Agenda — Cudahy City Council, July 16, 2024 (part 3 of 20)

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5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
December 12, 2022
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$85,333.76
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
August 2021 to November 2022
CBP
Cost Recovery Fee $46,227.66
$42,393.97
Outstanding balance through July
31, 2021
City Labor from August 2021 to
November 2022
URBF1
Non-Operating Fee $112,949.76
$56,474.88
$5,647.49
Outstanding balance through July
31, 2021
August 2021 -November 2022
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties August 2022-November
2022
OPFEE
Total Fees $529,028.52 Due December 29, 2022
397 of 454 ATTACHMENT F Page 509 of 3559
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments totaling $265,334.76 are due December 29, 2022.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to November 2022 totaling $88,621.63 are due December 29, 2022.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to November 2022 totaling $169,424.64 are due December 29, 2022.

Late Payment Penalties
Penalties totaling $5,647.49 from August 2022 to November 2022 are due December 29, 2022. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

Please pay no later than December 29, 2022, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 398 of 454 ATTACHMENT F Page 510 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

BILLINGS
Aug 2021 5,333.36 335.18 3,529.68 9,198.22 Sep 2021 5,333.36 496.78 3,529.68 9,359.82 Oct 2021 5,333.36 441.00 3,529.68 9,304.04 Nov 2021 5,333.36 2,973.23 3,529.68 11,836.27 Dec 2021 5,333.36 774.65 3,529.68 9,637.69 Jan 2022 5,333.36 494.28 3,529.68 9,357.32 Feb 2022 5,333.36 1,137.30 3,529.68 10,000.34 Mar 2022 5,333.36 875.25 3,529.68 9,738.29 Apr 2022 5,333.36 1,103.88 3,529.68 9,966.92 May 2022 5,333.36 3,115.39 3,529.68 11,978.43 Jun 2022 5,333.36 127.60 3,529.68 8,990.64 Jul 2022 5,333.36 924.63 3,529.68 9,787.67 Aug 2022 5,333.36 932.38 3,529.68 882.42 10,677.84 Sep 2022 5,333.36 2,550.29 3,529.68 1,235.39 12,648.72 Oct 2022 5,333.36 1,914.65 3,529.68 1,588.36 12,366.05 Nov 2022 5,333.36 2,591.48 3,529.68 1,941.32 13,395.84

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022

0.00 0.00 0.00 0.00 0.00
72,020.00
7,202.00
3 years
21,606.00 21,606.00
Oct 2022
Nov 2022
Annual City Reimbursement Costs
Cost per operator (10)
Three years(2019‐2022)
City Labor
Balance as of November 30, 2022 265,334.76 88,621.63 169,424.64 5,647.49 529,028.52 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 399 of 454 ATTACHMENT F Page 511 of 3559
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5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960

November 14, 2022
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$80,000.40
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
from August 2021 to October 2022
CBP
Cost Recovery Fee $46,227.66
$39,802.49
Outstanding balance through July
31, 2021
City Labor from August 2021 to
October 2022
URBF1
Non-Operating Fee $112,949.76
$52,945.20
$3,706.16
Outstanding balance through July
31, 2021
August 2021 through October 2022
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties August 2022-October
2022
OPFEE
Total Fees $515,632.67 Due November 30, 2022
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments totaling $260,001.40 are due November 30, 2022.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to October 2022 totaling $86,030.15 are due November 30, 2022.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to October 2022 totaling $165,894.96 are due November 30, 2022.

Late Payment Penalties
Penalties totaling $3,706.16 from August 2022 to October 2022 are due November 30, 2022. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

Please pay no later than November 30, 2022, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 401 of 454 ATTACHMENT F Page 513 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022 0.00 0.00 0.00 0.00 0.00
Annual City Reimbursement Costs           72,020.00
Cost per operator (10)              7,202.00
Three years(2019‐2022) 3 years
City Labor           21,606.00             21,606.00
Balance as of October 31, 2022 260,001.40                   86,030.15              165,894.96          3,706.17           515,632.68 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 402 of 454 ATTACHMENT F Page 514 of 3559
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5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
October 10, 2022
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$69,333.68
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
from August 2021 to August 2022
CBP
Cost Recovery Fee $46,227.66
$35,337.55
Outstanding balance through July
31, 2021
City Labor from August 2021 to
August 2022
URBF1
Non-Operating Fee $112,949.76
$45,885.84
Outstanding balance through July
31, 2021
August 2021 through August 2022
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
OPFEE
Total Fees $489,735.49 Due October 31, 2022
403 of 454 ATTACHMENT F Page 515 of 3559
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments totaling $249,334.68 are due October 31, 2022.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to August 2022 totaling $81,565.21 are due October 31, 2022.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to August 2022 totaling $158,835.60 are due October 31, 2022.

Please pay no later than October 31, 2022, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 404 of 454 ATTACHMENT F Page 516 of 3559
CBP URBF1 OPFEE
Operator Comm Benefit Cost Recovery Non Operating Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Annual City Reimbursement Costs           72,020.00
Cost per operator (10) 7,202.00
Three years(2019‐2022) 3 years
City Labor           21,606.00 21,606.00
Balance as of August 31, 2022 249,334.68           81,565.21              158,835.60                489,735.49 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 405 of 454 ATTACHMENT F Page 517 of 3559
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P a g e | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
February 9, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$96,000.48
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
August 2021 to January 2023
CBP
Cost Recovery Fee $46,227.66
$49,867.25
Outstanding balance through July
31, 2021
City Labor from August 2021 to
January 2023
URBF1
Non-Operating Fee $112,949.76
$63,534.24
$10,589.04
Outstanding balance through July
31, 2021
August 2021 -January 2023
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties Aug 2022- Jan 2023
OPFEE
Total Fees $559,169.43 Due February 28, 2023
412 of 454 ATTACHMENT F Page 524 of 3559
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments from August 2021 to January 2023 totaling $276,001.48 are due February 28, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to January 2023 totaling $96,094.91 are due February 28, 2023.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to January 2023 totaling $176,484.00 are due February 28, 2023.

Late Payment Penalties
Penalties totaling $10,589.04 from August 2022 to February 2023 are due February 28, 2023. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

Please pay no later than February 28, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 413 of 454 ATTACHMENT F Page 525 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022
Nov 2022
Dec 2022
Jan 2023 0.00 0.00 0.00 0.00 0.00
Annual City Reimbursement Costs           72,020.00
Cost per operator (10)             7,202.00
Three years(2019‐2022) 3 years
City Labor           21,606.00          21,606.00
Balance as of January 31, 2023 276,001.48                   96,094.91              176,484.00    10,589.04        559,169.43 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 414 of 454 ATTACHMENT F Page 526 of 3559
P a g e | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
January 11, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$90,667.12
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
August 2021 to December 2022
CBP
Cost Recovery Fee $46,227.66
$47,815.00
Outstanding balance through July
31, 2021
City Labor from August 2021 to
December 2022
URBF1
Non-Operating Fee $112,949.76
$60,004.56
$7,941.78
Outstanding balance through July
31, 2021
August 2021 -December 2022
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties August 2022-December
2022
OPFEE
Total Fees $545,606.88 Due January 31, 2023
415 of 454 ATTACHMENT F Page 527 of 3559
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments from August 2021 to December 2022 totaling $270,668.12 are due January 31, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to December 2022 totaling $94,042.66 are due January 31, 2023.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to December 2022 totaling $172,954.32 are due January 31, 2023.

Late Payment Penalties
Penalties totaling $7,941.78 from August 2022 to December 2022 are due January 31, 2023. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part-up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

Please pay no later than January 31, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 416 of 454 ATTACHMENT F Page 528 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022

0.00 0.00 0.00 0.00 0.00
72,020.00
7,202.00
3 years
21,606.00 21,606.00
Nov 2022
Dec 2022
Annual City Reimbursement Costs
Cost per operator (10)
Three years(2019‐2022)
City Labor
Balance as of December 31, 2022 270,668.12 94,042.66 172,954.32 7,941.78 545,606.88 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 417 of 454 ATTACHMENT F Page 529 of 3559
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P a g e | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
March 6, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $180,001.00
$98,598.91
Outstanding balance through July
31, 2021
Monthly installments ($5,333.36)
August 2021 to February 2023
CBP
Cost Recovery Fee $46,227.66
$52,371.25
Outstanding balance through July
31, 2021
City Labor from August 2021 to
February 2023
URBF1
Non-Operating Fee $112,949.76
$67,063.92
$13,589.27
Outstanding balance through July
31, 2021
August 2021 - February 2023
The monthly non-operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties Aug 2022- Feb 2023
OPFEE
Total Fees $573,536.70 Due March 31, 2023
424 of 454 ATTACHMENT F Page 536 of 3559
P a g e | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of July 31, 2021, and current CBP monthly installments from August 2021 to February 2023 totaling $281,334.84 are due March 31, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of July 31, 2021, the City labor, and third-party contractors from August 2021 to February 2023 totaling $98,598.91 are due March 31, 2023.

Non-Operating Fees
The outstanding balance as of July 31, 2021, and the current monthly non-operating fees from August 2021 to February 2023 totaling $180,013.68 are due March 31, 2023.

Late Payment Penalties
Penalties totaling $13,589.27 from August 2022 to February 2023 are due March 31, 2023.

Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees.

In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in partup to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

Please pay no later than March 31, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director
See supporting detail attached of monthly billings and payments from August 2021 through current. 425 of 454 ATTACHMENT F Page 537 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Penalties Outstanding NYCE Guys, LLC
September 22, 2021 Letter 180,001.00 46,227.66 112,949.76 339,178.42

PAYMENTS
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Apr 2022
May 2022
Jun 2022
Jul 2022
Aug 2022
Sep 2022
Oct 2022
Nov 2022
Dec 2022

0.00 0.00 0.00 0.00 0.00
72,020.00
7,202.00
3 years
21,606.00 21,606.00
Jan 2023
Feb 2023
Annual City Reimbursement Costs
Cost per operator (10)
Three years(2019‐2022)
City Labor
Balance as of February 28, 2023 281,334.84 98,598.91 180,013.68 13,589.27 573,536.70 (a) City Reimbursement cost of $7,202 per year (x three years (2019‐2022)= $21,606.00 426 of 454 ATTACHMENT F Page 538 of 3559
427 of 454

ATTACHMENT F

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428 of 454

ATTACHMENT F

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Page | 1

5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773‐5143
Fax: (323) 771‐2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA‐CM
Incorporated November 10, 1960
September 15, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18‐017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18‐017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $276,001.48
$32,000.16
Outstanding balance as of March
31, 2023.

Monthly installments ($5,333.36)
from April 2023 to September 2023. CBP
Cost Recovery Fee $96,094.91
$10,421.67
$7,121.12
Outstanding balance as of March
31, 2023.

City Labor from April 2023 to August
2023.

Escrow Deposit Beginning Charge
URBF1
Non‐Operating Fee $183,543.36
$21,178.08
$38,120.54
Outstanding balance as of March
31, 2023.

April 2023 – September 2023
The monthly non‐operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties August 2022‐Sep 2023
OPFEE
Total Fees $664,481.32 Due September 30, 2023
430 of 454 ATTACHMENT F Page 542 of 3559
Page | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of March 31, 2023, and current CBP monthly installmentsfrom April 2023 to September 2023 totaling $308,001.64 are due September 30, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of March 31, 2023, the City labor, and third‐party contractors from April 2023 to August 2023 totaling $106,516.58 are due September 30, 2023.

Escrow Account
Effective September 15, 2023, the City will require NYCE Guys, LLC to make an upfront payment of assessed quarterly fees into a deposit to open an escrow account to obtain timely payment of those fees. By this invoice, the Department of Finance is informing you that your beginning charge of your escrow deposit is $7,121.12. This beginning charge of your escrow deposit is based on the average amount of cost recovery fees from July 2022 to June 2023 ($28,484.47) and it will be used to repay fees assessed by the City on a monthly basis beginning in the fourth quarter of 2023 and escrow will be replenished quarterly, as needed. Please see attached worksheet.

Non‐Operating Fees
The outstanding balance as of March 31, 2023, and the current monthly non‐operating fees from April 2023 to September 2023 totaling $204,721.44 are due September 30, 2023.

Late Payment Penalties
Penalties totaling $38,120.54 from August 2022 to September 2023 are due September 30, 2023. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non‐operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part‐up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.
431 of 454 ATTACHMENT F Page 543 of 3559
Page | 3
Please pay no later than September 30, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director

See supporting detail attached of monthly billings and payments as of September 1, 2023, along with escrow deposit beginning balance.
432 of 454 ATTACHMENT F Page 544 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Fees Penalties Outstanding NYCE Guys, LLC
Balance as of March 31, 2023 276,001.48 96,094.91 183,543.36 555,639.75 Penalties from Aug 2022‐Mar 2023 16,942.46 16,942.46

PAYMENTS
Apr 2023
May 2023
Jun 2023
Jul 2023
Aug 2023
Sep 2023
Oct 2023
Nov 2023
Dec 2023
Jan 2024
Feb 2024
Apr 2024
May 2024
Jun 2024
Balance as of September 7, 2023 308,001.64                   106,516.58                   204,721.44       38,120.54             657,360.20 433 of 454 ATTACHMENT F Page 545 of 3559
Operator
NYCE Guys, LLC
As of September 15, 2023 $                                  7,121.12 Sep‐23 $                                       7,121.12 Oct‐23
Nov‐23
Dec‐23
Jan‐24
Feb‐24
Mar‐24
Apr‐24
May‐24
Jun‐24
Total $                                  7,121.12
Escrow Beginning
Balance
Billings Escrow Beginning
Balance
Deposits to
Escrow Account
Cost Recovery
Monthly Fees
Escrow Ending
Balance
434 of 454 ATTACHMENT F Page 546 of 3559
Page | 1

5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773‐5143
Fax: (323) 771‐2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA‐CM
Incorporated November 10, 1960
October 12, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18‐017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18‐017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $276,001.48
$37,333.52
Outstanding balance as of March
31, 2023.

Monthly installments ($5,333.36)
from April 2023 to October 2023. CBP
Cost Recovery Fee $96,094.91
$11,735.44
$7,121.12
Outstanding balance as of March
31, 2023.

City Labor from April 2023 to
September 2023.

Escrow Deposit Beginning Charge
URBF1
Non‐Operating Fee $183,543.36
$24,707.76
$41,650.22
Outstanding balance as of March
31, 2023.

April 2023 – October 2023
The monthly non‐operating fee is
$3,529.68 (.42 x 8,404 square
footage of the premises)
Penalties August 2022‐Oct 2023
OPFEE
Total Fees $678,187.81 Due October 31, 2023
435 of 454 ATTACHMENT F Page 547 of 3559
Page | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of March 31, 2023, and current CBP monthly installmentsfrom April 2023 to October 2023 totaling $313,335.00 are due October 31, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of March 31, 2023, the City labor, and third‐party contractors from April 2023 to September 2023 totaling $107,830.35 are due October 31, 2023.

Non‐Operating Fees
The outstanding balance as of March 31, 2023, and the current monthly non‐operating fees from April 2023 to October 2023 totaling $208,251.12 are due October 31, 2023.

Late Payment Penalties
Penalties totaling $41,650.22 from August 2022 to October 2023 are due October 31, 2023.

Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non‐operating/operating fees.

In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part‐ up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.
436 of 454 ATTACHMENT F Page 548 of 3559
Page | 3
Please pay no later than October 31, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director

See supporting detail attached of monthly billings and payments as of October 1, 2023, along with escrow deposit beginning balance worksheet.
437 of 454 ATTACHMENT F Page 549 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Fees Penalties Outstanding NYCE Guys, LLC
Balance as of March 31, 2023 276,001.48 96,094.91 183,543.36 555,639.75 Penalties from Aug 2022‐Mar 2023 16,942.46 16,942.46

PAYMENTS
Apr 2023
May 2023
Jun 2023
Jul 2023
Aug 2023
Sep 2023
Oct 2023
Nov 2023
Dec 2023
Jan 2024
Feb 2024
Apr 2024
May 2024
Jun 2024
Balance as of October 1, 2023          313,335.00         107,830.35                   208,251.12       41,650.22              671,066.69 438 of 454 ATTACHMENT F Page 550 of 3559
Operator
NYCE Guys, LLC
As of September 15, 2023 $                                   7,121.12 Sep‐23 $                                   7,121.12
Oct‐23
Nov‐23
Dec‐23
Jan‐24
Feb‐24
Mar‐24
Apr‐24
May‐24
Jun‐24
Total as of October 1, 2023 $                                   7,121.12 Escrow Beginning
Balance
Billings Deposits to
Escrow Account
Cost Recovery
Monthly Fees
Escrow Ending
Balance
439 of 454 ATTACHMENT F Page 551 of 3559
Page | 1

5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773‐5143
Fax: (323) 771‐2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA‐CM
Incorporated November 10, 1960
November 15, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18‐017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18‐017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $276,001.48
$42,666.88
Outstanding balance as of March 31,
2023.

