, (Condition of Approval #18).
• The site is physically suited for the type and proposed density of development.

There are no minimum lot dimensions in a commercial zone so long as new development complies with the City’s commercial development standards. The proposed parcels are consistent with the conceptual site plan established by the STSP. No new development is proposed at this time. • The design of the subdivision or the proposed improvements are not likely to cause substantial environmental damage and the type of improvements is not likely to cause serious public health problems.

ITEM 15 Agenda Packet Page 249
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 5
The purpose of the requested tentative map is to allow separate ownership of the site to encourage the redevelopment of a hotel and retail offering. No improvements are proposed as part of this project so the proposed subdivision does not have the potential to cause substantial environmental damage or cause public health problems. The proposed Development Agreement includes necessary provisions to ensure any future development of the site adheres to minimum City standards and provide utilities necessary to serve the site.
• The design of the subdivision or type of improvements will not conflict with easements acquired by the public at large for access through or use of property within the proposed subdivision.

The project site retains existing access to both Greenback Lane and Sunrise Boulevard. No site access modifications are proposed at this time. The Parcel Map and Development Agreement require an Irrevocable Offer of Dedication (IOD) to ensure the necessary frontage improvements for the site can be constructed when warranted by future development.

Tentative Parcel Map – Conclusion
Staff recommends the Planning Commission recommend that the City Council approve the Tentative Parcel Map, subject to the findings and conditions of approval contained in the staff report and Attachment 2.

FINDINGS FOR TENTATIVE PARCEL MAP APPROVAL
• The proposed tentative parcel map is consistent with the General Plan and the design or improvement of the proposed subdivision is consistent with the General Plan. • The site is physically suited for the type and proposed density of development. • The design of the subdivision or the proposed improvements are not likely to cause substantial environmental damage and the type of improvements is not likely to cause serious public health problems.
• The design of the subdivision or type of improvements will not conflict with easements acquired by the public at large for access through or use of property within the proposed subdivision.

DEVELOPMENT AGREEMENT
The Sunrise Tomorrow Specific Plan requires that a Development Agreement between the property owner and the City prior to the issuance of any entitlements by the City, including a Parcel Map. A copy of the proposed Development Agreement is attached as Exhibit C. Although the proposed Parcel Map does not include any development at this time, the Specific Plan allows a variety of development types including hotel and retail within this specific site.

Some of the items addressed in the Development Agreement include the following:
• Transportation/Circulation Improvements. The Sunrise Tomorrow Specific Plan EIR anticipates that by Plan Buildout, the Sunrise and Greenback Intersection will necessitate ITEM 15 Agenda Packet Page 250
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 6
significant infrastructure improvements to facilitate vehicular and transit related access through the intersection. Although these improvements are not necessary at this time, the Development Agreement includes the Irrevocable Offer of Dedication to ensure the future roadway improvements are feasible when warranted.
• Infrastructure Facilities. The anticipated buildout of the Sunrise Tomorrow property will necessitate future trunk line infrastructure improvements to enable the full buildout. The timing, location, and ownership of these future improvements are unknown at this time. The Development Agreement includes provisions to allow new infrastructure to be installed across the proposed parcels that benefit other property owners within the mall site. The Development Agreement include provisions to require participation in infrastructure financing necessary to serve the full buildout of the site including roadway and utility infrastructure. • Hotel Operating Standards. Although not a part of the Parcel Map application, the STSP calls for a hotel to be located in Planning Area 1B. A potential footprint of a future hotel is shown on the Parcel Map to demonstrate feasibility of the parcel to accommodate a future hotel. The Development Agreement includes operating requirements for any future hotel development on this site. While any future hotel will require Development Review by the Planning Commission, the Development Agreement includes a streamlined approval process for any hotel brand preapproved in the Development Agreement. Any non-approved brand would require approval from both the Planning Commission and City Council.

The Zoning Code outlines the process for adoption of development agreements. This section of the Code states that the following findings (in bold/italics) must be made in order for a development agreement to be approved:
• That the development agreement is consistent with the objectives, policies, general land uses and programs specified in the Citrus Heights General Plan and any applicable specific plan;
• That the development agreement is in conformity with the public convenience, general welfare, and good land use practices;
• That the development agreement will not be detrimental to the health, safety, and general welfare of persons residing in the immediate area nor detrimental or injurious to property or persons in the general neighborhood or to the general welfare of the residents of the City as a whole;
• That the development agreement will not adversely affect the orderly development of property or the preservation of property values; and
• That the development agreement is consistent with the provisions of Government Code Sections 65864 through 65869.5.

Staff believes that the proposed Development Agreement, as outlined in Exhibit C, is consistent with each of the findings listed above. Staff recommends that the Planning Commission recommend approval to the City Council of the proposed Development Agreement.

ENVIRONMENTAL DETERMINATION
An Environmental Impact Report (EIR) was certified in conjunction with adoption of the Sunrise Tomorrow Specific Plan. The proposed parcel map and Development Agreement are consistent with the EIR and also exempt from CEQA as a Minor Land Division per Section 15315. Therefore, no further environmental review is required. The parcel map will allow for the sale of parcels for the construction of a Hotel and retail building consistent with the Sunrise Tomorrow Specific Plan.

ITEM 15 Agenda Packet Page 251
Sunrise Tomorrow Hotel Parcel Map
Planning Commission Meeting – May 22, 2024 Page 7
Any future construction on the proposed parcels resulting from this action are subject to CEQA as well.

The project is conditioned (Condition of Approval #4) to demonstrate consistency with the Sunrise Tomorrow EIR prior to issuance of any future construction permits.

PUBLIC OUTREACH
Property owners within 500 feet of the project site were mailed a meeting notice as required and a notice of this hearing was published in the Citrus Heights Messenger. In addition, the nearby neighborhood association (NA #11) was notified of the project. To date, no comments have been received on the project.

RECOMMENDED MOTIONS
The Planning Division recommends the Planning Commission make the following recommendations to the City Council:

1. Move to recommend that the City Council determine the previously adopted Sunrise Tomorrow Specific Plan EIR is the appropriate Environmental Document For this Project and no further review is required.

2. Move to recommend that the City Council Approve a Tentative Parcel Map to allow the division of an existing 2.8-acre parcel into three parcels, 1.48-acres, 0.93-acres, and 0.38-acres in size subject to the findings and conditions contained in the staff report.

3. Move to recommend that the City Council Approve Ordinance 24- ___ an Ordinance of the City Council of the City of Citrus Heights California, adopting and approving the Sunrise Tomorrow Hotel Development Agreement.

Attachments

1. Vicinity Map

2. Conditions of Approval
Exhibits
A. Proposed Tentative Map
B. Ordinance 24-___ an Ordinance of the City Council of the City of Citrus Heights California, adopting and approving the Sunrise Tomorrow Hotel Development Agreement B-1 – Sunrise Tomorrow Hotel Development Agreement
ITEM 15 Agenda Packet Page 252
CONDITIONS OF APPROVAL – TENTATIVE PARCEL MAP (FILE # PLN-22-26) General Conditions
1) The Tentative Parcel Map shall be exercised within a three (3) year period from the date of the approval and if not effectuated shall expire on June 27, 2027 or consistent with the Development Agreement whichever is greater. Extensions in time shall be subject to 106.64.070 of the Zoning Code and in compliance with the Subdivision Map Act. [Planning] 2) The development approved by this action is the creation of three (3) commercial lots from an existing 2.8-acre lot, 1.48 and 0.38-acres, and 0.93-acres in size, as described in the staff report and all associated Exhibits. [Planning]
3) A Design Review Permit is required for any subsequent development on parcel A, B, or C.

The Design Review Permit shall demonstrate that any future hotel proposed by the Developer, and its successors and assigns, shall be operated, furnished, serviced, maintained and refurbished to at least the standard of quality of a Three Star Hotel as described in the Development Agreement. [Planning].
4) The development shall substantially comply with the plans submitted to the Planning Division as well as all applicable provisions of the Citrus Heights Municipal Code (Zoning Ordinance, Sunrise Tomorrow Specific Plan, Subdivision, Building Codes, Grading/Erosion Control, Sewer, etc.), Citrus Heights General Plan and any applicable policy or Development Agreement. Any revisions to the approved tentative map shall be subject to review and approval by the Planning and Engineering Divisions prior to recordation of the final map.

Prior to issuance of any building or grading permit the applicant shall submit evidence the proposed development complies with the Sunrise Tomorrow EIR and Mitigation Monitoring and Reporting Program. [Planning]
5) SMUD has existing underground _12_kV facilities surrounding and throughout the project site that will need to remain. The Applicant shall be responsible for maintaining all CalOSHA and State of California Public Utilities Commission General Order No. 128 safety clearances during construction and upon building completion. If the required clearances cannot be maintained, the Applicant shall be responsible for the cost of relocation. [SMUD] 6) Structural setbacks less than 14-feet shall require the Applicant to conduct a preengineering meeting with all utilities to ensure property clearances are maintained. [SMUD] 7) Any necessary future SMUD facilities located on the Applicant’s property shall require a dedicated SMUD easement. This will be determined prior to SMUD performing work on the Applicant’s property. [SMUD]
8) In the event the Applicant requires the relocation or removal of existing SMUD facilities on or adjacent to the subject property, the Applicant shall coordinate with SMUD. The Applicant shall be responsible for the cost of relocation or removal. [SMUD] 9) SMUD reserves the right to use any portion of its easements on or adjacent to the subject property that it reasonably needs and shall not be responsible for any damages to the

