Agenda packet — Costa Mesa City Council, August 6, 2024 (part 1 of 2)

CITY OF COSTA MESA
REGULAR CITY COUNCIL AND HOUSING AUTHORITY*
Agenda
City Council Chambers
77 Fair Drive
6:00 PMTuesday, August 6, 2024
*Note: All agency memberships are reflected in the title "Council Member" 5:00 P.M. Closed Session
The City Council meetings are presented in a hybrid format, both in-person at City Hall and as a courtesy virtually via Zoom Webinar. If the Zoom feature is having technical difficulties or experiencing any other critical issues, and unless required by the Brown Act, the meeting will continue in person.

TRANSLATION SERVICES AVAILABLE / SERVICIOS DE TRADUCCIÓN DISPONIBLE Please contact the City Clerk at (714) 754-5225 to request language interpreting services for City meetings. Notification at least 48 hours prior to the meeting will enable the City to make arrangements.

Favor de comunicarse con la Secretaria Municipal al (714) 754-5225 para solicitar servicios de interpretación de idioma para las juntas de la Ciudad. Se pide notificación por lo mínimo 48 horas de anticipación, esto permite que la Ciudad haga los arreglos necesarios.

Members of the public can view the City Council meetings live on COSTA MESA TV (SPECTRUM CHANNEL 3 AND AT&T U-VERSE CHANNEL 99) or
http://costamesa.granicus.com/player/camera/2?publish_id=10&redirect=true and online at youtube.com/costamesatv.

Closed Captioning is available via the Zoom option in English and Spanish.

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1 REGULAR CITY COUNCIL AND HOUSING
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Agenda August 6, 2024
As a courtesy, the public may participate via the Zoom option.

Zoom Webinar: (For both 5:00 p.m. and 6:00 p.m. meetings) Please click the link below to join the webinar:
https://us06web.zoom.us/j/81879579049?
pwd=_XoNBT2uciL7zrDsfj4A9Q9srLgExg.bQEU-le6VvXjPDeL
Or sign into Zoom.com and “Join a Meeting”
Enter Webinar ID: 818 7957 9049/ Password: 608584
• If Zoom is not already installed on your computer, click “Download & Run Zoom” on the launch page and press “Run” when prompted by your browser. If Zoom has previously been installed on your computer, please allow a few moments for the application to launch automatically.
• Select “Join Audio via Computer.”
• The virtual conference room will open. If you receive a message reading, “Please wait for the host to start this meeting,” simply remain in the room until the meeting begins.
• During the Public Comment Period, use the “raise hand” feature located in the participants’ window and wait for city staff to announce your name and unmute your line when it is your turn to speak. Comments are limited to 3 minutes, or as otherwise directed.

Participate via telephone: (For both 5:00 p.m. and 6:00 p.m. meetings) Call: 1 669 900 6833 Enter Webinar ID: 818 7957 9049/ Password: 608584 During the Public Comment Period, press *9 to add yourself to the queue and wait for city staff to announce your name/phone number and press *6 to unmute your line when it is your turn to speak. Comments are limited to 3 minutes, or as otherwise directed.

Note, if you have installed a zoom update, please restart your computer before participating in the meeting.

Additionally, members of the public who wish to make a written comment on a specific agenda item, may submit a written comment via email to the City Clerk at [email protected].

Comments received by 12:00 p.m. on the date of the meeting will be provided to the City Council, made available to the public, and will be part of the meeting record.

Please know that it is important for the City to allow public participation at this meeting. If you are unable to participate in the meeting via the processes set forth above, please contact the City Clerk at (714) 754-5225 or [email protected] and staff will attempt to accommodate you. While the City does not expect there to be any changes to the above process for participating in this meeting, if there is a change, the City will post the information as soon as possible to the City’s website.

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Note that records submitted by the public will not be redacted in any way and will be posted online as submitted, including any personal contact information. All pictures, PowerPoints, and videos submitted for display at a public meeting must be previously reviewed by staff to verify appropriateness for general audiences. This includes items submitted for the overhead screen during the meeting. Items submitted for the overhead screen should be 1 page and provided to the City Clerk prior to the start of the meeting. No links to YouTube videos or other streaming services will be accepted, a direct video file will need to be emailed to staff prior to each meeting in order to minimize complications and to play the video without delay. The video must be one of the following formats, .mp4, .mov or .wmv. Only one file may be included per speaker for public comments, for both videos and pictures. Please e-mail to the City Clerk at [email protected] NO LATER THAN 12:00 Noon on the date of the meeting. If you do not receive confirmation from the city prior to the meeting, please call the City Clerks office at 714-754-5225.

Note regarding agenda-related documents provided to a majority of the City Council after distribution of the City Council agenda packet (GC §54957.5): Any related documents provided to a majority of the City Council after distribution of the City Council Agenda Packets will be made available for public inspection. Such documents will be posted on the city’s website and will be available at the City Clerk's office, 77 Fair Drive, Costa Mesa, CA 92626.

All cell phones and other electronic devices are to be turned off or set to vibrate. Members of the audience are requested to step outside the Council Chambers to conduct a phone conversation.

Free Wi-Fi is available in the Council Chambers during the meetings. The network username available is: CM_Council. The password is: cmcouncil1953.

As a LEED Gold Certified City, Costa Mesa is fully committed to environmental sustainability.

A minimum number of hard copies of the agenda will be available in the Council Chambers.

For your convenience, a binder of the entire agenda packet will be at the table in the foyer of the Council Chambers for viewing. Agendas and reports can be viewed on the City website at https://costamesa.legistar.com/Calendar.aspx.

In compliance with the Americans with Disabilities Act, Assistive Listening headphones are available and can be checked out from the City Clerk. If you need special assistance to participate in this meeting, please contact the City Clerk at (714) 754-5225. Notification at least 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. [28 CFR 35.102.35.104 ADA Title II].

En conformidad con la Ley de Estadounidenses con Discapacidades (ADA), aparatos de asistencia están disponibles y podrán ser prestados notificando a la Secretaria Municipal. Si necesita asistencia especial para participar en esta junta, comuníquese con la oficina de la Secretaria Municipal al (714) 754-5225. Se pide dar notificación a la Ciudad por lo mínimo 48 horas de anticipación para garantizar accesibilidad razonable a la junta. [28 CFR

35.102.35.104 ADA Title II].

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Agenda August 6, 2024
CLOSED SESSION - 5:00 P.M.

CALL TO ORDER

ROLL CALL
PUBLIC COMMENTS Members of the public are welcome to address the City Council only on those items on the Closed Session agenda. Each member of the public will be given a total of three minutes to speak on all items on the Closed Session agenda.

CLOSED SESSION ITEMS:

1. CONFERENCE WITH REAL PROPERTY NEGOTIATOR
Pursuant to California Government Code Section 54956.8
APN: 424-051-23; Property: 778 Shalimar Drive, Costa Mesa, CA 92627 Agency Negotiators: Lori Ann Farrell Harrison, City Manager Negotiating Parties: Dominic Bulone
Under Negotiation: Price and Terms of Payment

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Agenda August 6, 2024

REGULAR MEETING OF THE CITY COUNCIL AND HOUSING AUTHORITY AUGUST 6, 2024 – 6:00 P.M.

JOHN STEPHENS
Mayor

JEFFREY HARLAN ANDREA MARR
Mayor Pro Tem - District 6 Council Member - District 3

MANUEL CHAVEZ LOREN GAMEROS
Council Member - District 4 Council Member - District 2

ARLIS REYNOLDS DON HARPER
Council Member - District 5 Council Member - District 1

KIMBERLY HALL BARLOW LORI ANN FARRELL HARRISON
City Attorney City Manager

CALL TO ORDER

NATIONAL ANTHEM AND PLEDGE OF ALLEGIANCE

MOMENT OF SOLEMN EXPRESSION
[Per Council Policy 000-12, these presentations are made by community volunteers stating their own views. The City Council disclaims any intent to endorse or sponsor the views of any speaker.]

ROLL CALL

CITY ATTORNEY CLOSED SESSION REPORT
PRESENTATIONS:

1. Recognition of the Costa Mesa Pony 13U All-Stars and 10U Sox

2. Recognition of the Costa Mesa Little League 10U, 11U and 12U All-Stars, and Major Dodgers
PUBLIC COMMENTS – MATTERS NOT LISTED ON THE AGENDA
Comments on Consent Calendar items may also be heard at this time.

Comments are limited to 3 minutes, or as otherwise directed.

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Agenda August 6, 2024

COUNCIL MEMBER COMMITTEE REPORTS, COMMENTS, AND SUGGESTIONS Each council member is limited to 3 minutes. Additional comments will be heard at the end of the meeting.

1. Council Member Harper

2. Council Member Marr

3. Council Member Reynolds

4. Council Member Chavez

5. Council Member Gameros

6. Mayor Pro Tem Harlan

7. Mayor Stephens
REPORT – CITY MANAGER
REPORT – CITY ATTORNEY

CONSENT CALENDAR
All matters listed under the Consent Calendar are considered to be routine and will be acted upon in one motion. There will be no separate discussion of these items unless members of the City Council, staff, or the public request specific items to be discussed and/or removed from the Consent Calendar for discussion.

1. PROCEDURAL WAIVER: WAIVE THE FULL READING OF ALL

ORDINANCES AND RESOLUTIONS
24-298
RECOMMENDATION:

City Council and Housing Authority approve the reading by title only and waive further reading of Ordinances and Resolutions.

2. READING FOLDER 24-300
RECOMMENDATION:

City Council receive and file Claims received by the City Clerk and authorize staff to reject any and all Claims: Subro Claims, Inc. on behalf of Geico Ins. for Alex Hernandez, Ashley Ned, Mercury Ins. for Richard Chamberlin, Zoe Marie Neria Percival.

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Agenda August 6, 2024

3. ADOPTION OF WARRANT RESOLUTION 24-288
RECOMMENDATION:

City Council approve Warrant Resolution No. 2721.

1. Summary Check Register 06.27.24

2. Summary Check Register 07.03.24

3. Summary Check Register 07.12.24

4. Summary Check Register 07.18.24
Attachments:

4. MINUTES 24-299
RECOMMENDATION:

City Council approve the minutes of the regular meeting of July 16, 2024.

1. 07-16-2024 Draft MinutesAttachments:

5. AGREEMENT FOR A SCHOOL RESOURCE OFFICER PROGRAM

BETWEEN THE CITY OF COSTA MESA AND NEWPORT-MESA
UNIFIED SCHOOL DISTRICT FOR FISCAL YEAR 2024-2025
24-289
RECOMMENDATION:

Staff recommends the City Council:

1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2024-2025.

2. Authorize the City Manager to execute the agreement.

1. Costa Mesa SRO Agreement FY 24-25

2. SRO projected 2024-2025
Attachments:

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6. SERVICE AGREEMENT AMENDMENT WITH TYLER TECHNOLOGIES
PERTAINING TO IMPLEMENTATION OF THE CITY ’S LAND

MANAGEMENT SYSTEM (TESSA) UPDATE
24-291
RECOMMENDATION:

Staff recommends the City Council:

1. Authorize the City Manager and City Clerk to increase the total compensation by $90,000 to a not- to-exceed amount of $1,300,856, in substantially the form as approved by the City Attorney.

2. Authorize the City Manager to approve future amendments to the agreement with Tyler Technologies in an amount not-to-exceed $100,000.

Agenda ReportAttachments:

7. AUTHORIZE THE PURCHASE OF FORD FLEET VEHICLES 24-297 RECOMMENDATION:

Staff recommends the City Council:

1. Authorize by minute action, that compliance with the bidding requirements and procedures is inefficient and not in the best interest of the city, based on identified conditions and supported by substantial evidence.

2. Authorize the purchase of Ford fleet vehicles from local authorized Ford dealerships.

3. Authorize the City Manager or designee to execute the necessary documents for the purchase of new and replacement Ford fleet vehicles as approved in Fiscal Year 2024-2025, and as approved during the annual budget.

AT THIS TIME COUNCIL WILL ADDRESS ANY ITEMS PULLED FROM THE CONSENT

CALENDAR
------------------------------END OF CONSENT CALENDAR------------------------------- PUBLIC HEARINGS: (NEXT PAGE)
(Pursuant to Resolution No. 05-55, Public Hearings begin at 7:00 p.m.)

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Agenda August 6, 2024

1. INTRODUCTION AND FIRST READING OF AN ORDINANCE
APPROVING THE FIRST AMENDMENT (DA- 20-05) TO
DEVELOPMENT AGREEMENT (DA- 94-01) BETWEEN THE CITY OF

COSTA MESA AND THE INTERINSURANCE EXCHANGE OF THE
AUTOMOBILE CLUB ALLOWING FOR A 20-YEAR TIME EXTENSION
THAT WOULD EXPIRE OCTOBER 31, 2044; AMENDING

PROVISIONS PERTAINING TO THE RATE AND METHODOLOGY
FOR CALCULATING TRAFFIC IMPACT FEES; AND, AMENDING

PROVISIONS RELATED TO THE SETBACK OF A FUTURE PARKING
STRUCTURE; FOR A PROPERTY LOCATED AT 3333 FAIRVIEW
ROAD
24-302
RECOMMENDATION:

On July 22, 2024, the Planning Commission recommended that the City Council approve the proposed Development Agreement amendments and Ordinance adoption by a vote of 4-1-2 to:

1. Find, pursuant to CEQA Guidelines Section 15162, that the project is within the scope of the June 20, 1994-certified Final Environmental Impact Report (EIR) #1045 (State Clearing House No. 94021036) for the Auto Club Expansion project. The effects of the project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project and no new mitigation measures are required. Therefore, the 1994 FEIR for the Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied.

2. Introduce for first reading, by title only, Ordinance 2024-XX approving the First Amendment (DA-20-05) to the Automobile Club of Southern California Development Agreement (DA-94-01) to allow for a 20-year time extension that would expire October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees; and to amend provisions related to the setback of a future parking structure.

Agenda Report

1. Ordinance

2. Development Agreement Track Changes Reference Only

3. Applicant Letter

4. Project Plans

5. Unofficial Planning Commission Minutes

6. Planning Commission Resolution

7. Planning Commission Public Comments

8. Planning Commission July 22 2024 Staff Report
Attachments:

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Agenda August 6, 2024

2. ORDINANCE NO. 2024-02 AMENDING TITLE 13 (PLANNING, ZONING

AND DEVELOPMENT) OF THE COSTA MESA MUNICIPAL CODE TO

ESTABLISH AFFORDABLE HOUSING REQUIREMENTS FOR NEW

RESIDENTIAL DEVELOPMENT PROJECTS, AND A FEE

RESOLUTION TO ESTABLISH THE AFFORDABLE HOUSING IN-LIEU

FEE SCHEDULE
24-277
RECOMMENDATION:

Staff recommends the City Council:

1. Find that the adoption of Ordinance No. 2024-02 is exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3), General Rule in that the Affordable Housing Ordinance and subsequent Affordable Housing In-Lieu Fee will not have a significant impact on the environment.

2. Adopt Ordinance No. 2024-02, approving the Affordable Housing Ordinance and amending Title 13 to establish the affordable housing requirements for certain new residential development projects or make changes to Ordinance No. 2024-02 and give it a new first reading.

3. Adopt a fee resolution establishing the affordable housing in-lieu fee.

Agenda Report

1. Ordinance 2024-02

2. Track Changes

3. In-Lieu Fee Resolution

4. 2nd Reading City Council Agenda Report June 18, 2024

5. In-Lieu Fee Resolution City Council Agenda Report June 18, 2024
Attachments:

OLD BUSINESS: NONE.

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Agenda August 6, 2024
NEW BUSINESS:

1. CITY COUNCIL FIRST READING OF ORDINANCE TO INCREASE

CITY COUNCIL COMPENSATION
24-239
RECOMMENDATION:

Staff recommends the City Council introduce for first reading, by title only, Ordinance No. 2024-XX increasing the City Council compensation effective after the general election, with the new City Council in December 2024.

1. Council Salaries OrdinanceAttachments:

2. ACCEPTANCE OF THE STORM DRAIN MASTER DRAINAGE PLAN
(SDMDP)
24-245
RECOMMENDATION:

Staff recommends the City Council accept Phase 1 of the Storm Drain Master Drainage Plan (SDMDP) update consisting of the Existing Conditions Assessment Report (ECAR) and the Proposed Drainage & Water Quality Improvements.

3. GENERAL PLAN (PSCR- 24-0001) AND RESIDENTIAL INCENTIVE

OVERLAY DISTRICT DEVELOPMENT SCREENING REQUEST FOR A
PROPOSED RESIDENTIAL DEVELOPMENT ON A 1.77 ACRE SITE
LOCATED AT 220 VICTORIA PLACE (“VICTORIA PLACE”)
24-301
RECOMMENDATION:

Provide direction regarding whether or not a General Plan Amendment associated with the proposed development of 40 residential units should proceed for the property located at 220 Victoria Place. The General Plan Amendment would include adding an overlay (Residential Incentive Overlay District) to the property that would allow for residential development, pursuant to specific standards of Costa Mesa Municipal Code Section (CMMC) Chapter V, Article 12.

Agenda Report

1. Applicant Letter

2. Trip Generation Memo

3. Preliminary Plans
Attachments:

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Agenda August 6, 2024

4. UPDATES TO POLICE DEPARTMENT STAFFING AND

COMPENSATION RELATED TO POLICE RECRUIT, POLICE CADET,

POLICE RESERVE OFFICER AND COMMUNICATIONS OFFICER

POSITIONS
24-312
RECOMMENDATION:

Staff recommends the City Council:

1. Authorize and approve staffing as follows:
a. Authorize an increase of 5.0 FTE for Police Cadet
b. Authorize an increase of 2.5 FTE for Police Reserve Officer

2. Approve Resolution Number 2024-XX establishing full-time pay rate and benefits for Police Recruit.

3. Approve Resolution Number 2024-XX revising the pay rate for Police Reserve Officer.

4. Appropriate $211,000 in the FY 2024/2025 Police Department ’s General Fund budget to cover the estimated costs of the additional 5.0 FTE Police Cadets.

1. Police Recruit Resolution

2. Police Reserve Resolution
Attachments:

5. COSTA MESA CHAMBER OF COMMERCE FINANCIAL SUPPORT 24-284 RECOMMENDATION:

Staff recommends the City Council authorize the use of City Manager contingency funds to provide relief to the Costa Mesa Chamber of Commerce due to the financial impacts of COVID-19 and the loss of revenue.

1. City of Costa Mesa ARPA Financial Support Request LetterAttachments:

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Agenda August 6, 2024

6. APPROVE PROPOSED DESIGN IMPROVEMENTS FOR SHALIMAR
PARK
24-279
RECOMMENDATION:

Staff recommends the City Council approve the conceptual park design Plan B, and provide staff direction on the Parks and Community Services Commission recommendation to include restroom facilities, for the proposed improvements at Shalimar Park, 782 Shalimar Drive, Costa Mesa.
1A. Design Plan Option A with Renderings
1B. Design Plan Option B with Renderings
2A. Amenity Options
2B. Amenity Options - Community Feedback
Attachments:

ADDITIONAL COUNCIL /BOARD MEMBER COMMITTEE REPORTS, COMMENTS, AND

SUGGESTIONS

ADJOURNMENT

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13 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-298 Meeting Date: 8/6/2024
TITLE:

PROCEDURAL WAIVER: WAIVE THE FULL READING OF ALL ORDINANCES AND

RESOLUTIONS
RECOMMENDATION:

City Council and Housing Authority approve the reading by title only and waive further reading of Ordinances and Resolutions.

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14 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-300 Meeting Date: 8/6/2024
TITLE:

READING FOLDER
DEPARTMENT: City Manager’s Office/City Clerk’s Division RECOMMENDATION:

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15 CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-288 Meeting Date: 8/6/2024
TITLE:

ADOPTION OF WARRANT RESOLUTION
DEPARTMENT: FINANCE DEPARTMENT
PRESENTED BY: CAROL MOLINA, FINANCE DIRECTOR
CONTACT INFORMATION: CAROL MOLINA, (714) 754-5243
RECOMMENDATION:

City Council approve Warrant Resolution No. 2721.

BACKGROUND:

In accordance with Section 37202 of the California Government Code, the Director of Finance or their designated representative hereby certify to the accuracy of the following demands and to the availability of funds for payment thereof.

FISCAL REVIEW:

Funding Payroll Register No.24-13”A”Off Cycle, 24-14 On Cycle, 24-15 On Cycle, and City operating expenses for $8,841,699.22.

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CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-299 Meeting Date: 8/6/2024
TITLE:

MINUTES
DEPARTMENT: City Manger’s Office/City Clerk’s Division
RECOMMENDATION:

City Council approve the minutes of the regular meeting of July 16, 2024.

Page 1 of 1 ends

145
Minutes – Regular Meeting July 16, 2024 Page 1 of 10

REGULAR CITY COUNCIL AND HOUSING AUTHORITY
TUESDAY, JULY 16, 2024 - MINUTES
CALL TO ORDER– The Closed Session meeting was called to order by Mayor Stephens at 5:00 p.m.

ROLL CALL

Present: Council Member Chavez, Council Member Gameros, Council Member Harper, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Absent: Council Member Marr.

PUBLIC COMMENTS – NONE.

CLOSED SESSION ITEMS:

Closed Session adjourned at 5:43 p.m.

CALL TO ORDER – The Regular City Council and Housing Authority meeting was called to order by Mayor Stephens at 6:00 p.m.

NATIONAL ANTHEM AND PLEDGE OF ALLEGIANCE – A video was played of the National Anthem and the mayor led the Pledge of Allegiance.

MOMENT OF SOLEMN EXPRESSION – Led by Calvary Chapel Dave Manne, Pastor Emeritus.

ROLL CALL

Present: Council Member Chavez, Council Member Gameros, Council Member Harper (Excused at 8:33 p.m.), Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Absent: Council Member Marr.
146
Minutes – Regular Meeting July 16, 2024 Page 2 of 10
CITY ATTORNEY CLOSED SESSION REPORT – No reportable action.

PRESENTATIONS: NONE.

PUBLIC COMMENTS – MATTERS NOT LISTED ON THE AGENDA
Kim Hendricks, Fairview Park Alliance, spoke on Fairview Park and is opposed to flying in Fairview Park.

Alberta Mirisciotti, Costa Mesa, spoke in support of a beekeeping ordinance.

Priscilla Rocco, Costa Mesa, spoke in support of a beekeeping ordinance.

Sandy Tabako, Garden Grove, spoke in support of a beekeeping ordinance.

Alfie Sanchez, Grand Prix 5K Fun Run, invited the City Council to the event at 3555 Harbor Gateway, 1:00 p.m. - 2:00 p.m., on Sunday, July 21st.

Diana Summer, Lakewood, spoke in support of a beekeeping ordinance.

Speaker, Resilience Orange County, thanked staff for participating in a tenants rights training, shared pictures from the event, spoke on publishing the agenda earlier, and requested a crosswalk at Placentia Avenue and Center Street.

John Wesley Lakewood, spoke in support of a beekeeping ordinance.

Boris Baer spoke in support of a beekeeping ordinance.

Eilleen Aragon spoke in support of a beekeeping ordinance.

Barbara Baer-Imhoof spoke in support of a beekeeping ordinance.

Speaker, spoke on traffic on Placentia Avenue, spoke on development and housing, and spoke against the current parking requirements.

COUNCIL MEMBER COMMITTEE REPORTS, COMMENTS, AND SUGGESTIONS Council Member Gameros spoke on the July 3rd event and thanked staff, spoke on the Orange County Fair starting on July 19 th, spoke on Movies in the Park, and spoke on community meetings for the Fairview Developmental Center.

Council Member Harper thanked speakers for information on beekeeping and congratulated the Slammers Soccer Club in Costa Mesa for winning National Championships. 147
Minutes – Regular Meeting July 16, 2024 Page 3 of 10
Council Member Reynolds spoke on the intersection at Placentia Avenue and Center Street and requested staff to explore options, spoke on bicycle and pedestrian safety, spoke on the Fairview Park Steering Committee and the timing for the Master Plan Update, spoke on the Mobile Home Advisory Committee meeting, and spoke on the August 15 th Fair Housing Workshop.

Council Member Chavez thanked speakers for information on beekeeping, spoke on exploring options at the Placentia Avenue and Center Street intersection, spoke on the green striping to Fairview Park, spoke on the 311 app and reporting graffiti, spoke on utilizing the 311 app, and thanked Supervisor Foley for appointing him to the OCTA Community Advisory Committee.

Mayor Pro Tem Harlan congratulated Urban Workshop for celebrating their 10-year anniversary and spoke on Concerts in the Park.

Mayor Stephens spoke on Urban Workshop, spoke on the July 3 rd event and thanked staff for their work on the event, thanked the Fire Department for extinguishing the June 23 rd fire at Fairview Park, thanked the Fire Department for extinguishing the two structure fires due to electric bike batteries, spoke on Adams Avenue improvements, spoke on the Orange County Fair and July 19 th is Costa Mesa Day at the Fair, and spoke on the Raiders training camp beginning on July 20th.

REPORT – CITY MANAGER – Ms. Farrell Harrison reported on bringing forth a beekeeping ordinance, the Raiders training camp, and that staff will explore the Placentia Avenue and Center Street intersection.

REPORT – CITY ATTORNEY – NONE.

CONSENT CALENDAR
MOVED/SECOND: Council Member Reynolds/Council Member Harper MOTION: Approve the Consent Calendar.

The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Harper, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: None.

Absent: Council Member Marr.

Abstain: Mayor Stephens recused himself on item 3 the Warrant Resolution due to campaign contributions received from Everette Dorey LLP and Ware Disposal Inc.

Motion carried: 6-0

1. PROCEDURAL WAIVER: WAIVE THE FULL READING OF ALL ORDINANCES AND

RESOLUTIONS
ACTION:

City Council and Housing Authority approved the reading by title only and waived further reading of Ordinances and Resolutions.
148
Minutes – Regular Meeting July 16, 2024 Page 4 of 10

2. READING FOLDER
ACTION:

City Council received and filed Claims received by the City Clerk and authorized staff to reject any and all Claims: Joyce Jie Luo, Christopher Pizarro, Adolfo Rodriguez, Augustine Ume-Ezeoke.

3. ADOPTION OF WARRANT RESOLUTION
Mayor Stephens recused himself on this item due to campaign contributions received from Everette Dorey LLP and Ware Disposal Inc.

ACTION:

City Council approved Warrant Resolution No. 2720.

4. MINUTES
ACTION:

City Council approved the minutes of the regular meeting of June 18, 2024.

5. RENEWAL OF THE MICROSOFT ENTERPRISE AGREEMENT
ACTION:

1. City Council approved a 3-year renewal of the Microsoft Enterprise Agreement through Dell Technologies in the amount not-to-exceed $924,625.83 (payable in three equal annual payments of $308,208.61).

2. Authorized the City Manager to sign the agreement and any documents necessary to continue the City’s participation in the program during the 3-year term.

6. TRAFFIC MANAGEMENT SERVICES AGREEMENTS WITH THE 32ND DISTRICT

AGRICULTURAL ASSOCIATION
ACTION:

1. City Council approved the 2024 agreement between the City and the 32nd District Agricultural Association for traffic management services for the Orange County Fair.

2. Approved the 2024 agreement between the City and the 32nd District Agricultural Association for traffic management services for all designated year-round events at the Orange County Fair and Event Center (“OCFEC”).

3. Authorized the City Manager, or her designee, to execute the agreements.

4. Authorized the City Manager, or her designee, to execute any amendments to the agreements, including but not limited to, amendments increasing the maximum compensation to be paid to the City.
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7. SERVICES AGREEMENT FOR PUBLIC SAFETY HELICOPTER SUPPORT

BETWEEN THE CITY OF HUNTINGTON BEACH AND THE CITY OF COSTA MESA ACTION:

1. City Council approved the Services Agreement for public safety helicopter support services between the City of Huntington Beach and the City of Costa Mesa for three years in an amount not to exceed $300,000 annually.

2. Approved the Consumer Price Index (CPI) annually and adjusted the contract accordingly.

3. Authorized the City Manager to execute the Services Agreement, in substantially the form as attached and in such final form as approved by the City Attorney, and future amendments to the Agreement.

8. ACCEPTANCE OF THE INFORMATION TECHNOLOGY DEPARTMENT
REMODELING PROJECT, CITY PROJECT NO. 22-09
ACTION:

1. City Council accepted the work performed by Builtall, 4712 East 2nd Street, #520, Long Beach, California 90803, for the Information Technology Department Remodeling Project, City Project No. 22-09, and authorize the City Clerk to file the Notice of Completion.

2. Authorized the City Manager to release the retention monies thirty-five (35) days after the Notice of Completion filing date, release the Labor and Material Bond seven (7) months after the filing date, and release the Faithful Performance Bond at the conclusion of the one-year warranty period.
----------------------------------------END OF CONSENT CALENDAR----------------------------------------- PUBLIC HEARINGS:
(Pursuant to Resolution No. 05-55, Public Hearings begin at 7:00 p.m.)

1. ENHANCED MOBILITY FOR SENIORS AND INDIVIDUALS WITH DISABILITIES

GRANT FUNDING - OCTA
Presentation by Mr. Gruner, Parks and Community Services Director.

Public Comments: None.
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Minutes – Regular Meeting July 16, 2024 Page 6 of 10
MOVED/SECOND: Council Member Reynolds/Council Member Chavez MOTION: Approve staff recommendation.

The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Harper, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: None.