Monthly installments ($5,333.36) from
April 2023 to November 2023. CBP
Cost Recovery Fee $96,094.91
$12,254.94
($14,950.50)
$7,121.12
Outstanding balance as of March 31,
2023.

City Labor from April 2023 to October
2023.

Reimbursement Expense Credit
applied on October 24, 2023.

Escrow Deposit Beginning Charge
URBF1
Non‐Operating Fee $183,543.36
$28,237.44
$45,179.90
Outstanding balance as of March 31,
2023.

April 2023 – November 2023
The monthly non‐operating fee is
$3,529.68 (.42 x 8,404 square footage
of the premises)
Penalties August 2022‐Nov 2023
OPFEE
Total Fees
Escrow Deposit Beginning Charge
$669,028.41
$7,121.12
Due November 30, 2023
440 of 454 ATTACHMENT F Page 552 of 3559
Page | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of March 31, 2023, and current CBP monthly installmentsfrom April 2023 to November 2023 totaling $318,668.36 are due November 30, 2023.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of March 31, 2023, the City labor, and third‐party contractors from April 2023 to October 2023 totaling $93,399.35 are due November 30, 2023.

Non‐Operating Fees
The outstanding balance as of March 31, 2023, and the current monthly non‐operating fees from April 2023 to November 2023 totaling $211,780.80 are due November 30, 2023.

Late Payment Penalties
Penalties totaling $45,179.90 from August 2022 to November 2023 are due November 30, 2023. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non‐operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part‐up to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.
441 of 454 ATTACHMENT F Page 553 of 3559
Page | 3
Please pay no later than November 30, 2023, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director

See supporting detail attached of monthly billings and payments as of November 1, 2023, along with escrow deposit beginning balance worksheet.
442 of 454 ATTACHMENT F Page 554 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Fees Penalties Outstanding NYCE Guys, LLC
Balance as of March 31, 2023 276,001.48 96,094.91 183,543.36 555,639.75 Penalties from Aug 2022‐Mar 2023 16,942.46 16,942.46

PAYMENTS
Apr 2023
May 2023
Jun 2023
Jul 2023
Aug 2023
Sep 2023
Oct 2023
Nov 2023
Dec 2023
Jan 2024
Feb 2024
Apr 2024
May 2024
Jun 2024
Expense Reimbursement ‐ 10/2023         (14,950.50)              (14,950.50) Balance as of November 1, 2023          318,668.36           93,399.35                   211,780.80       45,179.90              669,028.41 Revised Invoice: 10/24/2023
443 of 454 ATTACHMENT F Page 555 of 3559
Operator
NYCE Guys, LLC
As of September 15, 2023 $                                   7,121.12 Sep‐23 $                                   7,121.12
Oct‐23
Nov‐23
Dec‐23
Jan‐24
Feb‐24
Mar‐24
Apr‐24
May‐24
Jun‐24
Total as of November 1, 2023 $                                   7,121.12 Escrow Beginning
Balance
Billings Deposits to
Escrow Account
Cost Recovery
Monthly Fees
Escrow Ending
Balance
444 of 454 ATTACHMENT F Page 556 of 3559
Page | 1

5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Daisy Lomeli
Vice Mayor
Jose R. Gonzalez
Councilmember
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
December 12, 2023
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $276,001.48
$48,000.24
Outstanding balance as of March 31,
2023.

Monthly installments ($5,333.36) from
April 2023 to December 2023. CBP
Cost Recovery Fee $96,094.91
$13,165.69
($14,950.50)
$7,121.12
Outstanding balance as of March 31,
2023.

City Labor from April 2023 to
November 2023.

Reimbursement Expense Credit
applied on October 24, 2023.

Escrow Deposit Beginning Charge
URBF1
Non-Operating Fee $183,543.36
$31,767.12
$48,709.58
Outstanding balance as of March 31,
2023.

April 2023 – December 2023
The monthly non-operating fee is
$3,529.68 (8,404.00 square footage of
the premises x .42).

Penalties August 2022- December
2023
OPFEE
Total Fees
Escrow Deposit Beginning Charge
$682,331.88
$7,121.12
Due January 2, 2024
445 of 454 ATTACHMENT F Page 557 of 3559
Page | 2
Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of March 31, 2023, and current CBP monthly installments from April 2023 to December 2023 totaling $324,001.72 are due January 2, 2024.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of March 31, 2023, the City labor, and third-party contractors from April 2023 to November 2023 totaling $94,310.10 are due January 2, 2024.

Non-Operating Fees
The outstanding balance as of March 31, 2023, and the current monthly non-operating fees from April 2023 to December 2023 totaling $215,310.48 are due January 2, 2024.

Late Payment Penalties
Penalties totaling $48,709.58 from August 2022 to December 2023 are due January 2, 2024.

Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees.

Sincerely,
Joshua Calhoun, CPA
Finance Director

See supporting detail attached of monthly billings and payments as of December 1, 2023, along with escrow deposit beginning balance worksheet.
447 of 454 ATTACHMENT F Page 559 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Fees Penalties Outstanding NYCE Guys, LLC
Balance as of March 31, 2023 276,001.48 96,094.91 183,543.36 555,639.75 Penalties from Aug 2022-Mar 2023 16,942.46 16,942.46

PAYMENTS
Apr 2023
May 2023
Jun 2023
Jul 2023
Aug 2023
Sep 2023
Oct 2023
Nov 2023
Dec 2023
Jan 2024
Feb 2024
Apr 2024
May 2024
Jun 2024
Expense Reimbursement - 10/2023 (14,950.50) (14,950.50) Balance as of December 1, 2023 324,001.72 94,310.10 215,310.48 48,709.58 682,331.88 448 of 454 ATTACHMENT F Page 560 of 3559
Operator
NYCE Guys, LLC
As of September 15, 2023 $ 7,121.12
Sep-23 $ 7,121.12
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Total as of December 1, 2023 $ 7,121.12
Escrow Beginning
Balance
Billings Deposits to
Escrow Account
Cost Recovery
Monthly Fees
Escrow Ending
Balance
449 of 454 ATTACHMENT F Page 561 of 3559
ATTACHMENT AA.

Los Angeles County Fire Department
Plan Corrections Report
450 of 454 ATTACHMENT F Page 562 of 3559
PLAN CORRECTIONS REPORT FEPC2021-3984
FOR REPORT TEXT LIBRARY: MUNICIPALITY_NAME
PLAN ADDRESS: 4907 Cecilia Street PARCEL: 6224024011
Bell Gardens, CA 90201
APPLICATION DATE: 12/28/2021
EXPIRATION DATE:

SQUARE FEET: 0.00
VALUATION: $0.00
DESCRIPTION: Tenant improvement. Proposed using existing building for cannabis cultivation facility. No manufacturing
proposed. No CO2 enrichment proposed
CONTACTS Name Company Address
Applicant Lihan Li 3947 Berenice Place
Los Angeles, CA 90031

FBU - CANNABIS
Fire Engineer Building Review

REVIEW ITEM STATUS REVIEWER
Fire Engineering - FBU v.1 Not Cleared Evelyn Ochoa Ph: (323) 890-4108 email: [email protected].

Fire - Fire Building Unit
Correction: 056 - General Electrical Requirements - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Wet locations: Grow rooms will be considered damp/wet locations as they are subject to wash down and are subjected to the high humidity. Indoor wet location wiring methods shall meet the requirements of the CEC Article 300.3(D) when humidity is left uncontrolled >50%.

ACTION REQUIRED : Provide notes on site plan.

Correction: 057 - General Electrical Requirements - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Circuit interrupters: Ground Fault Circuit Interrupters are required for personnel protection in the wet locations.

ACTION REQUIRED : Provide notes on site plan.

Correction: 001 - Review Regulation 30 - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Review Regulation 30 for Cannabis Cultivation /Production Requirements for Businesses. (Attached) Correction: 058 - General Electrical Requirements - Evelyn Ochoa (12/29/21) - Not Resolved Comments: NM cables: NM cable (romex) is not allowed for the use in wet locations (i.e. grow rooms) per the CEC Article 334.10.

ACTION REQUIRED : Provide notes on site plan.

Correction: 059 - Form 30C - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Complete and return the attached "Notice to prospective business statement of intended use" Form 30C.

ACTION REQUIRED : Provide attached form completed.

FBU - Water & Access
Fire Engineer Building Review

REVIEW ITEM STATUS REVIEWER
Fire Engineering - FBU v.1 Not Cleared Evelyn Ochoa Ph: (323) 890-4108 email: [email protected].

Fire - Fire Building Unit
Correction: 020 - Key box - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Where access to or within a structure or an area is restricted because of secured openings or where immediate access is necessary for life-saving or fire-fighting purposes, the fire code official is authorized to require a key box to be installed in an approved location.

The key box shall be of an approved type listed in accordance with UL 1037 shall be provided as required by Fire Code 506. The location of each key box shall be determined by the Fire Inspector.

ACTION REQUIRED: Provide verbatim note on site plan.

Correction: 017 - Building address numbers - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Approved building address numbers, building numbers or approved building identification shall be provided and maintained so as to be plainly visible and legible from the street fronting the property. The numbers shall contrast with their background, be Arabic numerals or alphabet letters, and be a minimum of 4 inches high with a minimum stroke width of 0.5 inch. Fire Code 505.1.

ACTION REQUIRED: Provide verbatim note on site plan.

Correction: 021 - Fire flow form 195 / 196 - Evelyn Ochoa (1/20/22) - Not Resolved Comments: Every application for a building permit shall be accompanied by evidence indicating that the proposed structure is provided with a reliable water supply capable of supplying the required fire flow as required by Fire Code 507.1.1.

ACTION REQUIRED: Complete and return the "Fire Flow Availability" Form 196, with fire flow information provided by the water purveyor from the closest fire hydrant along the lot frontage.

Correction: 023 - Public fire flow requirement __________ - Evelyn Ochoa (1/20/22) - Not Resolved December 06, 2023 Report Text Library: Municipality_Page_Footer Page 1 of 2 451 of 454 ATTACHMENT F Page 563 of 3559
PLAN CORRECTIONS REPORT (FEPC2021-3984)
Comments: The required fire flow for fire hydrants at this location is 1,500 gpm, at 20 psi residual pressure, for a duration of 2 hours over and above maximum daily domestic demand. Fire Code 507.3 and Appendix B105.2.

ACTION REQUIRED: Provide the following calculation on site plan.

The required fire flow is based on the following calculation:

Type of construction per the Building Code: II-B
Fire-flow calculation area: 8,404 sq. ft.

Fire flow based on the fire-flow calculation area: 2,000 gpm Reduction for fire sprinklers (maximum 50%): 500 gpm
Total fire flow required: 1,500 gpm
Correction: 025 - Hydrant spacing requirements - Evelyn Ochoa (1/20/22) - Not Resolved Comments: Spacing of fire hydrants shall not exceed the distances specified in Fire Code C105.2 & C105.4.

ACTION REQUIRED: Show all existing public and private on-site fire hydrants on the site plan. Include the location of all public fire hydrants within 300 feet of the lot frontage on both sides of the street. Specify size of fire hydrant(s) and dimension(s) to property lines. Additional fire hydrant requirements may be necessary after this information is provided.

General Correction
Fire Engineer Building Review

REVIEW ITEM STATUS REVIEWER
Fire Engineering - FBU v.1 Not Cleared Evelyn Ochoa Ph: (323) 890-4108 email: [email protected].

Fire - Fire Building Unit
Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Current code cycle shall be specified, indicate all applicable codes used on site plan including 2019 California Fire Code and 2020 County of Los Angeles Fire Code.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Submitted application states "No CO2 enrichment proposed" however on sheet A1.8 a "Exhaust/CO2 escape" is indicated. Please clarify and revise plans.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: The means of egress illumination level shall be not less than 1 foot-candle at the walking surface level. Building Code 1008.2.1.

ACTION REQUIRED: Provide note on site plan.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: The emergency power system shall provide power for a duration of not less than 90 minutes and shall consist of storage batteries, unit equipment or an on-site generator. The installation of the emergency power system shall be in accordance with Section 2702. Building Code 1008.3.4.

ACTION REQUIRED: Provide note on site plan.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Egress doors shall be readily openable from the egress side without the use of a key or any special knowledge or effort. Building Code 1010.1.9.

ACTION REQUIRED: Provide note on site plan and indicate in door schedule.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Aisles and aisle accessways shall be provided from all occupied portions of the exit access that contain seats, tables, furnishings, displays and similar fixtures or equipment. The minimum width or required capacity of aisles shall be unobstructed. Fire Code 1018.1.

ACTION REQUIRED: Indicate required aisle capacity on the floor/egress plan.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Portable fire extinguishers shall be installed in locations as required by Fire Code 906.

ACTION REQUIRED: Provide note on site plan.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: ACTION REQUIRED: Please indicate if any fertilizers, pesticides, or other hazardous materials will be stored or used in the facility.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Provide a 6-inch high X 4-inch wide clear border space at the lower right-hand side of each sheet for Fire Department stamps.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: A separate answer sheet/s which shall include responses to each plan review requirements shall be submitted with the resubmitted plans.

Correction: Correction - Evelyn Ochoa (12/29/21) - Not Resolved Comments: Additional conditions of approval may be required once revised plans are resubmitted.

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ATTACHMENT BB.

Proof of certified mailing of Notice of
Hearing
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DECISION and ORDER
Administrative Hearing Regarding Compliance by NYCE Guys LLC (Respondent) with Commercial Cannabis Permit (CCP) 18-0017 and Development Agreement (DA) 18-017C Between Respondent and the City of Cudahy (City).

Hearing Date: January 8, 2024.

Hearing Officer: Steve Napolitano, Esq. The Hearing Officer was present for the hearing.

The hearing took place in the City Council Chambers at Cudahy City Hall, 5220 Santa Ana St., Cudahy, CA 90201. The hearing was recorded and a copy is available through the City Clerk’s Office.

Respondent: NYCE Guys LLC, 4907 Cecilia St., Cudahy, CA 90201. Respondent did not appear and was not represented at the hearing.

City was present and represented by:
• Cecilia Madrigal-Gonzalez, Senior Planner
• Paloma McEvoy, Assistance City Attorney
• Glenn Calsada, Special Counsel
• Juan Arauz, Community Development Director
• Joshua Calhoun, Finance Director
• Raul Diaz, Building Official
• Richard Iglesias, City Clerk

DECISION SUMMARY
Based on the evidence and analysis discussed below, this Hearing Officer finds that a preponderance of the evidence shows that Respondent, despite considerable notice and opportunities to cure any issues, has breached the terms and conditions of DA 18-017C and Respondent’s portion of its CCP and recommends that the Planning Commission and/or City Council repeal Ordinance No. 689 and terminate DA 18-017C and revoke Respondent’s interest under CCP 18-0017.

ADMINISTRATIVE HEARING PROCEDURES
All state and local public entities are subject to due process of law. State agencies are subject to statutory requirements, including the Administrative Procedures Act. Local public agencies are, with some minor exceptions, not subject to the APA and generally subject only to the constitutional limitations of due process of law. Govt. Code §11410.30. While a local agency may elect to apply some or all of the provisions of the APA to its hearings, the City has not done so.

The process required by law are those imposed by our constitution(s) as well as any procedures adopted by the City. In Mohilef v. Janovici (1996) 51 Cal.App.4th 267 and E.W.A.P., Inc. v. City of Los Angeles (1997) 56 Cal.App.4th 310, the court explored what due process is necessary in an administrative proceeding. There is general agreement that there must be notice and an opportunity to be heard. Beyond this, “there is no precise manner of hearing which must be afforded; rather the particular interests at issue must be considered in determining what kind of hearing is appropriate. A formal hearing, with full rights of confrontation and cross-examination is not necessarily required. (Saleeby v. State Bar (1985) 39 Cal.3d 547, 565, 216 Cal.Rptr. 367, 702 P.2d 525.) ‘Due process’ is an ATTACHMENT G Page 567 of 3559
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elusive concept. Its exact boundaries are undefinable, and its content varies according to specific factual contexts.” Mohilef at 286. Our Supreme Court has stated, “[D]ue process may require only that the administrative agency comply with the statutory limitations on its authority.” People v. Ramirez (1979) 25 Cal.3d 260, 269
Beyond notice and a hearing, the procedures available in this case to the participants are those provided by Cudahy Municipal Code (CMC) 5.20.080.