CITY OF CITRUS HEIGHTS

PLANNING DIVISION CONDITIONS OF APPROVAL
Revised Conditions of Approval
ITEM 15 Agenda Packet Page 253
developed property within said easement that unreasonably interferes with those needs. [SMUD]
10) The Applicant shall not place any building foundations within 5-feet of any SMUD trench to maintain adequate trench integrity. The Applicant shall verify specific clearance requirements for other utilities (e.g., Gas, Telephone, etc.). [SMUD] 11) In the event the City requires an Irrevocable Offer of Dedication (IOD) for future roadway improvements, the Applicant shall dedicate a 12.5-foot public utility easement (PUE) for overhead and/or underground facilities and appurtenances adjacent to the City’s IOD. [SMUD]
12) The Applicant shall comply with SMUD siting requirements (e.g., panel size/location, clearances from SMUD equipment, transformer location, service conductors). Information regarding SMUD siting requirements can be found at: https://www.smud.org/en/BusinessSolutions-and-Rebates/Design-and-Construction-Services[SMUD] 13) The Applicant shall provide separate SMUD service points to each parcel to the satisfaction of SMUD. [SMUD]
14) The Applicant shall locate, verify, and provide a drawing to SMUD identifying all electrical utility infrastructure for the existing structures. If necessary, any existing onsite electrical infrastructure that serves existing structures shall be relocated to the satisfaction of SMUD. [SMUD]
15) The Applicant shall dedicate a 12.5-foot public utility easement for overhead and/or underground facilities and appurtenances adjacent to all public street rights-of-ways. [SMUD]
16) The Applicant shall dedicate any private drive, ingress and egress easement, (and 10-feet adjacent thereto) as a public utility easement for (overhead and) underground facilities and appurtenances. All access roads shall meet minimum SMUD requirements for access roads. [SMUD]
17) The Applicant shall dedicate and provide all-weather vehicular access for service vehicles that are up to 26,000 pounds. At a minimum: (a) the drivable surface shall be 20-feet wide; and (b) all SMUD underground equipment and appurtenances shall be within 15-feet from the drivable surface.[SMUD]
Prior to Recordation of Map
18) The applicant shall provide to the Planning Division a draft of the reciprocal parking, maintenance, drainage, and access easement documentation that shall be provided for all parcels, subject to City Attorney review and approval. Reciprocal parking and access easements shall relate solely to the parcels created by this subject tentative map. Nothing herein shall be deemed to modify or amend such reciprocal parking and access easements as may have existed on the date of this subject Tentative Parcel Map Application was deemed complete as to which the original parcel was subject to (and/or a beneficiary thereof). Subject to the City Attorney’s review and direction, any documentation necessitating access to Parcels A,B, and C shall be recorded to the satisfaction of the City Attorney prior to or simultaneously to the approved Parcel Map [Planning and Engineering]
ITEM 15 Agenda Packet Page 254
19) Applicant must comply with the Development Agreement by and between the City of Citrus Heights and Antioch Street LP Relating to the Development Commonly known as Sunrise Tomorrow Hotel Parcel Map. [Engineering]
20) Dedicate adequate Irrevocable Offer of Dedication (I.O.D.) or Right-of-Way (ROW) on the west and north sides of the parcel of sufficient width, per the Development Agreement between the owner and the City including compensation as specified in the Development Agreement subject to direct or indirect payment of just compensation related thereto, as appropriate. [Engineering]
21) Dedicate a Public Utilities Easement (PUE) along both Sunrise Boulevard and Greenback Lane. The minimum width shall be 12.5-feet and the PUE shall be located outside to the proposed I.O.D. or as indicated and described in the Development Agreement subject to direct or indirect payment of just compensation related thereto, as appropriate. [Engineering] 22) Parcel Map shall include or record applicable easement for parking, common areas, access, common building components and utilities for and across the three proposed parcels. [Engineering]
23) Applicant must pay the Quimby Act fees, please contact the Sunrise Recreation and Parks District (916-725-PARK). [Engineering]
24) Applicant shall contact Sacramento Area Sewer District (SASD) and pay applicable sewer impact fees for this map have been paid OR provide a letter from SASD that no fees are due (916-876-6100 [email protected]). [Engineering] 25) Applicant must provide proof of payment for the full fiscal year of any applicable County Taxes (https://eproptax.saccounty.net/#secured). [Engineering] 26) Update and/or dedicate easements (private or public) for all existing utilities if affected by the change in property lines. [Engineering]
27) Provide Fire Access Agreement between all parcels connected to and served by fire access.

Fire Access Agreement shall be recorded with the Public Recorders Office having jurisdiction. [Fire]
28) Provide Fire Access Roadway Maintenance Agreement (RMA) between all parcels connected to and served by the fire access roadway. The Fire Access Roadway Maintenance Agreement shall be recorded with the Public Recorders Office having jurisdiction. The roadway maintenance agreement shall include the following:

A. Provisions for the necessary repair and maintenance of the roadway surface B. Removal of vegetation overgrowing the roadway and infringing on the roadway clear vertical height of thirteen feet six inches (13' 6") or width of twenty feet (20') C. Provisions for the maintenance, repair, and/or replacement of NO PARKING-FIRE LANE signage or striping
D. Provisions for the necessary repair and maintenance of vehicle and pedestrian access gates and opening systems [Fire]
29) The map must include the existing private sewer easement for the installation and maintenance of the private sanitary sewer line. [SASD]
30) The project shall comply with the requirements of the Water District. [CHWD] Conditions applicable prior to any new development taking place:
31) The developer shall prepare a detailed construction improvement and phasing plan for all proposed infrastructure necessary to serve the site including all private or public easements ITEM 15 Agenda Packet Page 255
necessary to serve the proposed infrastructure subject to the City Engineer’s review and approval. At a minimum the plan shall:

A. Identify proposed points of connection for all utilities B. Demonstrate adequate capacity for all utilities and points of connection, including anticipated downstream connections
C. Verify existing integrity of any onsite utilities from proposed points of connection through connections to public systems. If proposed connections are degraded, insufficient, or inadequate, the developer shall identify new infrastructure necessary to serve the site and anticipated development identified in the Sunrise Tomorrow Specific Plan.

D. If the developer intends to use existing onsite utility infrastructure to serve the proposed development until such time an upgraded system is constructed prior to issuance of any future building or grading permit, the developer shall enter into an agreement with the City, to the satisfaction of the City Attorney. At a minimum, the Agreement shall require:
i) Future fair share contributions for replacement and upgrade of any onsite infrastructure used to serve development on the subject parcel(s). In establishing “fair share” the amount of contribution shall take into account the benefit conferred by upgraded infrastructure on onsite development, the costs already incurred for infrastructure upgrades, maintenance and repairs, and the incremental burden caused such infrastructure by the onsite development of the parcels. ii) Provisions (including necessary easements) to allow the City, utility, or adjacent developers to connect utilities serving the subject parcel to the ultimate utility backbone infrastructure and abandonment or removal of existing onsite infrastructure as required.
iii) Provisions to ensure a course of action to allow maintenance of utilities to existing buildings without service interruptions (24-hour fire system service is required) E. Identify necessary utility easements to serve the site. All utility easements shall be recorded prior to issuance of any grading or building permit. 32) The Developer shall enter into an agreement to construct the proposed Green Loop as identified in the Sunrise Tomorrow Specific Plan on the subject parcel. The agreement, subject to City Attorney Review and Approval, shall stipulate the construction may be deferred until such time as determined appropriate by the City Engineer. The terms of the agreement shall be negotiated between the parties based on considerations related to the nexus between the onsite development activity and the use of/requirement for the Green Loop, just compensation related to the value of the land on which the improvement is to be constructed, and other elements customarily made subject to inquiry with respect to exactions made part of the development entitlements process.
33) Prior to issuance of any Building Permit or Grading Permit, the Developer shall pay the Prorata share of the Off-site improvements as identified in the Sunrise Tomorrow Specific Plan.

The determination of pro-rata share shall be made in the context of the Development Agreement pertaining to the subject parcel(s) as set forth therein and on Exhibit D thereto. 34) Developer agrees to indemnify, defend, and hold harmless the City, its officials, officers, employees, agents and consultants from any and all administrative, legal or equitable actions or other proceedings instituted by any person not a party to this Tentative Parcel Map challenging the validity of the Tentative Parcel Map, Development Agreement, or any Project Approval or any Subsequent Project Approval, or otherwise arising out of or stemming from this Tentative Parcel Map or Development Agreement. Developer may select its own legal counsel to represent Developer’s interests at Developer’s sole cost and ITEM 15 Agenda Packet Page 256
expense. The parties shall cooperate in defending such action or proceeding. Developer shall pay for City's costs of defense, whether directly or by timely reimbursement on a monthly basis. Such costs shall include, but not be limited to, all court costs and attorneys' fees expended by City in defense of any such action or other proceeding, plus staff and City Attorney time spent in regard to defense of the action or proceeding. The parties shall use best efforts to select mutually agreeable defense counsel but, if the parties cannot reach agreement, City may select its own legal counsel and Developer agrees to pay directly or timely reimburse on a monthly basis City for all such court costs, attorney fees, and time referenced herein. [Planning]
ITEM 15 Agenda Packet Page 257
ITEM 15 Agenda Packet Page 258
ORDINANCE NO. 2024-___

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CITRUS

HEIGHTS APPROVING A DEVELOPMENT AGREEMENT BETWEEN THE

CITY OF CITRUS HEIGHTS AND ANTIOCH STREET LP GOVERNING THE

USE AND DEVELOPMENT OF THE SUNRISE TOMORROW HOTEL

PROJECT
The City of Citrus Heights does ordain as follows:

Section 1. That certain Development Agreement (the "Sunrise Tomorrow Hotel Development Agreement") by and between the City of Citrus Heights and Antioch Street LP and pertaining to certain real property in the City of Citrus Heights, State of California, which property is more particularly described in said Sunrise Tomorrow Hotel Development Agreement, is incorporated in this ordinance by reference and made a part hereof.

Section 2. The City Council hereby approves the Sunrise Tomorrow Hotel Development Agreement, substantially in the form on file with the City Clerk, subject to such minor and clarifying changes consistent with the terms thereof as may be approved by the City Attorney prior to execution thereof.

Section 3. The City Council hereby finds that the Sunrise Tomorrow Hotel Development Agreement is consistent with the Citrus Heights General Plan and adopts the findings set forth in the Development Agreement as if set forth herein in full.

Section 4. The City Manager and City Clerk are authorized and directed to execute the Sunrise Tomorrow Hotel Development Agreement on behalf of the City of Citrus Heights after the effective date of this ordinance. Upon execution, the City Clerk shall cause the Sunrise Tomorrow Hotel Development Agreement to be recorded in the Official Records of Sacramento County.

Section 5.