Absent: Council Member Marr.

Abstain: None.

Motion carried: 6-0
ACTION:

City Council conducted the public hearing to meet Orange County Transportation Authority (OCTA) grant fund application requirements to establish coordination with non-profits and ensure services are not being duplicated.

OLD BUSINESS:

1. ADOPTION OF ORDINANCES TO AMEND CHAPTERS 2 AND 3 OF TITLE 4 (BICYCLES); AND CHAPTERS 1 THROUGH 21 OF TITLE 10 (MOTOR VEHICLE

TRAFFIC) OF THE COSTA MESA MUNICIPAL CODE
Presentation by Mr. Thomas, Active Transportation Coordinator.

Public Comments: None.

MOVED/SECOND: Council Member Reynolds/Council Member Chavez MOTION: Approve staff recommendation.

The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Harper, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: None.

Absent: Council Member Marr.

Abstain: None.

Motion carried: 6-0
ACTION:

1. City Council adopted Ordinance No. 2024-08, to amend Chapters 2 and 3 of Title 4 (Bicycles) of the Costa Mesa Municipal Code to be in compliance with current California laws related to bicycles and current practices and procedures.

2. Adopted Ordinance No. 2024-09, to amend Chapters 1 through 21 of Title 10 (Motor Vehicle Traffic) of the Costa Mesa Municipal Code to be in compliance with current California laws and related to bicycles and current practices and procedures. 151
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NEW BUSINESS:

1. ORANGE COUNTY POWER AUTHORITY - FEASIBILITY STUDY
Presentation by Ms. Gallardo Daly, Assistant City Manager and Joe Mosca, Chief Executive Officer, Orange County Power Authority.

Public Comments:

Speaker, spoke on the item, spoke on the Orange County Power Authority leadership, inquired why other government entities are opted out, and requested the study be brought before the Finance and Pension Advisory Committee.

Craig Preston, Costa Mesa, spoke in support of the item.

Tom Hazellief spoke in support of the item.

Jennifer Tanaka, Costa Mesa, spoke on the reliability of the feasibility study, and for the City to do their own due diligence, spoke on an opt out program, and spoke on credit ratings.

MOVED/SECOND: Mayor Pro Tem Harlan/Council Member Chavez MOTION: Approve staff recommendation.

The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: Council Member Harper.

Absent: Council Member Marr.

Abstain: None.

Motion carried: 5-1-1
ACTION:

City Council authorized the City Manager and City Attorney to issue a non-disclosure agreement to release City of Costa Mesa load data from Southern California Edison (SCE) to the Orange County Power Authority (OCPA) to conduct a feasibility study to determine whether joining OCPA is mutually beneficial.

2. OPTION TO LEASE AGREEMENT TO CONSTRUCT AND OPERATE A 70-UNIT

AFFORDABLE SENIOR AND SUPPORTIVE HOUSING PROJECT LOCATED AT THE CITY’S SENIOR CENTER, 695 WEST 19TH STREET
Presentation by Mr. Mendez, Senior Planner.

Public Comments:

Robert Morse spoke on the need for affordable housing.
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MOVED/SECOND: Mayor Stephens/Mayor Pro Tem Harlan
MOTION: Approve staff recommendation.

The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: None.

Absent: Council Member Harper and Council Member Marr.

Abstain: None.

Motion carried: 5-0-2
ACTION:

City Council reviewed and approved the “Option to Lease Agreement” for a term that will expire on October 31, 2024, with one possible 120 day extension. The purpose of the agreement is for Jamboree Housing to apply for Project-Based Vouchers issued by the County of Orange.

3. APPROVE PROPOSED DESIGN IMPROVEMENTS FOR KETCHUM-LIBOLT PARK Presentation by Mr. Yang, City Engineer and Mr. Coward, Community Relations Manager.

Public Comments:

Ralph Taboada requested bathrooms to be added to the design and that they be open daily.

David Martinez spoke on a pedestrian cut through at the end of Minor Street for a more direct path, requested to add bathrooms to the design, spoke on noise mitigation, spoke on including bike racks that fit different size bikes, and expressed concern for two parks in District 4 being under construction at the same time.

Cynthia McDonald, Costa Mesa, requested bathrooms and bike racks be added to the design.

Discussion ensued on outreach to the families of Officers Ketchum and Libolt, adding bike racks that’s accommodates various sizes, conduct outreach to residents on Miner Street regarding pedestrian access, the OCTA bus stop that has been deactivated, and during phase two explore the feasibility of installing bathrooms.

MOVED/SECOND: Council Member Chavez/ Council Member Gameros MOTION: Approve staff recommendation, including outreach to families of Officers Ketchum and Libolt for input on the design, add bike racks that’s accommodates various sizes, conduct outreach to residents on Miner Street regarding pedestrian access, and during phase two explore the feasibility of installing bathrooms. 153
Minutes – Regular Meeting July 16, 2024 Page 9 of 10
The motion carried by the following roll call vote:

Ayes: Council Member Chavez, Council Member Gameros, Council Member Reynolds, Mayor Pro Tem Harlan, and Mayor Stephens.

Nays: None.

Absent: Council Member Harper and Council Member Marr.

Abstain: None.

Motion carried: 5-0-2
ACTION:

City Council approved the conceptual design plan, park theme, and park components for the improvements at Ketchum-Libolt Park, 2150 Maple Street, Costa Mesa. Including outreach to families of Officers Ketchum and Libolt for input on the design, add bike racks that’s accommodates various sizes, conduct outreach to residents on Miner Street regarding pedestrian access, and during phase two explore the feasibility of installing bathrooms.

ADDITIONAL COUNCIL/BOARD MEMBER COMMITTEE REPORTS, COMMENTS, AND SUGGESTIONS – NONE.

ADJOURNMENT – Mayor Stephens adjourned the meeting at 9:36 p.m. 154
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Minutes adopted on this 6th day of August, 2024.
___________________________
John Stephens, Mayor
ATTEST:
___________________________
Brenda Green, City Clerk
155

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-289 Meeting Date: 8/6/2024
TITLE:

AGREEMENT FOR A SCHOOL RESOURCE OFFICER PROGRAM BETWEEN THE CITY OF COSTA MESA AND NEWPORT-MESA UNIFIED SCHOOL DISTRICT FOR FISCAL YEAR 2024- 2025
DEPARTMENT: POLICE DEPARTMENT
PRESENTED BY: SCOTT STAFFORD, LIEUTENANT
CONTACT INFORMATION: SCOTT STAFFORD, (714) 754.5675
RECOMMENDATION:

Staff recommends the City Council:

1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2024-2025.

2. Authorize the City Manager to execute the agreement.

BACKGROUND:

In 2001, the Costa Mesa Police Department began an SRO Program with NMUSD. The program consisted of two full-time police officers to staff Costa Mesa’stwo high schools and one intermediate school. The program was viewed as a tremendous success and a benefit to all parties involved.

Since then, the City and NMUSD have entered into annual agreements in connection with the SRO Program. In September 2022, the Department committed a third officer to the SRO Program, which was outlined in the SRO Program agreement for FY 2023-2024.

ANALYSIS:

Since the SRO Program’sinception, the primary mission of the SROs has been to prevent and deter school violence before it occurs. SROs help mitigate problems that might otherwise result in an emergency call for police services, thereby reducing the burden on Patrol Services and protecting those in the learning environment. SROs accomplish this by their presence on campus and regular interaction with school staff and students. In addition, SROs are a resource for students to advise of potential issues, which the SROs can proactively address and mitigate.

SROs are present on school campuses to ensure the safety and security of our schools. SROs respond to and handle all criminal acts occurring on school campuses or in the immediate vicinity. In this respect, SROs conduct the initial investigation on a variety of crimes such as child abuse, assaults, thefts, graffiti, and narcotics related crimes. They also provide immediate and direct support

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File #: 24-289 Meeting Date: 8/6/2024
to the school administration and security staff.

Pursuant to the proposed agreement between the City and NMUSD, the City will assign three full- time CMPD officers to serve as SROs at Costa Mesa High School, Estancia High School, and Back Bay Continuation School, and to provide assistance, as needed, at other schools throughout the City.

NMUSD will reimburse the City for fifty percent (50%) of the total compensation paid to each of the three SRO’s, including salary and benefits.

ALTERNATIVES:

No other alternatives have been considered. If the SRO Program were discontinued, the Police Department would have to utilize staffing from Patrol Services to handle any campus-related calls for service. This alternative would draw upon the resources in the field and render them temporarily unavailable in other parts of the community. There would also be no consistency in the services provided to the school district.

FISCAL REVIEW:

The combined annual salaries and benefits expense for three officers is estimated at $1,030,000.

NMUSD shares fifty percent (50%) of this cost is estimated at $515,000. The remaining portion of the officers’salaries and benefits is included in the Police Department’sFY 2024-2025 adopted budget in the General Fund (Fund 101).

LEGAL REVIEW:

The City Attorney’s Office has reviewed this report and the agreement and approved them as to form.

CITY COUNCIL GOALS AND PRIORITIES:

This item supports the following City Council Goal: Strengthen the Public’s Safety and Improve the Quality of Life.

CONCLUSION:

Staff recommends the City Council:

1. Approve the agreement for a School Resource Officer (SRO) Program between the City of Costa Mesa and Newport-Mesa Unified School District (NMUSD) for Fiscal Year 2024-2025.

2. Authorize the City Manager to execute the agreement.

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1 SRO Agreement 2024-2025

SCHOOL RESOURCE OFFICER SERVICES AGREEMENT

BETWEEN THE CITY OF COSTA MESA

AND THE NEWPORT-MESA UNIFIED SCHOOL DISTRICT
FOR THE 2024-2025 FISCAL YEAR

THIS SCHOOL RESOURCE OFFICER SERVICES AGREEMENT (“Agreement”) is entered into as of the 1st day of July, 2024 (“Effective Date”) by and between the CITY OF COSTA MESA, a municipal corporation (“City”), and the NEWPORT-MESA UNIFIED SCHOOL DISTRICT, a political subdivision of the State of California (“District”).

RECITALS

A. City is a municipal corporation duly organized and validly existing under the Constitution and the laws of the State of California.

B. District is a political subdivision of the State of California located in Orange County, California, and is organized and exists pursuant to the laws of the State of California.

C. District desires services as part of the School Resource Officer Program (“SRO Program”), as more fully described herein (the “Services”).

D. District is authorized to enter into this Agreement pursuant to the laws of the State of California.

E. City employs sworn peace officers specially trained, experienced and competent to provide the Services and City is willing to provide the Services to District on the terms and in the manner provided in this Agreement.

F. This Agreement is not intended to modify any program or service provided by City to District as of the Effective Date except as expressly provided herein.

G. City and District are joining together in a collaborative effort to provide School Resource Officers (“SROs”) to work with the school communities to help provide a safe and secure environment for all.

H. The Agreement’s goal is to have a working partnership between the City and the District which provides a safe and secure learning environment for all students and encourages a positive learning experience.

NOW THEREFORE, for and in consideration of the mutual covenants and conditions set forth herein, City and District agree as follows:

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2 SRO Agreement 2024-2025

1.0. TERM

The term of this Agreement shall commence on the Effective Date and continue for a period of one (1) year, ending on June 30 , 2025, unless previously terminated as provided herein.

2.0. CITY’S DUTIES

2.1. Scope of Services. The Services shall include the following requ ired and discretionary services designed to promote safety in the learning environment, which shall be provided at District schools located within the City, including Costa Mesa High School (“CMHS”), Estancia High School (“EHS”), Early College High School, Back Bay High School (“BBHS), Tewinkle Middle School, and any elementary schools in need of SRO presence, as requested by District.

(a) Required Services. City shall perform the following services:

(i) Assign three (3) full-time sworn officers employed by the Costa Mesa Police Department (“CMPD”) to the function of SROs.

(ii) Establish and maintain a liaison between District personnel, CMPD personnel, and stakeholders in the juvenile justice system.

(iii) Serve as a resource to District employees, such as administrators, faculty and security personnel, as well as students and their guardian(s) on law enforcement -related issues including crime prevention and investigations.

(iv) Assign one SRO to CMHS, one SRO to EHS, and one SRO to BBHS.

As needed, the SROs will share the responsibility of providing Services to the other District schools in the City, subject to the discretion of the Costa Mesa Chief of Police (“Chief of Police”) to make assignment changes.

(b) Discretionary Services. City may, in the sole discretion of the SRO and/or the Chief of Police, perform the following services:

(i) Conduct patrol activities in and around the designated campuses.

(ii) Conduct preliminary and follow-up investigations of crimes that occur on or near the designated campuses.

2.2. Selection and Supervision of SROs. The Chief of Police will determine those individuals best suited for the assignment to the SRO Program in accordance with City’s employment procedures and conditions and advise the District of the eligible candidates. The Chief of Police will consider input from the District representative as to 159
3 SRO Agreement 2024-2025

the selection of the SROs, but the Chief of Police shall have the sole discretion in the selection of the SROs. The Chief of Police’s selections shall be final. The SROs shall perform the Services under the supervision and control of the Chief of Police.

2.3. Vehicles, Equipment, and Uniforms. Except as otherwise provided in this Agreement, City shall furnish all vehicles, equipment, and uniforms as may be required to support the SROs assigned to the District pursuant to this Agreement. City agrees that each SRO will perform his/her duties in full police uniform. The uniform will include safety equipment designated for use by sworn field personnel pursuant to CMPD policies and practices.

2.4. Schedule of Services; SRO Assignment. City shall schedule each SRO such that each SRO provides services four (4) days a week for ten (10) hours each day (“Normal Work Week”). The SROs will spend a minimum of seventy-five percent (75%) of their time allocated in this Agreement in and around the assigned schools. City shall use its best efforts to ensure that the same person provides Services to the same campus except when he/she is on paid leave or otherwise absent. Subject to provisions of relevant City personnel policies or labor agreements, City shall use its best efforts to schedule SROs so that at least one (1) SRO is on duty each day that school is in session and that each SRO can be present during special school activities. On the days that there is only one (1) SRO on duty during the week, he/she shall serve as the SRO for both CMHS, EHS, and BBHS and will also be available to assist, if needed, any other District school in the City.

2.5. District Security . The Services performed by SROs pursuant to this Agreement are not intended to supplant those provided by existing District security personnel. District may request security services from City pursuant to other provisions of this Agreement.

3.0. DISTRICT’S DUTIES

3.1. Compensation. District shall compensate City for the Services as set forth herein.

3.2. Access to Student Records . District shall designate the SROs as designated school officials for stu dent records purposes. SROs shall have access to students’ education records when there is a legitimate educational interest in the records.

Pursuant to the Family Educational Rights and Privacy Act of 1974 (FERPA), the SROs may only use the personally identifiable information conta ined in a student’s record for the purposes for which the disclosure is made, such as for promoting school safety and the physical security of students. SROs shall not redisclose personally identifiable information from a student’s educational record to an y other outside sources, including the CMPD, without consent, unless the redisclosure meets an exception to consent in FERPA.

3.3. Staff Liaison . District designates its Director of Student and Community 160
4 SRO Agreement 2024-2025

Services, or an alternate as designated by the Superintendent, as a liaison to the CMPD to facilitate communication between District personnel and the SROs and to coordinate the SROs’ activities with District activities and events.

3.4. Cooperation. District personnel shall cooperate with the SROs to facilitate the performance of Services pursuant to this Agreement.

3.5. Special Events ; Supplemental Services . The SRO Program shall not supplant or alter the existing District practice of hiring CMPD personnel for the purpose of policing special events. District may request in writing that City provide additional services beyond the Normal Work Week by a SRO during evening or weekend events, such as Parent -Teacher Association (PTA) meetings, Back -to-School Night(s), Open House(s), sporting event(s), dance(s), prom(s) or other District -sponsored events. City shall use its best efforts to provide the requested servic es by the SRO assigned to the campus at which the event or activity is scheduled. If the District has requested an SRO’s presence at an event, or requested supplemental services to be provided by a n SRO, District agrees that District shall compensate City for such supplemental services in accordance with this Agreement.

4.0. COMPENSATION

4.1. Compensation. For Services provided during the Normal Work Week, District shall pay City fifty percent (50%) of the total compensation paid each SRO under this Agreement, as invoiced by City to District. The term “total compensation” includes salary and benefits as those exist on the Effective Date and as set forth in E xhibit “A,” attached hereto and incorporated herein by this reference, and as such salary and benefits are modified from time to time during the term of this Agreement.

4.2. Supplemental Services. If District requests additional services beyond the Normal Work Week for special events, District shall pay City one hundred percent (100%) of the costs that City incurs in providing the additional services as requested by the District, with the understanding that City is generally required to pay SROs at least one and one-half (1.5) times their regular rate of pay for overtime.

4.3. Method of Billing. At the end of each quarter, City will invoice District for the SRO costs incurred during that quarter. District shall pay City’s invoice within thirty (30) days of receipt of the invoice. If City provides supplemental services as provided herein, City will invoice District for such supplemental services following the provision of such services and District shall pay such invoice within thirty (30) days of receipt of an invoice from City.

4.4. Extended Closure of Schools. Should there be an extended closure of District schools (longer than 30 days) due to an unforeseen event that diminishes the need of SRO’s on school campuses and allows City to redeploy SROs to other agency duties, City will assume 80% of the costs of SRO’s after the 30th consecutive day of such a closure while the District will continue to be responsible for 20% of the such costs. 161
5 SRO Agreement 2024-2025

Equally shared costs of SRO’s between the District and the City would resume once the District begins normal operations that includes the re -entry of students onto District campuses.

5.0. GRANT ADMINISTRATIVE REQUIREMENTS

City and District will be responsible for their own respective grant monies received, if any, in connection with the SRO Program, including all administrative duties and responsibilities. This includes receipt and disbursement of funds, financial reporting and grant management issues.

6.0. TERMINATION

District or City may terminate this Agreement without cause any time, by giving thirty (30) days’ written notice to the other party. In the event of termination, District shall compensate City for Services performed through the effective date of the termination. City shall continue to provide Services after notice to terminate and during the thirty (30) day notice period, unless District, in the notice, requests that City not perform Services.

7.0. INDEMNIFICATION

7.1. District Obligations . District agrees to defend, indemnify and hold harmless City, its elected and appointed officials, officers, agents, employees, and volunteers from and against any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys’ fees, arising out of or in any way connected with the District’s negligent performance of this Agreement. District assumes workers’ compensation liability for injury or death of its officers, agents, employees and volunteers, and, except as provided herein, assumes no workers’ compensation responsibility for the elected and appointed officials, officers, and employees of the City.

7.2. City Obligations . City agrees to defend, indemnify and hold harmless District, its officers, agents, employees and volunteers harmless from and against any and all losses, claims, actions, damages, expenses or liabilities, including reasonable attorneys’ fees, arising out of or in any way connected with City’s negligent performance of this Agreement. Except as provided herein, City assumes workers’ compen sation liability for injury or death of its elected and appointed officials, officers, and employees, and assumes no workers’ compensation responsibility for the officers, agents, employees and volunteers of the District.

8.0. ASSIGNMENT

This Agreement may not be assigned or transferred by either party without the express written consent of the other party.

9.0. NOTICE / REPRESENTATIVES
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6 SRO Agreement 2024-2025

City and District have designated the following representatives to receive notices and act on their agency’s behalf in the administration of this Agreement. Notices shall be deemed given when personally delivered to the District or City representative or three (3) days after the date the notice is deposited in the United States mail, first -class postage prepaid, and addressed as set forth below.

CITY: Chief of Police
Costa Mesa Police Department
99 Fair Drive
Costa Mesa, CA 92626

DISTRICT: Superintendent of Schools
Newport-Mesa Unified School District
2985 Bear Street
Costa Mesa, CA 92626

10.0. NO THIRD-PARTY BENEFICIARIES

This Agreement is entered into for the sole benefit of City and District and no other parties are intended to be direct or incidental beneficiaries of this Agreement and no third party shall have any right in, under or to this Agreement.

11.0. INDEPENDENT CONTRACTOR

The parties understand and agree that in performing the Services under this Agreement, City, and any person employed by or contracted with City to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of the District.

12.0. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties with respect to any matter referenced herein and supersedes any and all other prior writings and oral negotiations. This Agreement may be modified only in writing, and signed by the partie s in interest at the time of such modification. The terms of this Agreement shall prevail over any inconsistent provision in any other contract document appurtenant hereto, including exhibits to this Agreement.

13.0. ATTORNEYS’ FEES

If litigation is brought by any party in connection with this Agreement, the prevailing party shall be entitled to recover from the opposing party all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in the exercise of any of its rights or remedies hereunder or the enforcement of any of the terms, conditions, or provisions hereof.
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7 SRO Agreement 2024-2025

14.0. GOVERNING LAW

This Agreement shall be governed by and construed under the laws of the State of California without giving effect to that body of laws pertaining to conflict of laws. In the event of any legal action to enforce or interpret this Agreement, the parties hereto agree that the sole and exclusive venue shall be a court of competent jurisdiction located in Orange County, California.

15.0. AMENDMENTS

Only a writing executed by the parties hereto or their respective successors and assigns may amend this Agreement.

16.0. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. All counterparts shall be construed together and shall constitute one agreement.

[Signatures appear on following page.]
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8 SRO Agreement 2024-2025

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by and through their respective authorized officers, as of the date first written above.

CITY OF COSTA MESA

Lori Ann Farrell Harrison
City Manager

ATTEST:

Brenda Green
City Clerk

NEWPORT-MESA UNIFIED SCHOOL DISTRICT

Sara Jocham, Ed.D.

Assistant Superintendent of Student Support Services

Date:

APPROVED AS TO FORM:

Kimberly Hall Barlow
City Attorney

Date:

APPROVED AS TO FORM:

General Counsel

165

EXHIBIT A

SCHOOL RESOURCE OFFICER SALARIES FOR 2024-2025

166
City of Costa Mesa
School Resource Officer Program
Fiscal Year 2024-2025

Amount per Officer
Salaries

$133,207
Special Pays
(POST/Uniform/Liaison/Bilingual) 28,861
Medicare Tax 2,719
Health Insurance Benefit 25,428
Retirement Benefit 138,637
Insurance
(Workers
Comp/Liability/Unemployment) 14,909
343,760
x 3
Total Costs for Three Officers $ 1,031,281 x 50%
NMUSD share at 50% $515,641

167

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-291 Meeting Date: 8/6/2024
TITLE:

SERVICE AGREEMENT AMENDMENT WITH TYLER TECHNOLOGIES PERTAINING TO IMPLEMENTATION OF THE CITY’S LAND MANAGEMENT SYSTEM (TESSA) UPDATE DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/

PLANNING DIVISION
PRESENTED BY: DANIEL INLOES, AICP, ECONOMIC DEVELOPMENT

ADMINISTRATOR
CONTACT INFORMATION: DANIEL INLOES, AICP, ECONOMIC DEVELOPMENT ADMINISTRATOR, 714-754-5088
RECOMMENDATION:

Staff recommends the City Council:

1. Authorize the City Manager and City Clerk to increase the total compensation by $90,000 to a not-to-exceed amount of $1,300,856, in substantially the form as approved by the City Attorney.

2. Authorize the City Manager to approve future amendments to the agreement with Tyler Technologies in an amount not-to-exceed $100,000.

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168

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City of Costa Mesa
Agenda Report

77 Fair Drive
Costa Mesa, CA 92626
Item #: 24-291 Meeting Date: 8/06/2024
TITLE: SERVICE AGREEMENT AMENDMENT WITH TYLER TECHNOLOGIES PERTAINING TO IMPLEMENTATION OF THE CITY’S LAND MANAGEMENT SYSTEM (TESSA) UPDATE

DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/PLANNING

DIVISION

PRESENTED BY: DANIEL INLOES, AICP, ECONOMIC DEVELOPMENT ADMINISTRATOR

CONTACT INFORMATION: DANIEL INLOES, AICP, ECONOMIC DEVELOPMENT ADMINISTRATOR, 714-754-5088

RECOMMENDATION:

Staff recommends the City Council:

1. Authorize the City Manager and City Clerk to increase the total compensation by $90,000 to a not- to-exceed amount of $1,300,856, in substantially the form as approved by the City Attorney.

2. Authorize the City Manager to approve future amendments to the agreement with Tyler Technologies in an amount not-to-exceed $100,000.

BACKGROUND:

On October 1, 2019, the City Council approved $1,974,693 for th e City’s comprehensive “land management system” (LMS) update. Among other components and consultant services involved in this effort, the LMS budget included a contract with Tyler Technologies for the new Energov software and the associated implementation services with a not to exceed amount of $901,606. The Tyler Technologies contract also included a contract contingency of up to $100,000.

On March 19, 2022, the City Council approved an amendment providing additional professional implementation services by Tyler Technologies with a not-to-exceed amount of $1,060,856. This contract amendment was necessary due to the additional time needed for consultant meetings with staff to ensure successful implementation of the software.

On June 6, 2023, the City Council approved a request to modify the provisions of the Tyler Technologies agreement to allow for expanded licensing of the Energov software . The software licensing change allowed the City to have an unlimited number of users to access and use the software. This increased the not-to-exceed amount of the agreement to $1,210,856.

The City’s Land Management System, TESSA, was launched on August 21, 2023.

169

Item #: 24-291 Meeting Date: 8/06/2024

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ANALYSIS:

This request is to secure additional funding for Tyler Technology services and upgrades that will improve the City’s new Land Management System for customers and staff. These software upgrades will assist customers in selecting the appropriate applications, offer enhanced public interfaces, and bolster City departmental integration. Initial tests have demonstrated these enhancements to be beneficial and significantly improve system functionality. The requested contract increase is for $90,000 and includes both additional software and consultant software support.

In addition, staff is requesting that the City Council authorize the City Manager to approve future amendments (not to exceed $100,000) to the Tyler Technologies contract if further software upgrades or software support is necessary. Future amendments would be limited to the total LMS budget.

The budget for this request and future amendments (not to exceed $100,000) for additional software upgrades and support, if needed, is available in the overall LMS budget.

This Fall, after one year of operation, staff will present an update to the City Council on TESSA's contributions to customer service and improvements to the staff permitting review process.

ALTERNATIVES:

The City Council could not approve the additional LMS software upgrades, and/or not approve the authorization of the City Manager to approve future contract amendments.

FISCAL REVIEW:

The requested contract increase amount of $90,000 for additional software and consultant software support is available in the Information Technology Replacement Fund (Fund 603), under the Land Management System (LMS) Project Budget (Project #200086). The budget for future amendments (not to exceed $100,000) for additional software upgrades and support, if needed, is also available in Fund 603.

LEGAL REVIEW:

The City Attorney’s Office has reviewed and approved this report as to form.

CITY COUNCIL GOALS AND PRIORITIES:

This item is administrative in nature.

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CONCLUSION:

Staff recommends the City Council authorize the City Manager and City Clerk to increase the not-to- exceed amount of Tyler Technologies agreement to provide for additional software upgrades and the associate implementation services, and increase the total compensation by $90,000 for a not-to- exceed amount of $1,300,856. Staff further recommends the City Council authorize the City Manager to approve future amendments to the agreement with Tyler Technologies in an amount not-to-exceed $100,000.

171

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-297 Meeting Date: 8/6/2024
TITLE:

AUTHORIZE THE PURCHASE OF FORD FLEET VEHICLES
DEPARTMENT: PUBLIC WORKS DEPARTMENT, MAINTENANCE SERVICES

DIVISION
PRESENTED BY: RAJA SETHURAMAN, PUBLIC WORKS DIRECTOR
CONTACT INFORMATION: ROBERT RYAN, MAINTENANCE SERVICES MANAGER (714) 327-7499
RECOMMENDATION:

Staff recommends the City Council:

2. Authorize the purchase of Ford fleet vehicles from local authorized Ford dealerships.

BACKGROUND:

Consistent with past practices, new and/or replacement vehicle and equipment requests are evaluated during the annual budget process along with Equipment Maintenance staff recommendations.

The vehicles and equipment identified have high mileage and usage, are in poor condition, and have severe mechanical issues. Other factors for replacement consideration include obsolete parts, availability and high maintenance and repair costs. All the vehicles and equipment approved for replacement have exceeded their anticipated service lives.

Typically, vehicles and equipment are purchased using contracts through Sourcewell. Utilizing a Sourcewell contract meets all requirements outlined in the City of Costa Mesa’sPurchasing Policy and all requirements set forth by the State of California in regard to regional cooperative purchasing agreements. This process has been utilized successfully by the City for several previous vehicle purchases. However, over the last several years, the availability of vehicles has been severely limited and manufacturers have not been allocating sufficient inventory for government procurement through

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File #: 24-297 Meeting Date: 8/6/2024
and manufacturers have not been allocating sufficient inventory for government procurement through Sourcewell.

At their regularly scheduled meeting on June 20, 2023, Council authorized by minute action, that compliance with the bidding requirements and procedures was inefficient and not in the best interest of the city, based on identified conditions and supported by substantial evidence as shared above.

The Council authorized the purchase of Ford fleet vehicles directly from local authorized Ford dealerships. Since that authorization was granted, staff was able to work with local Ford dealerships to procure eighteen (18) new and replacement vehicles authorized for purchase in Fiscal Year 2022- 2023 and thirty (30) new and replacement vehicles, including eight (8) Police Interceptors, authorized for purchase in Fiscal Year 2023-2024. This process has reduced staff time dedicated to sourcing replacement vehicles and increased efficiency in the purchasing process overall. All of the local Ford dealerships that the City has worked with offer a government liaison, as well as government incentives and pricing, passed on from the manufacturer.