The legal standard of review applicable to an administrative hearing is based on a preponderance of the evidence, or “evidence which is of greater weight and more convincing than the evidence which is offered in opposition to it; that is evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary, Fifth Edition.

BACKGROUND
Background information was presented in the City’s Staff Report dated January 8, 2024, with attachments A through X, which were admitted into the record.

On September 11, 2017, the City adopted Ordinance No. 673 (Attachment A) establishing the City of Cudahy's commercial cannabis production activity regulations codified in Chapter 5.20 of the Cudahy Municipal Code (“CMC”). CMC Section 5.20.040 authorizes medicinal commercial cannabis activities within a designated overlay zone, pursuant to a development agreement adopted in accordance with the Development Agreement Law (Govt. Code Section 65864 et seq.) and Chapter 20.28 of the CMC.

On June 25, 2018, the Planning Commission recommended the City Council to approve CCP18-0017 to permit cannabis cultivation, manufacturing and distribution activities at 4907 Cecilia Street (“Site), subject to the approval of a development agreement between the City and the Respondent for cannabis cultivation, manufacturing, and distribution.

On July 17, 2018, the City Council adopted Resolution No. 18-37 (Attachment B) approving the issuance of CCP18-0017 (Attachment C) that imposed conditions of approval upon the permitted cannabis activities with the execution of a development agreement with the City.

On July 17, 2018, the City Council conducted the first reading to adopt Ordinance No. 689 (Attachment D) approving DA18-017C (Attachment E). The second reading was conducted August 7, 2018, approving Ordinance No. 689 inclusive of Exhibits A-F (Attachment F) between Respondent and the City authorizing commercial cannabis cultivation, manufacturing, and distribution activities at Site as illustrated in Figures 1 and 2 in the City’s Staff Report. The site plan and floor plan are incorporated by reference in Section 3.c. of DA18-017C. Recital I of DA18-017C permits the Respondent to utilize approximately 8,404 square feet of space for the permitted cannabis activities, inclusive of a 3,085 sf cultivation area, 1,196 sf for manufacturing activities, and 1,136 sf for distribution activities.

On October 2, 2019, the City provided the Respondent with a Notice of Delinquency (Attachment G) prior to placing the Respondent in default status due to payment non-compliance with the Development Agreement and Commercial Cannabis Permit, inclusive of the payment of Community Benefit Fees, Cost Recovery Fees, and Non-Operating Fees in the amount of ($97,720.74). The Respondent was given no later October 17, 2019, to cure the past due amounts, however, the default was not timely cured.

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On May 4, 2021, the City provided the Respondent with a Notice of Default (Attachment H) due to payment non-compliance with a payment of fees due in the amount of two hundred ninety-one thousand three hundred thirty-three dollars and fifty-four cents ($291,333.54). The Respondent was given no later than thirty (30) days to cure the default, however, the default was not timely cured.

On April 15, 2021, Building Permit No. 8221 was issued by the City’s Building and Safety Division for the installation of a permitter fence (Attachment J).

On September 2, 2021, the City notified the Respondent of their failure to sign the DA (Attachment I).

The DA was not executed by the Respondent until November 7, 2022.

During November 2022, the City’s Building & Safety Division received the plan check submittal for interior tenant improvements as demonstrated in Figure 3 in the City’s Staff Report and Attachment K.

The plans did not conform to the floor plans or site plan approved and incorporated with DA-18- 0017C as shown in Figures 1 and 2 in the City’s Staff Report.

Condition of Approval No. 49 of CCP18-0017 requires the Respondent to obtain a Zoning Clearance prior to commencing construction. A Plumbing Permit (Installation of floor drains, trench drains, and rough plumbing) was issued by the City’s Building and Safety Division on November 29, 2021 (Attachment J). The Respondent submitted building permit plans for interior tenant improvements on December 13, 2022. The Respondent did not obtain a Zoning Clearance prior to submitting the plans nor pay the required plan check fees with the plan check submittal.

Furthermore, the plans submitted by the Respondent to the City’s third-party plan check consultants do not conform to the original Site and Floor plans approved by the City in the Respondent’s CCP and DA as shown on Figure 3 of the City’s Staff Report and Attachment K. The submitted plans were approved by the City’s third party-consultant on December 13, 2022.

On December 6, 2022, the City Manager presented the City Council with a proposed a Cannabis Deferment and Payment Program ("Payment Agreement”) to assist cannabis operators with the accumulated Non-Operating and other fees by deferring and providing additional time for payment without penalty, which was approved by the City Council. On December 7, 2023, the City presented the Payment Agreement to the Respondent (Attachment L). All cannabis operators interested in participating in this program were given no later than January 31, 2023, to execute the Payment Agreement. The City received interest from the Respondent and due to their good faith negotiations the City extended the deadline to execute a Payment Agreement.

Under Section 5 of DA18-017C the City Manager or his/her designee(s) have the right to enter all Site from time to time unannounced for the purpose of making reasonable inspections to observe and enforce compliance with the Development Agreement and state and local laws and regulations without the requirement of a search warrant, subpoena, or court order. On March 8, 2023, City staff conducted an inspection of the Site and red tagged the building. During this inspection several violations of building, electrical, and mechanical codes were observed (Attachment M). The unpermitted construction and improvements consisted of the demolition of existing interior walls, the installation of fire sprinklers, insulated panel walls, interior framing walls with mezzanine, electrical wiring, recessed lighting, and HVAC ducts as detailed in (Attachment N). The City has no record of the Respondent submitting applications for building permits for unpermitted work. The site inspection resulted in a determination that the unpermitted construction and improvements resulted in an unsafe and dangerous structure and further required all building violations to be remedied before people could reenter or occupy the structure, more commonly known as red-tagging.

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On April 10, 2023, the City’s Finance Department presented the Respondent with a Letter Agreement agreeing to a payment plan to forbear outstanding payment due on DA-18-017C (Attachment O). The Respondent also acknowledged and agreed “that the past due amounts stated are true and correct and are in fact presently due and owing. The parties agree that the Respondent is in ‘default status’ on its obligations under its Development Agreement with the City...[and would] remain in ‘default status’ on its Development Agreement until all past due fees set forth in [the] Letter Agreement have been paid and Respondent is in full compliance with all terms of its Development Agreement.” The Letter Agreement also provided that if the Respondent is more than thirty (30) days late on any of the forbearance payments due under the Letter Agreement or fees and costs under the Development Agreement would be deemed a material breach of the Letter Agreement. The Letter Agreement also provided that if the Respondent is more than thirty (30) days late on any of the forbearance payments due under the Letter Agreement or fees and costs under the Development Agreement would be deemed a material breach of the Letter Agreement.” The Letter Agreement states that in the event of an uncured default under the Letter Agreement, the Letter Agreement would terminate without further notice to the Respondent allowing the City to “exercise any and all rights and remedies under the Development Agreement and revocation of the CCP.” The Respondent accepted the proposed terms on April 13, 2023, and agreed to begin payments on May 1, 2023.

The Respondent made payments on April 13, 2023, for February and March 2023 totaling $15,145.80 as agreed upon Letter Agreement. However, the Respondent failed to make the May and June 2023 payments. Between May and June 2023, the City notified the Respondent with two (2) Notices of Delinquency (Attachment P) and provided a 30-day opportunity to cure outstanding payments due.

However, the default on the Letter Agreement was not timely cured and the Letter Agreement therefore was terminated on June 16, 2023, and was no longer in force and effect. Accordingly, the total of all past due amounts at the time the Letter Agreement was terminated and an amount of $619,182.74 was due and owed.

In March 2023, the Site was cited by the City’s Building and Safety Division for unpermitted improvements and the observation of several building, electrical and mechanical code violations resulting in a determination that the structure was unsafe for occupancy (“red tag status”). (Attachments M & N.) On April 25, 2023, the Respondent requested assistance with the remedy of the red tag. The City’s Building and Safety Division provided a permit fee breakdown on May 4, 2023, with an assessed construction valuation of $420,000.00, including investigation fees, plan check fees, and penalty fees for construction without proper permits, totaling $34,013.20 (Attachment Q). This amount was to be paid by the Respondent to obtain all necessary permits and remove the red tag from the building.

The Respondent did not agree with the construction valuation of $420,000.00 assessed by the City’s Building and Safety Division and thus City staff provided an alternative option to retain a third-party appraiser to make an independent building valuation assessment (Attachment Q). The Respondent did not entertain this option and failed to remediate the red tag status. The Respondent has not remedied the red tag since its issuance of citations on March 8, 2023, the structure continues to maintain its red tag status as of the writing of the City’s Staff Report.

On June 23, 2023, the City sent a Final Demand Letter (Attachment R) demanding Respondent to respond to the following demands: 1) Forwarding your payment for the total past due amount; 2) Forwarding your payment of $34,013.20 in order to remove “red tag” from building. 3) Contact City staff for a meeting to revise CCP’s Schedule of Performance and for further information to become compliant with DA and CCP. The total amount past due as of June 1, 2023, was $606,616.42. The Respondent did not respond in a timely manner and has failed to make any attempt to cure the ATTACHMENT G Page 570 of 3559
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defaults. As of the writing of this report, the City has received minimal payment of fees due under DA18-017C since the Development Agreement has been in effect.

On August 9, 2023, the City issued an Escrow Account Letter (Attachment S) requiring all cannabis Respondents to open an escrow account by September 15, 2023, to ensure payment of Cost Recovery Fees consistent with the escrow accounts required to be opened and maintained by all cannabis operators within the City. As of the writing of this report, the Respondent has not opened an escrow account nor made any payments into the account.

On October 10, 2023, City staff conducted an inspection of the Site and entered areas that were not accessible during the March 8, 2023, Site inspection. Further, violations were observed, including the unpermitted installation of non-structural walls in the rear of the facility and an unpermitted welding business in the rear of the property (Vazquez Iron Work). A violation notice was issued by the City’s Code Enforcement Division with the following corrective steps required 1) Contact the Planning Department, 2) Obtain necessary approval and inspection from the Planning Department, 3) Submit Zoning Clearance (Attachment T). As of the writing of this report the violation notice has not been corrected.

On October 17, 2023, the Respondent’s legal counsel submitted correspondence to dispute (1) the legality of the fees assessed and due under DA18-107C and CCP18-0017; and (2) the legality of the Building and Safety Division’s issuance of building citations at the Site. (Attachment U.) The City Council was informed of the demands made by the Respondent in Closed Session and instructed the City Attorney to respond to the Respondent’s legal counsel, which also detailed the reasons why legal counsel’s arguments were not supported by the law. (Attachment U.) On October 24, 2023, the City issued a letter (Attachment V) updating the Respondent on their payment and fees related to the DA by correcting the amount due to an error in the total amount billed.

The City provided a credit in the amount of $14,950.50. As of December 1, 2023, Respondent owes the City six hundred eighty-two thousand three hundred thirty-one dollars and eightyeight cents ($682,331.88). Community Benefit Fees, Cost-Recovery and Non-operating Fees plus penalties continue to accrue and the total amount due may be higher as of the date of the Review Hearing on January 8, 2024.

On November 27, 2023, the City issued to the Respondent a Notice of Review Hearing (Attachment W) with the hearing date, time, and place.

As of December 18, 2023, the website for the California Department of Cannabis Control shows no record of a cannabis license issued to Nyce Guys, LLC. (Attachment X) or see https://search.cannabis.ca.gov/results?searchQuery=nyce%20guys .

PROCEDURAL ISSUES
As noted, Respondent did not participate and was not represented at the hearing. No evidence was submitted by Respondent.

Evidence submitted prior to the hearing by City staff and testimony and statements made at the hearing by City staff are incorporated herein by reference, including the City’s Staff Report dated January 8, 2024, including all attachments previously mentioned.

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The City engaged this Hearing Officer to conduct an impartial, independent review of the evidence in this matter and determine whether Respondent is in compliance with its CCP and DA between itself and the City.

No objections or other procedural issues were raised.

Presenting City Staff members were sworn in prior to giving testimony.

EVIDENCE
Cecilia Madrigal-Gonzalez, Senior Planner, provided an overview of the City’s Staff Report. Ms.

Madrigal-Gonzalez asked the Hearing Officer to make the recommended findings to repeal and revoke Respondent’s portion of the CCP and their DA in its entirety based on the City’s Staff Report and the testimony by City staff at the hearing.

Joshua Calhoun, Finance Director, testified as to the accuracy of amounts owed by Respondent and that Respondent had failed to make their required payments.

Ms. Madrigal-Gonzalez stated that Respondent had failed to provide proof of being licensed by the state for cannabis manufacturing as required by the DA.

Raul Diaz, Building Official, testified that no permits were issued for any site improvements and no certificate of occupancy had been issued to Respondent. Ms. Madrigal-Gonazalez also confirmed that no zoning clearances were issued.

Richard Iglesias, City Clerk, testified that all documents were true and correct copies and all mailing procedures under the CMC were followed.

ANALYSIS
Pursuant to the CMC Section 5.20.080(6)(a), “[a]ny material violations of this chapter or any other relevant city law by a cannabis permittee, or cannabis permittee’s agent, is grounds for suspending or revoking the relevant cannabis permit.” To suspend or revoke a cannabis permit the City Manager must determine “that the cannabis permittee has failed to comply with any conditions of approval, or any agreement or covenant.”
Under Section 19 of the Development Agreement, if the “City finds and determines based on substantial evidence that, Owner or Landlord executing [the] Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of the Agreement, City may terminate or modify [the] Agreement (except that no modification shall increase Owner’s liability nor reduce Owner’s rights).”
The City asserts that Respondent has made several material violations of the CCP and/or DA as outlined in the City’s Staff Report and testimony, which will be discussed as follows.

1. Breach of Payment Obligations
Pursuant to the DA Section 5.b (Community Benefit Fees), Section 7.c (Operating Fees) and Section 8 (Cost Recovery Fees), the Respondent must pay the City an annual Community Benefit Fee in the amount of $66,667.00 ($13,333.40 down payment and monthly payments in the amount of $5,333.36), ATTACHMENT G Page 572 of 3559
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a Cost Recovery Fee, and an Operating [or Non-Operating] Fee each year since 2018. The Respondent is also obligated to make each year since 2018. The Respondent is also obligated to make payments for these fees under Condition of Approval No. 45; the obligation for Non-Operating Fees is also repeated in Condition of Approval No. 8 for cultivation activities, Condition of Approval No. 13 for manufacturing activities, and Condition of Approval No. 37 for distribution activities. The Respondent has made minimal required timely payments and as of December 1, 2023, is past due in the amount of $669,028.41 as shown in Table 1 of the City’s Staff Report. Past-due payments continue to accumulate, including late payment penalties. The Respondent must pay all required DA fees in accordance with DA terms. Failure to pay fees constitutes a breach of the DA and may result in suspension or immediate revocation of the DA.

The evidence shows that on August 7, 2018, Respondent executed Development Agreement No. 18- 017C, which is a legally binding contract between Respondent and the City of Cudahy pursuant to DA Section 5.b [Community Benefit Fees], Section 7.c [Operating Fees] Section 8 [Cost Recovery Fees] discussed above. In addition, in accordance with Section 7.c(1), late payment of Non-Operating Fees are subject to penalties that begin to accrue once a payment is more than thirty (30) days late. On December 6, 2022, (Attachment L), the City offered a Payment Agreement to the Respondent which was ultimately accepted through the execution of a Letter Agreement on April 13, 2023 with the first payment due on May 1, 2023. The Respondent did not make their required payments in May, June, or July of 2023. Despite the City’s notices and attempts to get the Respondent into compliance, the Respondent did not cure the delinquency and as a result, the payment plan was null and voided on June 16, 2023. (See, 10-day Notice of Intention to Terminate Letter Agreement (Attachment P).) Proper notice of default was given with the opportunity to cure, but the Respondent has failed to fulfill its monetary obligations owed to the City. (See, Final Demand Letter with Notice of Default and 30- day Opportunity to Cure (Attachment R).)
The City Staff Report theorizes several potential defenses that Respondent may assert and discusses how each defense would fail. The Hearing Officer agrees but finds no need for further analysis as Respondent has made no such arguments itself, as Respondent failed to provide any evidence contrary to that presented by the City. Respondent knew and accepted the terms of the DA, including all payment provisions, willingly and voluntarily. In fact, Respondent explicitly acknowledged and agreed that the past due amounts owed to the City were true and correct and that Respondent was in default status when Respondent accepted the proposed terms of the City’s Letter Agreement on April 13, 2023 and made some, but not all required payments thereafter. Respondent’s failure to make the payments as required resulted in the termination of the Letter Agreement, making all past payments due, including all future accumulating unpaid payments.