The City of Citrus Heights does find as follows:
• That the development agreement is consistent with the objectives, policies, general land uses and programs specified in the Citrus Heights General Plan and any applicable specific plan;
• That the development agreement is in conformity with the public convenience, general welfare, and good land use practices;
• That the development agreement will not be detrimental to the health, safety, and general welfare of persons residing in the immediate area nor detrimental or injurious to property or persons in the general neighborhood or to the general welfare of the residents of the City as a whole;
ITEM 15 Agenda Packet Page 259
• That the development agreement will not adversely affect the orderly development of property or the preservation of property values; and
• That the development agreement is consistent with the provisions of Government Code Sections 65864 through 65869.5.
• An Environmental Impact Report (EIR) was certified in conjunction with adoption of the Sunrise Tomorrow Specific Plan. The proposed parcel map and Development Agreement are consistent with the Sunrise Tomorrow Specific Plan EIR and no further environmental review is required.

Section 6. If any section of this Ordinance is determined to be unenforceable, invalid, or unlawful, such determination shall not affect the enforceability of the remaining provisions of this Ordinance.

Section 7. This Ordinance shall take effect thirty (30) days after its adoption, provided it is published in full or in summary within fifteen (15) days after its passage, in a newspaper of general circulation published and circulated in the City of Citrus Heights.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights this _____ day of ______, 2024 by the following vote, to wit:

AYES: Council Members:

NOES: Council Members:

ABSENT: Council Members:

ABSTAIN: Council Members:
__________________________
Bret Daniels, Mayor
ATTEST:
__________________________
Amy Van, City Clerk
Exhibit:

B-1. Sunrise Tomorrow Hotel Development Agreement
ITEM 15 Agenda Packet Page 260

RECORDING REQUESTED BY
WHEN RECORDED, RETURN TO:

City of Citrus Heights
Community Development Department
6360 Fountain Square Drive
Citrus Heights, CA 95621
Record at the request and for the benefit
of City of Citrus Heights pursuant to
Government Code §§ 6301 and 27383
Space Above Reserved for Recorder’s
Use Only

DEVELOPMENT AGREEMENT

BY AND BETWEEN

THE CITY OF CITRUS HEIGHTS
AND

ANTIOCH STREET LP

RELATING TO THE DEVELOPMENT COMMONLY KNOWN AS

SUNRISE TOMORROW HOTEL PARCEL MAP
ITEM 15 Agenda Packet Page 261
-1-

DEVELOPMENT AGREEMENT BY AND BETWEEN

ANTIOCH STREET LP AND THE CITY OF CITRUS HEIGHTS,

RELATING TO THE DEVELOPMENT COMMONLY KNOWN AS

SUNRISE TOMORROW HOTEL PARCEL MAP
This Development Agreement (“Agreement”) is entered into as of (INSERT DATE), by and between the City of Citrus Heights, a municipal corporation (“City”), and Antioch Street LP) (“Developer”). City and Developer are sometimes referred to individually herein as a “Party” and collectively as the “Parties”.

RECITALS
A. To strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California enacted Government Code section 65864 et seq. (“Development Agreement Statute”), which authorizes a city to enter into a development agreement with any person having a legal or equitable interest in real property regarding the development of such property and establishing certain development rights therein.

B. This Agreement has been processed, considered, and executed in accordance with the Development Agreement Statute.

C. Developer has a legal interest in approximately 2.8 acres APN: 243-0192-016- 0000 of real property located at 6100 Sunrise Boulevard, as more particularly described in attached and shown on the map set forth in attached, EXHIBIT A. Collectively, the Property shall be referred to herein as the “Subject Property”.

D. Developer desires to develop the Subject Property with the Project (as that term is defined below), which will provide benefits to City and to the Citrus Heights community generally, including all of the following (collectively, the “Public Benefits”):
 Dedication of land in the form of an Irrevocable Offer of Dedication (IOD) to the City adequate to construct the planned roadway, intersection and related infrastructure improvements along the frontage of Sunrise Boulevard and Greenback Lane. Compensation for the fair value of the aforesaid land dedication may take the form of, but is not limited to, a credit against assessment allocations should financing of improvements be accomplished by means of a participatory assessment district or in such fashion as the parties may later agree.
 Generation of a significant additional amount of sales tax and transient occupancy tax from the proposed retail and hotel uses.
 Enhanced commercial retail amenities to serve the community which could potentially include, among others, a hotel, coffee shop, brewery and other mixed commercial, retail uses offering a wide range of products and services, depending on market, permitted uses and other considerations.

E. By this Agreement, the Developer will receive assurance that it may proceed with the development of the Project on the Subject Property in accordance with the Applicable Law (as that term is defined below).

ITEM 15 Agenda Packet Page 262
F. Consistent with Government Code section 65867, the City Planning Commission held a duly noticed public hearing on an application for this Agreement on (INSERT DATE).

The City Planning Commission recommended that the City Council approve this Agreement and the Parcel Map for the Project set forth below.

G. To comply with the California Environmental Quality Act (Cal. Pub. Res.

Code § 21000 et seq. and 14 Cal. Code Regs. § 15000 et seq.; collectively, “CEQA”), on (INSERT DATE), at a duly-noticed public hearing, the City Council determined the Project was Categorically Exempt from CEQA as a Minor Land Division per Section 15315.

Further, the any subsequent discretionary actions are required to comply with the Sunrise Tomorrow Specific Plan EIR and mitigation monitoring and reporting plan (“MMRP”). As a result, on (INSERT DATE), a Notice of Exemption was filed with the Sacramento County Clerk in accordance with the CEQA guidelines.

H. Consistent with Government Code section 65867, the City Council held a duly noticed public hearing on an application for this Agreement on (INSERT DATE), and after taking testimony and closing the public hearing, deliberated and approved this Agreement and introduced Ordinance No. ___ (“DA Ordinance”).

J. Consistent with Government Code Section 65867, on (INSERT DATE), at a duly noticed public meeting the City Council adopted the Development Agreement Ordinance.

K. Subsequent to approval of this Agreement, the Parties will cooperatively and expeditiously pursue other discretionary approvals for the Project, including:

1. Submittal and approval for a Design Review Permit and/or Use Permit to allow the construction of a hotel, commercial, or mixed use project as specified by the Sunrise Tomorrow Specific Plan;
Each said approval shall be referred to individually as a “Discretionary Entitlement” and, collectively as “Discretionary Entitlements”. Discretionary Entitlements will comply with the California Environmental Quality Act (Cal. Pub. Res. Code § 21000 et seq. and 14 Cal.

Code Regs. § 15000 et seq.; collectively, “CEQA”).

L. City anticipates that during the Term (as that term is defined below) of this Agreement and subsequent to the Effective Date, Developer will seek from City as well as other public agencies certain additional approvals, entitlements, and permits that are necessary or desirable for the Project, which may include, without limitation, approval of various agreements to allow for utility service and the dedication of land and improvements; ministerial design review; tree removal permit(s); lot line adjustment(s); final or parcel map(s); sign permit(s); encroachment permit(s); demolition permit(s); grading permit(s); site development permit(s); building permit(s); certificate(s) of occupancy; and any amendments to the foregoing (each a “Subsequent Approval” and, collectively, the “Subsequent Approvals”).

M. The terms and conditions of this Agreement have undergone review by City staff, the Planning Commission, and the City Council at duly noticed public meetings and hearings and have been found to be fair, just, and reasonable, and in conformance with the applicable provisions of City’s General Plan and City’s Municipal Code, and Sunrise Tomorrow Specific Plan and further, that the City Council finds that the interests of the citizens of and their public health, safety, and welfare will best be served by entering into this Agreement.

ITEM 15 Agenda Packet Page 263
N. City and Developer have reached mutual agreement and desire to voluntarily enter into this Agreement to vest specified development rights, and facilitate development of the Project subject to the conditions, terms and requirements set forth herein.

NOW, THEREFORE, in consideration of the promises, covenants, and provisions set forth herein, the receipt and adequacy of which consideration is acknowledged, City and Developer agree as follows.

AGREEMENT

ARTICLE I DESCRIPTION OF SUBJECT PROPERTY, PROPOSED DEVELOPMENT, EFFECTIVE DATE, AND TERM.

Section 1.01 Description of Subject Property. This Agreement vests laws applicable to development of the Project on the Subject Property, as more particularly described and depicted in attached Exhibit A and Exhibit C.

Section 1.02 Proposed Development. For purposes of this Agreement, the “Project” shall be defined to consist of a parcel map with building sites designated for hotel and commercial retail development, as may be further refined during the Current Discretionary Entitlement process and the Subsequent Approvals process. Collectively, the Discretionary Entitlements, DA Ordinance, Tentative Parcel Map, Sunrise Tomorrow Specific Plan, EIR and, MMRP, and the Subsequent Approvals, once they are granted and become effective, shall be referred to herein as the “Project Approvals”.

Section 1.03 Effective Date. The rights, duties, and obligations hereunder shall be effective and the Term shall commence on the “Effective Date,” which shall mean the date that is thirty (30) days following the adoption of the DA Ordinance by the City Council as set forth in Recited J above.

Section 1.04 Initial Term. The term of this Agreement shall commence on the Effective Date and shall expire seven (7) years thereafter (“Initial Term”), unless it is sooner terminated or extended as provided in Section 1.05 below.