ANALYSIS:

The purchase of new and replacement vehicles is necessary in order to upgrade the City’sfleet of operable vehicles to serve the community and its stakeholders. The necessity of these purchases is exemplified by the continual breakdowns and repairs of the aging fleet of vehicles. The purchases will also provide vehicles to newly added staff that serve the community.

Traditional procurement avenues have been exhausted with no results. Staff have been able to procure vehicles effectively, efficiently and at government pricing by working directly with local Ford dealerships. Approving the recommendation would allow staff to continue to negotiate directly with one or more local authorized Ford dealership(s) to continue to procure the vehicles necessary to ensure maintenance and safety operations as well as other City functions.

ALTERNATIVES:

The City Council could choose not to authorize the direct purchase of vehicles from local authorized Ford dealerships. This is not recommended as it would result in further delays in the procurement of approved vehicles and equipment. These delays could potentially result in safety issues, as well as maintenance units not being in service promptly, causing staff to be operating unreliable vehicles.

FISCAL REVIEW:

Funding for the replacement of City vehicles and equipment is approved each fiscal year by City Council during budget adoption and is available in the adopted FY 2024-25 operating budget in the Equipment Replacement Fund (Fund 601).

LEGAL REVIEW:

The City Attorney’s Office has reviewed this report and approves it as to form.

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CITY COUNCIL GOALS AND PRIORITIES:

This item works toward achieving the following City Council goals:
· Strengthen the public’s safety and improve quality of life. · Advance environmental sustainability and climate resiliency.

CONCLUSION:

Staff recommends the City Council:

2. Authorize the purchase of Ford fleet vehicles from local authorized Ford dealerships.

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174

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-302 Meeting Date: 8/6/2024
TITLE:

INTRODUCTION AND FIRST READING OF AN ORDINANCE APPROVING THE FIRST AMENDMENT (DA-20-05) TO DEVELOPMENT AGREEMENT (DA-94-01) BETWEEN THE CITY

OF COSTA MESA AND THE INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB ALLOWING FOR A 20-YEAR TIME EXTENSION THAT WOULD EXPIRE OCTOBER 31, 2044;

AMENDING PROVISIONS PERTAINING TO THE RATE AND METHODOLOGY FOR CALCULATING TRAFFIC IMPACT FEES; AND, AMENDING PROVISIONS RELATED TO THE SETBACK OF A FUTURE PARKING STRUCTURE; FOR A PROPERTY LOCATED AT 3333

FAIRVIEW ROAD
DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/

PLANNING DIVISION
PRESENTED BY: CHRISTOPHER ALDANA, ASSISTANT PLANNER
CONTACT INFORMATION: CHRISTOPHER ALDANA, ASSISTANT PLANNER, (714) 754- 4868
RECOMMENDATION:

On July 22, 2024, the Planning Commission recommended that the City Council approve the proposed Development Agreement amendments and Ordinance adoption by a vote of 4-1-2 to:

2. Introduce for first reading, by title only, Ordinance 2024-XX approving the First Amendment (DA- 20-05) to the Automobile Club of Southern California Development Agreement (DA-94-01) to allow for a 20-year time extension that would expire October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees; and to amend provisions related to the setback of a future parking structure.

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City of Costa Mesa
Agenda Report

77 Fair Drive
Costa Mesa, CA 92626
Item #: 24-302 Meeting Date: 08/06/2024
TITLE: INTRODUCTION AND FIRST READING OF AN ORDINANCE APPROVI NG THE FIRST AMENDMENT (DA-20-05) TO DEVELOPMENT AGREEMENT (DA-94-01) BETWEEN

THE CITY OF COSTA ME SA AND THE INTERINSU RANCE EXCHANGE OF TH E AUTOMOBILE CLUB ALLOWING FOR A 20 -YEAR TIME EXTENSION THAT WOULD EXPIRE OCTOBER 31, 2044; AMENDING PROVISIONS PERTAINING TO THE RATE AND METHODOLOGY FOR CALC ULATING TRAFFIC IMPA CT FEES; AND, AMEND ING PROVISIONS RELATED TO THE SETBACK OF A F UTURE PARKING STRUCTURE; FOR A PROPERTY LOCATED AT 3333 FAIRVIEW ROAD

DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/ PLANNING

DIVISION

PRESENTED BY: CHRISTOPHER ALDANA, ASSISTANT PLANNER

CONTACT INFORMATION : CHRISTOPHER ALDANA, ASSISTANT PLANNER, (714) 754-4868
RECOMMENDATION:

On July 22, 2024, the Planning Commission recommended that the City Council approve the proposed development agreement amendments and Ordinance adoption by a vote of 4-1-2 to:

2. Introduce for first reading, by title only, Ordinance 2024-XX approving the First Amendment (DA-20-05) to the Automobile Club of Southern California Development Agreement (DA - 94-01) to allow for a 20-year time extension that would expire October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees; and to amend provisions related to the setback of a future parking structure.

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APPLICANT OR AUTHORIZED AGENT:

The applicant and authorized agent is Jennifer J. Farrell, Esq., representing the property owner, Interinsurance Exchange Automobile Club of Southern California.

BACKGROUND:

The Automobile Club of Southern California (AAA) has operated at 3333 Fairview Road since the 1980s. The site operates and is developed with AAA office and support services that were approved pursuant to Development Review (DR -80-05). The AAA site is a 29.5 -acre lot subdivided in 1979 as Parcel 1 of Parcel Map No. 79-381 and an adjacent 9.7-acre site to the west that was later subdivided in 1994 as Parcel 2 of Parcel Map No. 94 -120 (see the below Exhibit 1).

Exhibit 1 – Vicinity Map

In 1994, the City of Costa Mesa approved the following applications for the development of the subject property:

1) Final Environmental Impact Report #1045 (State Clearinghouse No. 94021036); 177

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2) General Plan Amendment (GP -94-01A) to redesignate the subject property and the adjacent 9.7-acre parcel from Industrial Park and Medium Density Residential to Urban Center Commercial;

3) Rezone (R-94-01) to change the subject property from Industrial Park (MP) and Planned Development Reside ntial-Medium Density (PDR -MD) to Planned Development Commercial (PDC);

4) Planning Action (PA -94-15) for a final development plan for a 500,000 -square-foot expansion of the existing Automobile Club facility with a four-level parking structure;

5) Tentative Par cel Map (S -94-120) to divide the northerly portion of the Segerstrom Home Ranch site into three parcels to accommodate the proposed project; and

6) Development Agreement (DA -94-01) an agreement between the applicant and the City pursuant to California Government Code Sections 65864, et seq. that guarantees project approvals for 30 years from its effective date, in exchange for certain public benefits.

Exhibit 2 – DA-94-01 Approved AAA Site Plan

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The 1994 entitlements included a 500,000-square-foot expansion that was planned to occur in two phases . E ach phase was to consist of an approximate 250,000-square-foot building .

Additionally, a four-level 1,840 space parking structure is approved on the adjacent 9.7 -acre parcel. To date, AAA has completed Phase I improvements, which total 235,825 square feet of the 500,000 -square-foot expansion. Including the aforementioned addition (Phase I), the AAA total site floor area is approximately 702,825 square feet. Additionally, the 9.7-acre parcel to the west, which has a driveway along Susan Street, has been improved and is utilized as a surface parking lot for AAA employees. This surface parking lot is accessed internally by a 40- foot-wide bridge that connects the main AAA facility. The remaining Phase II improvements are shown in yellow-shading on the above Exhibit 2.

The original development agreement (DA-94-01) provided for a 30-year timeframe in which to develop the project. This term will expire on October 31, 2024 unless extended . AAA is in full compliance with all terms of the development agreement for the square footage that has been constructed to date, which includes payment of traffic impact fees and Transportation Corridor fees.

In recent years, AAA management has contemplated consolidating their southern California regional operations to their Costa Mesa facility. The square footage that remains to be built pursuant to the development agreement is believed to be adequate to accommodate this consolidation. In 2023, AAA approached the City with a request to extend the development agreement by 20 years , starting on November 1, 2024 to October 31, 2044 , in order to accommodate their consolid ation plans . During conversations with the applicant, City staff requested additional updates to the terms of the development agreement that include the payment of traffic impact fees, and consideration of the setback of the future parking structure from t he adjacent residential community, which was contemplated in the original project approval. The applicant was amenable to these updates and has included them in their application.

Requested Amendments

In support of their long-term plans to consolidate regional business operations in Costa Mesa, AAA proposes the following revisions to the development agreement (see Attachment 2):

1. Page 2, Section 2: Change the expiration year from 2024 to 2044. This will extend the development agreement for an additional 20 years, commencing on November 1, 2024 and terminating on October 31, 2044.

2. Page 3, Section 6 (a): Update the average daily vehicle trip “ADT” multiplier from .00718 to .00989. This change reflects the current Institute of Transportation Engineers (ITE) trip generation factor for office land uses.

3. Page 4, Section 6 (b): Update the Traffic Impact Fee from $228 to $235 , or the current rate at time of development , whichever is less. This change is necessary to reflect the City’s current adopted fee.
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4. Page 3, Section 5(e): Specify that the Phase II parking structure shall be proposed a minimum of 60 feet from the existing residential uses located to the north of the smaller parcel to improve land use compatibility.

5. Other non-substantive numbering, reference, and/or formatting edits to clarify intent and implement the proposed changes.

Refer to the appli cant’s letter in Attachment 3 for a detailed description of the applicant’s requests.

Public Comments

One comment letter was received prior to the Planning Commission meeting. The letter requested additional information from staff relating to the proposed parking structure location.

Staff spoke with the commenter by phone and addressed their questions. The commenter then indicated to staff that they had no concerns. At the Planning Commission meeting held on July 22, 2024, no members of the general public spoke either in support or opposition to the project.

Planning Commission Recommendation

On July 22, 2024, the Planning Commission considered the request and reviewed the proposed DA modifications/updates. After considering staff’s presentation, the applicant’s presentation, and opening the hearing for public comments, the Planning Commission deliberated and voted 4-1-2 to find that the project is within the scope of the June 20, 1994 certified Final Environmental Impact Report, and to adopt a Resolution that recommends City Council approval of the First Amendment (DA -20-05) to the Automobile Club of Southern California Development Agreement (DA -94-01) by adopting an ordinance to allow for a 20 - year time extension until October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees; and, to amend provisions related to the setback of a future parking structure. Planning Commissioner Martinez voted to not recommend project approval to the City Council, and Chair Ereth and Commissioner Andrade recused themselves from the project review.

Planning Commissioner comments supporting the motion for approval included that “the AAA is an excellent local business”, “the AAA facility is very well maintained” and the “AAA facility has great employee amenities that attracts high quality jobs to the City”. Commissioner Martinez did not support the motion and provided comments that the project was generally not consistent with certain General Plan Polices that encouraged multi-modal transportation, and that the site was over-parked. The July 22, 2024, Planning Commission staff report and video is linked below:

The July 22, 2024 Planning Commission staff report (also provided as Attachment 8) can be viewed at this link:

https://costamesa.legistar.com/LegislationDetail.aspx?ID=6790093&GUID=D41EA24A- 9362-496E-B877-A33BB700B732

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The July 22, 2024 Planning Commission meeting video can be viewed at this link:
https://costamesa.granicus.com/player/clip/4155?view_id=14&redirect=true

ANALYSIS:

Pursuant to City Council Resolution No. 88 -53, Development Agreement Procedures and Requirements, and Government Code Section 65865(c), the proposed amendments are subject to the following two determinations:

1. The Development Agreement between the City of Costa Mesa and Developer is:
o Consistent with the objectives, policies, general land uses and programs specified in the General Plan and with the General Plan as a whole;

o Compatible with the uses authorized in, and the existing land use regulations prescribed for, the zoning district in which the real property is and will be located; and

o Is in conformity with and will promote public convenience, g eneral welfare, and good land use practice.

In making its recommendation to the City Council, the Planning Commission found that t he proposed first amendment to the development agreement is consistent with General Plan policies and objectives, primarily o bjective LU-6C, in that the long-term build-out of the AAA office campus will support the retention and expansion of the City’s employment base with diverse and quality employment opportunities. Additionally, the City’s Land Use Element specifies that the “Urban Center Commercial” Land Use District is intended to “allow for high - intensity mixed-use commercial development within a limited area” and identifies that one of the four major developments located within the Urban Center Commercial Land Use District is the “Automobile Club of Southern California”. The proposed development is also compatible with the existing land uses located north of Interstate 405 which includes larger developments such as South Coast Plaza, Metro Pointe, IKEA and the Segerstrom Center for the Arts. Lastly, AAA has operated from this site since 1980 without any impacts to surrounding uses, including the nearby residential developments.

2. The Development Agreement between the City of Costa Mesa and Developer will not:

o Be detrimental to the health, safety and general welfare; and

o Adversely affect the orderly development of property or the preservation of property values.

In making its recommendation to the City Council, the Planning Commission also found that the AAA headquarters has operated at th e site since 1980 and there have been no incompatibilities with the surrounding uses. The proposed use, size , and intensity of the project is consistent with the existing development within the general area located north of the 405 freeway, and would not be detrimental to the health, safety, and general welfare of the community. There are no modifications proposed to the site’s previously entitled development 181

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intensity and only minor considerations are proposed to improve the site’s physic al layout to avoid potential impacts to nearby residential development . As such, the extension of the Development Agreement will not be detrimental to the health, safety and general welfare , or adversely affect the orderly development of property or the preservation of property values.

Project Effective Date

The current development agreement provides that it may be amended or canceled in whole or in part only by written consent of all parties in the manner provided for in Government Code Section 65868. If the City Council approves this request prior to the expiration date of the existing development agreement, this first amendment will become effective on November 1, 2024 and be valid through October 31, 2044.

ENVIRONMENTAL DETERMINATION:

Pursuant to CEQA Guidelines Section 15162, this project remains within the scope of the June 20, 1994 certified Final Environmental Impact Report (FEIR) #1045 (State Clearinghouse No. 94021036) for the A AA Expansion project. The effects of the project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project , and no new mitigation measures are required. Therefore, the 1994 FEIR for AAA Expansion project is determined t o be adequate to serve as the environmental documentation for this project, no further environmental review is required, and that all requirements of CEQA are satisfied.

ALTERNATIVES:

Other than the recommended action, the City Council may:

1. Introduce the Ordinance for First Reading with Modifications. The City Council may suggest specific changes that are appropriate to address concerns or improve the project. Please note that Development Agreements are, effectively, contracts between the City and the applicant and, as such, the applicant would need to agree to any proposed modifications.

2. Continue the Ordinance for First Reading to a date certain. The City Council may continue the item to a date certain with direction for staff to return with additio nal information, changes, and/or clarifications. Please note that any continuation should have the item return to the City Council for final action before September 30, 2024 , so that an approval will occur prior to the expiration of the existing agreement.

3. Deny the project. If the City Council believes there are insufficient reasons to support the determinations for approval, the City Council must deny the application.

FISCAL REVIEW:

The overall impact to the City from Traffic Impact Fee revenue under the revised calculation from $228 to $235 per net trip, if AAA expands to the maximum allotted 250,000 -square-foot building, would be an additional one -time estimated increase of $160,000 in revenue to the Traffic Impact Fees Fund (Fund 214).
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LEGAL REVIEW:

The draft Ordinance and staff report have been prepared in conjunction with and reviewed by the City Attorney’s Office.

PUBLIC NOTICE:

Pursuant to CMMC Section 13 -29(d), three types of public notification have been completed no less than 10 days prior to the date of the public hearing:

1. Mailed notice. A public notice was mailed to all property owners and occupants within a 500-foot radius of the project site. The required notice radius is measured from the external boundaries of the property.

2. On-site posting. A public notice was posted on each street frontage of the project site.

3. Newspaper publication. A public notice was published once in the Daily Pilot newspaper.

Any public comments received prior to the August 6 , 2024 City Council meeting, may be viewed at this link: CITY OF COSTA MESA - Calendar (legistar.com)

CITY COUNCIL GOALS AND PRIORITIES:

This item is administrative in nature.

CONCLUSION:

An Ordinance for DA 94-01 was adopted by the City Council in 1994 and included a 30-year time frame for completion. Unless extended, the DA will expire on October 31, 2024. As approved, the AAA development consists of two phases of which only Phase I has been completed. AAA is now interested in completing the second phase of the approved entitlements to consolidate regional operations in Costa Mesa. Beyond extending the date of expiration, updati ng the rate and method of calculating traffic impact fees, and modifying language pertaining to the location of a future parking structure, there are no changes to the DA agreement. The Planning Commission voted in favor of the proposed first amendment because the extended term will retain a large and high-quality local employer, allow the City the opportunity to benefit from the remaining traffic impact fees which would be used on road improvement projects, and the development will create additional quality local employment opportunities. Finally, the proposal is in conformance with the City’s General Plan.

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Ordinance No. 2024-xx Page 1 of 15

ORDINANCE NO. 2024-xx

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA, APPROVING THE FIRST AMENDMENT (DA -20-05) TO DEVELOPMENT AGREEMENT (DA-94-01) BETWEEN THE CITY OF COSTA MESA AND THE INTERINSURANCE

EXCHANGE OF THE AUTOMOBILE CLUB

THE CITY COUNCIL OF THE CITY OF COSTA MESA , CALIFORNIA DOES HEREBY FIND AND DECLARE AS FOLLOWS:

WHEREAS, public hearings were held on May 23, 1994 before the Planning Commission pursuant to the Procedures and Requirements for Consideration of Develop ment Agreements set forth in City Council Resolution No. 88 -53 and Government Code 65867 , regarding the proposed Development Agreement DA -94-01 (hereinafter, the “Agreement”), at which time the Planning Commission considered testimony presented by the publ ic and applicant (hereinafter, “Developer”) and thereafter made a recommendation to the City Council; and
WHEREAS, a public hearing was subsequently held before the City Council on June 6, 1994 and June 20, 1994 pursuant to the requirements of Resolution No. 88 -53 and Government Code 65867 , at which time the City Council considered testimony presented by the public and the Developer and the recommendation of the Planning Commission regarding the proposed Agreement; and
WHEREAS, EIR No. 1045 and Addendum No. 1 were prepared for the project and were certified on June 20, 1994, in accordance with Sections 15090 and 15164 of the CEQA Guidelines; and
WHEREAS, on behalf of the property owner, the applicant, Jennifer J. Farrell of Rutan, submitted application De velopment Agreement DA -20-05 in August 2023 requesting amendments to several terms of Development Agreement DA-94-01; and WHEREAS, the proposed First Amendment (DA -20-05) to Development Agreement (DA-94-01) between the City of Costa Mesa and the Interinsurance Exchange of the Automobile Club requests approval of the following:
 A 20-year time extension that would expire on October 31, 2044,  Update to the rate and methodology for calculating traffic impact fees,  Update to the setback of a future parking structure, and ATTACHMENT 1
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Ordinance No. 2024-xx Page 2 of 15

WHEREAS, a duly-noticed public hearing was held on July 22, 2024, before the Planning Commission pursuant to the Procedures and Requirements for Consideration of Development Agreement s set forth in City Council Resolution No. 88 -53 and Gover nment Code Section 65867 , regarding the proposed First Amendment (DA -20-05) to Development Agreement (DA-94-01), attached hereto as Exhibit “A” (hereinafter, the “Agreement”), at which time the Planning Commission considered testimony presented by the publ ic and applicant and property owner Interinsurance Exchange of the Automobile Club (hereinafter, “Developer”) and thereafter recommend ed by a vote of 4 -1-2 that the City Council approve the proposed amendments; and
WHEREAS, a duly-noticed public hearing w as subsequently held on August 6 , 2024, before the City Council pursuant to the Procedures and Requirements for Consideration of Development Agreements set forth in City Council Resolution No. 88 -53 and Government Code 65867, regarding the proposed First Amendment (DA-20-05) to Development Agreement (DA-94-01), at which time the City Council considered testimony presented by the public and the Developer and the recommendation of the Planning Commission; and WHEREAS, the First Amendment to the Development Agreement is:
(a) Consistent with the objectives, policies, general land uses and programs specified in the General Plan;
(b) Compatible with the uses authorized in, and the existing land use regulations prescribed for, the zoning district in which the real property is and will be located; and
(c) Is in conformity with and will promote public convenience, general welfare, and good land use practice.

WHEREAS, the First Amendment to the Development Agreement will not:
(a) Be detrimental to the health and safety and general welfare; or (b) Adversely affect the orderly development of property or the preservation of property values.

WHEREAS, the First Amendment to the Development Agreement will promote and encourage the development of the proposed project and will ensure the public benefits promised therein, by providing stability and certainty to Developer; and 185
Ordinance No. 2024-xx Page 3 of 15

WHEREAS, pursuant to CEQA Guidelines Section 15162 the project is within the scope of the June 20, 1994 -certified Final Environmental impact Report (EIR) #1045 (State Clearinghouse No. 94021036) for the Auto Club Expansion project. The effects of the project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project and no new mitigation measures are required. Therefore, the 1994 FEIR for the Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied.

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

Now, therefore, THE CITY COUNCIL OF THE CITY OF COSTA MESA , CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS:

Section 1: Findings and Declarations. The above stated findings and declarations are true and correct.

Section 2: Approval. The City Council hereby approves, adopts, and enters into First Amendment (DA-20-05) to the Development Agreement (DA-94-01) in the form attached hereto as Exhibit “A” and incorporates the First Amendment (DA-20-05) to the Development Agreement (DA-94-01) herein by this reference.

Section 3: Recordation. Upon execution of the Agreement by all parties, the City Clerk is directed to record the First Amendment (DA-20-05) pursuant to Resolution No. 88-53.

Section 4: Environmental Compliance. Pursuant to the provisions of CEQA and State CEQA guidelines, a Final EIR, State Clearing House No. 94021036, including a mitigation monitoring program and statement of overriding considera tion, was certified for the project on June 20, 1994, and the City has determined that the effects of th is project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this p roject and no new mitigation measures are required. Therefore, the 1994 FEIR for the Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied.

Section 5: Inconsistencies. Any provision of the Costa Mesa Municipal Code or appendices thereto inconsistent with the provisions of this ordinance, to the extent of such inconsistencies 186
Ordinance No. 2024-xx Page 4 of 15

and or further, is hereby repealed or modified to the extent necessary to affect the provisions of this ordinance.

Section 6: Severability. If any chapter, article, section, subsection, subdivision, sentence, clause, phrase, word, or portion of this Ordinance, or the app lication thereof to any person, is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this Ordinance or its application to other persons. The City Council hereby declares that it would have adopted this Ord inance and each chapter, article, section, subsection, subdivision, sentence, clause, phrase, word, or portion thereof, irrespective of the fact that any one or more subsectio ns, subdivisions, sentences, clauses, phrases, or portions of the application thereof to any person, be declared invalid or unconstitutional. No portion of this Ordinance shall supersede any local, State, or Federal law, regulation, or codes dealing with life safety factors.

Section 7: Effective Date. This Ordinance shall take effect 30 days after adoption.

Section 8 : Certification. The City Clerk shall certify the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner as required by law.

PASSED AND ADOPTED this ___day of _____, 2024.

______________________
John Stephens
Mayor of the City of Costa Mesa

ATTEST: APPROVED AS TO FORM:

________________________ _____________________________ Brenda Green, City Clerk Kimberly Hall Barlow, City Attorney

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Ordinance No. 2024-xx Page 5 of 15

STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss

CITY OF COSTA MESA )

I, BRENDA GREEN, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY that the above and foregoing Ordinance No. 2024-xx was duly introduced for first reading at a regular meeting of the City Council held on the ____day of _________ 2024, and that thereafter, said Ordinance was duly passed and adopted at a regular meeting of the City Council held on the ___ day of _________, 2024, by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the City of Costa Mesa this ___ day of ___________, 2024.

__________________________
Brenda Green, City Clerk

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Ordinance No. 2024-xx Page 6 of 15

EXHIBIT A

FINDINGS

DA-20-05 is a request for 20-year time extension that would expire on October 31, 2044, and to also amend provisions o f Development Agreement DA -94-01 pertaining to the rate and methodology for calculating Traffic Impact Fees and the setback for a future parking structure.

The requested amendments do not change the previously approved project plans. Therefore, the finding s, and the facts in support of those findings, contained in the Ordinances and Resolutions for Final Environmental Impact Report #1045, General Plan Amendment (GP -94- 01A), Rezone (R -94-01), Planning Action (PA -94-15), Tentative Parcel Map (S -94-120), and Development Agreement (DA -94-01) remain true and in effect. The following findings , and facts in support of those findings, pertain only to the scope of the proposed amendments.

Pursuant to City Council Resolution No. 88 -53, Development Agreement Procedure s and Requirements, and Government Code Section 65865(c), staff recommends approval of the requested amendments, based on the following assessment of facts and findings:

 The Development Agreement between the City of Costa Mesa and Developer is:
o Consistent with the objectives, policies, general land uses and programs specified in the General Plan and with the General Plan as a whole;

o Compatible with the uses authorized in, and the existing land use regulations prescribed for, the zoning district in which the real property is and will be located; and

o Is in conformity with and will promote public convenience, general welfare, and good land use practice.

The proposed amendment to the DA is consistent with General Plan policies and objectives, primarily objective LU-6C, in that the long-term build-out of the AAA office campus will support the retention and expan sion of the City’s employment base with diverse and quality employment opportunities. Additionally, the City’s Land Use Element specifies that the “Urb an Center Commercial” Land Use District is intended to “allow for high -intensity mixed -use commercial development within a limited area”, and identifies that one of the four major developments located within the Urban Center Commercial Land Use District is the “Automobile Club of Southern California”. The proposed development is also c ompatible with the existing land uses located North of Interstate 405 which includes larger developments such as The South Coast Plaza, Metro Pointe, IKEA and the Segerstrom C enter for the Arts. Lastly, AAA has operated from this site since 1980 without any impacts to surrounding uses, including the nearby residential developments.

 The Development Agreement between the City of Costa Mesa and Developer will not:
o Be detrimental to the health, safety and general welfare; and 189
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o Adversely affect the orderly development of property or the preservation of property values.

This AAA headquarters has operated at th e site since 1980 and there have been no incompatibilities with the surrounding uses. The proposed use, size, and intensity of the project is consistent with the existing development within the general area located north of the 405 freeway, and would not be detrimental to th e health, safety, and general welfare of the community. There are no modifications proposed to the site’s previously entitled development intensity and only minor considerations are proposed to improve the site’s physical layout to avoid potential impacts to nearby residential development . As such, the extension of the DA will not be detrimental to the health, safety and general welfare , or adversely affect the orderly development of property or the preservation of property values.

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EXHIBIT B

FIRST AMENDMENT (DA-20-05) TO THE DEVELOPMENT AGREEMENT BETWEEN THE

CITY OF COSTA MESA AND INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB (DA-94-01)

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RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:

City of Costa Mesa
PO Box 1200
Costa Mesa, CA 92628-1200
Attn: City Clerk
Space Above This Line for Recorder’s Use (Exempt
from Recording Fee per Gov’t Code §6103 and §27383)

FIRST AMENDMENT TO

DEVELOPMENT AGREEMENT

BETWEEN

THE CITY OF COSTA MESA
AND

THE INTERINSURANCE EXCHANGE OF THE

AUTOMOBILE CLUB

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FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
This First Amendment to Development Agreement (the “Amendment”) is entered into as of the day of , 2024 (“First Amendment Effective Date”), by and between the CITY OF COSTA MESA (“City”), and the INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB, formerly known as the Interinsurance Exchange of the Automobile Club of Southern California (“Owner”). Each party may be referred to individually as “Party” or together as the “Parties”.

RECITALS
A. WHEREAS, pursuant to Section 65864 et seq. of the Gove rnment Code and the City’s adopted rules and procedures, the Parties entered into that certain Development Agreement dated October 5, 1994 and recorded in the official records of Orange County, California on November 1, 1994, as instrument number 94-0641379 (the “Development Agreement”); and B. WHEREAS, among other purposes, the City entered into the Development Agreement in furtherance of the City’s policy to support the retention and expansion of businesses located in the City in order to increase employment , maintain a stable tax base, attract new businesses, and promote a diversified, stable, and healthy local economy; and C. WHEREAS, the assurances provided by the Development Agr eement were and remain necessary to provide the certainty which will allow the Owner to make the long -term commitments involved in consolidating its facilities and operations in the City; and D. WHEREAS, the Project on the Property (as defined and described i n the Development Agreement) has not been completed based, in part, by the interr uption starting in early 2020 in the Owner’s development and planning caused by the COVID -19 pandemic, uncertainty in space needs caused by the changing trends in remote and h ybrid work, uncertainty in the configuration of spaces in buildings due to safety protocols and other changing trends, and the evolving business needs of the Owner, all of which merit additional time to complete the development of the Project; and
E. WHEREAS, extending the term of the Development Agreement and updating specified City fees, with all of the terms and conditions in the Development Agreement otherwise remaining the same, continue to further the City’s policy to support the retention and expansion of businesses located in the City in order to increase employment, maintain a stable tax base, attract new businesses, and promote a diversified, stable, and healthy local economy; and F. WHEREAS, the best interests of the citizens of Costa Mesa, and the public health, safety and welfare, are served by extending the term of the Developmen t Agreement as provided herein; and
G. WHEREAS, the Amendment and the Project are consistent with the City’s General Plan; and
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H. WHEREAS, pursuant to Section 65868 of the Governme nt Code and the City’s adopted rules and procedures, this Amendment has been reviewed by City Staff, the Planning Commission, and the City Council; and
I. WHEREAS, the City and Owner have a mutual interest, based on the Recitals in the Agreement and as set forth herein above, to extend the term of the Development Agreement.

AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions set forth herein, and for good and valuable consideration, the Parties do hereby agree as follows:

1. Except as expressly defined in this Amendment, all capitalized words and phrases shall have the same meaning ascribed to them in the Development Agreement.

2. The term of the Development Agreement shall be extended for an additional twenty (20) years (“Extension Term”), commencing on November 1, 2024, which is the first day after the last day of the 30-year term set forth in Section 2.3 of the Development Agreement. For purposes of the Agreement, the “term” or “Term” of the Agreement shall include the entire period for which the Development Agreement is operative, including the initial 30-year term and Extension Term.

3. To correct duplicative numbering in Article 2 of the Development Agreement, the second Section numbered “2.4” shall be renumbered to “2.5”, and the Section numbers thereafter in Article 2 shall likewise be renumbered, so that the Sections numbered “2.5” and “2.6” shall be renumbered to “2.6” and “2.7”, respectively.

4. The Owner notice addresses in the Development Agreement in Section 2.7(b), as modified by this Amendment, shall be deleted in their entirety and replaced with the following:
“If to OWNER:

Interinsurance Exchange of the Automobile Club
3333 Fairview Road, A410
Costa Mesa, California 92626
Attn: Vice President, Administrative Services
with copies to:

Interinsurance Exchange of the Automobile Club
3333 Fairview Road, A491
Costa Mesa, California 92626
Attn: General Counsel”

5. The proposed Phase II parking structure location shall be addressed in Section 3.7 of the Development Agreement, relating to changes to the Existing Development Approvals which 194
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shall be deemed “minor,” by adding a new clause as clause (e) and renumbering clause (e) to (f) in the last sentence of Section 3.7, to read as follows:
“Unless otherwise required by law, a change to the Existing Development Approvals shall be deemed ‘minor’ and not require an amendment to this Agreement provided such change does not:

(e) Decrease the setback distance requirements for the proposed Phase II parking structure from the northern property boundary, as set forth in Item #5 (Shade and Shadows) of the Inventory of Mitigation Measures, attached as part of Exhibit “B” to City Council Resolution No. 94 -54. (Relocation of the Phase II parking structure shall be proposed further away from the existing residential uses north of the smaller parcel to improve compatibility and to minimize potential a dverse impacts of the parking structure proximate to residential units); or,

(f) Constitute a project requiring a subsequent or supplemental environmental impact report pursuant to Section 21166 of the Public Resources Code.”

Except as amended above, all of the terms and conditions set forth in Section 3.7 of the Development Agreement shall remain in full force and effect.

6. The Development Exactions in Section 3.9(b), clauses (i) and (iii), of the Development Agreement shall be amended as follows:
(a) During the Extension Term as defined above, the first sentence of clause (i) of Section 3.9(b) is amended such that the ADT generated by the second phase of development shall be calculated by multiplying .00989 times the number of square feet of building area to be constructed under the building permit, to read as follows:

“The ADT generated by new development shall be calculated by multiplying .00718 times the number of square feet of bu ilding area to be constructed under the building permit; provided, however, that during the Extension Term, the ADT generated by the second phase of development shall be calculated by multiplying .00989 times the number of square feet of building area to be constructed under the building permit.”
Except as amended above, all of the terms and conditions set forth in clause (i) of Section 3.9(b) of the Development Agreement shall remain in full force and effect.
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(b) During the Extension Term as defined above, clause (iii) of Section

3.9(b) of the Development Agreement shall be amended by adding the following sentences at the end of the paragraph, to read as follows:
“Commencing on the Extension Term, the traffic impact fee shall be adjusted to two hundred thirty -five dollars ($235.00) per ADT.

For any building permit issued during the Extension Term, the traffic impact fee shall be the lesser of either $235 per ADT or the amount per ADT then in effect in accordance with Section 13-274 of the CITY Planning, Zoning and Development Code or any successor CITY ordinance.”
Except as amended above, all of the terms and conditions set forth in clause (iii) of Section 3.9(b) of the Development Agreement shall remain in full force and effect.

7. The Development Exactions in Section 3.9(c), clauses (ii) and (iii), of the Development Agreement shall be amended as follows:
(a) During the Extension Term as defined above, the last sentence of clause (ii) of Section 3.9(c) shall be amended so that the modified traffic impact fee of two hundred thirty-five dollars ($235.00) and provisions applicable during the Extension Term are incorporated into this clause (ii), to read as follows:
“Any such payment by OWNER or refund by CITY shall be made within thirty days of submittal of such traffic study and shall be based on the lesser of either two hundred twenty -eight dollars ($228.00) (or, during the Extension Term, two hundred thirty-five dollars ($235.00)) per ADT or the amount per ADT then in effect under Section 13-326 (or, during the Extension Term, Section 13 - 274) of the CITY Planning , Zoning and Development Code or any successor CITY ordinance.”
Except as amended above, all of the terms and conditions set forth in clause (ii) of Section 3.9(c) of the Development Agreement shall remain in full force and effect.
(b) During the Extension Term as defined above, the last sentence of clause (iii) of Section 3.9(c) of the Development Agreement shall be amended so that the modified traffic impact fee of two hundred thirty-five dollars ($235.00) and provisions applicable during the Extension Term are incorporated into this clause (iii), to read as follows:

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“Any such payment by OWNER or refund by CITY shall be made within thirty (30) days of submittal of such second traffic study and shall be based on the lesser of two-hundred twenty-eight dollars ($228.00) (or, during the Extension T erm, two hundred thirty -five dollars ($235.00)) per ADT or the amount per ADT the n, in effect under Section 13-326 (or, during the Extension Term, Section 13- 274) of the CITY Planning, Zoning and Development Code or any successor CITY ordinance.”
Except as amended above, all of the terms and conditions set forth in clause (iii) of Section 3.9(c) of the Development Agreement shall remain in full force and effect.

8. Except as expressly modified by this Amendment, all of the terms and conditions set forth in the Development Agreement shall remain the same and shall be in full force and effect.

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IN WITNESS WHEREOF, Developer and City have executed this Amendment as of the First Amendment Effective Date.

“CITY”

CITY OF COSTA MESA
Dated: By:

Name:

Its:

ATTEST:

CITY CLERK
By:

Name:

APPROVED AS TO FORM:

By:

Name:

Its:

“OWNER”

INTERINSURANCE EXCHANGE OF

THE AUTOMOBILE CLUB
Dated: By:

Name:

Its:

APPROVED AS TO FORM:

By:

Name:

Its:

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DEVELOPMENT AGREEMENT BETWEEN

THE CITY OF COSTA MESA
and

THE INTERINSURANCE EXCHANGE OF

THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA
ATTACHMENT 2

FOR REFERENCE ONLY
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DEVELOPMENT AGREEMENT
This Development Agreement (hereinafter “Agreement”) is entered into effective on the date it is recorded with the Orange County Recorder (hereinafter the “Effective Date”) by and between the CITY OF COSTA MESA (hereinafter “CITY”), and the INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA (hereinafter “OWNER”).

RECITALS
WHEREAS, CITY is authorized to enter into binding development agreements with persons having legal or equitable interests in real property for the development of such pr operty, pursuant to Section 65864, et seq. of the Government Code; and, WHEREAS, CITY has adopted rules and regulations for consideration of development agreements, pursuant to Section 65865 of the Government Code; and, WHEREAS, OWNER has requested CITY to enter into a development agreement and proceedings have been taken in accordance with the rules and regulations of CITY; and, WHEREAS, by electing to enter into this Agreement, CITY shall bind future City Councils of CITY by the obligations specified herein and limit the future exercise of certain governmental and proprietary powers of CITY; and,
WHEREAS, it is the policy of the CITY to support the retention and expansion of businesses located in the CITY in order to increase employment, maintain a stable tax base, attract new businesses, and promote a diversified, stable, and healthy local economy; and, WHEREAS, the assurances provided by this Agreement are necessary in order to provide the certainty which will allow OWNER to make the long -term commitments involved in consolidating its facilities and operations in the CITY; and, WHEREAS, the retention and expansion of OWNER ’s business pursuant to this Agreement will substantially promote a diversified, stable, and healthy local economy, serving to retain approximately twelve hundred jobs in the CITY and ultimately producing an additional thirteen hundred fifty local jobs; and,
WHEREAS, the terms and conditions of this Agreement have undergone extensive review by CITY, its Planning Commission and City Council and have been found to be fair, just and reasonable; and,
WHEREAS, the best interests of the citizens of Costa Mesa and the public health, safety and welfare will be served by entering into this Agreement; and, WHEREAS, all of the procedures of the Califo rnia Environmental Quality Act (Public Resources Code Section 21000 et seq.) have been met with respect to the Project and this Agreement; and,
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WHEREAS, this Agreement and the Project (as hereinafter defined) are consistent with the CITY General Plan; and,
WHEREAS, all actions taken and approvals given by CITY have been duly taken or approved in accordance with all applicable legal requirements for notice, public hearings, findings, votes, and other procedural matters; and,
WHEREAS, development of the Property in accordance with this Agreement will provide substantial benefits to CITY and will further important policies and goals of CITY; and, WHEREAS, this Agreement will eliminate uncertainty in planning and provide for the orderly development of the Proper ty, ensure progressive installation of necessary improvements, provide for public services appropriate to the development of the Project, and generally serve the purposes for which development agreements under Sections 65864, et seq. of the Government Code are intended; and,
WHEREAS, OWNER has incurred and will in the future incur substantial costs in order to assure development of the Property in accordance with this Agreement.

COVENANTS
NOW, THEREFORE, in consideration of the above recitals and of the mutual covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. DEFINITIONS AND EXHIBITS.

1.1 Definitions. The following terms when used in this Agreement shall be defined as follows:

1.1.1 “Agreement” means this Development Agreement.

1.1.2 “CITY” means the City of Costa Mesa, a municipal corporation organized and existing under the laws of the State of California.

1.1.3 “Development”, “development”, and “develop” mean the improvement of the Property for the purposes of completing the structures, improvements and facilities comprising the Project including, but not limited to: grading; the construction of infrastructure and public facilities related to the Project whether located within or outside the Property; the construction, demolition, reconstruction and redevelopment of buildings and structures; and the installation of landscaping.

1.1.4 “Development Approvals” means all permits and other entitlements for use subjec t to approval or issuance by CITY in connection with development of the Property including, but not limited to:
(a) Tentative and final subdivision and parcel maps;
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(b) Conditional use permits, final development permits and variances; (c) Zoning;
(d) Grading and building permits.
(e) Occupancy permits.

1.1.5 “Development Exaction” means any requirement of CITY in connection with or pursuant to any Land Use Regulation or Development Approval for the dedication of land, the construction of public improvements or public facilities, or the payment of fees in order to lessen, offset, mitigate or compensate for the impacts of development on the environment or other public interests.

1.1.6 “Development Plan” means the Existing Development Approvals and the Existing Land Use Regulations applicable to development of the Property.

1.1.7 “Effective Date” means the date this Agreement is recorded with the Orange County Recorder.

1.1.8 “Existing Development Approvals” means all Development Approvals approved or issued prior to the Effective Date. Existing Development Approvals includes the Development Approvals incorporated herein as Exhibit “C” and all other Development Approvals which are a matter of public record on the Effective Date.

1.1.9 “Existing Land Use Regulations ” means all Land Use Regulations in effect on t he Effective Date. The Existing Land Use Regulations are listed on Exhibit “D” and incorporated herein by reference.

1.1.10 “Index” means the Engineering News-Record Construction Cost Index for Los Angeles published monthly in the Engineering News -Record by McGraw-Hill, Inc. The Index for January 1994 was 6474.60. In the event the publication of the Index is discontinued or the basis of calculating the Index is modified, then CITY and OWNER shall jointly select an alternative index of construction costs which is most nearly the same as the Index.

1.1.11 “Land Use Regulations” means all ordinances, resolutions, codes, rules, regulations and official policies of CITY governing the development and use of land, including, without limitation: the permitted use of land; the density or intensity of use; subdivision requirements; the maximum height and size of proposed buildings; Development Exactions; regulations regarding the rate, time or sequence of development; and the design, improvement and construction standards and spe cifications applicable to the development of the Property. “Land Use Regulations” includes any CITY ordinance or regulation adopted by initiative or referendum.

1.1.12 “OWNER” means the Interinsurance Exchange of the Automobile Club of Southern California, a reciprocal insurer organized under the California Insurance Code to serve the members of the Automobile Club of Southern California, a California non-profit mutual benefit corporation, and its successors in interest to all or any part of the Property. 202
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1.1.13 “Mortgagee” means a mortgagee of a mortgage, a beneficiary under a deed of trust or any other secured lender, and their successors and assigns.

1.1.14 “Project” means the development of the Property as provided by the Development Plan as such Development Plan may be further defined, ‘enhanced or modified pursuant to the provisions of this Agreement.

1.1.15 “Property” means the real property described on Exhibit “A” and shown on Exhibit “B” to this Agreement.

1.1.16 “Resolution No. 88-53” means the CITY resolution adopted on July 19, 1988 titled “A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA,

CALIFORNIA, ESTABLISHING PROCEDURES AND REQUIREMENTS FOR CONSIDERATION OF DEVELOPMENT AGREEMENTS.*

1.1.17 “Subsequent Development Approvals ” means all Development Approvals required subsequent to the Effective Date in connection with development of the Property.

1.1.18 “Subsequent Land Use Regulations” means any Land Use Regulations adopted and effective after the Effective Date of this Agreement.

1.2 Exhibits. The following documents are attached to, and by this reference made a part of, this Agreement:

Exhibit “A” —
Legal Description of the Property.

Exhibit “B” —
Map showing Property and its location.

Exhibit “C” —
Existing Development Approvals.

Exhibit “D” —
Existing Land Use Regulations.

2. GENERAL PROVISIONS.

2.1 Binding Effect of Agreement . The Property is hereby made subject to this Agreement. Development of the Property is hereby authori zed and shall be carried out in accordance with the terms of this Agreement.

2.2 Ownership of Property. OWNER represents and covenants that it is the owner of a legal or equitable interest in the Property.

2.3 Term. The term of this Agreement shall commence on the Effective Date and shall continue for a period of thirty (30) years thereafter unless this term is modified or extended 203
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pursuant to the provisions of this Agreement. The term of the Development Agreement shall be extended for an a dditional twenty (20) years (“Extension Term”), commencing on November 1, 2024, which is the first day after the last day of the 30-year term set forth in Section 2.3 of the Development Agreement. For purposes of the Agreement, the “term” or “Term” of the Agreement shall include the entire period for which the Development Agreement is operative, including the initial 30-year term and Extension Term.

2.4 Assignment. OWNER shall have the right to sell, assign or transfer the Property in whole or in part (provided that no such partial transfer shall violate the Subdivision Map Ac t, Government Code Section 66410 et seq.) to any person, partnership, joint venture, fir m or corporation at any time during the term of this Agreement. Any such sale, assignment or transfer may
include the assignment of those rights, duties and obligations arising under or from this Agreement which are applicable to the Property or part thereof being assigned, transferred or sold; provided, however, that no such assignment of this Agreement shall be effective without the prior written approval of the CITY, which approval shall not be unreasonably withheld.

OWNER shall
give written notice to CITY of its intent to assign this Agreement, in whole or in part, at least thirty (30) days prior
to making such assignment, and CITY shall give written notice to OWNER approving or disapproving such proposed assignment, within thirty (30) days of receipt of such notice of intent to assign. If CITY fails to give notice to OWNER approving or disapproving any proposed assignment within thirty (30) days of receipt of the notice of intent to assign, such failure shall be deemed approval of the proposed assignment. No sale, transfer, or assignment of any right or int
erest under this Agreement shall be made unless made together with the sale, transfer, or assignment of all or a part of the Property. The express written assumption of any or all of the obligations of OWNER under this Agreement by such assignee, transferee or purchaser shall relieve OWNER of its legal duty to perform such obli gations under this Agreement. Any purchaser, assignee or transferee of OWNER shall have all of the rights, duties and obligations of OWNER under this Agreement insofar as such rights, duties and obligations are applicable to the Property or part thereof purchased, assigned or transferred.

2.5 2.4 Amendment or Cancellation of Agreement. This Agreement may be amended or cancelled in whole or in part only by written consent of all parties in the manner provided for in Government Code Section 65868. This provision shall not limit any remedy of CITY or OWNER as provided by this Agreement.

2.6 2.5 Termination. This Agreement shall be deemed terminated and of no further effect upon the occurrence of any of the following events:
(a) Expiration of the stated term of this Agreement as set forth in Section 2.3.
(b) Entry of a final judgment setting aside, voiding or annulling the adoption of the ordinance approving this Agreement or otherwise invalidating this Agreement.
(c) The adoption of a referendum measure overriding or repealing the ordinance approving this Agreement.
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(d) Completion of the Project in accordance with the terms of this Agreement including issuance of all required occupancy permits. Termination pursuant to this paragraph shall not be deemed to occur until OWNER provides written notice to CITY of completion of the Project.

Termination of this Agreement shall not constitute termination of any other Development Approvals approved for the Property.

2.7 2.6 Notices.
(a) As used in this Agreement, “notice” includes, but is not limited to, the communication of notice, request, demand, approval, statement, report, acceptance, consent, waiver, appointment or other communication required or permitted hereunder. (b) All notices shall be in writing and shall be considered given either:
(i) when delivered in person to the recipient named below; or (ii) on the date of delivery shown on the return receipt, after deposit in the United States mail in a sealed envelope as either registered or certified mail with return receipt requested, and postage and postal charges prepaid, and addressed to the recipient named below; or (iii) on the date of delivery shown in the records of the telegraph company after transmission by telegraph to the recipient named below. All notices shall be addressed as follows:

If to CITY:

City of Costa Mesa
77 Fair Drive
Costa Mesa, California 92626
Attn: City Manager
with a copy to:

City of Costa Mesa
77 Fair Drive
Costa Mesa, California 92626
Attn: City Attorney
If to OWNER:

Interinsurance Exchange of the
Automobile Club of Southern California
2601 South Figueroa Street
Los Angeles3333 Fairview Road, A410
Costa Mesa, California 90007-3294 92626
Attn: Director ofVice President, Administrative Services with copies to:

Interinsurance Exchange of the
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Automobile Club of Southern
3333 Fairview Road, A491
Costa Mesa, California 92626
2601 South Figueroa Street
Los Angeles, California 90007-3294
Attn: General Counsel
and
Pillsbury Madison & Sutro
600 Anton Boulevard, Suite 1100
Costa Mesa, CA 92626
Attention: Robert L. Klotz
(c) Either party may, by notice given at any time, require subsequent notices to be given to another person or entity, whether a party or an officer or representative of a party, or t o a different address, or both. Notices given before actual receipt of notice of change shall not be invalidated by the change.

3. DEVELOPMENT OF THE PROPERTY.

3.1 Rights to Develop. Subject to the terms of this Agreement, OWNER shall &aye a vested right to dev elop the Property in accordance with, and to the extent of, the Development Plan. The Project shall remain subject to all Subsequent Development Approvals required to complete the Project as contemplated by the Development Plan. Except as otherwise provided in this Agreement, the permitted uses of the Property, the density and intensity of use, the maximum height and size of proposed buildings, and provisions for reservation and dedication of land for public purposes shall be those set forth in the Development Plan.

3.2 Effect of Agreement on Land Use Regulations. Except as otherwise provided under the terms of this Agreement, the Land Use Regulations applicable to development of the Property shall be the Existing Land Use Regulations, and no Subsequent Land Use Regulation shall be applicable to the Project. If there is any conflict between any Existing Land Use Regulation and any other provision of this Agreement, such other provision of this Agreement shall be controlling.

3.3 Timing of Development. The parties acknowledge that OWNER cannot at this time predict when or the rate at which phases of the Project will be developed. Such decisions depend upon numerous factors which are not within the control of OWNER, such as business demand, interest rates, competition and other similar factors. Since the California Supreme Court held in Pardee Construction Co. v. City of Camarillo (1984) 37 Cal.3d 465, that the failure of the parties therein to provide for the timing of development resulted in a later adopte d initiative restricting the timing of development to prevail over such parties ’ agreement, it is the parties’ intent to cure that deficiency by acknowledging and providing that OWNER shall have the right to develop the Property in such increments and in such order and at such rate and at such times as OWNER deems appropriate within the exercise of its subjective business judgment, subject only to any timing or phasing requirements set forth in the Development Plan. In the event any Subsequent Land Use Regulation is enacted which relates to the rate, timing or sequencing of development of property 206
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within the CITY, CITY agrees that such Subsequent Land Use Regulation shall not apply to the Project. In addition to and not in limitation of the foregoing, CITY agrees that no moratorium or other limitation affecting subdivision maps, building permits or other entitlements for use within the CITY or any part of the CITY shall apply to the Project.

3.4 Environmental Review . CITY certifies that Environmental Impact Re port No. 1045 (“EIR”), prepared in conjunction with the Project, is a complete and accurate document which satisfies all the requirements of the California Environmental Quality Act (“CEQA”, Public Resources Code, Section 21000 et seq.) and the State CEQA Guidelines (14 California Code of Regulations 15000 et seq.) with respect to the Project and this Agreement. CITY agrees that no mitigation measures arising out of environmental concerns that are not incorporated in the Existing Development Approvals shal l be imposed on the Project except as otherwise provided in this Section. CITY has reviewed the Development Plan and determined that all Subsequent Development Approvals required to implement the Existing Development Approvals are “ministerial” as defined in CEQA and the State CEQA Guidelines and therefore exempt from review under Section 21080 of the Public Resources Code. Accordingly, CITY shall not require any further review pursuant to CEQA for any Subsequent Development Approval unless OWNER applies for a Subsequent Development Approval amending the Development Plan which requires discretionary action by the CITY and unless one or more of the events set forth in Section 21166 of the Public Resources Code occurs.

3.5 Duration of Development Approvals. Notwithstanding any provision of the Existing Land Use Regulations (including without limitation the provisions of Sections 13-254 and 13-349 of the CITY Planning, Zoning and Development Code), all Existing Development Approvals and all Subsequ ent Development Approvals shall remain valid and effective for all purposes during the term of this Agreement unless OWNER consents in writing to earlier termination.

3.6 Subsequent Development Approvals Implementing the Development Plan . In addition to the existing Development Approvals, completion of development. in accordance with the Development Plan will require the approval and issuance by the CITY of Subsequent Development Approvals including without limitation grading permits, building permits, and occupancy permits. CITY acknowledges and agrees that all such Subsequent Development Approvals required to implement and complete development in accordance with the Development Plan are ministerial in nature. In acting on such Subsequent Development Approvals, CITY shall act promptly, reasonably and in accordance with the Development Plan. CITY shall approve and issue any such Subsequent Development Approval within one hundred twenty (120) days after CITY accepts an application therefor as complete, provide d such application complies with the Development Plan. No later than thirty (30) days after receipt of an application for any such Subsequent Development Approval, City shall notify OWNER in writing whether the application is complete, specifying any information required to make the application complete.

3.7 Changes and Amendments to Existing Development Approvals . The parties acknowledge that refinement and further development of the Project may require Subsequent Development Approvals which change the Exist ing Development Approvals. In the event OWNER finds that a change in the Existing Development Approvals is necessary or appropriate, OWNER shall apply for a Subsequent Development Approval to effectuate such change and CITY 207
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shall promptly process and act on such application in accordance with the Existing Land Use Regulations, except as otherwise provided by this Agreement. If approved, any such change in the Existing Development Approvals shall be incorporated herein as an addendum to Exhibit “C”, and may be further changed from time to time as provided in this Section. Unless otherwise required by law, a change to the Existing Development Approvals shall be deemed “minor” and not require an amendment to this Agreement provided such change does not:
(a) Alter the permitted uses of the Property as a whole; or, (b) Increase the density or intensity of use of the Property as a whole; or,
(c) Increase the maximum height and size of permitted buildings; or, (d) Delete a requirement for the reservation or dedication of land for public purposes within the Property as a whole; or,
(d)(e) Decrease the setback distance requirements for the proposed Phase II parking structure from the northern property boundary , as set forth in Item #5 (Shade and Shadows) of the Inventory of Mitigation Measures , attached as part of Exhibit “B” to City Council Resolution No. 94-54. (Relocation of the Phase II parking structure shall be proposed further away from the existing residential uses north of the smaller parcel to improve compatibility and to minimize potential adverse impacts of the parking structure proximate to residential units); or,
(e)(f) Constitute a project requiring a subsequent or supplemental environmental impact report pursuant to Section 21166 of the Public Resources Code.

3.8 Reservations of Authority. Notwithstanding any other provision of this Agreement, the following Subsequent Land Use Regulations shall apply to the development of the Property. (a) Generally applicable processing fees and charges imposed by CITY to cover the actual costs to CI TY of processing applications for Development Approvals or for monitoring compliance with any Development Approvals granted or issued. Such processing fees and charges shall not exceed the reasonable estimated costs of providing such services.
(b) Regulations which are not in conflict with the Development Plan.

Any Development Exaction, any Land Use Regulation which increases the costs of development and any Land Use Regulation, whether adopted by initiative or otherwise, limiting the rate or timing or sequen cing of development of the Property shall be deemed to conflict with the Development Plan and shall therefore not be applicable to the development of the Property.
(c) Regulations which are in conflict with the Development Plan provided OWNER has given written consent to the application of such regulations to development of the Property.
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3.9 Development Exactions.
(a) All Development Exactions applicable to the Project are included in the Existing Development Approvals incorporated herein as Exhibit “C”. CITY shall not impose any Development Exaction on development in accordance with the Development Plan except as set forth in Exhibit “C.” In approving any Subsequent Development Approval amending the Development Plan as provided in Section 3.7 of this Agreement, CITY shall not impose any Development Exaction which would exceed the Development Exactions included in the Existing Development Approvals provided such Subsequent Development Approval does not alter the permitted uses of the Property as a whole or increase the density or intensity of use of the Property as a whole. CITY acknowledges and agrees that OWNER would not proceed with the Project but for the foregoing limitation on Development Exactions and the other assurances provided by this Agreement.

CITY has determined that the maintenance and expansion of a diverse employment base within the CITY, the direct and indirect contributions to overall economic activity within the CITY, and the positive fiscal impact associated with the Project substantially contribute to the public welfare notwithstanding the limitation on Development Exactions contained in this Agreement.
(b) OWNER shall pay a traffic impact fee for each new average daily vehicle trip end (“ADT”) generated by all new development on the Pr operty. This traffic impact fee shall be paid prior to issuance of a building permit for each phase of the Project and shall be determined as follows:
(i) The ADT generated by new development shall be calculated by multiplying .00718 times the number of squar e feet of building area to be constructed under the building permit ; provided, however, that during the Extension Term, the ADT generated by the second phase of development shall be calculated by multiplying .00989 times the number of square feet of buildi ng area to be constructed under the building permit. The number of square feet of building area shall not include any building area within any parking structure. If any phase of the Project involves both the demolition of an existing building and the con struction of a new building, the determination of the number of square feet of new building area shall be reduced by the building area to be demolished. CITY acknowledges and agrees that construction of the first phase of the Project will produce a decrea se of sixty -three (63) ADT as a result of the elimination of that number of trips between the Property and other offices of OWNER, and CITY therefore agrees that the number of ADT calculated for the first building permit for the first phase of the Project shall be reduced by sixty-three (63). This reduction shall be subject to confirmation and adjustment as described in paragraph (c) of this Section. (ii) For any building permit issued within three (3) years of the Effective Date, the traffic impact fee shall be the lesser of either two hundred twenty-eight dollars ($228.00) per ADT or the amount per ADT then in effect under Section 13-326 of the CITY Planning, Zoning and Development Code or any successor CITY ordinance. (iii) For any building permit issued more than three (3) years after the Effective Date, the traffic impact fee of two hundred twenty -eight dollars 209
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($228.00) per ADT shall be adjusted for inflation in accordance with the Index by multiplying two hundred twenty -eight dollars ($228.00) by a fraction, the numerator of which is the Index on the date of issuance of the building permit and the denominator of which is the Index on the Effective Date. For any building permit issued more than three (3) years after the Effective Date, the traffic impact fee shal l be the lesser of either such inflation-adjusted amount per ADT or the amount per ADT then in effect under Section 13- 326 of the CITY Planning, Zoning and Development Code or any successor CITY ordinance. Commencing on the Extension Term, the traffic imp act fee of two hundred thirty-five dollars ($235.00) per ADT. For any building permit issued during the Extension Term, the traffic impact fee shall be the lesser of either $235 per ADT or the amount per ADT then in effect in accordance with Section 13-274 of the CITY Planning, Zoning and Development Code or successor CITY ordinance.
(c) The ADT generated by new development on the Property and the traffic impact fee payable as a r esult of such ADT shall be subject to confirmation and adjustment in accordance with the following procedures:
(i) No earlier than thirty (30) months and no later than thirty-six (36) months after the issuance of certificate(s) of occupancy for new development totalling 200,000 square feet of building area or more, OWNER shall submit a traffic study to the CITY. This traffic study shall be prepared under the direction of the CITY Director of Public Services at OWNER’s expense by a professional traffic consulta nt selected by OWNER, and shall provide actual daily vehicle trip counts for the Property for a period consisting of not less than two twenty -four hour days, which days shall not include any holiday or weekend day. The traffic study shall calculate ADT by averaging the actual daily vehicle trip counts over the number of days studied. (ii) If the ADT counted pursuant to such traffic study exceeds the sum of 3353 and the ADT calculated pursuant to paragraph (b)(i) of this Section, OWNER shall pay to CITY an additional traffic impact fee for each such additional ADT.