Based on the evidence provided by the City above, and the failure of Respondent to provide any evidence to the contrary, a preponderance of the evidence shows that Respondent has materially breached the terms of DA No. 18-017C by failing to make all required payments to the City as required.

Similarly, the Respondent has failed to comply with Conditions of Approval No. 1(a) and (b) of the CCP, which required the Respondent to pay all City-issued invoices within 30 days of receipt thereof.

The City approved DA18-017C subject to Conditions of Approval, which are incorporated as part of Development Agreement No. 18-017C. Condition of Approval 1(b) provides that the Respondent is required to pay all City-issued invoices within thirty (30) days of receipt thereof. The City has sent the Respondent regular monthly invoices since 2019 (Attachment Y). The current outstanding fees owed by the Respondent have been owed to the City for longer than thirty (30) days. Despite demand and after proper notice of default and the opportunity to cure the Respondent has failed to cure its monetary ATTACHMENT G Page 573 of 3559
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obligations owed to the City in the time required. Respondent’s consistent and continued failure to make its payments to the City when required by the CCP also constitutes a material breach and violation of the CCP.

Additionally, Pursuant to Condition of Approval Nos. 45, 8, 13, and 37 the Respondent, LLC’s failure to pay Non-Operating Fees due under the Development Agreement and all fees due under the Development Agreement, respectively, constitutes a cross-breach of Development Agreement No. 18- 017C and is grounds for revocation of the Respondent’s interest in the CCP for the Site.

Similarly, under the Letter Agreement, “[t]he failure to pay the past due delinquency as required by the notice shall be deemed an uncured event of default and a basis for termination of the Development Agreement. Nothing in this provision abrogates any other remedies available to the City under the Development Agreement for an event of default.” As stated above, the Letter Agreement contained language in which the Respondent, Respondent “acknowledge[d] and agree[d] that past due amounts stated are true and correct and are in fact presently due and owing.” As such, the Respondent’s nonpayment of fees due under the Letter Agreement are grounds for termination of DA18-017 as well.

Again, based on substantial and unrefuted evidence presented by the City above, a preponderance of the evidence shows that Respondent breached multiple conditions of their DA and CCP. Despite multiple attempts and notices by the City to gain compliance, the evidence shows that Respondent failed to comply with their payment obligations, which constitutes the necessary grounds for termination of the DA and revocation of the CCP under CMC 5.20.080(6)(a).

2. Breach of Conditions of Approval No. 49 (Zoning Clearance) and No. 51 (Time Limits) under CCP19-0017
Condition of Approval No. 51.A.i sets a 90-day time limit from the effective date of the CCP for the Permittee to obtain a Zoning Clearance. CCP18-0017 Condition of Approval No. 51A.ii sets a 90-day time limit from the effective date of the CCP for the Permittee to complete construction of Phase I. The Respondent had until November 5, 2018, to satisfy these requirements. CCP18-0017 Condition No. 51A.iii sets a 180-day time limit from the effective date of the CCP for the Permittee to complete all Tenant Improvements and construction and to obtain a Certificate of Occupancy from the City Building Department, or until February 3, 2019.

Further, Condition of Approval No. 49 requires the Respondent to obtain a Zoning Clearance from the Planning Division prior to any construction.

Condition of Approval No. 51.A. states the approval decision for this CCP becomes effective upon the expiration of the 15-day appeal period following the approval decision, or when any appeals of the decision are finally resolved. The CCP effective date for the Development Agreement was August 7, 2018. No appeal was ever filed and thus as previously stated, the Respondent had until November 5, 2018 and February 3, 2019 to satisfy the foregoing requirements. The City Manager may grant an extension of time if the Permittee has made a diligent effort to implement the Project.

Here, the Respondent has not provided the City with any evidence it has obtained a Zoning Clearance, completed construction of Phase I, completed all Tenants Improvements, or obtained a Certificate of Occupancy for the Site within the time limits set forth in Condition of Approval No. 51. Without an extension, the deadlines expired in late 2018 and early 2019. The City has no record of any request by the Respondent to the City Manager for an extension of time, nor is there evidence the Respondent has made diligent efforts to comply, such as submitting for a zoning clearance nor applying for building ATTACHMENT G Page 574 of 3559
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permits. Despite the Respondent submitting for building plan check the Respondent remains in breach of its conditions of approval by failing to implement the Project within the time limits set forth in the Conditions for Approval No. 51.

The Respondent has not obtained a Zoning Clearance pursuant to Chapter 20.84 of the CMC, nor has the Respondent applied for a building permit to complete tenant improvements or otherwise obtained a certificate of occupancy. Therefore, the Respondent breached its Conditions of Approval under CCP18- 0017 by failing to implement the project within the time frames set forth in Condition of Approval No. 51.

3. Breach of Conditions of Approval No. 49 (Construction Activities) under CCP 18- 0017
CCP Condition No. 49 states that prior to any construction, the Respondent shall obtain a Zoning Clearance for construction from the Planning Division and a Building Permit from the Building and Safety Division.

The evidence shows that the City has no record of any requisite approvals or permits obtained by the Respondent for the Unpermitted Work. Additionally, the City contacted the Los Angeles Fire Department, Special Occupancy Inspection Unit and no building permits record were found for the fire sprinklers (Attachment AA). In accordance with the DA, the Owner shall not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval.

The Respondent failed to obtain any requisite approvals and permits from the City Planning Division, Building & Safety Division, and the County Fire Department, prior to the demolition of existing interior walls, the installation of fire sprinklers, insulated panel walls, interior framing walls with mezzanine, electrical wiring, recessed lighting, and HVAC ducts (“Unpermitted Work”). Therefore, the Respondent breached its conditions of approval for CCP18- 0017.

4. Noncompliance with State Law
Recital I of the DA states the Owner has applied for three (3) licenses: 1) Cultivation; 2) Manufacturing; and 3) Distribution. Section 21 of the DA states that the facility shall not operate unless the Owner is the holder of a State-issued Cannabis license for the type of commercial cannabis facility or business operation that is the subject of the DA.

A license search by the City of the California Department of Cannabis Control website using the search term “NYCE Guys” shows that the Respondent has not obtained a state issued cannabis license. See https://search.cannabis.ca.gov/results?searchQuery=nyce%20guys and Attachment X.

Based on a preponderance of the evidence presented by the City as noted above, Respondent has failed to maintain all its necessary licenses to operate under the DA, which constitutes a breach of Article 21 of the DA.

ATTACHMENT G Page 575 of 3559
Napolitano Law + Counsel
Law | Arbitration | Mediation | Adjudication

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5. Breach of Conditions of Approval No. 48 (Commercial Cannabis Permit Modification) under CCP 18-0017
CCP18-0017 Condition of Approval No. 48 states prior to undertaking any operational or constructionrelated activity which is not expressly described in the CCP conditions, the Respondent shall first contact the City Manager, or his designee, to determine if the proposed activity requires a modification of the CCP. The City Manager may, at his sole discretion, require the Respondent to file a written and/or mapped description of the proposed activity in order to determine if a permit modification is required.

The evidence shows that on November 18, 2021, the Respondent submitted building permit plans for interior tenant improvements at the Site to the City’s Plan Check Consultants without first obtaining a zoning clearance from the Planning Division and required fees. Furthermore, the plans submitted by the Respondent to the City’s Plan Check Consultants do not conform to the original Site and Floor plans approved by the City in the Respondent’s CCP and DA. The Respondent never filed a written or mapped description of the design changes made to the facility plans nor made the City Manager aware that such changes would be made. The City Manager has not approved any changes to the facility that do not conform to the original Site and Floor plans approved by the City in the Respondent’s CCP and DA. Therefore, the Respondent breached its conditions of approval for CCP18- 0017 by failing to receive City Manager approval for the design changes made to the facility set forth in Condition of Approval No. 48.

DECISION AND ORDER
Based on the evidence and analysis discussed above, this Hearing Officer finds that a preponderance of the evidence shows that Respondent, despite considerable notice and opportunities to cure any issues, has breached the terms and conditions of DA 18-017C and recommends that the Planning Commission and/or City Council repeal Ordinance No. 689 and terminate DA 18-017C and revoke respondent’s interest under CCP 18-0017.

This decision does not affect the payments and penalties outlined in the City’s Staff Report, which are still accumulating, owed and due to City from Respondent.

Submitted February 12, 2024 by Steve Napolitano, Esq., Administrative Hearing Officer.

Steve Napolitano, Esq.

Napolitano Law & Counsel
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Page | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Jose R. Gonzalez
Vice Mayor
Elizabeth Alcantar
Councilmember
Martin U. Fuentes
Councilmember
Cynthia Gonzalez, Ed. D
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
June 13, 2024
Via U.S. Mail and Email
NYCE Guys, LLC
Attn: Rolla Ramsi, Manager
4907 Cecilia Street
Cudahy, CA 90201
Re: DA 18-017C
Dear Owner/Operator:

Below is a summary of past and current amounts due under Development Agreement DA 18-017C for Ordinance No 689, with an Effective date of August 7, 2018.

Fee Type Payment
Amount
Payment Period City
Code
Community Benefit Program $276,001.48
$80,000.00
Outstanding balance as of March 31,
2023.

April 2023 to June 2024 Monthly Fees
($5,333.36 per month) CBP
Cost Recovery Fee $96,094.91
$24,446.73
($14,950.50)
$7,121.12
Outstanding balance as of March 31,
2023.

City Labor from April 2023 to May
2024.

Reimbursement Expense Credit
applied on October 24, 2023.

Escrow Deposit Beginning Charge
URBF1
Non-Operating Fee $183,543.36
$52,945.20
$69,887.66
Outstanding balance as of March 31,
2023.

April 2023 –June 2024
The monthly non-operating fee is
$3,529.68 (8,404.00 square footage of
the premises x .42).

Penalties Aug 2022 – June 2024
OPFEE
Total Fees
Escrow Deposit Beginning Charge
$767,969.24
$7,121.12
Due July 1, 2024
ATTACHMENT I Page 578 of 3559
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Community Benefit Program
The Community Benefit Program (CBP) payment amount is due the first day of each month and is considered late if payment is received on or after the fifth day of the month. All CBP outstanding balance as of March 31, 2023, and current CBP monthly installments from April 2023 to June 2024 totaling $356,001.88 are due July 1, 2024.

Cost Recovery Fee
The outstanding Cost Recovery Fee as of March 31, 2023, the City labor, and third-party contractors from April 2023 to May 2024 totaling $105,591.14 are due July 1, 2024.

Non-Operating Fees
The outstanding balance as of March 31, 2023, and the current monthly non-operating fees from April 2023 to June 2024 totaling $236,488.56 are due July 1, 2024.

Late Payment Penalties
Penalties totaling $69,887.66 from August 2022 to June 2024 are due July 1, 2024. Per the Development Agreement, amounts that are more than 30 days late after the due date shall result in a penalty equal to the sum of 25% of the non-operating/operating fees. In addition, a 10% shall be added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in partup to a maximum of 100% of the fee payable. The City will be enforcing these penalties for amounts due from July 2022 to present, as appliable. No penalties will be imposed on amounts outstanding prior to this date. This will be separately listed on current and future invoice letters provided by the City. Should you wish to avoid penalties, ensure that either amounts payable are paid timely or contact the City to discuss entering into a payment plan on prior amounts outstanding.

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Page | 3
Please pay no later than July 1, 2024, to avoid any penalties. If you have any questions relating to these items, please contact Joshua Calhoun at [email protected].

Sincerely,
Joshua Calhoun, CPA
Finance Director

See supporting detail attached of monthly billings and payments as of June 4, 2024, along with escrow deposit beginning balance worksheet.

ATTACHMENT I Page 580 of 3559
CBP URBF1 OPFEE OPFEE
Operator Comm Benefit Cost Recovery Non Operating Fees Penalties Outstanding NYCE Guys, LLC
Balance as of March 31, 2023 276,001.48 96,094.91 183,543.36 555,639.75 Penalties from Aug 2022-Mar 2023 16,942.46 16,942.46

BILLINGS
Apr 2023 5,333.36 2,066.85 3,529.68 3,529.68 14,459.57
May 2023 5,333.36 1,848.55 3,529.68 3,529.68 14,241.27
Jun 2023 5,333.36 3,703.28 3,529.68 3,529.68 16,096.00
Jul 2023 5,333.36 428.13 3,529.68 3,529.68 12,820.85
Aug 2023 5,333.36 2,374.86 3,529.68 3,529.68 14,767.58
Sep 2023 5,333.36 1,313.77 3,529.68 3,529.68 13,706.49
Oct 2023 5,333.36 519.50 3,529.68 3,529.68 12,912.22
Nov 2023 5,333.36 910.75 3,529.68 3,529.68 13,303.47
Dec 2023 5,333.36 3,818.83 3,529.68 3,529.68 16,211.55
Jan 2024 5,333.36 2,206.90 3,529.68 3,529.68 14,599.62
Feb 2024 5,333.36 1,180.32 3,529.68 3,529.68 13,573.04
Mar 2024 5,333.36 926.00 3,529.68 3,529.68 13,318.72
Apr 2024 5,333.36 1,189.41 3,529.68 3,529.68 13,582.13
May 2024 5,333.36 1,959.58 3,529.68 3,529.68 14,352.30
Jun 2024 5,333.36 pending 3,529.68 3,529.68 12,392.72

PAYMENTS
Apr 2023
May 2023
Jun 2023
Jul 2023
Aug 2023
Sep 2023
Oct 2023
Nov 2023
Dec 2023
Jan 2024
Feb 2024
Apr 2024
May 2024
Jun 2024
Expense Reimbursement - 10/2023 (14,950.50) (14,950.50) Balance as of June 4, 2024 356,001.88 105,591.14 236,488.56 69,887.66 767,969.24 ATTACHMENT I Page 581 of 3559
Operator
NYCE Guys, LLC
As of September 15, 2023 $ 7,121.12
Sep-23 $ 7,121.12
Oct-23
Nov-23
Dec-23
Jan-24
Feb-24
Mar-24
Apr-24
May-24
Jun-24
Total as of June 4, 2024 $ 7,121.12
Billings Deposits to
Escrow Account
Cost Recovery
Monthly Fees
Escrow Ending
Balance
Escrow Beginning
Balance
ATTACHMENT I Page 582 of 3559
Public Hearing - Repeal Ordinance and DA - Page 1 of 2
Long Beach Press-Telegram
5150 E. Pacific Coast Highway Suite 200
Long Beach, California 90804
(562) 499-1236
City of Cudahy
5220 Santa Ana Street
Cudahy, California 90201
FILE NO. 0011678076

PROOF OF PUBLICATION
(2015.5 C.C.P.)

STATE OF CALIFORNIA
County of Los Angeles
I am a citizen of the United States and
a resident of the County aforesaid; I
am over the age of eighteen years, and
not party to or interested in the aboveentitled matter. I am the principal clerk of the printer of Long Beach PressTelegram, a newspaper of general circulation, printed and published in the
City of Long Beach*, County of Los
Angeles, and which newspaper has
been adjudged a newspaper of general
circulation by the Superior Court of the
County of Los Angeles, State of
California, under the date of March 21,
1934, Case Number 370512. The
notice, of which the annexed is a
printed copy, has been published in
each regular and entire issue of said
newspaper and not in any supplement
thereof on the following dates, to wit:
06/28/2024
I certify (or declare) under the penalty
of perjury that the foregoing is true and
correct.

Executed at Long Beach, California,
this 28th day of June, 2024.
______________________________
Signature
*Long Beach Press-Telegram, a newspaper of general circulation, is delivered to and available in but not limited to the following cities: Long Beach, Lakewood, Bellflower, Cerritos, Downey, Norwalk, Artesia, Paramount, Wilmington, Compton, South Gate, Los Alamitos, Seal Beach, Cypress, La Palma, Lynwood, San Pedro, Hawaiian Gardens, and Signal Hill.

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“Serving The People” "Sirviendo A La Comunidad"
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07/16/2024 Page 1 of 17

STAFF REPORT
Date: July 16, 2024
To: Honorable Mayor and Council Members
From: Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Prepared by: Jessica Guillen, Assistant Planner
Reviewed by: Cecilia Madrigal-Gonzalez, Senior Planner and Paloma McEvoy, Assistant City Attorney
Subject: Introduction and Adoption by First Reading of Ordinance No. 751 Repealing Ordinance No. 698, Terminating Development Agreement No. 18-001C between the City of Cudahy and VM Evergreen, LLC.