Section 1.05 Extended Term. The Term of this Agreement may be extended beyond the Initial Term only in the manner provided in this Section 1.05. The Initial Term, together with any extensions of the Initial Term under this Section 1.05, are collectively referred to as the “Term”.
(a) Term Extension. If Developer is in compliance with the terms and conditions of this Agreement, and has with diligence and good faith pursued development of the Project, then Developer shall, at its request, have the right to request an extension of the Initial Term for a period of time to be considered by City Council, provided such request in delivered to the City at least ninety (90) days prior to the end of the Initial Term. (b) Additional Extensions; Tolling. In addition to the First Term Extension under Section 1.05(a) above, the Term may be further extended or tolled as provided in this Section 1.05(b).
(i) Extension for Enforced Delay. If Developer encounters an Enforced Delay (as defined in this Section 1.05(b)(i)) and desires to extend the Term because of ITEM 15 Agenda Packet Page 264
that delay, Developer shall give City written notice of the Enforced Delay. If that written notice does not state the duration of the Enforced Delay because the delay remains ongoing, Developer shall give City written notice of the date the Enforced Delay ends within ninety (90) days after the end of the delay. Following the end of the Enforced Delay, City shall provide Developer written notice to confirm the extension of the Term, which shall be extended for as many days as the Enforced Delay occurs, as reasonably determined by the City Manager. “Enforced Delay” means a delay arising from one or more of the following: (A) a natural disaster or other force majeure event; (B) an accident that requires development activities to stop; (C) the interruption of services by suppliers for a substantial period of time when no alternative suppliers are available; (D) the unavailability of construction materials for a substantial period of time when no substitute materials are available and feasible to incorporate; (E) war, civil disturbance, or riot where martial law is declared; or (F) any other severe occurrence (economic or otherwise) that is beyond Developer’s reasonable control. (ii) Tolling for Third-Party Lawsuit. If any third party files a lawsuit to challenge this Agreement, City’s adoption of the Initial Study/Mitigated Negative Declaration, the other Project Approvals, or any action taken or finding made by City in connection with the Project Approvals (each, a “Third-Party Lawsuit”), Developer may request that the Term be tolled during the pendency of the Third-Party Lawsuit by providing a written notice (“Tolling Notice”) to City within thirty (30) days after the commencement of said lawsuit, and any such request shall be granted by City. The tolling of the Term shall automatically begin upon City’s receipt of the Tolling Notice, and it shall end on the earliest of the following to occur:
(A) the date on which a court issues a final judgment in the Third-Party Lawsuit and the expiration of all appeal periods following that judgment; or (B) the date the Third-Party Lawsuit is dismissed. If, in a Third-Party Lawsuit, the court issues a temporary restraining order or injunction prohibiting Developer from taking action(s) to proceed with the Project, the Term also shall automatically be tolled beginning on the date the temporary restraining order or injunction is issued, and ending on the date the temporary restraining order or injunction is lifted or vacated.
(iii) Tolling for Initiative or Referendum. If the subject of an initiative petition or referendum petition would overturn, set aside, or substantially modify this Agreement, the other Project Approvals, or otherwise substantially impair development of the Project, the Term of this Agreement shall be tolled under this Section 1.05(c)(iii). The Term shall be automatically tolled beginning on the date that the initiative or referendum petition is submitted to the County elections official for signature verification, and ending on the date the last of the following that occurs: (A) the date the County elections official determines the petition does not include a sufficient number of signatures; (B) the date the measure is voted on by the City Council; or (C) the date of the election on the measure, if placed on the ballot.

ARTICLE II STANDARDS, LAWS, AND PROCEDURES GOVERNING DEVELOPMENT OF THE PROJECT.

Section 2.01. Vested Right to Develop. In recognition of the extraordinary, long-term investment in planning, engineering, design, entitlement, permitting, as well as in technical and legal resources necessary to pursue and implement the Project on the Subject Property, Developer shall have the vested right to pursue the Project in accordance with the Applicable Law (as that term is defined below), including, among other things, this Agreement and the other Project Approvals. Notwithstanding the foregoing or anything to the contrary in this Agreement, City shall apply to the Project the then-current California Building Standards Codes (including the California Fire Code), and all local amendments to those uniform codes, to the ITEM 15 Agenda Packet Page 265
extent that the codes have been adopted by City or the Fire Department and are then in effect on a Citywide basis. If there is any conflict or inconsistency between this Agreement and the Applicable Law, or between this Agreement and any other Project Approvals, to the fullest extent legally possible, this Agreement shall prevail and control.

Section 2.02. Development Standards. The permitted uses of the Subject Property, the density and intensity of uses, the maximum height, bulk, and size of the proposed buildings, provisions for reservation or dedication of land for public purposes and the location of public improvements, the general location of public utilities, and other terms and conditions of development applicable to the Project shall be as set forth in the Applicable Law, in particular as described in the Sunrise Tomorrow Specific Plan, Zoning Code, and the Project Approvals (collectively, “Development Standards”).

Section 2.03. Applicable Law. “Applicable Law” shall mean all applicable federal, state, County, and City laws, statutes, ordinances, governmental rules, regulations, official policies, entitlements, orders, permits, licenses, approvals and authorizations that govern permitted uses of land; the design, improvement and construction standards and specifications; and that are otherwise applicable to the condition, development, use, occupancy, or operation of the Project on the Subject Property that exist and are in place as of the Effective Date, as supplemented and modified by the Project Approvals once they are granted and become effective, and Later Enactments (as that term is defined below), all except as otherwise expressly provided in this Agreement.

Section 2.04. Development Impact Fees/Exactions. During the Term of this Agreement, Developer shall pay all Impact Fees for the Project at the rate in effect at the time the payment is made. The City retains discretion to revise such fees as the City deems appropriate, in accordance with applicable law. If the City revises such fees on a city-wide basis (as opposed to revising such fees on an ad hoc basis that applies solely to the Project) prior to the earlier of the issuance of a final Certificate of Occupancy or a temporary Certificate of Occupancy that allows for residential occupancy , then the Developer shall thereafter pay the revised fee. The Developer may, at its sole discretion, participate in any hearings or proceedings regarding the adjustment of such fees. Nothing in this Agreement shall constitute a waiver by the Developer of its right to challenge such changes in fees in accordance with applicable law provided that the Developer hereby waives its right to challenge the increased fees solely on the basis of any vested rights that are granted under this Agreement.

Developer shall pay all Processing Fees in connection with development of the Subject Property with the Project that are then in effect when Developer processes applications for Subsequent Approval(s). “Processing Fees” shall mean all lawfully adopted fees for processing development project applications imposed by City on a citywide basis, including any required supplemental or other further environmental review, plan checking (time and materials) and inspection, in connection with the processing and consideration of any Project Approvals, which are intended to cover the actual costs of processing and consideration of the foregoing.

Section 2.05. No Conflicting Enactments. Subject to the limitations set forth in this Section 2.05, City, or the City electorate through the adoption of referenda and initiatives, may enact new or modified rules, regulations, or official policies after the Effective Date (each a “Later Enactment” and, collectively, “Later Enactments”). All Later Enactments shall be applicable to the Project if and only to the extent that application of any Later Enactment does not modify the Project; does not prevent or impede development of the Project; and does not ITEM 15 Agenda Packet Page 266
conflict with this Agreement. Any Later Enactment shall be deemed to conflict with this Agreement if the enactment seeks to accomplish any one or more of the following results, either with specific reference to the Project or the development of the Subject Property, or as part of a general enactment that would otherwise apply to the Subject Property:
(a) Reduce the density or intensity of the Project under the Applicable Law; (b) Change any land use designation or permitted use of the Subject Property for the Project as described in the Applicable Law;
(c) Require, for any work necessary to develop the Project on the Subject Property, the issuance of permits, approvals, or entitlements by City other than those required by Applicable Law; or
(d) Materially limit the processing of, the procuring of applications for, or approval of the Subsequent Approval(s).

Notwithstanding the foregoing, City shall not be precluded from applying a Later

Enactment to the Project where the Later Enactment is: (a) specifically mandated by changes in state or federal laws or regulations adopted after the Effective Date, as provided in Government Code section 65869.5 and Section 2.06 below; (b) specifically mandated by a court of competent jurisdiction; or (c) required by changes to the California Building Standards Codes (including the California Fire Code), and similar life safety regulations that may change from time to time, including all local amendments adopted by City or the Fire Department on a citywide basis. Except as expressly provided herein, particularly with respect to Developer’s rights granted hereunder, this Agreement does not restrict City’s exercise of its police powers, and City reserves those powers to itself.

Section 2.06. Conflict of State or Federal Laws. In the event that state and/or federal law(s) and/or regulation(s) enacted after the Effective Date prevent or preclude compliance with one or more provisions of this Agreement, the Party identifying the conflict shall provide the other Party, as soon as practicable after the conflict becomes known to the notifying Party, written notice of the conflict, a copy of the law(s) and/or regulation(s) that give rise to the conflict, and a statement explaining the nature of the conflict. Within thirty (30) days after that notice is given, the Parties shall meet and confer in good faith in a reasonable attempt to modify this Agreement so as to comply with the state and/or federal law(s) and/or regulation(s) giving rise to the conflict, pursuant to Government Code section 65869.5. If Developer does not consent to an amendment that is required to make this Agreement consistent with state and/or federal law(s) and/or regulation(s) in accordance with Government Code section 65869.5, City shall provide Developer written notice of the immediate suspension of this Agreement, and the Agreement shall remain suspended until the date the Agreement is so amended. The Term shall not be tolled or extended for any period of suspension under this Section 2.06.

Section 2.07. Life of Approvals. The term of each current Discretionary Entitlement, as well as each Subsequent Approval (e.g., for a Tentative Map) once it is granted and becomes effective, shall be deemed extended for the longer of the Term of this Agreement or the term otherwise applicable to such Current Discretionary Entitlement(s) or Subsequent Approval(s).

Section 2.08. Timing of Construction and Completion. The Parties acknowledge that Developer cannot, at this time, predict when, if or at what rate the Project will be ITEM 15 Agenda Packet Page 267
constructed. The Parties agree there is no requirement herein that Developer commence or complete construction of the Project at all or within any particular period of time during the Term.

Therefore, notwithstanding anything to the contrary in the City’s Municipal Code, City has ordained by adopting the DA Ordinance that Developer may, in its sole discretion, commence construction at any time (or at no time) during the Term of this Agreement. The Parties acknowledge that construction may be delayed by litigation, by other public agencies’ approval process in connection with Subsequent Approvals, market factors, or other reasons, which may or may not be within Developer’s control. In light of the foregoing, the Parties agree that Developer may construct the Project (if at all) at the rate and time Developer deems appropriate within the exercise of its sole subjective business judgment, subject only to the provisions of this Agreement and other Project Approvals, as and when they are granted and become effective.

Section 2.09. Processing Subsequent Approvals. The Subsequent Approvals shall be deemed mechanisms to implement those final policy decisions reflected by this Agreement, the other Project Approvals, and other provisions of Applicable Law including CEQA Compliance and compliance with the Sunrise Tomorrow Specific Plan and Sunrise Tomorrow Specific Plan EIR. Upon submission by Developer to City of an application for a Subsequent Approval, City shall cooperate and diligently and expeditiously work to promptly process and consider approving that application. Subject to the terms and conditions of this Agreement and Developer’s vested rights hereunder, City shall retain its discretionary authority in its consideration of any and all Subsequent Approvals that involve discretion in the decisionmaking process. City shall consider an application for a Subsequent Approval with reference to the Applicable Law, Later Enactments, and this Agreement. City shall ensure that adequate staff is available to expeditiously process all applications for Subsequent Approval(s).

Section 2.10. Actions by Other Public Agencies Necessary to Implement the Approvals.