If the ADT counted pursuant to such traffic study is less than the sum of 3353 and the ADT calculated pursuant to paragraph (b)(i) of this Section, CITY shall pay to OWNER a refund of traffic impact fees for each such reduced ADT. Any such payment by OWNER or refund by CITY shall be made within thirty days of submittal of such traffic study and shall be based on the lesser of either two hundred twenty-eight dollars ($228.00) (or, during the Extension Term, two hundred thirty-five dollars ($235.00)) per ADT (adjusted for inflation as provided in paragraph (b)(iii) of this Section) or the amount per ADT then in effect under Section 13-326 (or, during the Extension Term, Section 13 -274) of the CIT Y Planning Zoning and Development Code or any successor CITY ordinance. (iii) No earlier than thirty (30) months and no later than thirty-six months after the issuance of certificate(s) of occupancy for new development totalling 450,000 square feet of building area or more, OWNER shall submit a second traffic study to CITY prepared in accordance with the provisions of paragraph (c)(i) of this Section. If the ADT counted pursuant to such second traffic study exceeds the sum of the ADT counted in the first traffic study prepared pursuant to paragraph (c)(i) of this Section and the ADT calculated pursuant to paragraph (b)(i) above for all new development occupied 210
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subsequent to the preparation of such first traffic study, OWNER shall pay to CITY an additional traffic impact fee for each such additional ADT. If the ADT counted pursuant to such second traffic study is less than the sum of the ADT counted pursuant to paragraph (c)(i) of this Section and the ADT calculated pursuant to paragraph (b)(i) of this Section for all new development occupied subsequent to the preparation of such first traffic study, CITY shall pay to OWNER a refund of traffic impact fees for each such reduced ADT. Any such payment by OWNER or refund by CITY shall be made within thirty (30) days of submittal of such second traffic study and shall be based on the lesser of two- hundred twenty-eight dollars ($228.00) (or, during the Extension Term, two hundred thirty- five dollars ($235.00)) per ADT (adjusted for inflation as provided in paragraph (b)(iii) of this Section) or the amount per ADT then . in effect under Section 13-326 (or, during the Extension Term, Section 13 -274) of the CITY Planning, Zoning and Development Code or any successor CITY ordinance.
(d) Notwithstanding any provision of the Existin g Land Use Regulations (including without limitation the provisions of Section 13-326 of the CITY Planning, Zoning and Development Code), CITY may utilize the traffic impact fees received pursuant to this Agreement for the construction or improvement of an y road, street, on-ramp, off-ramp or intersection within the CITY. (e) Notwithstanding any provision of the Existing Land Use Regulations, the Project shall not be subject to any requirement of the CITY with respect to a conditional use permit for a transportation demand management program.

3.10 Regulation by Other Public Agencies. It is acknowledged by the parties that other public agencies not within the control of CITY possess authority to regulate aspects of the development of the Property separately from or jo intly with CITY and this Agreement does not limit the authority of such other public agencies. OWNER agrees that the traffic -related development fees imposed by the joint powers authority known as the San Joaquin Hills Corridor Agency shall not be limited by this Agreement. CITY shall not oppose any application by OWNER to any other public agency for any permit or approval which is required for the Project.

CITY shall provide to OWNER or to such other public agencies information possessed by CITY and necessary for processing such applications, and OWNER shall reimburse CITY for the actual and reasonable costs of providing such information.

4. CONFLICTS OF LAW.

4.1 Conflict with State or Federal Laws . In the event that State or Federal laws or regulations, enacted after the Effective Date of Agreement, prevent or preclude compliance with one or more of the provisions of this Agreement, such provisions of this Agreement shall be modified or suspended as may be necessary to comply with such State or Federal laws or regulations; provided, however, that this Agreement shall remain in full force and effect to the extent it is not inconsistent’ with such laws or regulations and to the extent such laws or regulations do not render such remaining provisions impractical to enforce.

4.2 Notice. Any party which determines that it cannot perform any act authorized or required by the Agreement due to a conflict described in Section 4.1 shall, within fifteen (15) days 211
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of making such determination, provide all other parties with written notice of such State or Federal law or regulation and a statement of the conflict with provisions of this Agreement.

4.3 Modification Conference. The parties shall, within thirty (30) days after notice is provided in Section 4.2, hereof, meet and confer in good faith in an reasonable attempt to modify this Agreement to comply with such law or regulation.

4.4 City Council Hearing. Within thirty (30) days after the modification conference, regardless of whether the parties reach an agreement on the effect of such law or regulation upon this Agreement,, the matter shall be scheduled for hearing before the City Council. Notice of such hearing shall be given pursuant to Section 65090 of the Government Code. The City Council, at such hearing, shall determine the exact modification or suspension which shall be necessitated by such law or regulation. OWNER shall have the right to offer oral and written testimony at. the hearing. No modification or suspension of this Agreement shall be effec tive unless approved by the affirmative vote of not less than a majority of the authorized voting members of the City Council and by OWNER.

4.5 Cooperation in Securing Permits or Approvals . CITY shall use its best efforts to assist OWNER in the timely securin g of any permits or approvals which may be required as a result of such modifications to, or suspensions of, all or any part of this Agreement.

4.6 Challenge Regarding New Law or Regulation . OWNER or CITY shall have the right to challenge by appropriate judicial proceedings any such new law or regulation preventing compliance with the terms of this Agreement or the modification or suspension of this Agreement.

In the event that such challenge is successful, this Agreement shall remain unmodified and in full force and effect.

5. RESTRICTION ON SPECIAL DISTRICTS.

During the term of this Agreement, CITY and OWNER agree that no assessment district or special tax district including all or any part of the Property, will be created by the CITY or any agency or instrumentality of the CITY, unless OWNER expressly then grants such authority and concurs in the creation of such district and the terms and conditions of any assessments or special taxes to be levied thereunder. The provisions of this Section 5 shall apply only to assessment districts and special tax districts including developed property. The Property shall be considered developed property provided building permit(s) for a first phase of development comprising at least 200,000 square feet of building area are i ssued within three (3) years of the Effective Date.

The provisions of this Section 5 shall not be applicable to the levy or collection by CITY of any tax which is paid to the general fund of the CITY, including, but not limited to, any CITY general tax on utility service.

6. PERIODIC REVIEW.

6.1 Procedure. CITY shall, at least every twelve (12) months during the term of this Agreement, review the extent of good faith substantial compliance by OWNER with the terms of this Agreement in accordance with Government Code Section 65865.1 and Resolution No. 88-53 and as further provided in this Section. OWNER shall have the duty to demonstrate its good faith substantial compliance with the terms of -this Agreement at such periodic review. OWNER shall 212
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furnish such evidence of good faith substantial compliance as the CITY in the exercise of its reasonable discretion may require. Either party may address any requirements of this Agreement during the review. However, ten (10) days’ written notice of any requirement to be addressed shall be made by the requesting party. If at the time of review an issue not previously identified in writing is required to be addressed, the review at the request of either party shall be continued to afford sufficient time for anal ysis and preparation. CITY shall not terminate or modify this Agreement except upon failure of OWNER to perform a material duty or obligation under this Agreement which has not been cured by OWNER as provided under Section 8.3 of this Agreement.

6.2 Information to Be Provided OWNER. CITY shall deposit in the mail to OWNER a copy of -all staff reports, exhibits and other evidence concerning Agreement performance a minimum of ten (10) calendar days prior to any such review or action upon this Agreement by the Planning Commission or the City Council.

6.3 Failure to Perform Periodic Review . The failure of the CITY to review at least annually OWNER ’s compliance with the terms and conditions of this Agreement shall not constitute or be asserted by either party as a breach by the other party of this Agreement.

7. ESTOPPEL CERTIFICATES.

Either party may at any time, and from time to time, deliver written notice to the other party requesting that the other party certify in writing that to the knowledge of the certifying party:
(a) This Agreement is in full force and effect and is a binding obligation of the parties.
(b) This Agreement has not been amended or modified and, if so amended, identifying the amendments.
(c) No default in the performance of the requesting party ’s obligations under this Agreement exists or, if in default, the nature and extent of any default.

A party receiving a request hereunder shall execute and return the certificate within thirty (30) days following receipt thereof. The City Manager shall have the right to exe cute any certificate requested by OWNER on behalf of CITY.

8. DEFAULT AND REMEDIES.

8.1 Cumulative Remedies. Subject to the provisions of Section 8.6 of this Agreement, each of the parties hereto may pursue any remedy at law, excluding damages, or equity availab le for the breach of any provision of this Agreement. Any party may initiate arbitration to cure, correct or remedy any default, to enforce any covenant or agreement herein, or to enjoin any threatened or attempted violation of this Agreement, including w ithout limitation arbitration requesting declaratory relief, specific performance and relief in the nature of mandamus. All remedies shall be cumulative and not exclusive of one another, and the exercise of any one or more of the remedies shall not constitute a waiver or election with respect to any other available remedy. 213
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The parties acknowledge and agree that specific performance and other non -monetary relief are appropriate remedies for the enforcement of this Agreement and shall be available to all parties.

8.2 Cooperation in the Event of Legal Challenge . In the .event of any legal action instituted by a third party, including without limitation any. other governmental entity or official, challenging the validity of this Agreement or any Development Approval granted pursuant to this Agreement, the parties agree to cooperate fully with each other in defending such action; provided, however, that each party shall bear its own costs and legal expenses in defending such action.

8.3 Termination of Agreement for Def ault of OWNER . CITY may terminate this Agreement for any failure of OWNER to perform any material duty or obligation of OWNER under this Agreement (hereinafter referred to as “default”); provided, however, CITY may terminate this Agreement only after prov iding written notice to OWNER of default setting forth the nature of the default and the actions, if any, required by OWNER to cure such default and, where default can be cured, OWNER has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60 ) day period and to diligently proceed to complete such actions and cure such default.

8.4 Termination of Agreement for Default of CITY . OWNER may terminate this Agreement in the event of a default by CITY in the performance of a material duty or obligation of CITY under this Agreement and only after providing written notice to CITY of default setting forth the nature of the default and the actions, if any, required by CITY to cure such default and, where the default can be cured, CITY has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions nece ssary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default.

8.5 Attorneys’ Fees and Costs . In any action or proceeding (including arbitration) brought by any party to interpret or enforce any provision of this Agreement, or otherwise arising under this Agreement, the prevailing party shall be entitled to reasonable attorneys ’ fees and all costs, expenses and disbursements in connection with such action or proceeding, including the cost of reasonable investigation, preparation and professional expert consultation and arbitration fees and costs, which sums may be included in any judgment or decree entered in such action in favor of the prevailing party.

8.6 Arbitration. Any dispute or controv ersy arising from . any provision of this Agreement, including without limitation any action or proceeding brought by any party to interpret or enforce any provision of this Agreement, shall be submitted to arbitration under the provisions of this Section 8.6.
(a) The arbitration shall be held in Orange County, California before a single arbitrator acceptable to both parties. If the parties are unable to agree on an arbitrator within seven (7) days after either party gives a written notice to the other party r equesting arbitration, the Orange County office of the Judicial Arbitration and Mediation Service 214
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(“JAMS”) shall be requested by either party to submit a list of arbitrators.(all of whom must have had at least 5 years experience as a California superior court judge) from which the arbitrator shall be selected by agreement between the parties within seven (7) days after the parties receive that list. If the parties still fail to agree on an arbitrator within that time, they shall within seventy-two (72) hours after the expiration of that time each strike off the names of potential arbitrators who are unacceptable and shall indicate the order of preference of those remaining; each party must leave at least one name on its list. They, or either of them, shall thereupon immediately request JAMS to appoint an arbitrator from the names remaining, after considering preference, qualification, and availability. The parties shall thereafter use their best efforts and diligence to see that the appointment of the arbitrator by JAMS is made as rapidly as possible, and in no event more than fourteen (14) days after the date the list is submitted to JAMS. If at the time arbitration is requested JAMS is no longer in operation, then its successor by sale, acquisition or me rger (if applicable) shall take the place of JAMS under this provision. If there is no such successor, then the presiding judge of the Orange County Superior Court shall be requested to submit a list of qualified arbitrators (who shall be retired superior court judges) from which the parties will choose a single arbitrator in the manner provided above. (b) Upon the appointment of an arbitrator, the parties shall immediately use their best efforts and due diligence to begin the arbitration hearing at the earliest possible date, and in no event more than thirty (30) days after the appointment of the arbitrator, and to thereafter diligently pursue it to completion. The parties agree to promptly sign a JAMS Submission Agreement upon institution of the arbitration process to the extent the provisions of that Submission Agreement are not inconsistent with the provisions of this Section .8.6. Upon a showing of a lack of good faith and due diligence by a party in expediting the arbitration proceedings within the time limits described above, the aggrieved party shall be entitled to all damages suffered by that party as a result of any delay in the arbitration proceedings. This item of damages shall be a separate matter to be decided by the arbitrator at the arbitration hearing.
(c) Subject to the above thirty (30) day limitation, the arbitration shall be governed by the discovery procedures in California Code of Civil Procedure Section 1283.05 as presently existing (or, if not materially changed, as existing at the time the arbitration notice is given). The arbitrator shall apply California substantive law and the California Evidence Code to the arbitration proceeding. The arbitrator shall have the power to grant all legal and equitable remedies provided by California law but shall not have the power to award compensatory or punitive damages except as provided in paragraph (b) of this Section 8.6. The arbitrator shall prepare in writing and provide to the parties a decision including factual findings and the reasons on which the decision is based.

The arbitrator shall not have the power to commit errors of law or legal reasoning, and the decision may be vacated or corrected for those or other grounds pursuant to California Code of Civil Procedure Sections 1286.2, 1286.4, 1286.6, or 1282.8 as presently existing for any such error. The arbitrator shall be bound by all legal principles under California statutory and case law. The arbitrator shall decide the case in the same manner as the case would be decided in a California court of law.
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(d) The decision may be judicially enforced (confirmed, corrected, or vacated) pursuant to Section 1285, et seq. of the California Code of Civil Procedure. It is final and binding and there is no direct appeal from the decision other than as expressly provided to the contrary in this Section 8.6. The arbitrator shall award reasonable attorneys’ fees and costs to the prevailing party in its arbitration.

9. MORTGAGEE PROTECTION.

The parties hereto agree that this Agreement shall not prevent or limit OWNER, in any manner, at OWNER ’s sole discretion, from encumbering the Property or any portion thereof or any improvement thereon by any mortgage, deed of trust or other security device securing financing with respect to the Property. CITY acknowledges that the lenders providing such financing may require certain Agreement interpretations and modifications and agrees upon request, from time to time, to meet with OWNER and representatives of such lenders to negotiate in good faith any such request for interpretation or modification. CITY will not unreasonably withhold its consent to any such requested interpretation or modification provided such interpretation or modification is consistent with the intent and purposes of this Agreement. Any Mortgagee of the Property shall be entitled to the following rights and privileges:
(a) Neither entering into this Agreement nor a breach of this Agreement shall defeat, render invalid, diminish or impair the lien of any mortgage on the Property made in good faith and for value, unless otherwise required by law. (b) The Mortgagee of any mortgage or deed of trust encumbering the Property, or any part thereof, which Mortgagee, has submitted a request in writing to the CITY in the manner specified herein for giving notices, shall be entitled to receive written notification from CITY of any default by OWNER in the performance of OWNER ’s obligations under this Agreement.
(c) If CITY timely receives a request from a Mortgagee requesting a copy of any notice of default given to OWNER under the terms of this Agreement, CITY shall provide a copy of that notice to the Mortgagee within ten (10) days of sending the notice of default to OWNER. The Mortgagee shall have the right, but not the obligation, to cure the default during t he remaining cure period allowed such party under this Agreement.
(d) Any Mortgagee who comes into possession of the Property, or any part thereof, pursuant to foreclosure of the mortgage or deed of trust, or deed in lieu of such foreclosure, shall take the Property, or part thereof, subject to the terms of this Agreement.

Notwithstanding any other provision of this Agreement to the contrary, no Mortgagee shall have an obligation or duty under this Agreement to perform any of OWNER’s obligations or other affirmative covenants of OWNER hereunder, or to guarantee such performance; provided, however, that to the extent that any covenant to be performed by OWNER is a condition precedent to the performance of a covenant by CITY, the performance thereof shall continue to be a condition precedent to CITY’s performance hereunder.

10. MISCELLANEOUS PROVISIONS.
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10.1 Recordation of Agreement . This Agreement and any amendment or cancellation thereof shall be recorded with the Orange County Recorder by the City Clerk within the peri od required by Section 65868.5 of the Government Code.

10.2 Entire Agreement. This Agreement sets forth and contains the entire understanding and agreement of the parties, and there are no oral or written representations, understandings or ancillary covenants, undertakings or agreements which are not contained or expressly referred to herein. No testimony or • evidence of any such representations, understandings or covenants shall be admissible in any proceeding of any kind or nature to interpret or determine the terms or conditions of this Agreement.

10.3 Severability. If any term, provision, covenant or condition of this Agreement shall be determined invalid, void or unenforceable, the remainder of this Agreement shall not be affected thereby and shall remain in full force and effect unless amended by mutual written consent of the parties.

10.4 Interpretation and Governing Law . This Agreement and any dispute arising hereunder shall be governed and interpreted in accordance with the laws of the State of California.

This Agreement shall be construed as a whole according to its fair language and common meaning to achieve the objectives and purposes of the parties hereto, and the rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in interpreting this Agreement, all parties having been represented by counsel in the negotiation and preparation hereof.

10.5 Section Headings. All section headings and subheadings are inserted for convenience only and shall not affect any construction or interpretation of this Agreement.

10.6 Rules of Construction. As used herein, the singular of any word includes the plural and the masculine gender includes the feminine.

10.7 Consent. Where a consent or approval of a party is required or necessary under this Agreement, such consent or approval shall not be unreasonably withheld.

10.8 Time of Essence. Time is of the essence in the performance of the provisions of this Agreement as to which time is an element.

10.9 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing and signed by a representative of the party against whom enforcement of a waiver is sought. No waiver of any right or remedy in respect of any occurrence or event shall be deemed a waiver of any right or remedy in respect of any other occurrence or event.

10.10 No Third-Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the parties and their successors and assigns. No other person shall have any right of action based upon any provision of this Agreement.

10.11 Force Majeure. Neither party shall be deemed to be in default where failure or delay in performance of any of its obligations under this Agreement is caused by floods, earthquakes, other Acts of Go d, fires, wars, riots or similar hostilities, strikes and other labor 217
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difficulties beyond the party ’s control, (including the party ’s employment force), government regulations, court actions (such as restraining orders or injunctions), or other causes beyo nd the party’s control. If any such events shall occur, the time for performance by either party of any of its obligations hereunder shall be extended by the parties for the period of time that such events prevented such performance.

10.12 Mutual Covenants. The covenants contained herein are mutual covenants and also constitute conditions to the concurrent or subsequent performance by the party benefitted thereby of the covenants to be performed hereunder by such benefitted party.

10.13 Successors in Interest. The burdens of this Agreement shall be binding upon, and the benefits of this Agreement shall inure to, all successors in interest and assigns of the parties to this Agreement.

10.14 Counterparts. This Agreement may be executed by the parties in counterparts, which counterparts shall be construed together and have the same effect as if all of the parties had executed the same instrument.

10.15 Project as a Private Undertaking . It is understood and agreed by and between the parties hereto that the development of the Projec t is a private development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement.

No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between CITY and OWNER is that of a government entity regulating the development of private property and the owner of such property.

10.16 Further Actions and Instruments . Each of the parties shall cooperate with and provide reasonable assistance to the other to the extent contemplated hereunder in the performance of all obligations under this Agreement and the satisfaction of the conditions of this Agreeme nt.

Upon the request of either party at any time, the other party shall promptly execute, with acknowledgment or affidavit if reasonably required, and file or record such required instruments and writings and take any actions as may be reasonably necessary under the terms of this Agreement to carry out the intent and to fulfill the provisions of this Agreement or to evidence or consummate the transactions contemplated by this Agreement.

10.17 Covenant of Good Faith and Fair Dealing Domain. Neither party shall do anything which shall have the effect of harming or injuring the right of the other party to receive the benefits of this Agreement. Each party shall refrain from doing anything which would render its performance under this Agreement i mpossible or impracticable. Each party shall do everything which this Agreement contemplates that such party shall do to accomplish the objectives and purposes of this Agreement.

10.18 Releases. CITY hereby covenants and agrees that upon completion of the Project as provided under this Agreement, or any portion thereof, CITY shall execute and deliver to the Orange County Recorder an appropriate release of OWNER of further obligations under this Agreement.
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10.19 Integrated Project . CITY acknowledges, by executing this Agreement for the Project as a whole, that the Project is and shall be considered a single, integrated development project and that each component of the Project is dependent upon the completion and occupancy of each other component, and that the via bility of each component of the Project is and shall be dependent of the completion and occupancy of each other component and the full performance of this Agreement.

10.20 Authority to Execute.

10.20.1 CITY. By the execution hereof, CITY confirms and acknowledges that CITY, acting through its City Council and the City Planning Commission, have complied in full with the requirements of Section 65864 et seq. of the Government Code and Resolution No. 88- 53 for public hearing and the giving of notice of intention to consider adoption of this Agreement, and that this Agreement has been approved by ordinance as required by Section 65867.5 of the Government Code. CITY warrants and represents that the CITY has given all notices, held all hearings and complied with all other leg al requirements and procedures required to make this a valid Agreement.

10.20.2 OWNER. Persons executing this Agreement on behalf of OWNER warrant and represent that they have the authority to execute this Agreement and represent that they have the authority to bind OWNER to the performance of its obligations hereunder.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year set forth below.

Dated:

CITY OF COSTA MESA
By:

Mayor
ATTEST:

CITY CLERK
By:

Deputy
(SEAL)
APPROVED AS TO FORM:

City Attorney
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Date:

OWNER:

INTERINSURANCE EXCHANGE OF THE

AUTOMOBILE CLUB OF SOUTHERN

CALIFORNIA
By: ACSC Management Services, Inc.,
Attorney-in-Fact
By:

Name:

Its:
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19932284.8 a07/26/24a05/29/24a01/01/00a05/11/24 EXHIBIT A

DESCRIPTION OF PROPERTY
Parcel 1:

That portion of the land allotted to James McFadden in decree of partition of the Rancho Santiago De Santa Ana, recorded in Book “B” of Judgments of the 17th Judicial District Court of California, in the City of Costa Mesa, County of Orange, State of California, described as follows:

Beginning at the northeast corner of the land conveyed to Horace Kent by deed recorded January 28, 1878 in Book 58, Page 417 of Deeds of Los Angeles County, California; thence north 89° 36’ 27” west, 1100.00 feet to the northwest corner of said land of Kent; thence south 0° 23 ’ 33” west, 4.41 feet along the west line of laid land to the southerly line of the north one-half of the land conveyed to the J. J. Maxwell by deed recorded February 15, 1876 in Book 43 Page 2 of Deeds of said Los Angeles County; thence south 89° 48 ’ 26” west, 1102.02 feet to the southwest corner of said north one-half; thence north 0° 27’ 51” west 0.11 feet along the westerly line of said north one-half to the southerly li ne of the land described in a deed to the Orange County Flood Control District recorded October 31, 1959 in Book 4468, Page 441 of official records of said Orange County; thence easterly, northeasterly and northerly along the southerly, southeasterly and easterly line of said described land the following courses; north 89° 25 ’ 40” east, 156.80 feet to the beginning of the tangent curve concave northwesterly having a radius 1384.00 feet; thence northeasterly 2168.55 feet along said curve through a central angle of 89° 46’ 30”; thence tangent from said curve north 0° 20’ 50” west, 197.36 feet to the northerly line of said land of J. J. Maxwell, thence north 89° 25 ’ 45” east, 687.25 feet to the northeast corner of said land of J. J. Maxwell; thence south 0° 23’ 33” west 1597.66 feet to the point of beginning.

Parcel 2:

That portion of the land allotted to James McFadden in Decree of Partition of the Rancho Santiago De Santa Ana, recorded in Book “B” of Judgments of the 17th Judicial District Court, in the City of Costa Mesa, all in the County of Orange, State of California, described as follows:

Beginning at the northeast corner of the 160 acres parcel conveyed to J. J. Maxwell by deed recorded February 15, 1876 in Book 43, Page 2 of Deeds, in the Office of the C ounty Recorder of Los Angeles County, California; thence south 1584.00 feet along the east line of said Maxwell land to the northeast corner of the land conveyed to Horace Kent by deed recorded January 28, 1878 in Book 58, Page 417 of said deeds; thence west 1099.96 feet to the northwest corner of said Kent land being also the southeast corner of the land conveyed to Charles H. Stanley of deed recorded July 27, 1897 Book 32, Page 145 of deeds, in the office of the County Recorder of said County, thence north 1584.00 feet along the east line of said Stanley land to the north line of said Maxwell land; thence east 1089.00 feet to the point of the beginning.

Except that portion thereof lying southeasterly of the northwesterly line of the land described in the deed to the Orange County Flood Control District, recorded October 31, 1959 in Book 4469,

Page 441 ends

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19932284.8 a07/26/24a05/29/24a01/01/00a05/11/24 EXHIBIT B

MAP SHOWING THE PROPERTY AND ITS LOCATION
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19932284.8 a07/26/24a05/29/24a01/01/00a05/11/24 EXHIBIT C

EXISTING DEVELOPMENT APPROVALS

COPIES OF THE EXISTING DEVELOPMENT APPROVALS LISTED BELOW ARE ON

FILE IN THE CITY OF COSTA MESA PLANNING DIVISION AND ARE INCORPORATED HEREIN BY REFERENCE:

1. General Plan Amendment GP -94-01A, approved Ju ne 20, 1994, by Resolution No. 94-54;

2. Rezone Petition R-94-01, adopted July 5, 1994, by Ordinance No. 94-10;

3. Planning Action PA-94-15, approved June 20, 1994, by Resolution No. 94-55; and

4. Parcel Map S-94-120, approved June 20, 1994, by Resolution No. 94-56.

THE ABOVE DEVELOPMENT APPROVALS ARE SUBJECT TO ALL MITIGATION MEASURES INCLUDED IN FINAL ENVIRONMENTAL IMPACT REPORT NUMBER 1045, CERTIFIED JUNE 20, 1994, BY RESOLUTION NO. 94-53.
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19932284.8 a07/26/24a05/29/24a01/01/00a05/11/24 EXHIBIT D

EXISTING LAND USE REGULATIONS

1. City of Costa Mesa General Plan as amended through Resolution No. 94-54;

2. Title 13 of the Costa Mesa Municipal Code (Planning, Zoning, and Development Codes) as amended through Ordinance No. 94-10; and

3. Resolution No. 88-53, A Resolution of the City Council of the City of Costa Mesa, California Establishing Procedures and Requirements for Consideration of Development Agreements.

COPIES OF THE EXISTING LAND USE REGULATIONS LISTED ABOVE ARE ON FILE IN

THE CITY PLANNING DEPARTMENT AND ARE INCORPORATED HEREIN BY REFERENCE.
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Automobile Club of Southern California
Automobile Club of Southern California (the “Auto Club”), a California nonprofit mutual benefit corporation, was founded on December 13, 1900, in Los Angeles as one of the nation's first motor clubs dedicated to improving roads, proposing traffic laws, and improvement of overall driving conditions. The Auto Club, and its eight other affiliated motor clubs located throughout the United States, comprise the largest motor club group within the American Automobile Association (“AAA”) national federation and serve more than 8 million members in Southern California and more than 17 million members across 21 states. The Auto Club provides various products and services to its AAA members, including roadside assistance, insurance, and travel. The Interinsurance Exchange of the Automobile Club (the “Exchange”), a California domiciled insurance company, is the Auto Club’s largest affiliated insurer and offers automobile, homeowners, personal liability, and watercraft insurance to nearly 3.5 million Auto Club members. The Exchange owns the subject property located at 3333 Fairview Road (the “Costa Mesa Campus”) and is party to the agreements with the City of Costa Mesa for developing the Costa Mesa Campus.

Significantly, the Auto Club is one of the largest employers, if not the largest employer, in the City of Costa Mesa, and one of the largest employers in Orange County. According to data available on the California Economic Development Department (“EDD”) website, the Auto Club is listed as a “Major Employer” in Orange County. As such, the Auto Club is a significant economic driver in not only Costa Mesa but also Orange County.

The full list of “Major Employers,” as identified by America’s Labor Market Information System (ALMIS) Employer Database, 2024 1st Edition, may be accessed on EDD’s website at: https://labormarketinfo.edd.ca.gov/majorer/countymajorer.asp?CountyCode=000059.

ATTACHMENT 3
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Since the Auto Club desires to continue its presence in Costa Mesa and to grow its operations, we have submitted an application to amend the term of the currently operative 1994 Development Agreement (as defined below). The proposed amendment is simple and straightforward. It extends the term of the 1994 Development Agreement – with no other proposed changes – for an additional twenty (20) years from the current expiration date of October 31, 2024.

The Auto Club has long been dedicated to a presence in Costa Mesa and the development of facilities there dating back to 1979. As more fully described below, the Auto Club started developing the Costa Mesa Campus well before the currently operative 1994 Development Agreement was approved in 1994. With the proposed amendment, the Auto Club seeks to continue their progress and strong business connection to the City of Costa Mesa.