RECOMMENDATION
City staff recommends that the City Council take the following action(s):

1. Open the public hearing and receive public comment and testimony; and

2. Make a determination that VM Evergreen, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-001C with the City and find that the Operator is in default of contractual obligations set forth in the DA; and

3. Introduce and adopt by first reading Ordinance No. 751 (Attachment A) repealing Ordinance No. 698 terminating DA No. 18-001C, between the City of Cudahy and VM Evergreen, LLC; and

4. Schedule the second reading of Ordinance No. 751 at the next regularly scheduled meeting on August 20, 2024; and

5. Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

Item Number
13B

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SUMMARY
Pursuant to the terms and conditions of DA No. 18-001C and Commercial Cannabis Permit (“CCP”) No. 18-0001, it is the City’s purpose and intent to regulate cannabis activities within the City in a responsible manner to protect the health, safety, and welfare of the residents of Cudahy and to enforce rules and regulations consistent with California’s cannabis laws. Cannabis operators with development agreements are obligated to comply with all provisions of the Cudahy Municipal Code (“CMC”), obligations of the DA, and conditions of approval under the CCP, and applicable state and local laws and related regulations. This report provides a summary of the unrefuted evidence offered at an administrative review hearing; a decision by a thirdparty hearing officer (“Hearing Officer”) finding the Operator in default of the DA and out of compliance with the CCP; the public hearing by the Planning Commission determining that the Operator has failed to comply with the terms and conditions of its DA, despite being provided with ample notice and several opportunities to achieve compliance, thereby recommending to the City Council that it repeal Ordinance No. 698 and terminate DA No. 18-001C through the adoption of Planning Commission Resolution No. 2024-12 (Attachment M). Therefore, City staff recommends the City Council adopt Ordinance No. 751 repealing Ordinance No. 698 terminating DA No. 18-001C.

BACKGROUND

1. On September 11, 2017, the City adopted Ordinance No. 673 (Attachment B) establishing the City’s commercial cannabis production activity regulations codified in Chapter 5.20 of the Cudahy Municipal Code (“CMC”). CMC Section 5.20.040 authorizes medicinal commercial cannabis activities within a designated overlay zone, pursuant to a development agreement adopted in accordance with the Development Agreement Law (Govt. Code Section 65864 et seq.) and Chapter 20.28 of the CMC.

2. On November 19, 2018, the Planning Commission conducted a properly noticed public hearing to consider a commercial cannabis permit application for cannabis cultivation, manufacturing, distribution, delivery and non-cannabis café activities proposed at 8222 Atlantic Ave (“Subject Site”) shown in Figure 1, below. On a 2-1 vote, the Planning Commission continued the item to a date uncertain.

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Figure 1 – Aerial of the Subject Site

3. On November 23, 2018, the City received a formal written correspondence (Attachment E, p. 291) in the nature of an appeal from the Operator requesting that the City Council hold an immediate hearing on their applications for a CCP and a DA. The Operator cited that the Planning Commission’s failure to timely act on their applications was for no legitimate land-use reason and its continuation of a decision on the matter to an unspecified future hearing date is an unjustified delay in the processing of the CCP and DA resulting in substantial injury and significant competitive disadvantage. Furthermore, in such circumstances, the Planning Commission’s indecision and/or purposeful delay resulted in a de facto denial of the applications for the commercial cannabis permit and development agreement without expressed findings of facts as required by law.

4. On December 4, 2018, the City Council adopted Resolution No. 18-55 to hear an application for a development agreement by Operator. The Minutes are provided in Attachment K. Further, the City Council directed the Planning Commission to make a final decision and recommendation to the City Council regarding the CCP no later than December 17, 2018.

5. On December 4, 2018, the City Council conducted the first reading to adopt Ordinance No. 698 approving DA No. 18-001C (Attachment E, pp. 57-101) inclusive of Exhibits A-F (Attachment E, pp. 103-152) between Operator and the City authorizing commercial cultivation, manufacturing, distribution, delivery activities and non-cannabis cafe at the Subject Site as illustrated in Figures 2 and 3, below. The CCP and the DA require the Operator to make timely payments for Community Benefit Fees; Cost Recovery Fees; and Non-Operating Fees.1
1 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably.

Site
8222 Atlantic Ave

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Figure 2 – Floor Plan(s)

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Figure 3 – Site Plan

6. On December 17, 2018, the Planning Commission approved CCP No. 18-0001 (Attachment L).

7. On December 18, 2018, the City Council conducted the second reading of Ordinance No. 698 (Attachment L), which was approved on a 3-0-1 vote. Ordinance No. 698 (Attachment C) approved both the DA and CCP. The effective date of Ordinance No. 698 was January 17, 2019.

8. On October 2, 2019, the City provided the Operator with a Notice of Delinquency (Attachment E, p. 154) due to failure to pay the various fees due under CCP No. 18-0001 and DA No. 18-001C, prior to placing the Operator in default status due to payment noncompliance with the DA, inclusive of the non-payment of Community Benefit Fees, Cost Recovery Fees, and Non-Operating Fees in the amount of $41,609.03. The Operator was given no later than October 17, 2019, to cure the amount, however the delinquency was not timely cured.

9. On June 23, 2021, the City received a request from the Operator to update the floor plans as described in Attachment E, pp. 156-160. The City has no record of approval or denial of this request nor has the Operator provided any proof of approval or denial.

10. Under Article 5(d) of the DA, the City Manager, his/her designee(s), and Sheriff’s Department designee have the right to enter the Subject Site from time to time unannounced for the purpose of making reasonable inspections to observe and enforce compliance with the Development Agreement and state and local laws and regulations without the requirement of a search warrant, subpoena, or court order (Attachment E, p. 73).

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On September 29, 2022, City staff had a scheduled site inspection at the Subject Site, however, City staff were refused entry by the Operator. Raul Diaz, Building Official, testified at the Review Hearing confirming that he was denied access on September 29, 2022, after giving Operator adequate notice. On October 10, 2022, City staff conducted a follow-up inspection of the Site and found several violations. All improvements and construction done at the Subject Site were determined to be unpermitted; structurally insulated panel rooms were constructed without proper approvals and building permits; the cannabis extraction room was installed without permit and without LA County Fire Department approval; the fire suppression systems were installed without the proper plan checks and approvals from LA County Fire Department; and all mechanical, electrical and plumbing work were conducted without permits (Attachment E, pp. 162-166) which resulted in a determination that the unpermitted construction and improvements resulted in an unsafe and dangerous structure and further required all building violations to be remedied before people could re-enter or occupy the structure, more commonly known as “red-tagging.”

11. On October 24, 2022, a meeting was scheduled with the Operator, their legal counsel, City staff, and the City’s legal counsel to discuss the Operator’s default status next steps to get back into compliance. City staff and the City’s legal counsel verbally provided the Operator with the first necessary steps to bring their operation back on track to achieve compliance which included an updated project description and site plan.

12. On November 7, 2022, the City received an updated project description and site plan for City staff to review. City staff, including the Building & Safety and Planning Divisions, reviewed the plans and provided comments resulting in a denial on November 21, 2022 (Attachment E, pp. 168-186), because the submitted plans proposed to maintain previously unpermitted work and alterations without seeking the proper modifications of the development agreement, building permits and approvals to ensure that work is carried out in accordance with building code requirements.

13. On November 30, 2022, City staff reached out to the Operator for a status update on the project description and site plan and instructed the Operator to contact the Building & Safety Division for further permit application requirements (Attachment E, pp. 168-186).

The Operator did not show substantial progress on remediating their building red-tag status. In fact, the City did not hear back from the Operator until February 2023 as noted below.

14. Pursuant to City Council direction, on December 7, 2022, the City Manager offered a Deferment and Payment Program (Attachment E, pp. 188-189) to assist cannabis operators with accumulated Community Benefits, Cost Recovery and Non-Operating Fees by deferring and providing additional time for payment without penalty. Under the program:
a. Unpaid Non-Operating Fees would be deferred (without penalty) until six (6) months after the Operator was issued a Certificate of Occupancy, and then repay already

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accumulated Non-Operating Fees within twelve (12) months; and b. Operators would continue to be responsible for the timely payment of Community Benefit Fees and Cost Recovery Fees, as they accumulated; and c. Previously incurred Community Benefit Fees and Cost Recovery Fees would be subject to a payment plan and require timely payments.

All cannabis operators that were interested in participating in the program were given no later than January 31, 2023, to execute an agreement to participate in the Deferment and Payment Program. The City did not receive a request from the Operator to participate in the Payment Agreement.

15. On February 17, 2023, the Operator reached out to the City requesting the removal of the red-tag status at the Subject Site and a request to modify the DA (Attachment E, pp. 168- 186).

16. On February 22, 2023, the City issued a Final Demand Letter (Attachment D) summarizing the previous discussions between City staff and the Operator, reminding the Operator of its default status under DA No. 18-001C, and provided the Operator with thirty (30) days to cure outstanding violations.

17. On or about March 2, 2023, the Operator requested to enter into a Payment Agreement (Attachment E, p. 251).

18. On March 6, 2023, the Operator provided an updated site plan for City staff to review (Attachment E, pp. 168-186). The site plan provided was identical to the one previously provided to the City on November 7, 2022, and thus the City’s prior comments for unpermitted improvements were still applicable. Additionally, the submitted plans, which only included a site plan, were not adequate because they did not include information on framing, electrical, and mechanical plans which were called out as violations that needed to be corrected in the Operator’s citation (Attachment E, pp. 162-166). The Operator was instructed to reach out to the Building & Safety Division for further assistance. In fact, the Operator was not able to adequately address all deliverables outlined in the Final Demand Letter (Attachment E, pp. 198-196).

19. Based on the Operators request to enter into a Payment Agreement received on or about March 2, 2023, the City’s Finance Department presented the Operator with a draft payment plan (Attachment E, pp. 198-200 and 1010-1016) on or about March 21, 2023, offering the following terms:
• Deferral of Payment of Non-Operating Fees until six (6) months after a Temporary Certificate of Occupancy and then twelve (12) months to repay the amounts due; and
• Repayment of past due Community Benefits Fees and Cost Recovery Fees over a twelve (12) month period; and
• Payment of fees due for February 2023 at the time of executing a payment plan with

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the City.

The Operator rejected the proposed terms and instead countered the offer (“Counter Offer”) (Attachment E, p. 202), claiming the Operator had suffered “huge financial losses” and “multiple break-ins when hundreds of thousands of dollars' worth of equipment was stolen.” The City obtained reports made to law enforcement which reflected several thousand dollars’ worth of losses, but not in the hundreds of thousands as alleged by the Operator (Attachment E, pp. 1033-1047).

20. On March 22, 2023, the City rejected the Operator’s Counter Offer (Attachment E, pp. 204-211).

21. On April 12, 2023, the Operator requested to meet with City staff to discuss the Operator’s payment plans, financial situation and the appropriate steps moving forward.

The City’s legal counsel met with the Operator’s legal counsel on May 3, 2023.

22. On May 8, 2023, the Operator submitted a revised request for a payment agreement for the past due fees under DA No. 18-001C (Attachment E, p. 213) to the City.

23. On May 12, 2023, the Operator and the City entered into a Letter Agreement on Payment of Outstanding Fees and Costs (“Letter Agreement”) (Attachment E, pp. 215-222). The Letter Agreement’s terms required the Operator to maintain current on Community Benefit and Cost Recovery payments but deferred the payment of Non-Operating Fees until six (6) months after the Operator received a Temporary Certificate of Occupancy for the Subject Site. By signing the Letter Agreement, the Operator also acknowledged and agreed “that the past due amounts stated are true and correct and are in fact presently due and owing. The parties agree that the Operator is in ‘default status’ on its obligations under its Development Agreement with the City...[and would] remain in ‘default status’ on its Development Agreement until all past due fees set forth in [the] Letter Agreement have been paid and Operator is in full compliance with all terms of its Development Agreement” (Attachment E, p. 218). Pursuant to the terms of the Letter Agreement, the Operator agrees to maintain current payment for Community Benefit Fees and Cost Recovery Fees as they become due under the Development Agreement and to commence a 12-month payment schedule for past due Community Benefit Fees and Cost Recovery Fees beginning May 1, 2023. As stated above, all past due and accruing Non-Operating Fees were deferred until six months after the Operator was first issued a Temporary Certificate of Occupancy. The Letter Agreement also provided that if the Operator is more than thirty (30) days late on any of the forbearance payments due under the Letter Agreement, or fees and costs under the Development Agreement, would be deemed a material breach of the Letter Agreement. The Letter Agreement provided that in the event of a material breach under the Letter Agreement, the Letter Agreement would be deemed “null and void, and the City shall be entitled to full payments and sums due and owing to the City at the time of the breach.”

24. From June 2023 through October 2023, the City notified the Operator with invoices as

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well as two (2) notices of delinquency (Attachment E, pp. 224-246) and provided an opportunity to cure outstanding payments due. However, the breach on the Letter Agreement was not cured and therefore was terminated and no longer in full force.

Accordingly, the total of all past due amounts at the time the Letter Agreement was terminated was due and owed.

25. On August 9, 2023, the City issued an Escrow Account Letter (Attachment E, pp. 248-249) requiring all cannabis operators to open an escrow account by September 15, 2023, to ensure payment of Cost Recovery Fees. As of the writing of this report, the Operator has not opened an escrow account nor made any payments into the account.

26. On September 6, 2023, the Operator sent a request for a payment schedule to make payments on past due balances and accruing balances until after the Operator became operational (Attachment E, p. 251). The request also sought a waiver of Non-Operating Fees for a two-year period, in which the Operator alleged the City was closed for business.

27. On October 17, 2023, the City Council, at a regularly scheduled council meeting, considered the request from the Operator for a forgiveness of fees and repayment plan request citing financial hardship. City Staff recommended denial of the repayment plan based on the Operator’s: (1) “red-tag” status at the site due to noncompliant and unpermitted work; (2) failure to open an escrow account for cost recovery fees; and (3) repeated failure to pay the fees due pursuant to the DA executed between the City Council and Operator and previous payment plan arrangements made between the City and Operator. After public comment and deliberation by the City Council, the City Council tabled further discussion of the item, requesting more information regarding amounts paid to the City: (1) from the execution of the Development Agreement until the start of the COVID-19 pandemic (April 2018-March 2020); (2) during the COVID-19 pandemic (April 2020-June 2021); (3) from the end of the COVID-19 pandemic and the burglary that was reported by the Operator (July 2021-January 2023); (4) from the time of the burglary to present (February 2023-November 2023); and (5) the terms of the repayment and the exact amount Operator is seeking the City to waive. The City Council agenda and staff report from the October 17, 2023, meeting is provided in Attachment E, pp. 252-263.

28. On October 24, 2023, the City issued a letter (Attachment E, pp. 264-266) updating the Operator on their payment and fees related to the DA by correcting the amount due to an error in the total amount billed. The City provided a credit in the amount of $14,950.50.

29. On November 7, 2023, at a regularly scheduled meeting, City staff presented the requested information, including the Operator’s history of payments since it was granted approvals in 2018 (Attachment E, pp. 267-279) in which the Operator made a total of 13 payments out of the 55 payments that were due up until November 2023, and as demonstrated in Table 1, below (See also Attachment E, p. 287). The Operator failed to provide further information regarding the amount the Operator requested to waive or any other documentation regarding the Operator’s payment history nor did the Operator

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have any representatives present at the November 7, 2023, City Council meeting. City Council continued deliberations with the payment information requested above. After an opportunity for public comment and deliberations, the City Council voted to deny the Operator’s request.

Table 1. Payment Information (2018-2023)
Payment Date Payment Amount
04/15/2019 $13,333.40
04/25/2019 $5,333.36
06/05/2019 $5,333.36
10/21/2019 $15,000.00
11/18/2019 $15,000.00
03/01/2021 $13,333.40
01/12/2021 $51,008.35
04/12/2021 $151,331.98
06/10/2021 $27,297.24
07/16/2021 $5,333.36
08/13/2021 $9,099.08
07/05/2023 $7,181.91
07/05/2023 $5,333.36

30. On December 6, 2023, Mrs. Rosa Valles, owner of the Subject Site and the Operator’s landlord, verbally informed the City that the Operator has vacated the premises and turned over the keys.