In Developer’s sole discretion, but consistent with the Discretionary Entitlements, Developer may apply for Subsequent Approvals from other non-City public agencies, including, without limitation, the United States Fish and Wildlife Service (“USFWS”), United States Army Corps of Engineers (“ACOE”), California Department of Fish and Wildlife (“CDFW”), Regional Water Quality Control Board (“RWQCB”), Airport Land Use Commission (“ALUC”), and the California Department of Transportation (“Caltrans”) as may be necessary or desirable to implement the Project.

Section 2.11. No Limitation on Future Discretionary Actions. Except to the extent this Agreement expressly provides otherwise, particularly with respect to the vested rights granted hereunder, nothing in this Agreement requires City, its legislative body, or any of its boards or commissions, to adopt any future ordinances or resolutions, to enter into any other agreements with Developer, or to exercise its discretion in any particular manner in the future.

ITEM 15 Agenda Packet Page 268
ARTICLE III DEVELOPER OBLIGATIONS FOR COMMUNITY BENEFITS.

Section 3.01. Dedication of Land to Facilitate Planned Transportation and associated infrastructure Improvements. Prior to or concurrently with the recordation of the Final Parcel Map, Developer shall: (a) offer to dedicate to City approximately 17,184 square feet of land, which is a portion of the Property (“Irrevocable Offer of Dedication” or “IOD”) as conceptually depicted on the Sunrise Tomorrow Right-of-Way and IOD Requirements (Exhibit B). The payment of just compensation related to the aforesaid IOD may be arranged in one or another of several ways by agreement between the Developer and the City. For example, the employment of an Enhanced Infrastructure Financing District or Community Facilities District as referenced below might grant Developer a credit against assessments which it might otherwise be required to pay sufficient to justly compensate Developer for its dedication offer described herein.

The IOD shall be depicted on the Final Recorded Parcel Map. Payment of Just Compensation for the IOD shall be based on the fair market value of the IOD as determined by an appraisal prepared by a mutually agreed upon professional appraiser. The appraisal shall be performed as of the time the IOD is to be accepted by the City. The costs of the appraisal shall be shared equally between the City and the Developer.

Just compensation shall be paid to the developer prior to or simultaneously with City acceptance of the IOD. Prior to or simultaneously with the recordation of the final parcel map, an agreement between the City and the Developer shall be recorded identifying the process for compensation that shall take place upon acceptance of the IOD, which shall be based on the terms described above.

ITEM 15 Agenda Packet Page 269
Section 3.02. Obligation to participate in future Enhanced Infrastructure Financing District, Community Facilities District or similar infrastructure financing mechanism.

Significant infrastructure is necessary to support the development of the Sunrise Tomorrow Specific Plan. Prior to recordation of the final map, the Developer shall record a covenant on the title to the project site committing the developer to participation in any future infrastructure financing mechanism to support the development of necessary infrastructure; provided, however, such financing mechanism must acknowledge the in-kind contribution of land by Developer pursuant to the IOD as a credit against assessment otherwise due or it must make arrangements for a cost reimbursement of just compensation to be paid to Developer for its IOD from the City or some alternative source. Moreover, the particular financing mechanism must make equitable allowances for the allocation of the costs of future infrastructure based on the benefit conferred on each particular parcel and the burden on infrastructure attributable to the particular development associated with each particular parcel. In the event that infrastructure improvements contemplated by the financing mechanism are not reasonably required by the particular parcel and/or its burden on infrastructure improvements is mitigated by means other than participation in the particular financing mechanism, then participation shall not be required notwithstanding this section of this Agreement. Developer shall include in the covenant a commitment to detach from the Citrus Heights Lighting District (CHLD) and create/join a new lighting district zone within the CHLD. Said zone shall provide a current funding source for the ongoing maintenance of street lights with direct benefit on parcel(s) of the subject development and continued funding of city-wide safety lighting. Wording of the covenant is subject to the review and approval of the City Attorney.

Section 3.03. Pro-rata share of Sunrise and Greenback Intersection Improvements. Prior to occupancy of any future building on the site, the developer shall pay its pro-rata share of the Sunrise Boulevard and Greenback Lane intersection improvements as identified in Section 8.4.3 of Sunrise Tomorrow Specific Plan (and further refined in Exhibit D) and to the extent it can be reasonably demonstrated that its “pro-rata share” represents a fair charge based on traffic generation from its property/project and a recognized benefit is conferred in terms of the mitigation of traffic congestion as further described in Exhibit D.

Section 3.04. High Quality Hotel Development. Within 1 year of execution, of this Agreement or if extended in writing by mutual agreement of the parties, the Developer shall submit an application for a High Quality Hotel development on the resulting parcel (Parcel C).

The Hotel shall be designed in accordance with the Sunrise Tomorrow Specific Plan providing for a minimum of 110 rooms (keys). The construction and continued maintenance of the Hotel as a Three-Star Hotel, as defined by the Forbes Travel Guide, or of a Three-Diamond hotel, as defined by the AAA Diamond Ratings, or if those rating services are not in use, at an equivalent level used by an alternative nationally recognized hotel rating service.

A Design Review Permit will be required for the High Quality Hotel Development. If the initial Hotel Brand is selected from the list of Pre-approved Hotel Brands as depicted in Exhibit F the Planning Commission will be the reviewing body for the Design Review Permit. If the initial Hotel Brand identified as part of the Design Review Permit is not listed in Exhibit F, the Planning Commission will review and make a recommendation for the City Council’s consideration. The City Council may deny the Design Review Permit if the Council finds the proposed brand is not equivalent to or greater quality than the Brands depicted in Exhibit F at its sole discretion.

ITEM 15 Agenda Packet Page 270
Section 3.05 Use of the Hotel Project. The Developer, and its successors and assigns, shall ensure that the Hotel will be operated, furnished, serviced, maintained and refurbished to at least the standard of quality of a Three Star Hotel during the Term of the Hotel Operating Covenant.

Section 3.06 Maintenance. The Developer hereby agrees that prior to and subsequent to the completion of construction of the Hotel, the Hotel Site shall be maintained in a neat and orderly condition to the extent practicable and in accordance with applicable industry health and safety standards, and that the Hotel shall be well maintained as a Three-Star Hotel (as defined by the Forbes Travel Guide, or of a Three-Diamond hotel, as defined by the AAA Diamond Ratings, or if those rating services are not in use, at an equivalent level used by an alternative nationally recognized hotel rating service) to both external and internal appearance of the buildings, the common areas, and the parking areas. The Developer shall maintain or cause to be maintained the Hotel in good repair and working order, including the walkways, driveways, parking areas and landscaping, and from time to time make all necessary and proper repairs, renewals, and replacements. If the Developer fails to implement and continuously maintain the standard described above/then the City shall notify the Developer in writing of such condition, giving the Developer thirty (30) days from receipt of such notice to commence and thereafter diligently to proceed to cure said condition. In the event the Developer fails to cure or commence to cure the condition within thirty (30) days and such other additional time as may be required by Developer to cure the condition, the City shall notify the Developer in writing and thereafter the City shall have the right to perform all acts necessary to cure such a condition, or to take other recourse at law or equity that the City may then have. The Developer shall reimburse the City's reasonable costs, plus ten percent (10%) interest from the date of expenditure, in taking such action. The Parties hereto further mutually understand and agree that the rights conferred upon the City expressly include the right to enforce or establish a lien or other encumbrance against any of the parcels comprising the Hotel Site not complying with this Agreement. The provisions of Sections 3.04 and 3.05 shall be assumed by all successors to Developer and shall be in effect until expiration or termination of this Agreement.

Section 3.07 Hotel Operating Agreement. The initial Hotel Brand shall be selected from the list of Pre-approved Hotel Brands as depicted in Exhibit F. No later than twelve (12) months after the Effective Date or if extended in writing by mutual agreement of the parties, the Developer shall submit the Hotel Operating Agreement executed by the Developer and/or its Affiliate and the Hotel Brand and shall obtain the approval of the City for the Hotel Brand, if required, and the Hotel Operating Agreement pursuant to the criteria specified in this Section

4.5, which approval shall not be unreasonably withheld, conditioned or delayed. The Developer and/or its Affiliate and the Hotel Brand may redact confidential financial information provided that the information described in the following subsection (i), (ii) and (iii) is adequately disclosed.

The City's review of the Hotel Operating Agreement shall be limited for the sole purposes of determining that: (i) the Hotel shall be maintained in compliance with this Agreement; (ii) the term of the Hotel Operating Agreement is at least ten (10) years following the Completion Date for the Hotel, except as otherwise provided in the Hotel Operating Agreement, which may include termination events customarily included in hotel operating agreements for hotels similar in rating, size and location as the Hotel; and (iii) the Hotel Brand shall not have the right to transfer its interest in the Hotel Operating Agreement except for transfers customarily permitted in hotel operating agreements for hotels similar in rating, size and location as the Hotel. Any termination or transfer of the Hotel Operating Agreement prior to at least ten (10) years after the Completion Date shall require written notice thereof to the City, and if required, the City's approval of the subsequent Hotel Brand in accordance with Section 3.09. The City shall respond to such request for approval or subsequent approval of the Hotel Brand and the transfer of the ITEM 15 Agenda Packet Page 271
Hotel Operating Agreement within thirty (30) days after receipt of such request. The City's approval of such request shall be deemed given if the City fails to respond within such thirty (30) day period.

Section 3.08 Hotel Operating Covenant. Developer shall enter into a hotel operating covenant substantially in the form attached hereto as Exhibit E which shall be recorded against the Hotel Site and which shall run with the land (the "Hotel Operating Covenant"). The Hotel Operating Covenant shall (i) require that the Hotel Site be used for the Hotel for a term equal to twenty-five (25) years after the Completion Date,
Section 3.09 Change in Hotel Brand. A change in the identity of the Hotel Brand to a Preapproved Hotel Brand, by way of transfer of the Hotel Operating Agreement, the Hotel Site, or otherwise, shall constitute a Permitted Transfer. During the Term of this Agreement, any change in the Hotel Brand (a "Replacement Brand") shall require the prior written approval of the City, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, the City's approval will not be required if the Replacement Brand is a Pre-approved Hotel Brand or a Three Star Hotel. The City shall respond to such request for approval within thirty (30) days after receipt of the request and supporting documentation. The City's approval of such request shall be deemed given if the City fails to respond within such thirty (30) day period. The list of Pre-approved Hotel Brands attached hereto shall be deemed pre-approved by the City as the initial Hotel Brand and Replacement Brands and shall not require the further approval of the City. The City shall review any subsequent Hotel Operating Agreement in accordance with Section 3.07.