Purchase and 1980s Development of Costa Mesa Campus

In 1979, the Auto Club purchased raw land in Costa Mesa to support the Auto Club’s substantial Southern California growth. In 1980, there were plans for a two phase development of the property with Phase I consisting of three structures and Phase II with an additional two buildings.

Phase I, completed in 1985, consisted of a processing center, satellite building and service center/warehouse totaling 467,000 square feet with 1,010 parking stalls. After the completion of Phase I, the Auto Club and the City engaged in discussions to revisit and expand upon the Phase II proposal, which ultimately became the subject of the 1994 Development Agreement.

1990s Entitlements and Development of Costa Mesa Campus

By the 1990s, the Auto Club outgrew its Los Angeles headquarters – located in its landmark 100- year-old South Figuroa Street building – and began expansion planning efforts to transition most of its administrative operations from Los Angeles to Costa Mesa. In 1993-1994, Auto Club applied for the following entitlements from the City:

• A General Plan Amendment (“GPA”) to change approximately 39.2 acres from Industrial Park and Medium Density Residential to Urban Center Commercial.

• A rezone (Zone Change) of approximately 39.2 acres from Industrial Park and Planned Development Residential-Medium Density to Planned Development Commercial.

• A final development plan (Final Development Plan) for a 500,000 square foot expansion of Auto Club’s facility in two phases, including two 4-story office buildings (250,000 square feet each) and one 4-level parking structure with 1,840 parking spaces (the “Proposed Project”).

• A Development Agreement subject to a term of 30 years (ending October 31, 2024) (“1994 Development Agreement”).

• A parcel map to divide the northerly portion of the Segerstrom Home Ranch site into three parcels to accommodate the Proposed Project.

These Entitlements were approved by the City between June through November 1994.

Additional raw land was purchased in 1994 to accommodate the additional planned development.

The 1994 Development Agreement contemplates two phases of development on the Costa Mesa 226
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Campus:

• Phase I: 1,010 new surface parking spaces distributed on the 39.2 acres, creating a total of 2,165 parking spaces. A new 250,000 square foot office building, allowing an additional 687 people onsite, bringing the total square footage of the Campus’s buildings to 717,000 square feet, excluding a parking structure.

• Phase II: A 4-level parking structure, not to exceed 35 feet above grade, to be constructed on the northwestern portion of the site. The EIR and GPA documents contemplate a parking structure with 1,860 parking spaces. Along with the parking structure, a second 250,000 square foot office building, bringing another estimated 687 additional employees to the Campus.

Collectively, the approved planned development, when fully built out, would provide 967,000 total square feet of building space and 2,976 total parking spaces (856 surface spaces and 1,860 structure spaces) on the Costa Mesa Campus. The Auto Club completed development of Phase 1 in 1997 and most of the Auto Club’s administrative operations are now housed in Costa Mesa. We commonly refer to the Campus as the Costa Mesa Administrative Offices.

Growth Plans

In 2019, the Costa Mesa Campus was reaching capacity. Auto Club initiated aggressive carpooling and ride share programs to mitigate parking concerns and planning started for Phase II of the development plans.

Due to the effects of the 2020 COVID-19 pandemic, many of staffing plans significantly changed.

Work from home was a necessity for our operations. In order to remain relevant in a competitive employee marketplace, Auto Club aggressively revamped work from home strategies. These new staffing strategies provided substantial surplus space across our portfolio. Through our facilities utilization process, we looked to dispose of smaller regional sites while strengthening our Costa Mesa operations. Our total number of staff allocated to the Costa Mesa Campus is currently 2,940, of which about 1,900 come into the office at any given day. (See Current Staffing chart below.)

PRE-COVID STAFFING STATISTICS

Year Total
Staff
Staff In
Office
Required
Parking
Parking
Stalls
Remaing
Stalls
2017 2,892 2,754 2,203 2,275 72
2018 2,959 2,809 2,247 2,275 28
2019 3,044 2,865 2,292 2,275 (17)
2020 2,645 600 480 2,275 1,795
2021 2,750 1,254 1,003 2,275 1,272
2022 2,800 1,589 1,271 2,275 1,004
2023 2,940 1,895 1,516 2,275 759
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ANTICIPATED STAFFING GROWTH

Shifting Business Operations

The Costa Mesa Campus was originally developed for both call center operations and back office administrative support. Many of the call center operations have downsized and have implemented “work from home” strategies. This has allowed for growth in higher paying technology and management positions that are primarily in the office. The Costa Mesa Campus remains the largest facility among the Auto Club’s real estate portfolio. The facilities house the majority of executive leadership along with key leadership personnel for the organization.

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Campus Expansion Outlook

The Auto Club anticipates a substantial need for the planned Phase II building and parking space in the next 10 to 20 years to accommodate future growth. Our goal is to continue to modernize and expand the Costa Mesa Administrative Offices to provide quality space for our employees. As more employees return to the office or are hired, the offices will continue to grow and the need for parking will increase. Our estimated milestones to ensure our Costa Mesa Campus can accommodate the future growth plans are as follows:

• 2030: Auto Club develops a 10-year occupancy plan.
• 2040: Auto Club secures necessary permits and approvals. • 2041 - 2043: Auto Club commences phased construction for both parking structure and additional office space.
• 2044: Construction complete.

Completed & Pending Items / Conclusion

As the employment and projected growth data (above) indicate, the Costa Mesa Campus is anticipated to reach full build-out – pursuant to the already-approved, current land use entitlements – between 2041-2043. With the issuance by the City of the Certificates of Occupancy on August 25, 1997 (Costa Mesa Building Permit No. B81204), August 25, 1997 (Costa Mesa Building Permit No. B81204 [Offices]), September 5, 1997 (Costa Mesa Building Permit No. B83128, B81585 [Offices]), October 2, 1997 (Costa Mesa Building Permit No. B83651 [Offices]), October 18, 1997 (Costa Mesa Building Permit No. B81205, B83002 [Offices]), and October 28, 1997 (Costa Mesa Building Permit No. B83935 [Company Store]), all of the development requirements set forth in the 1994 Development Agreement for Phase I at the Costa Mesa Campus were completed. The development requirements that are pending under the agreement are those for Phase II.

Thus, the Auto Club has submitted a request for the simple amendment to the 1994 Development Agreement to extend the term for 20 years. And while COVID-19 delayed plans for build-out of Phase II under the 1994 Development Agreement, the Auto Club’s ultimate development plans still align with that agreement’s current entitlements. Therefore, the Auto Club respectfully requests that the City grant the simple amendment to 1994 Development Agreement.
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Phase II – Remaining Entitlements
Phase II – Entitled (not built)
• Additional Building 250,000 SF
• Parking Structure 1,860 stalls
Remaining Entitlements
ATTACHMENT 4
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MEETING MINUTES OF THE CITY OF

COSTA MESA PLANNING COMMISSION
July
22, 2024

1. ORDI
NANCE ADOPTION FOR A FIRST AMENDMENT (DA- 20-05) TO THE

AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA DEVELOPMENT
AGREEMENT (DA- 94-01) TO ALLOW FOR A 20 YEAR TIME EXTENSION THAT WOULD EXPIRE OCTOBER 31, 2044; TO AMEND PROVISIONS

PERTAINING TO THE RATE AND METHODOLOGY FOR CALCULATING
TRAFFIC IMPACT FEES; AND, TO AMEND PROVISIONS RELATED TO THE SETBACK OF A FUTURE PARKING STRUCTURE; LOCATED AT 3333

FAIRVIEW ROAD
Pr
oject Description: The Automobile Club of Southern California proposes to amend their Development Agreement (DA -20-05) with the City of Costa Mesa to allow for a 20 year time extension that would expire on October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees; and, to amend provisions related to the placement of a future parking structure for property generally located at 3333 Fairview Road.

Env
ironmental Determination: Pursuant to CEQA Guidelines Section 15162 this project is within the scope of the June 20, 1994- certified Final Environmental Impact Report (FEIR) #1045 (State Clearinghouse No. 94021036) for the Automobile Club Expansion project . The effects of the project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project and no new mitigation measures are required. Therefore, the 1994 FEIR for Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied.

Five ex-par
te communications reported.

Com
missioner Martinez meet with the applicant onsite on July 17, 2024.

Com
missioner Klepack meet with the applicant and representative on July 19, 2024.

Com
missioner Zich meet with the applicant’s management team onsite.

Vic
e Chair Toler participated in a zoom meeting with the applicant and representatives on July 19, 2024.

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Chair Ereth participated in a phone conversation with the applicant’s representative.

Chi
stopher Aldana, Assistant Planner, presented the staff report.

Chai
r Ereth paused the presentation to announce he needed to recuse himself from this item due to a conflict of interest.

Vi
ce Chair Toler took control of the meeting.

Chr
istopher Aldana continued with his presentation.

The C
ommission asked questions of staff including discussion of:

Com
missioner Martinez enquired what the approval process would be for a new parking structure, office building and proposed second bridge over the flood control channel without a developmental agreement in place. Staff responded that the applicant would need to reapply and submit a master plan. Martinez enquired if staff looked at the proposed Class 1 trail along the flood control channel regarding this item’s extension request. Staff responded they did not look at the trail because none of the proposed uses for the site would conflict with the Class 1 trail. Martinez asked staff about the requirements of the parking structure beside the setback.

Staff responded that the other requirements are height limitations, number of parking spaces and development standards. Martinez asked if the parking structure location was set and couldn’t be modified. Staff responded that if the applicant wanted to, they could push it further away from minimum setback.

Martinez clarified his question by asking if the applicant could move the structure over to a different parcel. Staff stated that would go to an approval process before the applicant would be allowed to change the location of the structure. Martinez asked if the parking structure will have an impact on the water quality because of its proximity to the flood channel. Staff responded stating the water that would flow in that direction would go through a cleaning process before flowing into the flood channel. Martinez asked if parking was a revenue generating land use. Staff respond that the applicant would be better able to respond to that question.

Martinez asked staff if adding more parking on the site would reduce the reliance on the automobile. Staff respond that the added parking spaces were meant to meet the parking requirements at the time. Martinez asked staff if adding more parking would encourage or discourage driving to the site. Staff respond that the parking requirements were based on parking for the site and in the future, they can reassess the parking needs for the site.

Com
missioner Klepack asked if the building codes when this project was first approved would stay in place or change to current codes. Staff responded that the planning and zoning codes were locked in. However, they would have to meet all the current building and safety codes.
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DRAFT
The Chair opened the Public Hearing.

The A
nita Lorz Villagrana, applicant’s representative stated they read and agreed to the conditions of approval.

The C
ommission asked questions of the applicant including discussion of:

Com
missioner Zich asked the applicant what facilities their company was considering closing when they consolidate. The applicants team responded that they have a big presence in southern California that is continuing to grow and that they believe that they will continue to grow in Costa Mesa.

Com
missioner Martinez asked the applicant how pedestrians or bicyclist have access to the site and how it might change. The applicant’s tea m responded that the only pedestrian access is by the buss stop. Martinez asked if the employees have key card access to the building. T he applicants stated that employees do have access with keycards. Martinez asked if the applicant still planned on building the proposed second bridge over the flood channel. The applicants team stated they would look at measurers to reduce traffic where pedestrians will walk and they will look to see if that bridge is still relevant to have during the permitting process, Martinez asked if the expanded office building would encompass the current security area. The applicant said the security check point would stay in its current location.

The
Chair opened public comments.

No pu
blic comments.

The
Chair closed public comments.

The C
ommission asked questions of the staff including a discussion of:

Com
missioner Zich asked the staff the reasons the original vote for the Development Agreement did not pass in Planning Commission. Staff responded that two of the 1994 Planning Commissioners Mr. Karonda and Ms. Kalen voted No to the original motion. Mr. Karonda voted No because he felt that AAA should do more to contribute funds to the 405-freeway access at the time and Ms. Kalen expressed she was concerned that AAA would sell the proposal package to a third party.

The
Chair closed the Public Hearing.

Com
missioner Martinez made a motion to approve the item with the following modifications:
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DRAFT

1. The parking structure is not approved (pursuant to Land Use Element Policies

5.6, 5.7, and 6.13; Circulation Element Policies 4.9, 5.5, 7.33, 9.5, and 11.3; and Noise Element Policy 2.8)

2. The applicant, the City, and the County (including the OC Flood Control District) will work towards the construction of a Class I multi-purpose trail along the flood control channel (pursuant to Circulation Element Policies 5.7, 7.4, 7.5

9.2, and 9.12)

3. Pedestrian access will be provided to the site (pursuant to Circulation Element Policies 5.13 and 11.7)

4. More bicycle parking will be added upon full buildout (pursuant to Circulation Element Policy 9.4)
Motion failed for lack of second.

Commissioner Zich made a motion to approve the item with staff’s recommendation. Seconded by Commissioner Rojas.

Commissioner Zich stated that for as long as he has lived in the City of Costa Mesa AAA has been a stellar business entity for the city. He stated when he conducted his site visit, he was impressed with the quality of maintenance, the appearance of the facility and the employee amenities. He stated this is a land use decision and horning the development agreement and work they have done so far should be a top priority in the city.

Commissioner Rojas agreed with Commissioner Zich’s statements. He stated that this is a land use decision and that he has no reason not to support the motion.

Commissioner Martinez asked if the maker of the motion was willing to modify his motion to request the parking structure be built in a way that would allow it to potentially be built into housing in the future.

Commissioner Zich’s response was no.

Commissioner Martinez continued his comment stating he is not in support the motion due to the reasons in his original motion. He stated he did not agree to the additional parking and felt the site was not to being used to its potential.

Vice Chair Toler stated he is in support of the motion. However, he does agree with some of the comments made by Commissioner Martinez. He stated what makes him support the motion is in the original agreement allowing the owner to apply for a subsequent development approval to make changes if the owner feels it is necessary or appropriate. He stated he hopes that the applicant and City -4-
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DRAFT
Council in 2041 would consider the environment, surrounding neighborhoods and pedestrians.

MOVED/SECOND: Zich/Rojas
MOTION: To move staff’s recommendation.

The motion carried by the following roll call vote:

Ayes: Toler, Klepack Rojas, Zich
Nays: Martinez

Absent: None
Recused: Ereth, Andrade
Motion carried: 4-1-2
ACTI
ON: The Planning Commission adopted a resolution to:

Therefore, the 1994 FEIR for the Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied; and

2. Adop
t Resolution 2024- XX recommending City Council approval of the first amendment (DA -20-05) to the Automobile Club of Southern California Development Agreement (DA-94-01) by adopting an ordinance to allow for a 20- year time extension until October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees ; and, to amend provisions related to the setback of a future parking structure.

RESOLUTION PC- 2024-17- A RESOLUTION OF THE PLANNING

COMMISSION OF THE CITY OF COSTA MESA , CALIFORNIA

RECOMMENDING CITY COUNCIL APPROVAL OF THE FIRST AMENDMENT (DA-20-05) TO THE DEVELOPMENT AGREEMENT BETWEEN THE CITY OF

COSTA MESA AND INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA (DA-94-01) TO ALLOW FOR A 20 YEAR TIME EXTENSION THAT WOULD EXPIRE ON OCTOBER 31, 2044; AND TO

UPDATE THE RATE AND METHODOLOGY FOR CALCULATING TRAFFIC IMPACT FEES; AND, TO AMEND PROVISIONS RELATED TO THE SETBACK OF A FUTURE PARKING STRUCTURE; LOCATED AT 3333 FAIRVIEW ROAD The V
ice Chair explained the appeal process.
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PARTIDA, ANNA
Subject: Regarding Application No. DA-20-05 / 3333 Fairview Road From: Kay Jafari <[email protected]>
Sent: Friday, July 12, 2024 8:33 PM
To: PLANNING INFO <[email protected]>
Subject: Regarding Application No. DA-20-05 / 3333 Fairview Road Good afternoon,
I received a notice in the mail concerning the Automobile Club of Southern California's application as captioned above. I am requesting information about what specifically is being proposed with this application, including the applicant's future parking structure. I reside at 3366 Cte Cassis, Costa Mesa, CA 92626, so this application may impact me.

I thank you in advance for your time and diligence.

Best,
Kiarash ("Kay") Jafarifesharaki
(949) 861 - 0352
CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Report any suspicious activities to the Information Technology Department.
1 ATTACHMENT 7
249
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PLANNING COMMISSION

AGENDA REPORT
MEETING DATE: JULY 22, 2024 ITEM NUMBER: PH-1
SUBJECT: ORDINANCE ADOPTION F OR A FIRST AMENDMENT (DA-20-05) TO

THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA
DEVELOPMENT AGREEMENT (DA-94-01) TO ALLOW FOR A 20
YEAR TIME EXTENSION THAT WOULD EXPIRE OCTOBER 31, 2044 ;

TO AMEND PROVISIONS PERTAINING TO THE RATE AND
METHODOLOGY FOR CALCULATING TRAFFIC IMPACT FEES ; AND,

TO AMEND PROVISIONS RELATED TO THE SETBACK OF A
FUTURE PARKING STRUCTURE; LOCATED AT 3333 FAIR VIEW
ROAD
FROM: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT /

PLANNING DIVISION
PRESENTATION BY: CHRISTOPHER ALDANA, ASSISTANT PLANNER

FOR FURTHER

INFORMATION
CONTACT:

CHRISTOPHER ALDANA, ASSISTANT PLANNER
714-754-4868
[email protected]
RECOMMENDATION:

Staf
f recommends the Planning Commission adopt a Resolution to:

1. Find,
pursuant to CEQA Guidelines Section 15162 , that the project is within the scope of the June 20, 1994-cer tified Final Environmental impact Report (EIR) #1045 (State Clearinghouse No. 94021036) for the Auto Club Expansion project . The effects of the project were examined in the 1994 FEIR, and all fe asible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project and no new mitigation measures are required. Therefore, the 1994 FEIR for the Automobile Club Expansion project is determined to be adequate to serve as the environmental documentation for this project, that no further environmental review is required, and that all requirements of CEQA are satisfied; and

2. Adopt
R esolution 2024- XX recommending City Council approval of the first amendment (DA-20-05) to the Automobile Club of Southern Cal ifornia Development Agreement (DA-94-01) by adopting a n ordinance to allow for a 20- year time extension until October 31, 2044; to amend provisions pertaining to the rate and methodology for calculating traffic impact fees ; and, to amend provisions related to the setback of a future parking structure.

ATTACHMENT 8
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APPLICANT OR AUTHORIZED AGENT:

The applicant and authorized agent is Jennifer J. Farrell, Esq., representing the property owner, Interinsurance Exchange Automobile Club of Southern California.

BACKGROUND:

The Automobile Club of Southern California (AAA) has operated at 3333 Fairview Road since the 1980s. The site operates and is developed with AAA office and support services that w ere approved pursuant to Develop ment Review ( DR-80-05). The AAA site is a 29.5-acre lot subdivided in 1979 as Parcel 1 of Parcel Map No. 79- 381 and an adjacent 9.7-acre site to the west that was later subdivided in 1994 as Parcel 2 of Parcel Map No. 94-120.

Exhibit 1 – Vicinity Map

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In 1994, the City of Costa Mesa approved a series of applications for the development of the subject property. These approvals include:

1) Final Environmental Impact Report #1045;

2) G eneral Plan Amendment (GP-94-01A) to redesignate the subject property and the adjacent 9.7-acre parcel from Industrial Park and Medium Density Residential to Urban Center Commercial;

3) R ezone (R-94-01) to change the subject property from Industrial Park (MP) and Planned Development Residential -Medium Density (PDR -MD) to Planned Development Commercial (PDC);

4) Planning Action (PA -94-15) for a final development plan for a 500,000- square- foot expansion of the existi ng Automobile Clu b facility with four -level parking structure with conditional use permit to reduce v ehicle trips through a transportation demand management program;

5) Tentative Parcel Map (S-94-120) to divide the northerly portion of the Segerstrom Home Ranch site into three parcels to accommodate the proposed project; and

6) Development Agreement (DA-94-01)

Exhibit 2, below, depicts the existing site plan along with the 1994-approved expansion.

Exhibit 2 – DA-94-01 Approved AAA Site Plan

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As indicated above , the 1994 entitlements included a 500,000 square- foot expansion that was planned to occur in two phases. Each phase was to consist of an approximate 250,000 square foot building. Additionally, a four-level 1,840 space parking structure is approved on the adjacent 9.7- acre parcel . To date, AAA has completed Phase I improvements, which total 235,825 square feet of the 500,000-square-foot expansion.

This square footage is located in a four-story office building situated south of the existing processing center . Additionally, the 9.7- acre parcel to the west , which has a driveway along Susan Street, has been improved and is utilized as a surface parking lot for AAA employees. This surface parking lot is fenced and is accessed internally by a 40-foot-wide bridge that connects the main AAA facility . T he remaining Phas e II improvements are shown in yellow-shading on the below Exhibit 2.

The original development agreement (DA -94-01) provided for a 30 -year timeframe in which to develop the project . This term will expire on October 31, 2024 unless extended. AAA is in full compliance with all terms of the Development Agreement for the square footage that has been constructed to date, which includes payment of traffic impact fees and Transportation Corridor fees.

In recent years, AAA management has contemplated consolidating their souther n California regional operations to their Costa Mesa facility . The squar e footage that remains to be built pursuant to the Development Agreement is believed to be adequate to accommodate this consolidation. In 2023, AAA approached the City with a request to extend the Development Agreement by 20 years starting on November 1, 2024 to October 31, 2044, in order to accommodate their consolidation plans . During conversations with the app licant, City staff requested additional updates to terms of th e development agreement that include the payment of traffic impact fees , and consideration of the setback of the future parking structure from the adjacent residential community, which was contemplated in the original project approval. The applicant was amenable to these updates and has included them in their application.

SETTING:

The project site is located north of South Coast Drive, east of Susan Street and west of Fairview Road. Sunflower Avenue, which is located north of the site, separates the City of Costa Mesa from the City of Santa Ana. The project site consists of two parcels that are bisected by the Greenville Banning Channel. The larger parcel is located east of the channel, is 29.5 acres in size, and is improved with a four -story, 310,000 sq. ft. processing center, a 2 -story, 130,000 sq. ft. service bui lding, a one-story, 27,000 sq. ft. satellite building, and a 235,000 sq. ft (Phase I) offic e building (approximately 702,825 sq. ft. total). The smaller parcel is 9.7 acres in size and is used as a surface parking lot .

The project site is designated Urban Center Commercial (UCC) and is zoned Planned Development Commercial (PDC).

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Exhibit 3 – Aerial Image of AAA Site and Surrounding Uses

As shown above in Exhibit 3, properties located across Sunflower Avenue are improved with a gas station, Calvary Chapel Church /High School, and a United States Post Office. Adjacent to and north of the smaller parcel, is a residential community developed in 2003. This residential property is zoned M edium-Density P lanned Residential Development (PDR -MD) and c onsists of detached single-family homes, attached townhomes and condominiums . Located east of the subject property (i.e., across Fairview) is a Medium -Density P lanned Residential Development (PDR-MD) zoned property that is developed with a residential neighborhood consisting of two -story detached single-family homes (Wimbledon Village). The property located to the south (across Sout h Coast Drive) is designated for commercial use and is zoned P lanned Development Commercial (PDC) . This property is a component of the Segerstrom Home Ranch development, which is entitled for futur e office space and a new fire station. This property is approximately 45 acres in size with 7.5 acres improved with a home, office space for the Festival of Children Foundation, and agriculture support buildings. The remainder of the property is used for agriculture. To the west, across Susan Street, is a 13.78-acre site that is currently improved with a multi-tenant office building and a sport s field previousl y used by the Los Angel es Chargers . The City is currently processing a planning application to redevelop this site with a 1,050 unit apartment complex known as “Hive Live.”

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REQUEST:

In support of their long -term plans to consolidate regional business operations in Costa Mesa, AAA proposes the following revisions to the Development Agreement ( see Attachment 6):

1. Page 2 , Secti on 2: Change the expi ration year from 2024 to 2044. This will extend the Development Agreement for an additional 20 years, commencing on November 1, 2024 and terminating on October 31, 2044.

2. Page 3, Section 6 (a): Update the average daily vehicle trip “ADT” multiplier from .00718 to .00989. This change reflects the current Institute of Trans portation Engineers (ITE) trip generation factor for office land uses.

3. Page 4, Section 6 (b): Update the Traffic Impact Fee from $22 8 to $235, or the current rate at time of development , whichever is less. This change is necessary to reflect the City’s current adopted fee.

4. Page 3 , Section 5 (e): Specify that the Phase II parking structure shall be proposed a minimum of 60 feet from the existing residential uses located to the north of the smaller parcel to improve land use compatibility.

5. O ther non-su bstantive numbering, references, and/or formatting e dits to cla rify intent and implement the proposed changes.

As summarized above, t he intent of the proposed DA amendment will allow AA A an additional 20 years to complete the previously approved development. In addition, the amendment includes a modification to the project average daily vehicle trip multiplier to update the traffic study conducted more than 20- years ago to current anticipated office use trip demand. Consistent with language in the current DA , the proposed amendment also updates the project traffic impact fee to reflect the City’s current fee rate. Lastly, when the original p roject DA was approved, the adjacent parcel to the north of the subject property was unimproved with no development contemplated. At that time and in consideration of potential development compatibility of the site , two project exhibits were provided (see Exhibit s 3 and 4 below) showing either a 20- foot or a 60-foot setback from the proposed AAA parking garage to the north property line of the adjacent vacant property . As stipulated in the AA A entitlements, the greater of the two setback distances is to be used if the adjacent property is developed with resident ial.

This distance was adopted as a mitigation measure within the final E IR and was included as Condition of Approval #7 within PA -94-15. Since the neighboring site has now been developed with residential , language within the first amendment to the development agreement is proposed to clarify that a minimum 60-foot setback from the adjacent residential property to the proposed parking garage is required.

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Exhibit 3 – Illustration of the 20’ North Parking Structure Setback

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Exhibit 4 – Illustration of the 60-Foot North Parking Structure Setback

JUSTIFICATIONS FOR APPROVAL:

Amendment to Development Agreement

Pursuant to City Council Resolution No. 88-53, Development Agreement Procedures and Requirements, and Government Code Section 65865(c), staff recommends approval of the requested amendments, based on the following assessment of facts and findings, which are also reflected in the draft Resolution:

• The Development Agreement between the City of Costa Mesa and Developer is:
o Consistent with the objectives, policies, general land uses and prog rams specified in the General Plan and with the General Plan as a whole;

o Compatible with the uses authorized in, and the existing land use regulations prescribed for, the zoning district in which the real property is and will be located; and
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o Is in conformity with and will promote public convenience, general welfare, and good land use practice.

The proposed first amendment to the development agreement is consistent with General Plan policies and objectives, primarily objective LU-6C, in that the long-term build-out of the AAA offic e c ampus will supp ort the retention and expan sion of the City’s employment base with diverse and quality employment opportunities. Additionally, the City’s Land Use Element specifies that the “Urban Center Commercial ” Land Use District is intended to “allow for high-intensity mixed-use commercial development within a limited area” and identifies that one of the four major development s located within the Urban Center Commercial L and Use District is the “ Automobile Club of Southern California”. The proposed development is also compatible with the existing land uses located north of Interstate 405 which includes larger developments such as South Coast Plaza, Metro Pointe, IKEA and the Segerstrom Center for the Arts. Lastly , AAA has operated from this site since 1980 without any impacts to surrounding uses, including the nearby residential developments.

• The Development Agreement between the City of Costa Mesa and Developer will not:
o Be detrimental to the health, safety and general welfare; and

o Adversely affect the orderly development of property or the preservation of property values.

This AAA headquarters has operated at th e site since 1980 and there have been no incompatibilities with the surrounding uses. The proposed use, size, and intensity of the project is consistent with the existing development within the general area located north of the 405 freeway , and would not be detrimental to th e health, safety, and general welfare of the community. There are no modifications proposed to the site’s previously entitled development intensity and only minor considerations are proposed to improve the site’s physical layout to avoid potential impact s to nearby residential development.

As such, the extension of the DA will not be detrimental to the health, safety and general welfare, or a dversely affect the orderly development of property or the preservation of property values.

ENVIRONMENTAL DETERMINATION:

Pursuant to CEQA Guidelines Sect ion 15162 this project remains within the scope of the June 20, 1994 certified Final Environmental Impact Report (FEIR) #1045 (State Clearinghouse No. 94021036) for the A AA Expansion project. The effects of the project were examined in the 1994 FEIR, and all feasible mitigation measures and alternatives developed in the 1994 FEIR are incorporated into this project , and no new mitigation measures are required. Therefore, the 1994 FEIR for AA A Expansion project is determined to be adequate to serve as the environmental documentation for this 258
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project, no further environmental review is required, and that all requirements of CEQA are satisfied.

ALTERNATIVES:

Other than the recommended action, the Planning Commission may consider the following alternatives:

1. Recommend Approval of the project with modifications . The Planning Commission may suggest specific changes for C ity Council consideration that are appropriate to alleviate concerns or improve the project.

2. R ecommend Denial of the project . If the Planning Commission believes that there are insufficient facts to support the findings for approval, the Plan ning Commission must recommend denial of the application, provide facts in support of the denial recommendation, and direct staff to forward the denial recommendation to the City Council.

LEGAL REVIEW:

The draft Resolution has been approved as to form by the City Attorney’s Office.