31. On November 27, 2023, the City sent a letter to the Operator (Attachment E, pp. 281-282) formally denying their request for a new payment plan arrangement and forgiveness of fees. Furthermore, the letter stated the Operator continues to be in default status along with other outstanding violations. Community Benefit Fees, Cost-Recovery and NonOperating Fees plus penalties have continued to accrue.

32. On November 27, 2023, the City issued to the Operator a Notice of Review Hearing with the hearing date, time, and place (Attachment E, pp. 284-285). The notice informed the Operator that the Review Hearing was being held pursuant to Article 19 of DA No. 18- 001C, requesting the Operator to timely submit evidence of compliance and to submit payment for an estimated cost2 of the Review Hearing (Attachment E, pp. 284-285).

33. On December 14, 2023, City staff met with Mrs. and Mr. Valles to discuss the status of the Unpermitted Work left behind by Operator, and potential new uses at the Subject Site. 2 Pursuant to Article 19(a) of the DA, Operators must submit an annual review and administration fee deposit based on the City’s estimated cost, upon the City’s reasonable notice in advance of the review. The City provided approximately 39 days’ notice of the estimated cost.

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34. On December 19, 2023, the City received correspondence from the Operator’s representative stating they would be out of town and would not be able to attend the hearing (Attachment E, pp. 1048-1050). The Operator’s representative did not offer any evidence of compliance with the DA and CCP in advance of or at the Review Hearing.

35. On January 8, 2024, the duly appointed third-party Hearing Officer, Steve Napolitano, conducted a Review Hearing as authorized under the CMC Section 5.20.080(7) and Article 19 of the DA No. 18-001C, to hear and consider information and evidence submitted by City staff (Attachment E) and the Operator. No representation from the Operator was present at the hearing nor did the Operator submit any information or evidence for consideration. During the hearing, City staff submitted a supplemental report to the Hearing Officer (Attachment G). The supplemental report elaborated on additional violations by the Operator and was made part of the official record during the Review Hearing.

36. On January 11, 2024, the City received correspondence from the Subject Site’s landlord informing the City that it had terminated the lease with the Operator in October 2023 (Attachment J).

37. On February 15, 2024, the Hearing Officer issued a written decision and order (the “Decision”) (Attachment F) finding evidence showing the Operator, despite considerable notice and opportunities to cure outstanding issues, has breached the terms and conditions of the DA and CCP and recommends the Planning Commission and City Council to repeal Ordinance No. 698 terminating DA No. 18-001C and revoke the related interest in CCP No. 18-001.

38. On May 14, 2024, pursuant to State law and the CMC, the Planning Commission held a duly noticed public hearing to consider the Hearing Officer’s recommendation to repeal Ordinance No. 698 and terminate DA No. 18-001C. The Planning Commission considered all public comments received before and during the public hearing, the presentation by City staff, the relevant staff report, administrative record, and all other pertinent documents. No representation from the Operator was present at the hearing. After closing the public hearing, the Planning Commission adopted Resolution No. 2024-12 (Attachment M), recommending the City Council repeal Ordinance No. 698 and terminate related DA No. 18-001C.

39. As of the writing of this report, Operator has continuously failed to make payments and as of June 13, 2024, owes $482,299.34 (Attachment H).

DISCUSSION/ANALYSIS
During a review of the Operator’s compliance with the Development Agreement, the burden is upon the Operator to demonstrate good faith compliance with the terms of the Development Agreement under Article 19. Pursuant to Government Code Section 65868.1 and Articles 19 and 19(d) of the Development Agreement, if the City Council determines, based on substantial

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evidence, that the Operator has not complied in good faith with the terms of the conditions of the Development Agreement, the City Council may terminate the Development Agreement or alternatively may choose to modify and impose conditions reasonably necessary to protect the interests of the City. Conversely, if the Operator is found to be in compliance with the Development Agreement, the Operator may request the City to issue a Certificate of Compliance pursuant to Article 19(e). Any decision to terminate a development agreement must be reviewed by the Planning Commission prior to review by the City Council. Gov. Code § 65867. Under Article 19(d), the decision to terminate a development agreement by the City Council is final and only subject to appeal pursuant to Civil Code Section 1094.5.

As it relates to the CCP, pursuant to CMC Sections 5.20.080(6) and 5.20.080(7), any material violations of Chapter 5.20, any other relevant city law or state law, condition of approval, or any other required agreement or covenant, such as a development agreement, by a cannabis permittee, or cannabis permittee’s agent, is ground for suspending or revoking the relevant cannabis permit. The decision to suspend or revoke a cannabis permit is with the City Manager or his designee. Furthermore, pursuant to CMC Section 5.20.080, any decision regarding the suspension or revocation may be appealed to the City Council.

The City has appointed a Hearing Officer to conduct a review of the Operator’s compliance with CCP No. 18-0001 and DA No. 18-001C. The findings and determinations made by the Hearing Officer inform any subsequent action to terminate or modify the Development Agreement and suspension or revocation of the CCP. As stated above, and further described in Attachment F, the Hearing Officer issued a written decision making several findings of fact and conclusions and determined that VM Evergreen, LLC breached the terms and conditions pursuant to DA No. 18- 001C and CCP No. 18-0001, based on a preponderance of the evidence, in the following material aspects:

1. Violation #1: Breach of Payment Obligations. Pursuant to the terms of the DA, the Operator is responsible for timely payment of Community Benefit Fees (Article 5(b)); Cost Recovery Fees (Article 8); and Operating Fees (Article 7(c)). In addition, in accordance with Section 7.c(1), late payment of Non-Operating Fees is subject to penalties that begin to accrue once a payment is more than thirty (30) days late. In December 2022, the City offered a Payment Agreement to the Operator but the City did not receive any interest from the Operator. After one previously failed attempt, the City and Operator came to an agreement for a payment plan through a Letter Agreement that was executed in May 2023. The Letter Agreement granted the Operator relief in the form of deferred payment obligations of the Operating Fees and a payment schedule for past-due Community Benefit Fees and Cost Recovery Fees; and an obligation to remain current on recurring fees under the DA.

From May to October 2023, Operator made two payments under the Letter Agreement, following two notices of delinquency and an opportunity to cure, the Letter Agreement became null and void as of October 13, 2023 (Attachment E, pp. 224-246). As of December 2023, the City reported that the Operator is past due in the amount of $389,101.55 and past due payments continue to accumulate, including late payment

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penalties. Between April 2019 to November 2023, the Operator made thirteen (13) payments out of the possible fifty-five (55) payments.

City staff brought forward the Operator’s request for relief, but failed to provide any evidence of compliance, nor was the Operator or the Operator’s representative present at the November 7, 2023, hearing. Nor did the Operator communicate to the City the amount of fees it sought to waive, as requested by the City Council. As of December 2023, the City reported that the Operator is past due in the amount of $441,068.48 and past due amounts continue to accumulate, including late payment penalties. The Operator continues to fail to make payments and as of June 13, 2024, $482,299.34 is due and owing.

Table 2. Summary of Past and Current Amounts Due as of June 13, 2024 Fee Type Payment Amount Due
Community Benefit Program $186.667.60
Cost Recovery Fees $81,738.85
Non-Operating Fees $139,331.64
Penalties (Late Payments) $74,561.25
TOTAL $482,299.34
Based on the evidence submitted by the City, the Hearing Officer determined that “…the City has put forward substantial and unrefusable evidence that [Operator] has breached its payment obligations under [Operator] DA 18-001C, and as a result, DA 18-001C is subject to suspension or revocation under CMC Section 5.20.080(6)(a)” (Attachment F, p. 7).

The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-12 (Attachment M) which recommends that the City Council find that the Operator is in default of the terms set forth in DA No. 18-001C and repeal Ordinance No. 698 and terminate the related DA.

The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-12 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-001C and repeal Ordinance No. 698 and terminate the related DA.

2. Violation #2: Failure to comply with Article 5(b) of DA18-001C. Article 5(b) of DA No. 18- 001C permits the City Manager or his/her designee to enter the premises for the purpose of determining if the Operator is in compliance with the DA terms, state and local laws and regulations. City staff gave the Operator reasonable notice that it intended to enter the premises to determine whether the Site was in compliance with the terms of DA No. 18-001C. Despite giving prior approval, City staff were denied entry onto the Subject Site on September 29, 2022. Staff were provided access to the Subject Site on October 10, 2022, which resulted in the discovery of unpermitted work that was inconsistent with the

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site plan and floor plan approved in conjunction with DA No. 18-001C. In addition, observed unpermitted construction and improvements that resulted in an unsafe and dangerous structure that required all building violations to be remedied before people reentered or occupied the structure. Raul Diaz, Building Official, testified at the hearing confirming that he was denied access on September 29, 2022, after giving Operator adequate notice.

Based on the evidence presented, the Hearing Officer concluded that “[a] preponderance of evidence shows that the City has provided substantial and unrefuted evidence that [Operator’s] failure to allow City staff access to inspect the Site after reasonable notice is a breach of Section 5.b of DA-001C, and as a result, DA18-001C is subject to suspension or revocation under CMC Section 5.20.080(6)(a)” (Attachment F, p. 9).

3. Violation #3: Failure to comply with Article 1(d) of DA No. 18-001C. Article 1(d) (Zoning) and Article 17 (Rules, Regulations, and Official Policies) required Operator to adhere to all applicable CMC zoning and building code requirements prior to construction at the Site, including obtaining all necessary zoning approvals and building permits.

The Operator failed to obtain any requisite approvals and permits from the City’s Planning Division, Building and Safety Division, and the Los Angeles County Fire Department prior to the installation of new insulated panel walls, interior framing walls, mezzanine, electrical wiring, recessed lighting, plumbing and HVAC ducts. As a result, the City redtagged the structure at the Site declaring it unsafe to occupy.

Based on the unrefuted evidence presented by the City, the Hearing Officer found that “…a preponderance of evidence shows that the [Operator] breached Article 1(d) of DA 18-001C" (Attachment F, p. 9).

The foregoing was ratified by the Planning Commission through the adoption of Resolution No. 2024-12 (Attachment M) which recommends that the City Council find that the Operator is in default of the terms set forth in DA No. 18-001C and repeal Ordinance No. 698 and terminate the related DA.

4. Violation #4 Failure to comply with Article 2 of DA No. 18-001C. Pursuant to DA Article 2 (Term), the DA was approved with a 10-year term subject to the Operator maintaining a legal and/or equitable interest over the Site.

On December 6, 2023, Mrs. Rosa Valles, owner of the Site, informed the City that the Operator has vacated the premises and turned over the keys. Subsequently, on December 14, 2023, City staff met with Mrs. and Mr. Valles to discuss the status of the Unpermitted

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Work left behind by Operator, and potential new uses at the Site.

Based on the unrefuted evidence presented by City staff, the Hearing Officer found that “[Operator] abandonment of the premises and turning over of the keys to Ms. Valles, the Site owner, is sufficient evidence to show that [Operator] breached Section 2 of DA18- 001C” (Attachment F, p. 9).

In addition, to further support this determination, on January 11, 2024, Ms. Valles submitted an email confirming that the landlord had terminated the lease agreement with the Operator in October 2023 (Attachment J).

5. Violation #5 Failure to comply with Article 7(e) of DA18-001C. Under Article 7(e), the Operator must obtain City approval prior to making changes to the interior layout of the facility that increases the amount of space subject to Operating Fees under DA No. 18- 001C.

Per the City’s submittals, all the structures and improvements at the Subject Site deviate from the floor plans and floor area described in DA-18-001C (see Figures 2 and 3, above), resulting in an increase in floor area from unpermitted mezzanines of unconfirmed size.

The Operator was required to formally submit the request at least fourteen (14) days prior to making any changes. The deviation from the floor plans was discovered during a routine inspection by City staff on October 20, 2022. Such changes are subject to authorization by the City Manager for the purpose of determining Operating Fees owed to the City. The City has no record including but not limited to building permits, zoning clearances, or other subsequent approvals of the floor plan deviation, for the unpermitted work as stated above.

Based on the unrefuted evidence submitted by City staff, the Hearing Officer finds that the “[Operator] did not complete this process in advance. Therefore, a preponderance of the evidence shows that [Operator] is in breach of Section 7.e of DA18-001C” (Attachment F, p. 10).

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PUBLIC NOTICE AND COMMENTS
This item was noticed in accordance with the City’s public notice requirements, which involved mailed notices to property owners and tenants within 300 feet of the Subject Site and publication in the local newspaper (Attachment I). As of the writing of this report, City staff have not received any public comments.

ENVIRONMENTAL ANALYSIS
The action(s) have been assessed in accordance with the California Environmental Quality Act (“CEQA”) (Pub. Res. Code § 21000 et seq.), CEQA Guidelines (Cal, Code Regs., tit. 14, § 15000 et seq.) and the environmental regulations of the City. The Project is categorically exempt from the requirements of CEQA pursuant to CEQA Guidelines Section 15321 - Class 21 (Enforcement Actions by Regulatory Agencies). This exemption is applicable to “[a]ctions by regulatory agencies to enforce or revoke a lease, permit, license, certificate, or other entitlement for use issues, adopted, or prescribed by the regulatory agency or enforcement or a law, general rule, standard, or objective, administered or adopted by the regulatory agency.” If the City Council adopts Ordinance No. 751 to repeal Ordinance No. 698 and terminate DA No. 18-001C., it would be an enforcement action. Therefore, the action(s) are categorically exempt from the provisions of CEQA.

CONCLUSION
As discussed above and based on the preponderance of unrefuted evidence offered at the administrative review hearing; the public hearing by the Planning Commission finding that the Operator has failed to comply with the terms and conditions of its DA, despite being provided with ample notice and several opportunities to achieve compliance, thereby recommending to the City Council that it repeal Ordinance No. 698 and DA No. 18-001C through the adoption of Planning Commission Resolution No. 2024-12. As stated above, the Operator has failed to comply with their obligations under the DA, despite being provided with ample notice and several opportunities to achieve compliance. Therefore, City staff recommends the City Council adopt Ordinance No. 751 repealing Ordinance No. 698 terminating DA18-001C.

ATTACHMENT(S)
A. Proposed Ordinance No. 751
B. Ordinance No. 673
C. Ordinance No. 698
D. Final Demand Letter dated June 23, 2023
E. Administrative Record for VM Evergreen, LLC
F. Decision and Order for VM Evergreen, LLC
G. Supplemental Report provided on January 8, 2024
H. VM Evergreen, LLC Invoice dated June 13, 2024
I. Newspaper Publication
J. Email from Rosa Valles dated January 11, 2024

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K. City Council Minutes – December 4, 2018
L. City Council Minutes – December 18, 2018
M. Planning Commission Resolution No. 2024-12

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ATTACHMENT A
ORDINANCE NO. 751

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY REPEALING ORDINANCE NO. 698 AND

TERMINATING RELATED DEVELOPMENT AGREEMENT
NO. 18-001C BETWEEN VM EVERGREEN, LLC AND THE
CITY OF CUDAHY.