Section 3.10 – Construction of Multi-Use Trail “Green Loop”. The Developer is required to construct the Multi-Use Trail “Green Loop” as identified in the Sunrise Tomorrow Specific Plan on the subject property (Parcels A, B, and C). Due to construction phasing of both on-site and off-site improvements, construction of the Green Loop may be deferred to such time as determined by the City Engineer. Prior to Issuance of a Grading or Building Permit for Parcel A, B, or C (whichever comes first), the Developer shall provide security as set forth in Govt. Code 66499 of the Subdivision Map Act and in a form approved by the City Attorney, ensuring the proposed Green Loop improvements are installed at the appropriate time.

ARTICLE IV AMENDMENTS.

Section 4.01. Amendment of this Agreement.
(a) Substantive changes to this Agreement or the other Project Approvals shall necessitate an amendment to this Agreement to incorporate the applicable changes to the terms and conditions of this Agreement and/or the other Project Approvals at issue and related documents and agreements. A “substantive change” to this Agreement is one that changes the Term of this Agreement or for which an application is made to modify any of the following: the permitted uses; density or intensity of use; height or size of buildings; provisions for reservation and dedication of land; conditions, terms, restrictions and requirements relating to Subsequent Approvals that are discretionary in nature; monetary contributions by Developer; or any other material term or condition of this Agreement. If either Party notifies the other Party that an amendment is needed or desirable due to the proposed substantive changes to this Agreement or the other Project Approvals, the Parties shall meet and confer in good faith the terms of an amendment to this Agreement. The scope of good faith negotiation shall be limited to such good faith amendment(s) necessary to effectuate the substantive changes to this Agreement or the other Project Approval(s) contemplated in this ITEM 15 Agenda Packet Page 272
Section 4.01(a), and shall not reopen other provisions of this Agreement not affected by the proposed amendment(s). City may temporarily suspend consideration of a Subsequent Approval that is discretionary in nature if reasonably required by the circumstances then existing at the time of the proposed change in this Agreement or the other Project Approval(s) until the Parties can come to an agreement on the terms of such an amendment or mutually agree to the termination of this Agreement. Amendments for substantive changes shall be made in accordance with the provisions of the Development Agreement Statute. (b) This Agreement need not be amended to allow for changes to this Agreement or the other Project Approvals that are not substantive, as described in Section

4.01(a) above, but rather minor in nature. The Parties acknowledge that refinement and further implementation of the Project Approvals may demonstrate that certain minor changes may be appropriate with respect to the Project details and performance of the Parties under this Agreement, and the Parties desire to retain a certain degree of flexibility with respect to such details and performances. If and when the Parties find and mutually agree that clarifications, minor changes, or minor adjustments are necessary or appropriate, they shall effectuate such clarifications, changes or adjustments through an operating written memorandum approved by the Parties, with the City Manager acting on behalf of City. After execution, the operating memorandum shall be attached to this Agreement. Further minor changes as necessary from time to time may be agreed upon by the Parties by written approval of the Parties. Unless required by the Development Agreement Statute, no operating memorandum shall require prior notice or public hearing, nor shall it constitute an amendment to or termination for convenience in whole or in part of this Agreement.

Section 4.02. Amendments of Project Approvals or Subsequent Approvals. No Subsequent Approval that is granted pursuant to this Agreement, or the amendment of any other Project Approvals (other than this Agreement) that is consented to by Developer, shall require an amendment to this Agreement, and the Subsequent Approval or amendment of any other said Project Approvals shall be deemed to be incorporated into this Agreement as of the date the approval or amendment is effective.

ARTICLE V DEFAULTS; PERIODIC REVIEW.

Section 5.01. Default and Litigation.
(a) Default. Any failure by either Party to perform any material term or condition of this Agreement, which failure continues uncured for a period of ninety (90) days following written notice of such failure from the non-defaulting Party (unless such period is extended by written mutual consent), shall constitute a default under this Agreement. written notice given pursuant to the preceding sentence shall specify the nature of the alleged failure and, where appropriate, the manner in which said failure may be cured. Provided, however, if the nature of the alleged failure is such that it cannot reasonably be cured within such ninety (90) day period, then, within that ninety (90) day period, the defaulting Party shall begin acting to cure the default and shall continue acting diligently to complete the cure. If the default is not cured as required by this Section 5.01(a), the non-defaulting Party may pursue legal action in accordance with Section 5.01(b).
(b) Litigation. If a default is not cured in the manner required by Section 5.01(a), the non-defaulting Party shall provide the defaulting Party written notice (“Dispute Notice”) that specifies, in reasonable detail, the reasons that a default and dispute exist, and what, if any, reasonable actions may be taken to cure the default and resolve the ITEM 15 Agenda Packet Page 273
dispute. Within thirty (30) days after the Dispute Notice is given (or such other time frame as may be mutually agreed to by the Parties), the Parties shall meet in person and confer in good faith in an attempt to resolve the dispute. If, following this meet and confer process, the nondefaulting Party determines that the dispute cannot be resolved informally, the non-defaulting Party may institute legal action to cure, correct, or remedy the default, enforce any covenant or agreement herein, enforce by specific performance the obligations and rights of the Parties hereto, or obtain any other remedy consistent with this Agreement and available under law or equity.

Section 5.02. Periodic Review. No later than ten (10) months after the Effective Date, and no later than every twelve (12) months thereafter, Developer and the City Manager, or his or her designee, shall meet and review this Agreement annually to ascertain the good faith compliance by Developer with the Agreement’s terms pursuant to the Development Agreement Statute. Such periodic review shall be limited in scope to compliance with the terms and provisions of this Agreement pursuant to California Government Code Section 65865.1 and the monitoring of mitigation in accordance with California Public Resources Code Section 21081.6.

Additionally, the City Council shall review this Agreement annually in accordance with the Development Agreement Statute. If, as a result of City’s periodic review of this Agreement, City determines, on the basis of substantial evidence, that Developer has not complied in good faith with the terms of this Agreement, City may terminate or modify this Agreement in accordance with the Development Agreement Statute as well as Section 5.03 below. If City has not performed a periodic review within ninety (90) days following the relevant 12-month period, Developer shall be deemed to be in substantial compliance with the terms and provisions of this Agreement.

Section 5.03. Termination.
(a) Termination by City. If City elects to consider terminating this Agreement due to a material default by Developer, then City shall give a notice of intent to terminate this Agreement and the matter shall be scheduled for consideration and review by the City Council in the manner set forth in the Development Agreement Statute. If the City Council, in its reasonable discretion and based on substantial evidence in the record, determines that a material default has occurred and elects to terminate this Agreement, City shall give Developer, by certified mail, written notice of termination of this Agreement under this Section 5.03(a) and this Agreement shall be terminated on the date that notice of termination is given.

Notwithstanding anything to the contrary in the foregoing, Developer reserves any and all rights it may have to challenge in court City’s termination of this Agreement and the basis therefor. (b) Termination by Developer. Developer may terminate this Agreement in its sole discretion at any time, subject to Developer’s obligations set forth in Article III above, Article VI below and Section 10.010 below, which shall survive any such termination.

If Developer determines, in its sole discretion, to terminate this Agreement pursuant to this subsection (b), then Developer shall give City, by certified mail, written notice of termination of this Agreement under this Section 5.03(b) and this Agreement shall be terminated thirty (30) days after that notice is given.

Section 5.04. Attorney’s Fees. In the event of any litigation by either Party pertaining to this Agreement, the prevailing Party in such litigation, in addition to any other relief which may be granted, shall be entitled to its litigation costs and expenses, including, without limitation, reasonable attorneys’ fees.

ITEM 15 Agenda Packet Page 274
Section 5.05. Notice of Compliance. Within sixty (60) days after Developer’s written request, but no more often than once per calendar year, City shall execute and deliver to Developer a written “Notice of Compliance” in recordable form, duly executed and acknowledged by City, that certifies the following, but only if City, in its reasonable discretion, determines the following to be true based on City’s actual knowledge as of the date the notice is given:
(a) This Agreement is unmodified and in full force and effect, or, if there have been modification(s) to this Agreement, this Agreement is in full force and effect as modified and stating the date and nature of such modification(s);
(b) There are no known current uncured defaults under this Agreement or, in the alternative, specifying the dates and nature of any such default.

Developer may, in its sole discretion, record any such City Notice(s) of Compliance.

ARTICLE VI INDEMNITY.

Except as expressly limited in this Article VI, Developer shall indemnify, defend (with counsel reasonably acceptable to City), and hold harmless City and its legislative body, boards, commissions, officers, employees, and agents from all liabilities, claims, demands, and losses, including for personal injury, death, and property damage, costs and expenses, including attorney’s and expert’s fees (collectively, “Liabilities”) that arise from the approval of this Agreement or the other Project Approval(s) except in the event and to the extent caused by City’s negligence or willful misconduct. Developer’s obligations under this Article VI apply to all Liabilities suffered or alleged to have been suffered, regardless of whether City prepared, supplied, or approved plans or specifications for the Project. However, the obligations of this Article VI do not apply to any Liabilities that arise solely from the operation of public improvements and facilities following City’s acceptance of those improvements and facilities.

ARTICLE VII NO AGENCY, JOINT VENTURE, OR PARTNERSHIP.

The Project is a private undertaking of Developer. Neither Party is acting as the agent of the other in any respect hereunder. Each Party is an independent contracting entity with respect to the terms and conditions contained in this Agreement. None of the terms or conditions of this Agreement shall be deemed to create a partnership, joint venture, or joint enterprise between or among the Parties to this Agreement.

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ARTICLE VIII SALE, ASSIGNMENT, OR TRANSFER.