PUBLIC NOTICE:

Pursuant to CMMC Section 13- 29(d) three ty pes of public notification have been completed no less than 10 days prior to the date of the public hearing:

1. Mailed notice. A public notice was mailed to all property owners and occupants within a 500 -foot radius of the project site. The required notice radius is measured from the external boundaries of the property.

2. On-site posting. A public noti ce was posted on each street frontage of the project site.

3. Newspaper publication. A public notice was published once in the Daily Pilot newspaper.

In response to the public notice, staff has received one comment letter (see Attachment 8).

The commentor requested add itional information from sta ff relating to th e proposed parking structure location. Staff spoke with the commentor by phone and addressed their questions. The commentor then indicated to staff that they had no concerns.

Public comments received after the Planning Commission Agenda is published can be viewed at this link: https://costamesa.legistar.com/Calendar.aspx

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CONCLUSION:

An Ordinance for DA 94-01 was adopted by the City Council in 1994 and included a 30- year time frame for completion. Unless extended, the DA will expire on October 31, 2024.

As approved, the AAA development consists of two phases of which only Phase I has been completed. AAA is now interested in completing the second phase of the approved entitlements to consolidate regional operations in Costa Mesa. Beyond extending the date of expiration, updating the rate and method of calculating traffic impact fees, and modifying language pertaining to the location of a future parking structure, there are no changes to the DA agreement. Staff is in support of the proposed first amendment because the extended term will retain a large local employer, allow the City the opportunity to benefit from the remaini ng traffic impact fees which would be used on road improvement projects, and the dev elopment will create additional quality employment opportunities. Finally, the proposal is in conformance with the City’s General Plan. 260

CITY OF COSTA MESA
Agenda Report
77 Fair Drive
Costa Mesa, CA 92626
File #: 24-277 Meeting Date: 8/6/2024
TITLE:

ORDINANCE NO. 2024-02 AMENDING TITLE 13 (PLANNING, ZONING AND DEVELOPMENT) OF

THE COSTA MESA MUNICIPAL CODE TO ESTABLISH AFFORDABLE HOUSING

REQUIREMENTS FOR NEW RESIDENTIAL DEVELOPMENT PROJECTS, AND A FEE

RESOLUTION TO ESTABLISH THE AFFORDABLE HOUSING IN-LIEU FEE SCHEDULE DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES

DEPARTMENT/PLANNING DIVISION
PRESENTED BY: AMBER GREGG, CONTRACT PLANNER
CONTACT INFORMATION: AMBER GREGG, CONTRACT PLANNER, (714) 754-5617 RECOMMENDATION:

Staff recommends the City Council:

3. Adopt a fee resolution establishing the affordable housing in-lieu fee.

Page 1 of 1 ends

261

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City of Costa Mesa
Agenda Report

77 Fair Drive
Costa Mesa, CA 92626
Item #: 24-277 Meeting Date: 8/6/2024
TITLE: ORDINANCE NO. 2024 -02 AMENDING TITLE 13 (PLANNING, ZONING AND

DEVELOPMENT) OF THE COSTA MESA MUNICIPAL CODE TO ESTABLISH AFFORDABLE

HOUSING REQUIREMENTS FOR NEW RESIDENTIAL DEVELOPMENT PROJECTS , AND A FEE

RESOLUTION TO ESTABLISH THE AFFORDABLE HOUSING IN-LIEU FEE SCHEDULE

DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICE S DEPARTMENT/PLANNING

DIVISION

PRESENTED BY: AMBER GREGG, CONTRACT PLANNER

CONTACT INFORMATION: AMBER GREGG, CONTRACT PLANNER, (714) 754-5617

RECOMMENDATION:

Staff recommends the City Council:

1. Find that the adoption of Ordinance No. 2024 -02 is exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3), General Rule in that the Affordable Housing Ordinance and subsequent Affordable Housing In -Lieu Fee will not have a significant impact on the environment.

3. Adopt a fee resolution establishing the affordable housing in-lieu fee.

BACKGROUND:

On January 16, 2024, the City Council considered the first reading of the Affordable Housing Ordinance.

The Affordable Housing Ordinance would require certain new housing projects in the City to provide a percentage of its housing units as “affordable” units for low, and/or very low -income households, or fulfill the affordable requirement by permitted alternative options . During the public hearing, t he City Council considered the ordinance as well as other issues raised by members of the public.

Modifications to the ordinance were introduced and the City Council voted 4-2 (Councilmember Chavez and Mayor Pro Tem Harlan voting no; Councilmember Harper absent) to give first reading of Ordinance No. 2024-02. The January 16, 2024, City Council agenda report, meeting video, and public comments are included in the links below:

January 16, 2024, City Council Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6478268&GUID=EE4EC0F0-BA26-4612- 9692-A189F4B8DA25
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January 16, 2024, City Council Video:
https://costamesa.granicus.com/player/clip/4078?view_id=14&redirect=true

On February 27, 2024, City Council held a study session to review affordable housing in-lieu fees.

During the study session, staff and Keyser Marston Associates (KMA) presented the proposed fee schedule as well as an explanation of the fee calculations. The City Council also received public comments, asked staff and KMA follow -up questions, and provided their comments on the proposed fees and overall vision for the proposed Affordable Housing Ordinance.

The February 27, 2024 , City Council study session agenda report, meeting video, and public comments are included in the links below:

February 27, 2024 City Council Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6554564&GUID=FD7A6E2C-57D9-41B7- AAA6-60D06D0D5B66

February 27, 2024 City Council Meeting Video:
https://costamesa.granicus.com/player/clip/4093?view_id=14&redirect=true

February 27, 2024 City Council Public Comments:
https://costamesa.legistar.com/View.ashx?M=E3&ID=1171565&GUID=B7C4B0DD-7AD7-4ADC- B8C3-392422409AF7
Public comments as well as the City Council’s feedback from the February 27, 2024 study session expressed the need to ensure that Costa Mesa is competitive with nearby cities, can attract housing developers for the creation of housing in the community, and the Affordable Housing Ordinance should not result in an impediment to the overall production of housing in the City. Discussions included comparing the City’s proposed in-lieu fee amounts with the City of Santa Ana (which has seen success with their affordable housing production program) and concerns that the City’s proposed fee amounts were too high. The City’s expert housing consultant, KMA, clarified that Santa Ana did not determine their in-lieu fee amounts based on a fee study or financial impact analysis; and therefor e, the Santa Ana in-lieu housing fee is not equivalent to their onsite production requirements. In contrast, Costa Mesa’s proposed fee amounts are derived from the pending Affordable Housing Ordinance requirements so that the fees are equivalent to produci ng the affordable units onsite. While the City Council could consider lowering the in -lieu fee amounts below equivalency to producing the onsite units, doing so would possibly result in housing developers choosing to pay the in-lieu fees rather than developing the affordable units.

At the April 2, 2024, City Council meeting, the City Council considered the second reading of the Affordable Housing Ordinance, and an in-lieu fee resolution to establish an affordable housing in -lieu fee schedule. The following ordinance modifications were introduced, and the City Council passed a motion for staff to make changes to the Ordinance and bring it back for second reading:

 At 60 units per dwelling acre, provide 10% of the units for low -income housing, or 5% for very low-income housing.
 Allocate $2.5 million into an Affordable Housing Trust Fund, including a first -time homeownership program.
 Direct staff to bring back strategies & needs to accelerate rezoning. 263

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 Streamline projects subject to the affordable housing ordinance.  Increase the project threshold subject to the ordinance to 50 dwelling units.  Strike sections related to home ownership project requirements in the ordinance.  Defer review of in-lieu fees to a future meeting.

April 2, 2024, City Council Agenda Report:
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6606550&GUID=99160B57-AADB-402D- 9FD2-7A72792DF456

April 2, 2023, City Council Video:
https://costamesa.granicus.com/player/clip/4125?view_id=14&redirect=true

On June 18, 2024, the City Council considered adoption of the proposed Affordable Housing Ordinance.

At the meeting, concerns were raised that the proposed 50-unit project threshold may be too high, and could potentially impact the “candidate housing sites” production of affordable housing identified in the City’s Housing Element (Appendix B - Sites Analysis). The City Council requested additional information if the threshold was set at 30 rental units, and how this lower alternative threshold may affect the City’s required planning for affordable housing. In addition, the Council continued the in-lieu fee resolution. Both items were continued to the regular City Council meeting of July 16, 2024.

June 18, 2024, City Council Agenda Report - Second Reading of the Affordable Housing Ordinance (also provided as Attachment 4):
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6726106&GUID=7187166B-02AF-4690- 8CEA-627EC9ACD7DE

June 18, 2024, City Council Agenda Report - In-Lieu Fee Resolution (also provided as Attachment 5):
https://costamesa.legistar.com/LegislationDetail.aspx?ID=6726107&GUID=E9E75AF2-0FBD-43E4- A8A8-2F4FA2E63722

June 18, 2024, City Council Video:
https://costamesa.granicus.com/player/clip/4149?view_id=14&redirect=true

DISCUSSION

Affordable Housing Ordinance

Modifications from the April 2, 2024 City Council meeting have been incorporated and are reflected in the draft City Council Ordinance contained in Attachment 1. Attachment 2 shows the modifications to the Ordinance in “track changes” format, added text is identified by an underline and text removal is shown in strikethrough. As presented, the Ordinance is the same as was included in the June 18, 2024 City Council Agenda.

Table 1 below provides a summary of the proposed Affordable Housing Program components and requirements included in the proposed ordinance.

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Table 1 - Proposed Affordable Housing Program Components and Requirements

PROGRAM COMPONENT PROPOSED REQUIREMENTS
Project Threshold 50 units
Number of Affordable Units/Required
Income – Rental Project
 60+ dwelling unit (du)/acre: 10% at low-
income or 5% at very-low income
 Under 60 du/acre: 6% at low-income or 4%
at very-low income
Covenant Period – Rental At least 55 years
Affordable Unit Minimum Size No more than 15% smaller than average market rate unit
Affordable Unit Bedroom Mix Proportional to market rate units Affordable Unit Location Evenly distributed/dispersed throughout the residential project
Alternatives for Compliance
 Land dedication
 Offsite construction of affordable units
 Payment of in-lieu fees
Incentives
 Allow residential uses in
commercial/industrial corridors
 Increased densities
 Allow low-income rents to be charged based
on 80% AMI vs. 60% AMI (required by State
density bonus)
 Reduced parking requirements
 Concurrent processing

At the June 18, 2024, City Council meeting, concerns were raised about the number of Housing Element “Opportunity Sites” the Affordable Housing Ordinance would apply to at the 50 -rental unit applicability threshold. The City Council requested staff provide additional analysis with the applicability threshold set at 30 rental units. Based on staff’s research, t here are a total of 97 sites listed in the Housing Element Opportunity Sites inventory, and of those, 47% would be subject to the proposed Affordability Housing Ordinance with a threshold of 50 units or more. In considering the percentage of sites to which the Ordinance would apply, it's also important to consider the number of overall units that will be subject to the requirements. The reason for this is because larger sites can accommodate a significant number of units , whereas smaller site s cannot. For City Council consideration, t he following Table 2 identifies the number of opportunity sites included at the 30 rental unit threshold and at various other threshold levels. In addition, the table identifie s the number of units subject to the Affordable Housing Ordinance and the percentage of overall units:

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Table 2 – Housing Site Inventory and Affordable Housing Ordinance Threshold Applicability

Affordable Housing
Ordinance Threshold
Number of
Opportunity Sites
Included
% of Opportunity
Sites Included
Number of
Opportunity Dwelling
Units
50 units+ 47 48% 15,184 units
(91% of total units)
45 units+ 55 57% 15,422 units
(92% of total units)
40 units+ 63 65% 15,785 units
(95% of total units)
35 units+ 73 75% 16,154
(97% of total units)
30 Units+ 81 84% 16,375
(98% of total units)
25 units+ 87 90% 16,536
(99% of total units)
20 Units+ 89 92% 16,579
(99% of total units)
10 Units+ 94 97% 16,659
(99.9% of total units)
Note: The City’s Regional Housing Needs Allocation (RHNA) is 11,760 units ; however, State law requires City’s to provide additional capacities, or a “buffer” to accommodate capacity for lower income units, thereby helping jurisdictions stay compliant with state law and avoid the need for rezoning or identifying new sites.

With the buffer and as approved by the HCD, the City’s total opportunity site net unit potential is 16,673.

Based on the above information, an applicability threshold of 50 units+ in a development would apply to 47% of the housing opportunity sites , and 91% of the total potential units. This is because larger sites accommodate most of our total unit count. At a threshold of 30 units+ per development, 84% of sites are subject to the Ordinance, and it applies to 98% of the potential units.

In-Lieu Fee

Attached to this Agenda Report is a fee resolution to adopt the in-lieu fee amounts as shown in Table 3 below. The proposed fee amount s are based on the proposed Affordable Housing Ordinance requirement set-aside percentages, and were originally proposed to be applicable to developments of 21+ units or more.

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Table 3 – Proposed Affordable Housing In-Lieu Fee Amounts

In-Lieu Fee Payment Schedule Per Square Foot of Total
Leasable Area in an Apartment Development
Developments greater than 60
units per acre
Developments less than 60
units per acre
$19.50 PSF $13.80 PSF

Previously, the proposed in-lieu fee payment schedule provided fee amounts for developments of 15 units to 21+ units; however, modifications to the Affordable Housing Ordinance now establishes the applicability threshold to developments with 50 dwelling units or more. Due to this, only one fee amount for each category is proposed. In addition, the previous in -lieu fee payment schedule included an “ownership housing development” fee category which has also been eliminated pursuant to the ownership housing development applicability removal from the Ordinance.

The fee resolution also includes a schedule of fractional in -lieu fee payments for developers who choose this option to fulfill an obligation to produce a fraction of an Inclusionary Unit. The fractional in- lieu fee schedule is included in Attachment 3.

Comparison of Other Cities In-Lieu Fee Amounts

To provide the City Council w ith additional comparisons of other cities’ affordable housing in -lieu fee amounts, refer to Table 4 below. As shown in the Table, there is no standard to establish an affordable housing in-lieu fee amount or fee structure, and cities generally adopt a fee that is consistent with their local housing conditions and objectives.

As shown in the fee examples below, the in-lieu fees could be based on a sliding scale, flat fee per square foot, incremental increase over time, and/or a formula based on certain variables. As an example, the City of Encinitas recently increased their fees from $20 per square foot to $2 3.79 per square foot. Encinitas also adjusts their fee administratively based on the percentage change in the most current Engineering News Record Construction Cost Index (CCI) for the Los Angeles region. The City of San Diego adopted a program that included an incremental increase to their in-lieu fee amounts each fiscal year with the current fee set at $25 per square foot. The City of San Diego initially set the in-lieu fee at a lower amount and over a five-year period, increased the fee to its eventual rate. The fee increased $12.27 over the five -year period. The fee is then updated annually based on the annual increase in the CCI, or similar construction industry index selected by the City Manager if the CCI index is discontinued.

Table 4 – Comparison of Other Cities In-Lieu Fee Amounts City Requirements
Santa Ana
 5-9 Units: $6 per sq. ft.
 10-14 Units: $9 per sq. ft.
 15-19 Units: $12 per sq. ft.
 20+ Units: $15 per sq. ft.
 Only applies to changes in land use and zoning designations.  Set Aside: 5-15% Rental, and 5% Ownership
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 Affordability Requirement:
o 15% Low, or 10% Very Low, or 5% at Extremely Low, or
o 5% Low + 3% Very Low + 2% Extremely Low
Long Beach
 Rental: $38 per sq. ft.
 Ownership: $29.10 per sq. ft.
 Affordability Requirement:
o 11% Very Low – Rental
o 10% Moderate – Ownership
Huntington Beach
 3-30 Units: $3.58-$35.80 per SF
 30-100 Units: $35.80 per SF
 100+ Units: Must build on-site
Mission Viejo
 Threshold: 10+ Units
 Rental: $41.90 per SF
 Ownership: $58.20 per SF
 For rental projects, the in -lieu fee can only be paid for projects between 10 and 20 units . For projects exceeding 20 units, production is required to be on-site. Ownership, any project with 10 or more units can pay the in-lieu fee.

Encinitas
 1 – 6 units: sliding scale1
 7+ units: $23.79 per sq. ft.
 Affordability Requirement:
o 10% Very Low or 15% Low
Irvine
 Formula based and calculated per project2
 Affordability Requirement:
o 5% Very Low + 5% Low + 5% Moderate
Oceanside
 $20 per sq. ft.
 Affordability Requirement:
o 10% Low – Rental
o 10% Moderate – Ownership
Santa Monica
 Rental: $35.70 per sq. ft.
 Ownership: $41.70 per sq. ft.
 Affordability Requirement:
o 5% to 30% Very Low, Low, and Moderate
San Diego
 Incremental increase from July 1, 2020 through June 30, 20243  2024 in-lieu fee increased to $25 per sq. ft.
 Affordability Requirement:
o 10% Very Low or Low – Rental
o 10 to 15% Moderate – Ownership
1 Sliding scale is based on a percentage of the adopted in -lieu fee amount depending on the number of units. For example, one unit project would be required to pay 14% of the in-lieu fee dollar amount.
2 Formula is based on land value, density, and percentage share of cost related to affordable units not being produced. 3 Prior to July 1, 2020, the in-lieu fee was established at $12.73 per sq. ft. and has increased every fiscal year (2021 - $15.18, 2022 - $17.64, 2023 – $20.09)

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ENVIRONMENTAL DETERMINATION:

The proposed Ordinance and Resolution is exempt from the California Environmental Quality Act (CEQA) per CEQA Guidelines Section 15061(b)(3), General Rule in that the Affordable Housing Ordinance and subsequent Affordable Housing In -Lieu Fee will not have a significant impact on the environment.

ALTERNATIVES:

The City Council has the following alternatives:

1. Adopt the Ordinance. The City Council may adopt the draft Ordinance if no changes are made.

2. Give first reading with modifications. The City Council may modify the draft Ordinance and give it a new first reading.

3. Continue the Ordinance review to a date certain. The City Council may continue the item to a date certain with direction for staff to return with additional information, changes and/or clarifications.

4. Adopt the fee resolution, modify the proposed fee schedule, or not adopt the fee resolution.

Similar to San Diego, t he Council could consider initially setting the fee at a lower rate and establish a schedule for increases over any specified period of time until the preferred maximum fee amount is met. For example, the Council may evaluate a fee of $12 in year one, with increases over a 3-year period to an eventual amount of $19.50 per applicable square foot (as currently proposed for developments with 60 dwelling units or more per acre), and/or include an annual update to the fee based on changes in the Orange County home values, building costs, or similar value related industry index.

FISCAL REVIEW:

Adoption of the proposed Ordinance is not anticipated to have a fiscal impact on the City’s general fund budget. Should the City Council adopt the in -lieu housing fee resolution, the City could potentially receive revenue from payment of fees that would be deposited into a Housing Trust Fund (Fund 226) to support and promote affordable housing programs in the City, i ncluding the administration of the City’s Affordable Housing Program.

Additionally, the City has been awarded a Local Early Action Planning (LEAP) grant, of which $70,000 is earmarked for the Inclusionary Housing Ordinance and In -Lieu Fees. The State Housing and Community Development (HCD) has set a deadline of September 30, 2024, for reimbursement of LEAP grant projects, with the stipulation that the City Council would need to approve the Ordinance and in- lieu fees by this deadline in order to be granted full reimbursement of this portion of the grant.

LEGAL REVIEW:

The proposed Ordinance, fee resolution, and this report, have been prepared in conjunction with and approved by the City Attorney’s Office.

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PUBLIC NOTICE:

Pursuant to Government Code Section 6062a, a notice was published in a newspaper publication on two occasions in accordance with Gov Code 6062a. In addition, Pursuant to Government Code Section 66016, the proposed fee schedule and fee study was made available to the public 15 days prior to the August 6, 2024, City Council meeting.

Public comments received prior to the August 6, 2024, City Council meeting may be viewed at this link:

CITY OF COSTA MESA - Calendar (legistar.com).

CITY COUNCIL GOALS AND PRIORITIES:

This item supports the City Council's Goal to Diversify, Stabilize, and Increase Housing to Reflect Community Needs in that the adoption of an Affordable Housing Ordinance, and subsequent in -lieu fee, assists in achieving the City’s RHNA for the very -low-, low-, and moderate -income categories, coupled with the other Housing Element programs intended to remove or reduce existing barriers and constraints to market-rate housing developments.

CONCLUSION:

Addressing housing needs for all income levels has been identified as one of the main housing goals by the Costa Mesa community and City Council. The community profile described in the 2021 -2029 Housing Element showed that approximately half of Costa Mesa residents are overpaying for housing costs due to the lack of housing options. Adoption of an Affordable Housing Ordinance would be a step towards addressing this issue coupled with the other Housing Element programs intended to remove or reduce existing b arriers and constraints to market -rate housing developments. Furthermore, the Ordinance would help towards achieving the City’s RHNA for the very-low-, low-, and moderate-income categories. Its adoption would also fulfill the objective of Program 2A of the Housing Element and help achieve City Council’s goal to “diversify, stabilize and increase housing to reflect community needs.”

A component of an Affordable Housing Ordinance is the establishment of an in-lieu fee for applicants choosing to fulfill their affordable housing requirements by paying an in -lieu fee rather than providing the affordable units on-site. The proposed fees are based on the KMA analysis, including the set-aside percentages previously considered by the City Council . Ho wever, the City Council may decide an alternative fee amount as discussed in this report.

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ATTACHMENT 1

Ordinance No. 2024-02 Page 1 of 16

ORDINANCE NO. 2024-02

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COSTA
MESA AMENDING TITLE 13 (PLANNING, ZONING, AND

DEVELOPMENT) OF THE COSTA MESA MUNICIPAL CODE TO

ESTABLISH AFFORDABLE HOUSING REQUIREMENTS FOR NEW

RESIDENTIAL PROJECTS

THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA DOES HEREBY FIND AND DECLAIRE AS FOLLOWS:

SECTION 1: Findings. The City Council finds and declares as follows:

WHEREAS, the City compiled a community housing characteristics report which found that approximately 47-percent of the Costa Mesa community earns a lower income and approximately 29-percent of the community qualify for very low or extremely low- income housing. Based on housing prices, lower income households cannot afford to own or rent in Costa Mesa without experiencing overpayment; WHEREAS, on September 27, 2021, the City Council adopted a Strategic Plan identifying five key goals to address specific community issues and needs which included to “diversify, stabilize, and increase housing to reflect community needs.” To address this goal, Council identified considering a draft affordable housing ordinance as a priority; WHEREAS, the City’s adopted 2021-2029 Housing Element includes Program 2A which calls for the City to adopt an affordable housing ordinance; WHEREAS, the City retained an expert consultant, Keyser Marston Associates Inc. (KMA), to prepare a Financial Evaluation in order to evaluate supportable affordable housing requirements and make policy recommendations for a potential affordable housing ordinance;
WHEREAS, the City Council held two joint study sessions with the Planning Commission on May 16, 2023 and July 11, 2023 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, a draft affordable housing ordinance has been prepared based on the direction of the City Council and Planning Commission, and considering KMA’s Financial Evaluation and feedback received during public comments and during stakeholders meetings with housing advocates and housing developers; 271

Ordinance No. 2024-02 Page 2 of 16

WHEREAS, a duly noticed public hearing was held by the Planning Commission on November 13, 2023 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, the Planning Commission voted 4-0 (Chair Ereth, Commissioner Rojas, and Commissioner Klepack absent) to continue the item to December 11, 2023; WHEREAS, a public hearing was held by Planning Commission on December 11, 2023 with all persons having the opportunity to speak for and against the proposal; WHEREAS, the Planning Commission voted 5-2 (Commissioners Zich and Andrade voting no) to recommend that the City Council give first reading to adopt an ordinance amending Title 13 of the Costa Mesa Municipal Code to establish minimum affordable housing requirements;
WHEREAS, a duly noticed public hearing was held by the City Council on January 16, 2024 with all persons having the opportunity to speak for and against the proposal; WHEREAS, the City Council voted 4-2 (Mayor Pro Tem Harlan and Councilmember Chavez voting no and Councilmember Harper absent) to give first reading of Ordinance No. 2024-02 (Affordable Housing Ordinance); WHEREAS, a duly noticed public hearing was held by the City Council for the second reading of Ordinance No. 2024-02 and fee resolution to establish the affordable housing in-lieu fee schedule on April 2, 2024 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, the City Council made additional revisions to the ordinance for the threshold project size and affordability requirements for rental projects at 60+ dwelling units/acre and voted 7-0 to adopt the Affordable Housing Ordinance and give another first reading of the ordinance as well as continue the fee resolution to a date uncertain; WHEREAS, a duly noticed public hearing was held by the City Council for the second reading of Ordinance No. 2024-02 on June 18, 2024 with all persons having the opportunity to speak for and against the proposal;
WHEREAS, the City Council requested additional information concerning threshold requirements and potentially modifying the threshold from 50+ units, to 30+ units, and voted 7-0 to continue the Affordable Housing Ordinance and In-Lieu fee resolution, to the regularly scheduled City Council meeting of July 16, 2024; 272

Ordinance No. 2024-02 Page 3 of 16

WHEREAS, a duly noticed public hearing was held by the City Council for the second reading of Ordinance No. 2024-02 on August 6, 2024, with all persons having the opportunity to speak for and against the proposal; and
WHEREAS, the City Council voted X-X to give second reading to and adopt the Affordable Housing Ordinance.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COSTA MESA HEREBY ORDAINS AS FOLLOWS:

SECTION 2: Code Amendment. Title 13 (Planning, Zoning and Development). Title 13, Planning, Zoning and Development of the Costa Mesa Municipal Code, as specified in Exhibit A, attached hereto and incorporated herein by this reference, is hereby amended as set forth therein.

SECTION 3. Compliance with CEQA. Adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3) (General Rule). Under Section 15061(b)(3), the activity is covered by the general rule that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the project is exempt from CEQA. This Ordinance will not affect the physical environment by permitting a new use or intensifying an existing use. Instead, the Ordinance establishes affordable housing requirements through a range of means for individual projects. There is no potential for the changes to result in significant impact on the environment. Furthermore, the Ordinance is not considered a project as defined pursuant to Public Resource Code 21065 because the Ordinance will not cause either direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.

SECTION 4. Severability. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of Costa Mesa hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more 273

Ordinance No. 2024-02 Page 4 of 16

sections, subsections, sentences, clauses, phrases or portions be declared invalid or unconstitutional.

SECTION 5. Effective Date. This Ordinance shall take effect on the 31st day after adoption.

SECTION 6. Certification. The Mayor shall sign and the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law.

PASSED AND ADOPTED this 6th day of August, 2024

________________________________
John Stephens, Mayor

ATTEST: APPROVED AS TO FORM

______________________________ ________________________________ Brenda Green, City Clerk Kimberly Hall Barlow, City Attorney

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Ordinance No. 2024-02 Page 5 of 16

EXHIBIT A

ARTICLE 1. RESIDENTIAL DISTRICTS
13-38.1. Affordable housing requirements for new residential developments.

For any proposed residential or mixed-use project with fifty (50) or more dwelling units, the affordable housing requirements set forth in Chapter XVII (Affordable Housing Ordinance) shall apply unless otherwise exempted.

CHAPTER XVII. AFFORDABLE HOUSING ORDINANCE
13-326. Purpose.

The purpose of this chapter is to establish an affordable housing program that facilitates the development and availability of housing affordable to a broad range of households with varying income levels within the City to meet current and future affordable housing needs.
13-327. Applicability.

This chapter shall apply to:
(a) properties that are located in areas for which the City completed a Zone Change and/or General Plan Amendment that allows for residential development after the effective date of this chapter; and/or
(b) properties that receive City approval of a General Plan Amendment, Zone Change or other discretionary land use or development approval including but not limited to Master Plan, Specific Plan, or subdivision after the effective date of this chapter and which allows for residential development and/or an increase in residential density as compared to the land uses and density that exists on the site at the time of the effective date of this chapter; and
(c) provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law.

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Ordinance No. 2024-02 Page 6 of 16

13-328. Exemptions.

The requirements of this chapter shall not apply to the following:
(a) Residential projects with less than fifty (50) dwelling units; (b) Any ownership residential projects of any size;
(c) Conversions of existing multi-family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing pursuant to section 13-42;
(d) The reconstruction of any residential structures that have been destroyed by fire, flood, earthquake or other act of nature;
(e) Residential building additions, repairs or remodels; (f) Residential projects or mixed-use projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan; and (g) Any residential project for which the city enters into a development agreement pursuant to California Government Code Section 65964 that provides affordable housing obligations comparable to this chapter.
13-328. Fairview Developmental Center Specific Plan.

All residential projects or mixed-use development projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan shall be subject to the affordability requirements established by the provisions of the Specific Plan at the time of its adoption and are not subject to the requirements of this chapter. 13-329. Definitions.

As used in this chapter the following terms shall have the meanings set forth below.

Terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:

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Ordinance No. 2024-02 Page 7 of 16

Affordable Housing Agreement. A legally binding recorded agreement and/or deed restriction in a form satisfactory to the director and the city attorney setting forth those provisions necessary to ensure that the requirements of the chapter are met, including but not limited to those specified in section 13-332.

Affordable Housing Plan. A plan containing all of the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.

Affordable Housing Trust Fund. The fund into which all collected in-lieu fees are deposited for the purposes of furthering affordable housing goals within the City.