WHEREAS, the City of Cudahy (the “City”) is a general law city, incorporated under the laws of the State of California; and
WHEREAS, pursuant to its police power, the City may enact and enforce laws within its boundaries that promote the public health, safety, or general welfare of the community, and are not in conflict with general laws; and WHEREAS, to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the California State Legislature adopted Section 65864 et seq. of the California Government Code (the “Development Agreement Statute"); and
WHEREAS, the Development Agreement Statute authorizes the City to enter into a development agreement with a person having legal or equitable interest in real property for the development of such property in order to establish certain development rights in exchange for public benefits; and
WHEREAS, in accordance with the Development Agreement Statute, the City Council adopted Ordinance No. 690 in 2018 establishing the procedures and requirements for the consideration of development agreement with the City and are contained within Cudahy Municipal Code (“CMC”) Sections 20.84.530 through 20.84.640; and WHEREAS, on September 11, 2017, the City Council adopted Ordinance No. 673 establishing regulations for commercial cannabis activities, in a specified Overlay Zone through an acquisition of a Commercial Cannabis Permit and execution of a development agreement with the City; and
WHEREAS, on November 19, 2018, the City Planning Commission (“Planning Commission”) conducted a properly noticed public hearing to consider an application by VM Evergreen, LLC (“Operator”) for approval of a Commercial Cannabis Permit to allow non-store front commercial cannabis cultivation, manufacturing, distribution, delivery, and non-cannabis café activities at 8222 Atlantic Ave. (“Site”); and WHEREAS, at this hearing, the Planning Commission heard and considered verbal and written testimony and evidence, and on a 2-1 vote, the Planning Commission continued the item to a date uncertain; and
WHEREAS, on November 23, 2018, the City received a formal written correspondence in the nature of an appeal from the Operator requesting that the City Council hold an immediate hearing on their applications for a Commercial Cannabis Permit

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and a Development Agreement; and
WHEREAS, on December 4, 2018, the City Council conducted a properly noticed public hearing to consider the issuance of the Commercial Cannabis Permit (“CCP”) No. 18-0001 and Development Agreement (“DA”) No. 18-001C at which the City Council heard and considered both written and oral testimony and evidence and subsequently approved, and adopted Resolution No. 18-55 for CCP No. 18-0001; and WHEREAS, at the same hearing the City Council considered and approved CCP No. 18-0001 it also conducted the first reading of Ordinance No. 698 which authorized the execution of DA No. 18-001C between the Operator and the City; and WHEREAS, on December 18, 2018, the City Council adopted, on second reading, Ordinance No. 698 approving DA No. 18-001C and authorizing the Mayor to execute the DA on behalf of the City; and
WHEREAS, the effective date of the Development Agreement is March 13, 2019 (“Effective Date”); and
WHEREAS, upon the Effective Date of Ordinance No. 698, the Operator was granted the permission to conduct commercial cannabis cultivation, manufacturing, distribution, delivery, and non-cannabis café activities provided, among other things, it apply for and receive a Zoning Clearance pursuant to the CMC’s requirements, receive State licensing approval from the Department of Cannabis Control, and comply with the terms outlined in the DA inclusive of the timely payment of Community Benefit Fees, Cost Recovery Fees and Operating/Non-Operating Fees and applicable penalties and interest; and
WHEREAS, the Operator has not complied with the terms and conditions of the DA and CCP despite multiple notices and opportunities to cure and remains in material breach of thereof; and
WHEREAS, on November 27, 2023, the City provided notice to the Operator that it would be conducting a Review Hearing (“Review Hearing”) under Article 19 of DA No. 18- 001C which informed the Operator of the burden to prove compliance with the DA and CCP; and
WHEREAS, on December 19, 2023, the City received correspondence from the Operator stating they would not be able to attend the scheduled Review Hearing but did not request an alternative date for the Review Hearing or provide any evidence to substantiate any showing of compliance with the DA; and WHEREAS, on January 8, 2024, Steve Napolitano, Esq., a duly appointed thirdparty hearing officer for the City (“Hearing Officer”), conducted a properly noticed Review Hearing; and
WHEREAS, the Operator did not participate at the Review Hearing, was not present at the hearing and did not present any evidence for consideration prior to or during the

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hearing, and the Hearing Officer heard and considered information and evidence by City staff, which a true and correct copy of the staff report and supporting evidence is attached hereto as Exhibit “A” and incorporated herein by reference; and WHEREAS, the Hearing Officer heard and considered information and evidence by City staff; and
WHEREAS, on February 12, 2024, the Hearing Officer issued a written decision and order (the “Decision”), incorporated by reference and attached hereto as Exhibit “B”, making several findings of fact and conclusions of law with respect to the Operator’s noncompliance with the DA based on a preponderance of the evidence; and WHEREAS, the Hearing Officer determined that Operator breached its payment obligations due to the Operator’s non-payment of fees and penalties due and owed to the City totaling $441,068.48, which continue to accumulate; and WHEREAS, the Operator continues to fail to meet its payment obligations under DA No. 18-001C and the total amount due to the City as of June 13, 2024, is $482,299.34; and
WHEREAS, the Operator failed to comply with Article 5(b) of DA No. 18-001C by failing to allow City staff access to inspect the Site after reasonable notice; and WHEREAS, the Operator failed to comply with Article 1(d) of DA No. 18-001C by failing to obtain any requisite approvals from the City Planning Division and Building and Safety Division prior to construction; and
WHEREAS, the Operator failed to comply with Article 2 of DA No. 18-001C by failing to maintain a legal and/or equitable interest over the Site; and WHEREAS, the Operator failed to comply with Article 7(e) of DA No. 18-001C by failing to receive City Manager approval for the design changes made to the facility which resulted in an increase of space subject to operating fees; and WHEREAS, the Hearing Officer has recommended that the City Council adopt an ordinance repealing Ordinance No. 698 terminating DA No. 18-001C and revoke the related interest in CCP No. 18-0001; and
WHEREAS, pursuant to state law and the CMC, the Planning Commission duly noticed, agendized, and conducted a public hearing on this matter on May 14, 2024; and WHEREAS, the Planning Commission considered all public comments received before and during the public hearing, the presentation by City staff, the relevant staff report, administrative record, and all other pertinent documents relating to the repeal of Ordinance No. 698; and
WHEREAS, after the close of such public hearing, the Planning Commission adopted Resolution No. 2024-12, attached hereto and incorporated by reference as Exhibit

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“C,” recommending the City Council repeal Ordinance No. 698 and terminate related DA No. 18-001C; and
WHEREAS, pursuant to state law and the CMC, the City Council duly noticed, agendized, and conducted a public hearing on this matter; and WHEREAS, the City Council considered all public comments received before and during the public hearing, the presentation by City staff, the relevant staff report, administrative record, and all other pertinent documents relating to the repeal of Ordinance No. 698; and
WHEREAS, after the close of such public hearing, the City Council introduced and adopted by first reading Ordinance No. 751, repealing Ordinance No. 698 and terminating related DA No. 18-001C.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CUDAHY DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. RECITALS
That the above Recitals are true and correct and are incorporated as though fully set forth herein.

SECTION 2. ADOPTION OF HEARING OFFICER’S FINDINGS OF FACT AND

CONCLUSIONS OF LAW
The City Council has reviewed and considered the Decision by the Hearing Officer (Exhibit “B”) issued on February 12, 2024, on this matter. For the reasons stated in the Decision, and as recommended by the Planning Commission (Exhibit “C”), the City Council adopts the Hearing Officer’s findings of fact and conclusions of law as its own and determines that VM Evergreen, LLC is not in compliance with the terms and conditions of the Development Agreement No. 18-001C and finds that VM Evergreen, LLC is in default of its contractual obligations set forth in said Development Agreement by a showing of the preponderance of the evidence.

SECTION 3. TERMINATION OF DEVELOPMENT AGREEMENT
Pursuant to Article 19(d) of the Development Agreement, the City Council may terminate Development Agreement No.18-001C in its entirety. For the reasons stated in the Decision, and as recommended by the Planning Commission, the City Council hereby adopts this Ordinance repealing Ordinance No. 698 terminating DA No. 18-001C in its entirety.

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

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of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions might subsequently be declared invalid or unconstitutional.

SECTION 5. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council has determined that this Ordinance is categorically exempt from the California Environmental Quality Act (“CEQA”) (Pub. Res. Code § 21000 et seq.) and CEQA Guidelines (Cal. Code Regs., tit. 14, § 21000 et seq.) pursuant to CEQA Guidelines Section 15321 (Class 21) because the repeal of Ordinance No. 698 and termination of DA No. 18-001C is an enforcement action to revoke an entitlement interest.

SECTION 6. PUBLICATION
The City Clerk shall certify the passage and adoption of this Ordinance and shall cause this Ordinance to be published and/or posted as required by law, which shall take full force and effect thirty days from its adoption.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Cudahy at the regular meeting of this ______ day of _____ 2024. ______________________________
Jose R. Gonzalez
Mayor
ATTEST:
____________________________
Richard Iglesias
City Clerk

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CERTIFICATION

STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS:

CITY OF CUDAHY )
I, Richard Iglesias, City Clerk of the City of Cudahy, hereby certify that the foregoing Ordinance No. 751 was introduced for a first reading on the _____ day of ____ 2024 and approved for a second reading and adopted by said Council at its regular meeting held on the ______ day of ______ 2024 by the following vote, to-wit:

AYES:

NOES:

ABSENT:

ABSTAIN:
___________________________
Richard Iglesias
City Clerk

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EXHIBIT “A”
EVIDENCE SUBMITTED BY THE CITY (“ADMINISTRATIVE RECORD”)

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EXHIBIT “B”

HEARING OFFICER DECISION AND ORDER

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Ordinance No. 751

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EXHIBIT “C”

PLANNING COMMISSION RESOLUTION

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ORDINANCE NO. 673

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY AMENDING TITLE 5 (BUSINESS LICENSES AND
REGULATIONS) AND TITLE 20 (ZONING) OF THE

CUDAHY MUNICIPAL CODE TO PROHIBIT CANNABIS

RETAILERS/DISPENSARIES CITYWIDE AND TO

ESTABLISH REGULATIONS AND A DISCRETIONARY

REVIEW PROCESS FOR THE ALLOWANCE OF

MEDICINAL-ONLY COMMERCIAL CANNABIS ACTIVITIES
(CULTIVATION, DISTRIBUTION, MANUFACTURING,

DELIVERIES, MICROBUSINESS, AND LABORATORY

TESTING) IN A SPECIFIED OVERLAY ZONE THROUGH A

DEVELOPMENT AGREEMENT
WHEREAS, in 1996, the California Legislature approved Proposition 215, also known as the Compassionate Use Act (the "CUA"), which was codified under Health and Safety Code Section 11262.5 et sec. and was intended to enable persons in need of medical marijuana for specified medical purposes, such as cancer, anorexia, AIDS, chronic pain, glaucoma and arthritis, to obtain and use marijuana under limited circumstances and where recommended by a physician. The CUA provides that "nothing in this section shall be construed or supersede legislation prohibiting persons from engaging in conduct that endangers others, or to condone the diversion of marijuana for non-medical purposes.";
WHEREAS, in 2004, the California Legislature enacted the Medical Marijuana Program Act (Health & Saf. Code, § 11362.7 et seq.)(the "MMP"), which clarified the scope of the CUA, created a state-approved voluntary medical marijuana identification card program, and authorized cities to adopt and enforce rules and regulations consistent with the MMP. Assembly Bill 2650 (2010) and Assembly Bill 1300 (2011) amended the MMP to expressly recognize the authority of counties and cities to "[a]dopt local ordinances that regulate the location, operation, or establishment of a medical marijuana cooperative or collective" and to civilly and criminally enforce such ordinances;
WHEREAS, the Federal Controlled Substances Act (21 U.S. C., § 801 et seq.) makes it unlawful under federal law for any person to cultivate, manufacture, distribute or dispense, or possess with intent to manufacture, distribute, or dispense marijuana.

Despite such federal prohibition, on August 29, 2013, the United States Department of Justice issued a memorandum (the "Cole Memo") stating that, notwithstanding the federal classification of marijuana as a schedule 1 controlled substance, jurisdictions that have legalized marijuana in some form are less likely to be subject to federal enforcement under the Controlled Substances Act if they have implemented strong and effective regulatory and enforcement systems to follow eight guiding principles: (1) preventing the distribution of marijuana to minors; (2) preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; (3) preventing the

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diversion of marijuana from states where it is legal under state law in some form to other states; (4) preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (5) preventing violence and the use of firearms in the cultivation and distribution of marijuana; (6) preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; (7) preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and (8) preventing marijuana possession or use on federal property;
WHEREAS, in September 2015, the California State Legislature enacted, and Governor Brown signed into law three bills - Assembly Bill 243, Assembly Bill 266, and Senate Bill 643 - which together comprise the Medical Marijuana Regulation and Safety Act (the "MMRSA"). The MMRSA created a comprehensive dual state licensing system for the cultivation, manufacture, retail, sale, transport, distribution, delivery, and testing of medical cannabis;
WHEREAS, on August 22, 2016, the City Council of the City of Cudahy (the "City Council" of the "City") adopted Interim Urgency Ordinance No. 656U to establish a temporary moratorium on medical "commercial cannabis activities," as defined under the MMRSA, for a period of 45 days and extended such moratorium for an additional period of 22 months and 15 days under Interim Urgency Ordinance No. 661, on September 26, 2016;
WHEREAS, the MMRSA was renamed the Medical Cannabis Regulation and Safety Act (the "MCRSA") under Senate Bill 837 in June 2016, which also made substantive changes to the applicable state laws, which affect the various state agencies involved in regulating cannabis businesses as well as potential licensees; WHEREAS, on November 8, 2016, the Control, Regulate, and Tax Adult Use of Marijuana Act ("AUMA") was approved California voters as Proposition 64 and became effective on November 9, 2016, pursuant to the California Constitution (Cal. Const., art.

II, § 10(a).). Proposition 64 legalized the nonmedical use of cannabis by persons 21 years of age and over, and the personal cultivation of up to six (6) cannabis plants. On November 14, 2016, the City Council adopted Urgency Ordinance No. 663 to prohibit outdoor personal marijuana cultivation and establish regulations and a permitting process for indoor personal marijuana cultivation;
WHEREAS, AUMA also created a state regulatory and licensing system j governing the commercial cultivation, testing, and distribution of nonmedical cannabis, and the manufacturing of nonmedical cannabis products. On January 9, 2017, Interim Urgency Ordinance No. 666 was adopted by the City Council to establish a temporary moratorium on nonmedical "commercial cannabis activities" for a period of 45 days and extended such moratorium for an additional period of 22 months and 15 days under Interim Urgency Ordinance No. 667, on February 27, 2017; Page2
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I
)
WHEREAS, on June 27, 2017, Governor Brown signed the Legislature-approved Senate Bill 94. SB 94 combined elements of the MCRSA and AUMA to establish a streamlined singular regulatory and licensing structure for both medical and nonmedical cannabis activities given that there were discrepancies between the MCRSA and AUMA. The new consolidated provisions under SB 94 is now known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act ("MAUCRSA") to be governed by the California Bureau of Cannabis Control. MAUCRSA refers to medical cannabis as "medicinal cannabis" and nonmedical/recreational cannabis as "adult-use cannabis"; WHEREAS, on June 27, 2017, the as part of an Economic Development Ad Hoc Committee presentation on revenue-generating opportunities, commercial cannabis regulations and strategies were offered to and discussed by the City Council; WHEREAS, the City seeks to establish an overlay zone in the City in which certain medicinal-only commercial cannabis activities can be conducted in accordance with MAUCRSA and the City's police power under Section 7 of Article XI of the California Constitution;
WHEREAS, it is the purpose and intent of the City to regulate medicinal cannabis in a manner that is consistent with the Cole Memo and promotes the health, safety, and general welfare of the residents and businesses within the City, while limiting any negative impacts;
WHEREAS, the City intends to be on the forefront of groundbreaking research, science, innovation, and development of treatment for symptoms and cures in the field of medicinal cannabis, as scientific research, studies, and data have established that medicinal cannabis can help patients with a vast array of medical conditions; WHEREAS, the City desires to reduce the illegal market for cannabis while minimizing the chances of social harm and creating jobs and revenue for the City; and WHEREAS, nothing in this Ordinance shall be construed to allow persons to engage in conduct that violates the law, endangers others, causes a public nuisance, allows the illegal use or diversion of cannabis, or allows any activity relating to cannabis that is otherwise illegal under California state law, as amended.

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

SECTION 1. The above recitals are true and correct and are incorporated herein.

SECTION 2. Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended by the addition of a new Chapter 20.120 (Commercial Cannabis Overlay Zone), which shall read as follows:

Chapter 20.120 - Commercial Cannabis Overlay Zone.

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20.120.010 Definitions
For purposes of this Chapter 20.120, the following definitions shall apply:
"Commercial cannabis activities" mean the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products. ) "Cannabis" means all parts of the Cannabis sativa Linnaeus, Cannabis indica, or j Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified, obtained from cannabis. "Cannabis" also means marijuana as defined by Section 11018 of the California Health and Safety Code as enacted by Chapter 14017 of the Statutes of 1972. Cannabis does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this Chapter, cannabis does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.
"Cannabis product" means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, or other cannabis derivative, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients. "Day care center" means any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and schoolage child care centers.
"Overlay Zone" means the commercial cannabis overlay zone, whose area and boundaries are attached to City Council Ordinance No. 673 as Exhibit "A" "MAUCRSA" means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, as may hereinafter be amended.
"Youth center" means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to, private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.

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20.120.020 Prohibitions.

Adult-use commercial cannabis activities and medicinal commercial cannabis activities, as both are described in state law, including, but not limited to MAUCRSA, are hereby prohibited unless otherwise allowed in this Chapter.

20.120.030 Overlay zone.

Medicinal commercial cannabis activities, except retail dispensaries that are open to the public for point-of-sale purchases, shall be allowed within the Overlay Zone pursuant to a development agreement adopted in accordance with the Development Agreement Law (Gov. Code, § 65864 et seq.) and Cudahy Municipal Code Chapter

20.28 (Development Agreements). No such activities shall be permitted without a development agreement within or outside of the boundaries of the Overlay Zone.