Developer may only assign or otherwise transfer this Agreement, or its interest in the Site, to any other person, firm, or entity, upon presentation to the City of an assignment and assumption agreement in a form reasonably acceptable to the City Attorney and receipt of the City’s written approval of such assignment or transfer by the City Manager; provided, however, that Developer may, from time to time and one or more times, assign this Agreement, or the Site, to one or more persons or entities without City approval, but with written notice to the City, as long as Developer either assigns this Agreement to a financial institution that finances Developer’s development of the Project or as long as Developer, or entities owned or controlled by it have and maintain at least a twenty-five percent (25%) ownership interest in such entities who are the assignees or transferees, or as long as the transfer is as a result of a sale of Developer and/or all or substantially all of its assets located in the State of California, including the rights granted under this Agreement, to another publicly-traded company or an entity having a net worth that is substantially similar to, or greater than, Developer’s net worth prior to such assignment or at the time of execution of this Agreement, which net worth is subject to verification by the City; and further provided that any assignee executes an assumption agreement assuming all of Developer’s duties and obligations hereunder. Any security posted by Developer may be substituted by the assignee or transferee. After a transfer or assignment as permitted by this Section, the City shall look solely to such assignee or transferee for compliance with the provisions of this Agreement which have been assigned or transferred.

ARTICLE IX NOTICES.

Unless this Agreement expressly provides otherwise, any notice, demand, or communication required hereunder between City and Developer shall be in ting, and may be given either personally, by overnight delivery, or by registered or certified mail (return receipt requested), to the address specified below:

City: City Manager
City of Citrus Heights
6360 Fountain Square Dr
Citrus Heights, CA 95621
Developer: Antioch Street LP
Care of Ellwood Commercial Real Estate
P.O. Box 2000, Orinda, CA 94563
A Party may change its address listed above by giving the other Party written notice in accordance with this Article IX at least (ten) 10 days before the change in address becomes effective. A notice shall be deemed effective on the day it is given if given personally, on the next business day following the date of deposit for overnight delivery, and three (3) business days following the date of mailing if given by registered or certified mail (return receipt requested).

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ARTICLE X MISCELLANEOUS.

Section 10.01. Capitalized Terms. The capitalized terms used throughout this Agreement shall have the meaning assigned to them herein or as otherwise apparent from the context in which they are used.

Section 10.02. No Third Party Beneficiary Rights. This Agreement is not intended nor shall it be construed to create any third party beneficiary rights in any person or entity that is not a Party to this Agreement
Section 10.03. Governing Law. Interpretation of Agreement. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California. Any action to enforce or interpret this Agreement shall be brought in the Superior Court of California, Sacramento County or, in the case of any federal claims, in the United States District Court, Eastern District of California.

Section 10.04. Severability. If any term of this Agreement, or its application to any situation, is held invalid or unenforceable in whole or in part for any reason, in a final judgment that is no longer subject to rehearing, review or appeal by a court of competent jurisdiction, then the invalid term shall be severed, and the remaining parts of this Agreement, and the application of any part of this Agreement to other situations, shall continue in full force and effect unless an essential purpose of this Agreement would be defeated by the loss of the invalid or unenforceable provisions, in which case either Party may terminate this Agreement by providing written notice thereof to the other.

Section 10.05. Covenants Running with the Land. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, successors, and assigns (including any person or entity acquiring an interest in any portion of the Subject Property or Project as an Assignee). All of the terms and provisions contained in this Agreement shall be enforceable as equitable servitudes and shall constitute covenants running with the land pursuant to California law including, without limitation, California Civil Code section 1468.

Section 10.06. Further Acts. Each Party shall execute and deliver any and all additional documents and instruments, and perform such further acts, that the executing, delivering, or performing Party determines, in its sole discretion, to be necessary or proper to achieve the purposes of this Agreement.

Section 10.07. Counterparts. This Agreement, and any and all amendments and supplements to it, may be executed in counterparts, and all counterparts together shall be construed as one document.

Section 10.08. Recordation of Agreement. Not later than ten (10) days after the Parties enter into this Agreement, the Clerk of the City Council shall cause this Agreement to be recorded in the Official Records of the County. Developer shall reimburse City for the cost to record this Agreement within thirty (30) days after Developer receives City’s written request for reimbursement of same.

Section 10.09. Appeals. Decisions made by the City Manager pursuant to this Agreement may be appealed by Developer, in its sole discretion, to the City Council, wherein it shall be the final decision maker on the matter.

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Section 10.010. Cooperation in the Event of Legal Challenge. (a) In General. In the event of any Third-Party Lawsuit challenging the validity of any provision of this Agreement; the procedures leading to its adoption; the issuance of any or all of the Project Approvals; or any CEQA document(s) approved in connection therewith, the Parties agree to cooperate in defending the Third-Party in accordance with the terms of this Section 10.010. The Parties shall keep each other informed of all developments relating to such defense, subject only to confidentiality requirements that may prevent the communication of such information. The obligations of this Section 10.010 shall survive the expiration or termination of this Agreement.
(b) Meet and Confer. If a Third-Party Lawsuit is filed, upon receipt of the petition or complaint, the Parties shall have twenty (20) days to meet and confer regarding the merits of such Lawsuit to determine whether they will jointly defend against it, which period may be extended by the Parties’ mutual agreement so long as it does not adversely and materially impact any litigation deadlines. City and Developer shall mutually commit to meet all required litigation timelines and deadlines. If City and Developer agree jointly to defend the Third-Party Lawsuit, they shall expeditiously enter a joint defense agreement, which shall include, among other things, provisions regarding the preservation of confidential communications. The City Manager is authorized to negotiate and enter such joint defense agreement in a form reasonably acceptable to the City Attorney and Developer’s attorney. Such joint defense agreement shall also provide that any proposed settlement of a Third-Party Lawsuit shall be subject to City’s and Developer’s approval, each in its reasonable discretion. If the terms of the proposed settlement would constitute an amendment or modification of this Agreement, the settlement shall not become effective unless such amendment or modification is approved by the Parties in accordance with Applicable Laws, and City reserves its full legislative discretion with respect thereto.
(c) Defense Election. If, after meeting and conferring, the Parties mutually agree (each in its sole discretion) to defend against the Third-Party Lawsuit, then the following shall apply:
(i) For the purposes of cost-efficiency and coordination, the Parties shall first consider defending the Third-Party Lawsuit with common counsel and under terms of a joint representation agreement mutually acceptable to City and Developer (each in its sole discretion), at Developer’s sole cost and expense.
(ii) If the Parties cannot reach timely and mutual agreement on a joint counsel, and Developer continues to elect (in its sole discretion) to defend against the ThirdParty Lawsuit, then:
(A) Developer shall take the lead role defending such ThirdParty Lawsuit and may, in its sole discretion, elect to be represented by the legal counsel of its choice;
(B) City may, in its sole discretion, elect to be separately represented by the City Attorney (and/or outside legal counsel of its choice) in any such action or proceeding with the reasonable costs of such representation to be paid by Developer; (C) Subject to Section 10.010(e) below, Developer shall reimburse City, within twenty (20) business days following City’s written demand therefor, which ITEM 15 Agenda Packet Page 278
may be made from time to time during the course of such litigation, all necessary and reasonable costs incurred by City in connection with the Third-Party Lawsuit, including City’s administrative, outside legal fees and costs, and court costs.

Notwithstanding anything to the contrary in the foregoing, the Parties intend that City’s role under subsection (c)(ii)(B) shall be primarily oversight although City reserves its right to protect City’s interests, and City shall make good faith efforts to maximize coordination and minimize its City Attorney and any outside legal costs (for example, minimizing filing separate briefs, and duplication of effort to the extent feasible).

For any Third-Party Lawsuit that Developer has elected to defend under this Section 10.010(c), Developer shall indemnify, and hold harmless City pursuant to Developer’s indemnity obligations under Article VI.
(d) Developer Election Not To Defend. If, after meeting and conferring, Developer elects, in its sole and absolute discretion, not to defend against the Third-Party Lawsuit, it shall deliver written Notice to City regarding such decision. If Developer elects not to defend, City has the right, but not the obligation, in its sole discretion to proceed to defend against the Third-Party Lawsuit at its sole cost and expense and shall take the lead role defending such Third-Party Lawsuit and may, in its sole discretion, elect to be represented by the legal counsel of its choice. In the alternative, if Developer and City both elect not to defend against the Third-Party Lawsuit, Developer shall remain obligated to indemnify and hold City harmless from and against any Liabilities that are actually awarded. If, following receipt of Developer’s Notice of election not to defend, City opts to take the lead role defending such Third-Party Lawsuit and terminate this Agreement, then City shall be solely responsible for all Liabilities, if any, which are actually awarded from and after such time City has taken such lead role.

Section 10.011. Waiver. Waiver of a default under this Agreement shall not constitute a continuing waiver or waiver of a subsequent breach of the same or any other provision of this Agreement.

Section 10.012. Signatures. The individuals executing this Agreement represent and warrant that they have the right, power, legal capacity, and authority to enter into and to execute this Agreement on behalf of the representative legal entities of Developer and City.

In witness whereof, the Parties have entered into this Agreement as of the Effective Date.

DEVELOPER:

Antioch Street LP
By:

Print:

Title:

CITY:

City of Citrus Heights
By:

Print:

Title:

Exhibits:

ITEM 15 Agenda Packet Page 279
A. APN Map
B. Sunrise Tomorrow Right-of-Way & IOD Requirements
C. Legal Description
D. Prorata Infrastructure Requirements
E. Hotel Operating Covenant
F. Pre-Approved Hotel Brands
G. Offsite Improvement Phasing and Engineers Estimate
ITEM 15 Agenda Packet Page 280
Exhibit A - APN Map
ITEM 15 Agenda Packet Page 281
Exhibit B – Sunrise Tomorrow Right-of-Way & IOD Requirements ITEM 15 Agenda Packet Page 282
Exhibit C – Legal Description

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF CITRUS

HEIGHTS, IN THE
COUNTY OF SACRAMENTO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

Parcel A:

Parcels 1 as shown on the "Parcel Map of portion of Projected Section 36, Township 10 North, Range 6 East, M.D.B.&M.", Filed December 18, 1970 in Book 3 of Parcel Maps, Page 38, Sacramento County Records.

Parcel B:

Easements for parking area, common area, access, all as set forth in Agreement between Mall Owner and Parcel 3 Owner, executed by Sunrise Mall Property LLC, a Delaware limited liability company and Steadfast Sunrise
III - IV, LLC, a Delaware limited liability company recorded November 25, 2015, Book 20151125, Page 893,Official Records.