Affordable Rent. The maximum affordable housing cost minus any housing costs that are imposed on the tenant on a mandatory basis. The affordable housing cost is based on the percentages of AMI identified in the following table, as adjusted for household size appropriate for the unit (as defined in California Health and Safety Code Section 50052.5), times 30%:

Income Category
Percentage of
AMI
Low Income 80%
Very Low Income 50%

Affordable Sales Price. The maximum price that can be charged to a moderate income household based on the calculation methodology defined in California Health and Safety Code Section 50052.5.

Affordable Unit. A dwelling unit that is required to be rented at the affordable rent or sold at the affordable sales price to very low, low- and moderate-income households.

Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.

Area Median Income (AMI). The median household income of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).
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Ordinance No. 2024-02 Page 8 of 16

Director. The Director of Economic and Development Services or his or her designee.

Density Bonus. An increase in the number of units permitted in a proposed Residential Project provided pursuant to California State Density Bonus Law as set forth in Government Code Section 65915, et seq.

Extremely Low-Income Household. A household with a gross annual household Income that does not exceed 30% of AMI for Orange County as defined in California Health and Safety Code Section 50106.

Gross Annual Household Income. As defined in 25 Cal. Code Regs. Section 6914 including any successor section thereto.

In-lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.

Low-income Households. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code Section 50079.5.

Market-rate Unit. A dwelling unit offered on the open market at the prevailing market-rate for purchase or rental.

Moderate-income Household. A household with a gross annual household income between 81% and 120% of AMI for Orange County as defined in California Health and Safety Code Section 50093.

Ownership Project. A residential project that is intended to be sold for homeownership.

Rental Project. A residential project that is intended to be rented to tenants.

Residential Project. A project undertaken for the purpose of development of land for residential purposes that requires the issuance of a discretionary approval or permit, including a permit for construction, and that will include fifty (50) or more dwelling units.

Very Low-income Households. A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code Section 50105.
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Zone Change. Any proposed change to the official zoning map. The terms rezone and zoning amendment shall also have the same meaning.
13-330. Affordable Housing Requirements.

The following requirements and standards shall apply to any for rent residential project subject to this chapter:
(a) Project Threshold. The affordable housing requirement is applicable to any proposed residential project with fifty (50) dwelling units or more. (b) Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follow:
(1) Rental Projects. An applicant of a rental project shall fulfill their obligation with onsite production of affordable rental units at either low or very-low income levels and the minimum required number of units shall be calculated based on the proposed project’s base density.
a. For residential projects either rezoned to or located in the areas designated to be rezoned in the General Plan and/or within the boundaries of Figure 13-200.106 of section 13.200.106 at 60 or more dwelling units per acre: at least 10% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 5% at the very-low income level. b. For residential projects either rezoned to or located in the areas to be rezoned in the General Plan and/or within the boundaries of Figure 13- 200.106 of section 13.200.106 at under 60 dwelling units per acre: at least 6% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 4% at the very-low income level. c. For any partial affordable unit calculated, the applicant shall pay a fractional in-lieu fee payment in accordance with the adopted in-lieu fee schedule or round up the calculation to the highest whole number.
(2) Residential Projects with Mixed Housing Types. If an applicant proposes a residential project that includes both ownership and rental units, the provisions of 279

Ordinance No. 2024-02 Page 10 of 16

this chapter that apply to rental projects shall apply to that portion of the development that consists of rental units.
(3) Parcel or Lot Merger. An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its affordable housing plan. The affordable housing agreement shall be recorded against the residential project and all contiguous property under common ownership or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control.
(c) Covenant Period. The affordable units shall remain affordable for not less than fifty- five (55) years or as stated in the affordable housing agreement or other agreement(s).

After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use.
(d) Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units. In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit.
(e) Unit Size. The size of the affordable units shall be the same size as the market rate units but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units.
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Ordinance No. 2024-02 Page 11 of 16

(f) Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the affordable housing agreements or other approved agreements with the City.
(g) Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider and approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units. (h) Location. Affordable Units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City’s discretion in an affordable housing agreement.

Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units. (i) Certificate of Occupancy. No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offsite) and/or payment of in-lieu fees. 13-331. Alternative Compliance Procedures.

The following are the alternative options to fulfill the requirements of this chapter if onsite production of affordable units is determined by the director or their designee to be economically infeasible.
(a) In-Lieu Fees. The payment of in-lieu fees may be used to fulfill the affordable housing requirement for rental projects and any fractional number of affordable units required. (1) In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project unless specified and/or agreed elsewhere in recorded agreement(s) with the City. For phased developments, the applicant may pay a pro rata share of the in-lieu fee concurrently with the issuance of a building permit for each phase.
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(2) In-lieu fees shall be paid according to a fee schedule adopted by the City Council.

The in-lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution.
(3) All in-lieu fees collected shall be deposited into the City’s housing trust fund. (b) Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable units must be constructed prior to or concurrently with construction of the market rate residential project.
(1) The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units. (2) The offsite location shall be located within the City of Costa Mesa boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement. (3) For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project’s approved master plan boundaries.
(c) Land Dedication. An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Costa Mesa boundaries that is sufficient to accommodate the number of affordable units required by the market rate project. The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:
(1) The land to be dedicated to the City shall be located in the City of Costa Mesa; (2) The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project’s required number of affordable units to be constructed;
(3) The land shall be suitable in terms of size, configuration, and physical characteristics including existing utilities, streets, and other infrastructure 282

Ordinance No. 2024-02 Page 13 of 16

improvements necessary to allow for the market rate project’s required number of affordable units to be constructed;
(4) The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project; (5) The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated including but not limited to title report, appraisal report, and environmental site assessment(s).

13-332. Affordable Housing Agreement and Affordable Housing Plan.

The applicant shall prepare and submit a draft affordable housing agreement and affordable housing plan as part of the proposed residential project’s planning application(s). The director shall review and determine if the plan and agreement are complete and in substantial conformance with the requirements of this chapter. This section shall not apply to residential projects where the developer fulfills their obligation with payment of in-lieu fees or land dedication.
(a) Affordable Housing Plan Requirements. The applicant shall submit a plan detailing how the requirements of this chapter will be implemented. The plan shall include the following information but not limited to:
(1) The location, structure, proposed tenure and size of the proposed market rate and affordable units;
(2) The total number of affordable units to be provided and the calculations used to determine the number of required affordable units;
(3) A floor plan and site plan depicting the location of the affordable units; (4) The income level targets for each affordable unit;
(5) The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in section 13-330(b); (6) A marketing plan for the process by which qualified households will be reviewed and selected to rent affordable units; and
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(7) Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects. (b) Affordable Housing Agreement Requirements. Upon final project approval, the developer shall execute and record an affordable housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential renters of the affordable units, consistent with the approved affordable housing plan and any administrative procedures adopted pursuant to section 13-338.
(1) An affordable housing agreement will not be required for projects which will be satisfying their affordable housing requirement through payment to the City of an in-lieu fee.
(2) The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required.
13-333. Affordable Housing Trust Fund.

All in-lieu fees, promissory note repayments, shared appreciation payments and other funds collected under this chapter shall be deposited into a separate account to be designated as the City of Costa Mesa Affordable Housing Trust Fund. The City may elect to deposit funds from other sources into this affordable housing trust fund. The moneys and all earnings from investments of the moneys in the affordable housing trust fund shall be expended exclusively to provide or assure continued provision of affordable housing in the City through, including but not limited to, acquisition, construction, development assistance, rent subsidies, or first-time homebuyer programs, and for the associated costs of administering and monitoring these programs.
13-334. Density Bonus.

Pursuant to the California State Density Bonus Law (Government Code Section 65915, et seq.), if the applicant is proposing to provide affordable units in exchange for an 284

Ordinance No. 2024-02 Page 15 of 16

increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required in this chapter provided they also meet, or exceed, the requirements outlined in section 13-330.
13-335. Parking Requirements.

An applicant that provides affordable units pursuant to this chapter is not required to comply with the parking requirements set forth in section 13-85. A lower parking requirement may be allowed if supported by a parking study prepared by a traffic engineering firm with expertise in parking trends and demands, unless otherwise prohibited by state law. The parking study shall be reviewed and approved by the director or their designee.
13-336. Concurrent Processing.

Concurrent processing of planning application(s) and plan check application(s) may be allowed at the discretion of the director or their designee when the planning application(s) have been deemed complete. The applicant shall be required to enter into a hold harmless agreement with the City prior to any concurrent review. 13-337. Compliance Monitoring.

To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the City for review. In addition, the City shall conduct periodic onsite audits to ensure compliance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review, which shall be deposited into the affordable housing trust fund for that purpose. 13-338. Administrative Procedures.

The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter including but not limited to eligibility requirements and/or preference standards that may be applied in the selection of homebuyers and tenants. 285

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13-339. Enforcement.
(a) Violations of this chapter may be enforced by all available remedies at law or in equity, including, but not limited to those set forth in section 1-33 of this code. (b) Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter.

286
ATTACHMENT 2

1 ARTICLE 1. RESIDENTIAL DISTRICTS
13-38.1. Affordable housing requirements for new residential developments.

For any proposed residential or mixed-use project with fifty (50) fifteen (15) or more dwelling units, the affordable housing requirements set forth in Chapter XVII (Affordable Housing Ordinance) shall apply unless otherwise exempted.

287

2 CHAPTER XVII. AFFORDABLE HOUSING ORDINANCE
13-326. Purpose.

This chapter shall apply to:
(a) properties that are located in areas which the City completed a Zone Change and/or General Plan Amendment that allows for residential development after the effective date of this chapter; and/or
(b) properties that receive City approval of a General Plan Amendment, Zone Change or other discretionary land use or development approval including but not limited to Master Plan, Specific Plan, or subdivision after the effective date of this chapter and whic h allows for residential development and/or an increase in residential density as compared to the land uses and density that exists on the site at the time of the effective date of this chapter; and (c) provided, however, that this chapter shall not be applied in a manner that conflicts with applicable State law.
13-328. Exemptions.

The requirements of this chapter shall not apply to the following:
(a) Residential projects with less than fifty (50) fifteen (15) dwelling units; (b) Any ownership residential projects of any size;
(c) Conversions of existing multi -family residential developments such as apartments to residential common interest developments (condominiums) for ownership housing pursuant to section 13-42;
(d) The reconstruction of any residential structures that have been destroyed by fire, flood, earthquake or other act of nature;
(e) Residential building additions, repairs or remodels; (f) Residential projects or mixed -use projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan; and 288

3 (g) Any residential project for which the city enters into a development agreement pursuant to California Government Code Section 65964 that provides affordable housing obligations comparable to this chapter.
13-328. Fairview Developmental Center Specific Plan.

All residential projects or mixed -use development projects having residential units and located within the boundaries of the Fairview Development Center Specific Plan shall be subject to the affordability requirements established by the provisions of the S pecific Plan at the time of its adoption and are not subject to the requirements of this chapter. 13-329. Definitions.

As used in this chapter the following terms shall have the meanings set forth below. Terms not specifically defined herein shall have the meanings ascribed to them elsewhere in this code:

Affordable Housing Plan. A plan containing all of the information specified and submitted in conformance with this chapter specifying the manner in which affordable units will be provided.

Affordable Housing Trust Fund. The fund into which all collected in-lieu fees are deposited for the purposes of furthering affordable housing goals within the City.

Income Category
Percentage of
AMI
Low Income 80%
Very Low Income 50%

Affordable Sales Price. The maximum price that can be charged to a moderate income household based on the calculation methodology defined in California Health and Safety Code Section 50052.5.
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4 Affordable Unit. A dwelling unit that is required to be rented at the affordable rent or sold at the affordable sales price to very low, low- and moderate-income households.

Applicant. A person or entity that applies for approval or approvals for a residential project and/or owns the property or properties on which a residential project is proposed.

Area Median Income (AMI). The median household i ncome of households in Orange County, adjusted for household size, as determined by the California Housing and Community Development department (HCD).

Director. The Director of Economic and Development Services or his or her designee.

Extremely Low-Income Household. A household with a gross annual household Income that does not exceed 30% of AMI for Orange County as defined in California Health and Safety Code Section 50106.

Gross Annual Household Income. As defined in 25 Cal Code Regs. Section 6914 including any successor section thereto.

In-lieu Fee. The fee payable as an alternative to the construction of on-site affordable units.

Low-income Households. A household with a gross annual household income between 51% and 80% of AMI for Orange County as defined in California Health and Safety Code Section 50079.5.

Market-rate Unit. A dwelling unit offered on the open market at the prevailing market -rate for purchase or rental.

Moderate-income Household. A household with a gross annual household income between 81% and 120% of AMI for Orange County as defined in California Health and Safety Code Section 50093.

Ownership Project. A residential project that is intended to be sold for homeownership.

Rental Project. A residential project that is intended to be rented to tenants.

5 Very Low-income Households. A household with a gross annual household income that does not exceed 50% of AMI for Orange County, as defined in California Health and Safety Code Section 50105.

Zone Change. Any proposed change to the official zoning m ap. The terms rezone and zoning amendment shall also have the same meaning.
13-330. Affordable Housing Requirements.

The following requirements and standards shall apply to any for rent residential project subject to this chapter:
(a) Project Threshold. The affordable housing requirements is applicable to any proposed residential project with fifty (50) fifteen (15) dwelling units or more. (b) Number of Affordable Units. The minimum number of dwelling units required to be set aside as affordable units and the required affordability level(s) of the units are specified as follow:
(1) Rental Projects. An applicant of a rental project shall fulfill their obligation with onsite production of affordable rental units at either low or very -low income levels and the minimum required number of units shall be calculated based on the proposed project’s base density.
a. For residential projects either rezoned to or located in the areas designated to be rezoned in the General Plan and/or within the boundaries of Figure 13-200.106 of section 13.200.106 at 60 or more dwelling units per acre: at least 11% 10% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 7% 5% at the very-low income level.
b. For residential projects either rezoned to or located in the areas to be rezoned in the General Plan and/or within the boundaries of Figure 13-200.106 of section

13.200.106 at under 60 dwelling units per acre: at least 6% of the total applicable dwelling units proposed shall be affordable at the low-income level or at least 4% at the very-low income level.
c. For any partial affordable unit calculated, the applicant shall pay a fractional in-lieu fee payment in accordance with the adopted in -lieu fee schedule or round up the calculation to the highest whole number.
(2) Ownership Projects. Onsite production of affordable units is not required for ownership projects. An applicant of an ownership project may choose to fulfill their obligation with 291

6 payment of in-lieu fees, onsite production of affordable ownership or rental units, offsite production of affordable ownership or rental units, or dedication of land. a. The applicable in-lieu fee calculation for ownership residential projects shall be based on the requirements set forth in section 13-331(a). b. Should an applicant choose to fulfill their obligation with on-site production of affordable ownership units, the minimum set-aside requirement shall be at least 8% at the moderate-income level. All applicable requirements pursuant to this chapter for onsite production of affordable units shall also apply. (3) Residential Projects with Mixed Housing Types. If an applicant proposes a residential project that includes both ownership and rental units, the provisions of this chapter that apply to ownership rental projects shall apply to that portion of the development that consists of ownership rental units, while the provisions of this chapter that apply to rental projects shall apply to that portion of the development that consists of rental units. (4) Parcel or Lot Merger . An applicant shall not avoid the requirements of this chapter by submitting piecemeal planning permit applications. At the time of the application for first approval for the residential project, the applicant shall identify all contiguous property under common ownership and control. The applicant shall not be required to construct dwelling units upon the contiguous property at the time of the application for first approval; however, the applicant shall be required to include the contiguous property under common ownership or control in its affordable housing plan. The affordable housing agreement shall be recorded against the residential project and all contiguous property under common owne rship or control and shall require compliance with this chapter upon development of each contiguous property at such time as there are planning permit applications that would authorize residential units for the residential development and the contiguous property under common ownership or control.
(c) Covenant Period. The affordable units shall remain affordable for not less than fifty-five (55) years. a minimum period as specified in the subsection below or as stated in the affordable housing agreement or other agreement(s).
(1) For rental projects, the affordable units must remain affordable for not less than fifty - five (55) years. After fifty-five (55) years the affordability covenant may be removed only if the property is redeveloped as a non-residential use. 292

7 (d) For ownership projects that fulfill their obligation with onsite production of affordable units, the affordable units must remain affordable for not less than forty-five (45) years. (e) Timing of Construction. The affordable units shall be constructed concurrently with or prior to the construction of market rate units.
(1) In phased developments, the affordable units shall be constructed in proportion to the number of dwelling units in each phase of the market rate project. The applicant shall provide a Construction Phasing Plan as part of their project plans for review by the director or their designee prior to the submittal of plans for a building permit. (f) Unit Size. The size of the affordable units shall be the same size as the market rate units but the final review authority may consider and approve affordable units no more than 15% smaller in square footage than the average square footage of the market rate units. (g) Bedroom Mix. The bedroom mix of the affordable units shall be proportional to the market rate units or as otherwise agreed in the affordable housing agreements or other approved agreements with the City.
(h) Design. All exterior and interior improvements including floor plan design, finishes/materials, etc. for the affordable units shall be comparable, if not same, to the market rate units. The affordable units shall have same access to and enjoyment of all community amenities/facilities in the residential project. The final review authority may consider a nd approve alternative exterior and/or interior design improvements for the affordable units as long as it is comparably the same to the market rate units.
(i) Location. Affordable Units shall be dispersed and evenly distributed throughout a residential project and not clustered in a particular area of the development or as otherwise agreed at the City’s discretion in an affordable housing agreement. Affordable units within a residential project that share a common entrance or access shall not have separate entrances or access for market rate and affordable units.
(j) Certificate of Occupancy . No certificate of occupancy will be issued for any corresponding market rate unit in a new residential project prior to completion of the required affordable units (including offsite) and/or payment of in-lieu fees.
13-331. Alternative Compliance Procedures.
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8 The following are the alternative options to fulfill the requirements of this chapter if onsite production of affordable units is determined by the director or their designee to be economically infeasible.
(a) In-Lieu Fees. The payment of in -lieu fees may be used to fulfill the affordable housing requirement for the following residential projects: Ownership projects of any size; rental projects with fewer than fifty (50) dwelling units and any fractional number of affordable units required.
(1) In-lieu fees shall be paid prior to the issuance of the first building permit for the residential project unless specified and/or agreed elsewhere in recorded agreement(s) with the City.

For phased developments, the applicant may pay a pro rata share of the in -lieu fee concurrently with the issuance of a building permit for each phase. (2) In-lieu fees shall be paid according to a fee schedule adopted by the City Council. The in- lieu fee schedule shall be adjusted periodically on an annual basis or as determined by the City Council or their designee and shall be adopted by resolution. (3) All in-lieu fees collected shall be deposited into the City’s housing trust fund. (b) Offsite Construction. Affordable units may be constructed offsite only upon a determination by the director or their designee that onsite production of affordable units is economically infeasible. If this alternative compliance option is chosen, then the offsite affordable unit s must be constructed prior to or concurrently with construction of the market rate residential project.
(1) The offsite affordable units shall comply with all applicable requirements pursuant to this chapter for onsite production of affordable units. (2) The offsite location shall be located within the City of Costa Mesa boundaries and shall be located within a reasonable distance from the market rate residential project that is subject to the affordable housing requirement.
(3) For residential projects for which a master plan is required, the affordable units may either be provided onsite or offsite on a separate parcel within the residential project’s approved master plan boundaries.
(c) Onsite Construction of Rental Units for Ownership Projects. An applicant of a market rate ownership project may construct affordable rental units concurrently with the market rate ownership units. The affordable rental units may be interspersed or located on a separate 294

9 parcel within the market rate ownership project site and shall comply with all applicable requirements pursuant to this chapter for onsite production of units. (d) Land Dedication. An applicant may dedicate, without cost to the City, land (single or multiple parcels) within the City of Costa Mesa boundaries that is sufficient to accommodate the number of affordable units required by the market rate project. The following requirements are applicable to any land proposed to be dedicated to the City to fulfill the affordable housing requirement:
(1) The land to be dedicated to the City shall be located in the City of Costa Mesa; (2) The General Plan and zoning standards shall allow for residential use at a density sufficient to allow for the market rate project’s required number of affordable units to be constructed;
(3) The land shall be suitable in terms of size, configuration, and physical characteristics including existing utilities, streets, and other infrastructure improvements necessary to allow for the market rate project’s required number of affordable units to be constructed;
(4) The value of the land shall be equivalent or comparable to the in-lieu fee payment that would be applicable to the proposed residential project; (5) The applicant shall provide property related report(s) to demonstrate the suitability and value of the land to be dedicated including but not limited to title report , appraisal report, and environmental site assessment(s).
13-332. Affordable Housing Agreement and Affordable Housing Plan.

10 (2) The total number of affordable units to be provided and the calculations used to determine the number of required affordable units;
(3) A floor plan and site plan depicting the location of the affordable units; (4) The income level targets for each affordable unit;
(5) The mechanisms that will be used to assure that the affordable units remain affordable for the required term as specified in section 13-330(b); (6) A marketing plan for the process by which qualified households will be reviewed and selected to either purchase or rent affordable units; and (7) Construction phasing plan schedule with the anticipated completion and opening date and as applicable for phased residential projects.
(b) Affordable Housing Agreement Requirements. Upon final project approval, the developer shall execute and record an affordable housing agreement in a form approved by the City Attorney, prior to approval of any final or parcel map or issuance of any building permit, whichever occurs first, and that at a minimum specifies the number, type, location, size, and phasing of all affordable units, provisions for income certification and screening of potential purchasers or renters of units , and resale control mechanisms including the financing of ongoing administrative and monitoring costs, consistent with the approved affordable housing plan and any administrative procedures adopted pursuant to section 13-338. (1) An affordable housing agreement will not be required for projects which will be satisfying their affordable housing requirement through payment to the City of an in - lieu fee.
(2) The City Council, by resolution, may establish fees for the ongoing administration and monitoring of the affordable units, which fees may be updated periodically, as required. 13-333. Affordable Housing Trust Fund.

All in -lieu fees, promissory note repayments, shared appreciation payments and other funds collected under this chapter shall be deposited into a separate account to be designated as the City of Costa Mesa Affordable Housing Trust Fund. The City may elect to deposit funds from other sources into this affordable housing trust fund. The moneys and all earnings from investments of the moneys in the affordable housing trust fund shall be expended exclusively to provide or assure continued provision of affordable housing in the City through including but not limited to acquisition, construction, development assistance, rent subs idies, or first -time 296

11 homebuyer programs, and for the associated costs of administering and monitoring these programs.
13-334. Density Bonus.

Pursuant to the California State Density Bonus Law (Government Code Section 65915 , et seq), if the applicant is pro posing to provide affordable units in exchange for an increase in density, concessions, incentives, or waivers/modifications of development standards, the affordable units required to fulfill the density bonus may also count as affordable units required in this chapter provided they also meet, or exceed, the requirements outlined in section 13-330. 13-335. Parking Requirements.

To ensure that affordable units constructed pursuant to this chapter are properly maintained and continue to comply with the applicable provisions of this chapter, the applicant or responsible party at the time shall submit annual compliance reports to the City for review. In addition, the City shall conduct periodic onsite audits to ensure compl iance with all applicable laws, policies, and agreements. The City Council may adopt fees for the costs of monitoring and compliance review, which shall be deposited into the affordable housing trust fund for that purpose. 13-338. Administrative Procedures.

The City Manager is authorized to adopt administrative rules, regulations, policies, guidelines, standards, and/or procedures necessary to implement the provisions of this chapter including but not limited to eligibility requirements and/or preference s tandards that may be applied in the selection of homebuyers and tenants.
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12 13-339. Enforcement.
(a) Violations of this chapter may be enforced by all available remedies at law or in equity, including, but not limited to those set forth in section 1-33 of this code. (b) Failure of any city official, employee, or agent to fulfill and/or enforce the requirements of this chapter shall not excuse any person or property from the requirements of this chapter.

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ATTACHMENT 3

Resolution No. 2024-10 Page 1 of 5

RESOLUTION NO. 2024-10

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COSTA MESA,

CALIFORNIA, ESTABLISHING AND ADOPTING AN AFFORDABLE HOUSING IN -

LIEU FEE SCHEDULE FOR THE AFFORDABLE HOUSING ORDINANCE

THE CITY COUNCIL OF THE CITY OF COSTA MESA, CALIFORNIA HEREBY FINDS AND DECLARES AS FOLLOWS:

WHEREAS, the City Council adopted the 2021 -2029 Housing Element on November 15, 2022; and
WHEREAS, the City’s adopted 2021-2029 Housing Element, Housing Plan Program 2A, calls for the City to adopt an inclusionary housing ordinance; and WHEREAS, the City retained an expert consultant, Keyser Marston Associates Inc. (KMA), to prepare a Financial Evaluation to evaluate supportable affordable housing requirements and make policy recommendations for an affordable housing ordinance; and
WHEREAS, on January 16, 2024, the City Council gave first reading to the Affordable Housing Ordinance (Ordinance No. 2024-02) and directed staff to present the Affordable Housing In-Lieu Fee Resolution for consideration along with the second reading of the ordinance; and
WHEREAS, the City Council held a study session on February 27, 2024 to separately discuss the proposed affordable housing in-lieu fee amounts prior to the second reading of Ordinance No. 2024-02 and with all persons having the opportunity to speak for and against the proposal; and
WHEREAS, on April 2, 2024, the City Council gave first reading of the Affordable Housing Ordinance (Ordinance No. 2024-02) and as part of their motion directed staff to present the Affordable Housing In-Lieu Fee Resolution at a later date; and WHEREAS, the City Council made additional revisions to the ordinance for the threshold project size and affordability requirements for rental projects at 60+ dwelling units/acre, increased the applicability of the project size threshold to 50+ dwelling units, struck references to ownership projects in the ordinance, and voted 7-0 to adopt the Affordable Housing Ordinance and give another first reading of the ordinance as well as continue the fee resolution to a date uncertain; and
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Resolution No. 2024-10 Page 2 of 5

WHEREAS, a duly noticed public hearing was held by the City Council for the second reading of Ordinance No. 2024-02 on June 18, 2024, with all persons having the opportunity to speak for and against the proposal;
WHEREAS, the City Council requested additional information concerning threshold requirements and potentially modifying the threshold from 50+ units, to 30+ units, and voted 7-0 to continue the Affordable Housing Ordinance and In-Lieu fee resolution, to the regularly scheduled City Council meeting of August 6, 2024; WHEREAS, a duly noticed public hearing was held by the City Council on August 6, 2024, for the Affordable Housing In-Lieu Fee Resolution, with all persons having the opportunity to speak for and against the proposal; and
WHEREAS, Government Code Section 65850(g) states that “The ordinance shall provide alternative means of compliance that may include, but are not limited to, in-lieu fees”; and
WHEREAS, KMA prepared the Affordable Housing In-Lieu Fee Analysis based on the proposed affordable housing requirements pursuant to Ordinance No. 2024-02; and WHEREAS, pursuant to the provisions of the California Constitution and the laws of the State of California, the City of Costa Mesa is authorized to adopt and implement rates, fees, and charges for municipal services; provided, however, that such rates, fees, and/or charges do not exceed the estimated reasonable cost of providing such services; and WHEREAS, Government Code Section 66016 requires notice to be given and data made available at specified times prior to the adoption of certain increases in rates, fees, and charges, or the adoption of new rates, fees, and charges for use permits and inspections; and
WHEREAS, the City has complied with the noticing requirements of Government Code Section 66016; and
WHEREAS, although the C ity is not required to compl y with the noticing requirements of Government Code Section 66018, the City has nevertheless published all notices consistent with the requirements of that section, including having published notice in accordance with Government Code Section 6062a and havi ng made the data available concerning rates, fees, and charges prior to conducting a public hearing on the fees; and
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Resolution No. 2024-10 Page 3 of 5

WHEREAS, the City Council has held at least two public hearings and received oral and written presentations with respect to the proposed fe es before adopting this Resolution; and
WHEREAS, the City Council desires to establish the Affordable Housing In -Lieu Fee as an alternative means of compliance for the Affordable Housing Ordinance; and WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF COSTA MESA HEREBY RESOLVES as follows:

Section 1. Findings . The City Council hereby finds that based upon the data, information, analysis, oral and written documentation presented to th e City Council concerning the fees described in Exhibit "A" attached hereto and by this reference incorporated herein, do not exceed the established reasonable cost of providing the service for which the fees are levied and that the fees solely recover an objectively reasonable approximation of the city’s actual and reasonable costs.

Section 2. Approval. The fees set forth in Exhibit “A” are hereby adopted and approved.

Section 3. Effective Date. The fees set forth in Exhibit "A" shall be effective on the later to occur of (a) 60 days after Council adoption of this Resolution; or (b) the effective date of the Affordable Housing Ordinance or any other ordinance which authorizes the fees set forth in this resolution.

Section 4. Certification. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.

PASSED AND ADOPTED this 6th day of August, 2024.

_____________________________
John Stephens, Mayor

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Resolution No. 2024-10 Page 4 of 5

ATTEST: APPROVED AS TO FORM:

________________________ _____________________________ Brenda Green, City Clerk Kimberly Hall Barlow, City Attorney

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Resolution No. 2024-10 Page 5 of 5

EXHIBIT A
Affordable Housing In-Lieu Fee Schedule

In-Lieu Fee Payment Schedule – Rental Projects

Fractional In-Lieu Fee Payment Schedule – Rental Housing Projects

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Costa Mesa City CouncilAugust 6, 2024

Costa Mesa City Council
August 6, 2024