Parcel C:

Easements for parking area, common area, access, common building components and utilities, all as set forth in "Construction, Operations and Reciprocal Easement Agreement", hereinafter called "REA", executed by H & C Associates, a Limited Partnership, Broadway-Hale Stores, Inc., a California Corporation, Amfac, Inc., a Corporation, J.C. Penney Properties, Inc., a Delaware Corporation and Sears Roebuck and Co., a New York Corporation, recorded January 29, 1971 in Book 710129 Page 731 of Official Records of Sacramento County, California, over and across the tracts of land as described in Parts II, III, IV, V, VI and VII of Exhibit "A" in the above referred to "REA". A REA Assignment and Assumption Agreement, recorded June 28, 1984 in Book 19840628, Page 973, Official Records. A REA Assignment and Assumption, recorded January 29, 2008 in Book 20080129, Page 0937, Official Records. An Assignment and Assumption of REA, recorded January 29, 2008 in Book 20080129, Page 0948, Official Records. An Assignment and Assumption of REA, recorded January 29, 2008 in Book 20080129, Page 0949, Official Records. An Assignment and Assumption of Recorded Agreements, recorded July 16, 2015 in Book 20150716, Page 1317, Official Records. An Assignment and Assumption of Recorded Agreement, recorded November 25, 2015 in Book 20151125, Page 884, Official Records. An Assignment and Assumption of Recorded Agreement, recorded November 25, 2015 in Book 20151125, Page 892, Official Records.

ITEM 15 Agenda Packet Page 283
Exhibit D – Prorata share
The Developer may be required to contribute the Pro-rata share of the off-site transportation improvements (intersection of Sunrise Boulevard and Greenback Lane) identified in the Sunrise Tomorrow Specific Plan, Environmental Impact Report and Local Transportation Analysis. The complete analysis as to the benefit conferred upon Developer’s project by the aforesaid improvements and/or the burden on traffic and circulation at the subject intersection caused by the Developer’s project and thus requiring the improvements has yet to be fully investigated.

The Developer’s duty to contribute and the amount of contribution shall be matters of further investigation. The following are preliminary projections of cost based on initial assumptions and may be subject to reconsideration and recalculation as part of subsequent development applications on the parcel in question.

The Sunrise Tomorrow Specific Plan is anticipated to be phased over several years; therefore, full implementation of the off-site improvement is not necessitated by the initial development phases of the proposed project. As a result, the off-site improvements have been designed in two individual phases –Phase 1 and Phase 2 as illustrated in Exhibit G The proposed development of the Antioch Street LP anticipated in the Development Agreement (110 key hotel and 12,000 SF High Quality Restaurant) and any subsequent development on resulting Parcel A will be required to contribute to both phases of the off-site development as follows:

Phase1 of Off-site Improvements:
- Prior to issuance of a Building or Grading Permit for the proposed hotel and/or proposed high quality restaurant the Developer shall contribute the Pro-rata share of Phase 1. The pro-rata share is based on the PM Peak Vehicle Trips within the Sunrise Boulevard/Greenback Lane intersection associated with the anticipated development.

Currently, the engineers estimate anticipates a total improvement cost of $1.85 Million (2023 Dollars) and traffic analysis calculates pro-rata share as follows:
o 110 Key Hotel (Proposed Parcel C)– 4.6% of Trips = $85,131 o 12,000 square foot High Quality Restaurant (Proposed Parcel B) – 2.8% = $51,819
The pro-rata calculations provided herein are based on 2023 dollars and current specifications for the proposed project. Prior to the developer’s contribution the City Engineer shall update the pro-rata share based on project details (number of rooms, square footage, etc. and associated PM Peak Traffic contribution to the Sunrise/Greenback Intersection) and as adjusted for inflation annually on January 1, based upon the US Bureau of Labor Statistics Consumer Price Index, all items, San Francisco Area as of October of the previous year, with adjustments, as recommended by the City Engineer, rounded to the nearest whole dollar.

ITEM 15 Agenda Packet Page 284
Phase 2 of Off-site Improvements
- Prior to issuance of a Building or Grading Permit resulting in an increase of PM Peak Trips associated with Parcel A, the Developer shall contribute the Pro-rata share of the Phase 2 of the Off-Site Improvements . The pro-rata share is based on the PM Peak Vehicle Trips within the Sunrise Boulevard/Greenback Lane intersection associated with the anticipated development. Currently, the engineers estimate for Phase 2 anticipates a total improvement cost of $1.71 Million (2023 Dollars). Due to unknown project characteristics associated with Parcel A, the pro-rata share is unknown at this time. Prior to the developer’s contribution the City Engineer shall calculate the pro-rata share based on project details (number of rooms, square footage, etc. and associated PM Peak Traffic contribution to the Sunrise/Greenback Intersection) and as adjusted for inflation annually on January 1, based upon the US Bureau of Labor Statistics Consumer Price Index, all items, San Francisco Area as of October of the previous year, with adjustments, as recommended by the City Engineer, rounded to the nearest whole dollar.

ITEM 15 Agenda Packet Page 285
Exhibit E
Form of Hotel Operating Covenant

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

The City of Citrus Heights
6360 Fountain Square Drive
Citrus Heights CA, 95621
Attn: City Manager
No fee for recording pursuant to
Government Code Section 27383
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)

HOTEL OPERATING COVENANT
THIS HOTEL OPERATING COVENANT (this "Covenant") is made as of , 202_, by and among, the City of Citrus Heights (the "City"), and ANTIOCH STREET LP (the "Developer") pursuant to that certain Development Agreement dated as of , 202 by and between the City and the Developer (the "Agreement").

Developer hereby agrees that the real property described in Exhibit C attached hereto and incorporated herein (the "Property" or the "Hotel Site") shall be used for the construction, operation and maintenance of a hotel and associated ancillary uses (including, without limitation, restaurants and other food and beverage outlets, meeting and pre-function space, retail, spa, fitness center, business center, parking and other similar uses) for a period of not less than twenty-five (25) years after the date the City issues a temporary or final certificate of occupancy for the hotel (the "Hotel Use Period"). Developer and the City shall execute and record a certificate stating the date the temporary or final certificate of occupancy for the hotel was issued by the City.

Notwithstanding the foregoing, Developer shall not be in default under this Covenant if the Hotel is damaged or destroyed or there occurs a force majeure event as described in the Agreement (including, without limitation, a condemnation event) that precludes the operation of the hotel and Developer takes commercially reasonable steps to repair and restore the Hotel (to the extent that insurance proceeds are available for such restoration) or to address the force majeure event within a reasonable period of time.

ITEM 15 Agenda Packet Page 286
This Covenant shall be a covenant running with the land and shall be binding on Developer and its successors and assigns during the Hotel Use Period. Upon the termination of the Hotel Use Period, this Covenant shall terminate and be of no further force or effect.

This Covenant may be executed in multiple originals, each of which is deemed to be an original, and may be signed in counterparts
WHEREFORE, the City and Developer have executed this Covenant as of the date first above written.

CITY:

CITY OF Citrus Heights,
a municipal corporation
By:_________________
Name: Ashley J. Feeney
Its: City Manager
Approved as to form:

Ryan Jones, City Attorney
ATTEST:

City Clerk
By: _______________
Date:

DEVELOPER:

Antioch Street LP
By:_____________________
Name: __________________
Title:____________________
ITEM 15 Agenda Packet Page 287
Exhibit F
Pre-approved Hotel Brands
Hilton brands: Hilton Garden Inn, Homewood Suites by Hilton, Home2 Suites by Hilton, Hilton, DoubleTree, Canopy by Hilton, Curio Collection, Embassy Suites Hyatt brands: Hyatt, Andaz, Hyatt Centric, Grand Hyatt, Park Hyatt and Hyatt Place IHG: Staybridge Suites, Hotel Indigo, Crowne Plaza
Kimpton Hotels
Marriott International brands: MOXY Hotels, TownePlace Suites, Element, Aloft, Four Points by Sheraton, Residence Inn by Marriott, Springhill Suites by Marriott, AC Hotels, Westin Hotels, Marriott, Courtyard by Marriott, Aloft, W Hotels, and JW Marriott Radisson brands: Radisson, Radisson Blu, Radisson RED, Cambria Sheraton brands: Four Points by Sheraton, Sheraton
Wyndham brands: Wyndham
ITEM 15 Agenda Packet Page 288
Exhibit G
Off-site Improvement Phasing and Engineers Estimate
ITEM 15 Agenda Packet Page 289
Printed on Recycled Paper

CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE: June 27, 2024
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FROM: Meghan Huber, Economic Development & Community Engagement Director
SUBJECT: Citrus Heights Business Attraction Incentive Request for DarkHeart Brewing
Summary and Recommendation
Economic Development, a key pillar of Citrus Heights’ strategic planning goals, has been a priority since incorporation. In the November 2022 – May 2023 strategic planning cycle, City Council set a strategic objective to “Present to City Council program guidelines and recommendations to develop a grant program utilizing ARPA funding that advances economic development goals of effectively attracting and retaining target businesses and industries.” On February 23, 2023 City Council approved the Citrus Heights Business Attraction Incentive Program Guidelines and allocated $1,000,000 in American Rescue Plan Act funds to administer the program through June 30, 2024. The program goal is to enhance the City’s competitiveness in attracting target industry businesses that create community vibrancy. The program specified three target attraction segments: restaurants, breweries and other craft beverage businesses, and entertainment. These categories encompass the most frequent and passionate requests from residents that they would like to see in Citrus Heights.

During the strategic planning cycle from June 2023 to March 2024, the City Council placed significant emphasis on the Business Attraction Incentive Program, setting a strategic objective to “effectively market the program to generate leads.” This underscores the Council's commitment to economic development and the potential benefits it can bring to the community.

Since the program’s approval, staff have diligently marketed it through various communications, marketing strategies, and direct outreach.

On June 9, 2024, DarkHeart Brewing Sylvan Corners submitted a Business Attraction Incentive Request for $86,869 to relocate their existing brewery from unincorporated Sacramento County to 7110 Auburn Blvd in Citrus Heights. As detailed in the request, the relocation is projected to bring significant community benefit to Auburn Blvd and to the city. Per program guidelines, the Economic Development Director thoroughly reviewed the application for completeness, ITEM 16 Agenda Packet Page 290
Subject: Citrus Heights Business Attraction Incentive Request for DarkHeart Brewing Date: June 27, 2024

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Citrus Heights City Council MeetingsJune 27, 2024

Citrus Heights City Council Meetings
June 27, 2024