The City may approve or deny such a development agreement in its sole and absolute discretion.

20.120.040 Particular restrictions for Atlantic Avenue.

Section 20.120.030 notwithstanding, no cannabis-related business shall be located within the Overlay Zone and on Atlantic Avenue with a storefront facing Atlantic Boulevard unless such business employs and effectuates a business model with a primary entertainment purpose.

20.120.050 Indoor Horticulture.

Indoor horticulture, excluding cannabis horticulture shall be permitted by-right within the Overlay Zone.

20.120.060 Prohibition on new schools, day cares, and youth centers in overlay zone.

The establishment of public or private schools providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center is prohibited within the Overlay Zone, or within 600 feet of the boundaries of the Overlay Zone, is hereby prohibited, unless otherwise mandated under state or federal law. An existing public or private school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center located within the Overlay Zone, or within 600 feet of the boundaries of the Overlay Zone shall be considered legal nonconforming, in accordance with Chapter 20.24 (Legal Nonconforming) of Title 20 (Zoning) of the Cudahy Municipal Code.

20.120.070 Temporary permits for local events - rights reserved.

The City reserves the right to issue temporary permits for onsite cannabis sales to, and consumption by, persons 21 years of age or older at a county fair, district agricultural association event, or other similar event authorized under state law, which is located within the Overlay Zone, pursuant to the provisions of Subdivision (e) of Business and Professions Code Section 26200.

SECTION 3. Subsection (3)(p) of Section 20.64.090 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.64 (Residential Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:

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(p) Schools, public and private, excluding schools providing instruction in kindergarten or any grades 1 through 12 located within 600 feet of a residential zone located within the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 4. Subsection (24) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(24) Day care centers, excluding those occupying any portion of the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 5. Subsection (49) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(49) Schools, colleges, and universities, accredited, including appurtenant facilities that offer instruction required to be taught by the Education Code of the state of California and in which no pupil is physically restrained, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 6. Subsection (50) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(50) Schools, business and professional, including art, barber, beauty, dance, drama, music, and swimming, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 7. Subsection (46) of Section 20.68.150 (Uses by conditional use permit in C-M Zone) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(46) Schools, colleges, and universities, accredited, including appurtenant facilities which offer instruction required to be taught by the Education Code of the state and in which no pupil is physically restrained, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the C-M zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise

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mandated under state or federal law.

SECTION 8. Subsection (47) of Section 20.68.150 (Uses by conditional use permit in C-M Zone) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(47) Schools, business and professional, including art, barber, beauty, dance, drama, music, and swimming, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the C-M zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 9. Title 5 (Business License and Regulations) of the Cudahy Municipal Code is hereby amended by the addition of a new Chapter 5.20 (Cannabis Permitting and Regulation), which shall read as follows:

Chapter 5.20 - Cannabis Permitting and Regulation.

5.20.010 Section Intent and Purposes.

The intent and purpose of this Chapter is to regulate Commercial Cannabis Activity (as defined below) in accordance with State Law (as defined below) to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law, including, but not limited to, MAUCRSA. The goals of this regulation for Commercial Cannabis Activity include:
(a) To comply with the goals and guidance set forth in the Cole Memo. (b) To minimize the size of the illegal market for Cannabis in the City and the surrounding regions.
(c) To create jobs, revenue, and economic growth for the City and its residents. (d) To enable law enforcement and regulators to have sufficient rights to inspect and audit Cannabis Permittees and take expeditious action against Cannabis Permittees who violate the requirements of this Chapter. (e) To minimize social harms which may arise from Cannabis including youth consumption or intoxicated driving.
(f) To regulate the manner of advertising and location of Cannabis Permittees such that public nuisance is minimized.

5.20.020 Definitions.

For purposes of this Chapter, the following definitions shall apply, unless the context clearly indicates otherwise:
(a) "Applicant" means an Owner seeking a Cannabis Permit pursuant to this Chapter.
(b) "Cannabis" means all parts of the Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every

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compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. Cannabis also means the separated resin, whether crude or purified, obtained from cannabis. Cannabis also means marijuana as defined by Section 11018 of the California Health and Safety Code as enacted by Chapter 14017 of the Statutes of 1972. Cannabis does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this Chapter 5.18, Cannabis does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.
(c) "Cannabis Permit" means a permit issued by the City to conduct a Commercial Cannabis Activity, including, but not limited to a Cultivation Permit, Distribution Permit, Manufacturing Permit, Microbusiness Permit, Retail Delivery Permit, or Testing.
(d) "Cannabis Permittee" means a Person who holds a Cannabis Permit. (e) "Cannabis Product" means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, or other cannabis derivative, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.
(f) "City" shall mean the City of Cudahy.
(g) "City Coden means the City of Cudahy Municipal Code. (h) "City Manager" means the City Manager of the City of Cudahy. (i) "Cole Memo" means the August 29, 2013 United States Department of Justice memorandum offering guidance on federal enforcement priorities regarding Cannabis.

U) "Commercial Cannabis Activity(ies)" means the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of Cannabis and/or Cannabis Products. (k) "Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of Cannabis.
(I) "Cultivation Permit" means a Cannabis Permit for the Indoor Cultivation of Cannabis in accordance with the terms and conditions of this Chapter and the Development Agreement for the applicable Cannabis Permit issued to the particular Cultivation Permittee.
(m) "Cultivation Permittee" means an applicant who has applied for and has been issued a Cultivation Permit by the City pursuant to the terms and conditions of this Chapter.

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(n) "Day Care Center" means any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and schoolage child care centers.
(o) "Development Agreement" means an agreement adopted pursuant to the Development Agreement Law (Gov. Code, § 65864 et seq.) and Cudahy Municipal Code Chapter 20.28 (Development Agreements), which provides agreed upon community benefits to the City.
(p) "Distribution" means the procurement, sale, and transport of cannabis and cannabis products between persons authorized to engage in permitted commercial cannabis activities pursuant to this Chapter. (q) "Distribution Permit" means, with respect to a Distribution Permittee, a Cannabis Permit for Distribution in accordance with the terms and conditions of this Chapter and the Development Agreement for the applicable Cannabis Permit issued to such Distribution Permittee.
(r) "Distribution Permittee" means a Person that has been issued a Distribution Permit by the City pursuant to the terms and conditions of this Chapter. (s) "Fully Enclosed and Secure Structure" means a space within a building or other structure which has a complete roof enclosure supported by connecting walls extending from the ground to the roof, which is reasonably secure against unauthorized entry, provides complete visual screening or is behind fencing or other features providing complete visual screening, and which is accessible only through one or more lockable doors and is inaccessible to minors. (t) "Good Cause" for purposes of refusing or denying a Cannabis Permit, for revoking a Cannabis Permit, or for refusing or denying a Cannabis Permit renewal or reinstatement means: (i) the Applicant has not obtained approval by the City Council of a Development Agreement setting forth the general terms for the operation of commercial cannabis activity or breaches a term or terms of a Development Agreement approved by the City Council pursuant to this Chapter; (ii) The Applicant or Cannabis Permittee has violated the terms, conditions, or provisions of this Chapter, of state law, of any regulations or rules promulgated pursuant to state law or this Chapter, any applicable local rules, regulations, or conditions placed upon its state license or Cannabis Permit; (iii) the licensed Premises have been operated in a manner that adversely affects the public health, safety, or welfare or the safety of the immediate neighborhood in which the Commercial Cannabis Activity is being conducted; (iv) the Applicant or Cannabis Permittee has knowingly made false statements, misrepresentations, or material omissions on an application form, renewal form, or other document submitted to the City; (v) the Applicant or Cannabis Permittee's criminal history does not indicate that the Applicant or Cannabis Permittee is of Good Moral Character or the Applicant or Cannabis Permittee has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the Applicant or Cannabis Permittee. However, if the City has issued a Cannabis Permit to the Applicant or Cannabis Permittee, the City shall not consider any

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criminal history of the Applicant or Cannabis Permittee that was disclosed to or discovered by the City prior to issuance of the Cannabis Permit and is confirmed by the Applicant or Cannabis Permittee. For any criminal history that was not disclosed to or discovered by the City prior to issuance of a Cannabis Permit, or that arose after the issuance of the Cannabis Permit, the City shall conduct a thorough review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation of the Applicant or Cannabis Permittee, and shall evaluate the suitability of the Applicant or Cannabis Permittee based upon such review. In determining which offenses are substantially related to the qualifications, functions, or duties of the Applicant or Cannabis Permittee, the City shall consider factors set forth in Business and Professions Code Section 26057; (vi) the Applicant or Cannabis Permittee is employing or allowing to volunteer any person whose criminal history indicates that such person is not of Good Moral Character; (vii) the Applicant or Cannabis Permittee fails to allow inspection by City officials of the security recordings, activity logs, business records, or other accessible records pertaining to the activities conducted on the applicable Premises; or (viii) the Applicant or Cannabis Permittee allows for Physician Services to be conducted on the applicable Premises. (u) "Good Moral Character" means having a personal history that demonstrates the propensity to serve the public in a manner that reflects openness, honest, fairness, and respect for the law and rights and well-being of others. In determining Good Moral Character, the following standards shall apply: (i) a judgment of guilt in a criminal prosecution or a judgment in a civil action shall not be used, in and of itself, as proof of an individual's lack of Good Moral Character.

Such judgment, however, may be used as evidence in the determination and when so used, the individual shall be notified and shall be permitted to rebut the evidence by showing that, at the current time, he or she has the ability to, and is likely to serve the public, in a fair, honest, and open matter, that he or she is rehabilitated, and/or that the substance of the former offense is not substantially related to the applicable Commercial Cannabis Activity; and (ii) a prior conviction where the sentence, including any term of probation incarceration, or supervised release is completed for the possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, is not considered substantially related, and shall not be the sole ground for denial of a Cannabis Permit, except that any of the convictions set forth in Business and Professions Code Section 26057(b)(4), as may be amended, shall be deemed substantially related to applicable Commercial Cannabis Activity. (v) "Health and Safety Code" means the California Health and Safety Code, as amended from time to time.
(w) "Indoor" means within a Fully Enclosed and Secure Structure. (x) "Manufacture" or "Manufacturing" means to compound, blend, extract, infuse, or otherwise make or prepare a Cannabis Product from such blends, extractions, or infusions.

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(y) uManufacturing Permit" means a Cannabis Permit to Manufacture in accordance with the terms and conditions of this Chapter and the conditions of approval for the applicable Cannabis Permit issued to the particular Manufacturing Permittee.
(z) "Manufacturing Permittee" means a Person that has been issued a Manufacturing Permit by the City pursuant to the terms and conditions of this Chapter.
(aa) "Medicinal Permittee" means a Person who is issued a Cannabis Permit to engage in Commercial Cannabis Activity with respect to medicinal Cannabis in accordance with applicable City law and State Law, including MAUCRSA. (bb) "Microbusiness" means a commercial medicinal cannabis business facility of cultivation of medicinal cannabis on areas less than 10,000 square feet and also acts as a licensed distributor, manufacturer, and Delivery-only retailer, pursuant to State Law, including MAUCRSA. Microbusinesses shall not be open to the public for point-of-sale retail Cannabis sales.
(cc) "Microbusiness Permit" means a Cannabis Permit to establish and conduct a Microbusiness in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Microbusiness Permittee. (dd) "Microbusiness Permittee" means a Person who has been issued a Microbusiness Permit by the City pursuant to the terms and conditions of this Chapter.
(ee) "Outdoors" means any location within the City that is not within a Fully Enclosed and Secure Structure.
(ff) "Owner" means any of the following: (i) a Person with an aggregate ownership interest of 20% or more in the Person applying for a Cannabis Permit, unless the interest is solely a security, lien, or encumbrance; (ii) the chief executive officer of a nonprofit or other entity; a member of the boards of directors of a nonprofit; (iv) an individual who will be participating in the direction, control, or management of the person applying for a Cannabis Permit. (gg) "Permit Zone" means, with respect to a Person holding a Cannabis Permit, the overlay zone described in Cudahy Municipal Code Chapter 20.120 where such Cannabis Permit type is permitted to operate pursuant to a Development Agreement with the City.
(hh) "Person" includes any individual, entity, firm, co-partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.
(ii) "Physician Services" means the consultation by a State-licensed physician of a patient with the possible recommendation by such physician of medicinal Cannabis for such patient.

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OD "Premises" means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the Cannabis Permittee applicant or Cannabis Permittee where the Commercial Cannabis Activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one Cannabis Permittee. (kk) "Retail Delivery" means the commercial transfer or delivery of Cannabis or Cannabis Products to a customer, patient, primary caregiver or Cannabis Permittee.
(II) "Retail Delivery Establishment" means a location where Cannabis or Cannabis Products are, either individually or in any combination, Delivered pursuant to State Law, including MAUCRSA. Retail Delivery Establishments shall not be open to the public for point-of-sale retail sales. (mm) "Retail Delivery Permit" means a Cannabis Permit to Deliver Cannabis and Cannabis Products to customers, patients, and primary caregivers in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Retail Delivery Permittee.
(nn) "Retail Delivery Permittee" means a Person that has been issued a Retail Delivery Permit by the City pursuant to the terms and conditions of this Chapter. (oo) "State" means the State of California.
(pp) "State Law" means all laws of the State of California, including, but not limited to, all rules and regulations adopted by State agencies and State regulatory entities, including subsequent amendments to such laws, rules, and regulations.
(qq) "State Medicinal license" means a State license for medicinal Commercial Cannabis Activities issued pursuant to State Law. (rr) "Testing" means the activities conducted by a Testing Laboratory. (ss) "Testing Laboratory" means an accredited laboratory, facility, or entity in the City that offers or performs tests of medicinal cannabis or medicinal cannabis products in accordance with State Law and City law:
(tt) "Testing Permit" means a Cannabis Permit for Testing the quality and makeup of Cannabis and Cannabis Products pursuant to the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Testing Permittee. (uu) "Testing Permittee" means a Person who has been issued a Testing Permit by the City pursuant to the terms and conditions of this Chapter. (vv) "Volatile Solvent" means a Class I Flammable liquid as defined by the National Fire Protection Association, including butane and propane. (ww) "Youth Center" means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to,

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private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.

5.20.030 Commercial Cannabis Activity Prohibited.

All Commercial Cannabis Activity within the City is prohibited except as permitted by this Chapter.

5.20.040 Certain Commercial Cannabis Activity Permitted. Medicinal Commercial Cannabis Activities, except retail dispensaries that are open to the public for point-of-sale purchases, shall be allowed within the area set forth in the overlay zone/Permit Area illustrated in Exhibit "A" to City Council Ordinance No. 673 pursuant to a development agreement adopted in accordance with the Development Agreement Law (Gov. Code,§ 65864 et seq.) and Cudahy Municipal Code Chapter

20.28 (Development Agreements). No such activities shall be permitted without a Development Agreement within or outside of the boundaries of such overlay zone.

The City may approve or deny such a Development Agreement in its sole and absolute discretion. The City Manager is authorized to develop and promulgate policies and procedures consistent with the intent and spirit of this Chapter concerning the applications, application process, including, but not limited to, the information required of Applicants, and application review procedures, which shall inform the administration and protocols to be used and followed by the City in the application and hearing processes.

5.20.050 Business standards.

Commercial Cannabis Activity within the City shall be in conformance with the standards set forth in this Section, in addition to those additional standards that may be imposed through negotiated Development Agreement. The City Manager is hereby authorized to formulate and impose additional Business Requirements applicable to Cannabis Permittees in furtherance of the public health, safety, and/or welfare.
(a) Commercial Cannabis Activity shall only be allowed upon application and issuance of a Cannabis Permit and a Development Agreement by the City in accordance with the criteria and process set forth in this Chapter and City Code. (b) Zoning and Land Use.
(1) Operation Near Schools, Day Cares, and Youth Centers. Following the enactment of this Chapter, no new Premises shall be established, developed, or operated within 600 feet of a Day Care Center, Youth Center, or public or private school providing instruction in kindergarten or any grades 1 through 12 that is in existence at the time the Cannabis Permit is issued. All distances shall be measured in a straight line, without regard to intervening structures, from the nearest point of the building or structure in which the Premises are, or will be, located to the nearest property line of those uses describe in this Subsection. The restrictions set forth in this Subsection shall not apply to Premises which operate within 600 feet of any Day Care Center, Youth Center, or public or private school

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providing instruction in kindergarten or any grades 1 through 12, if such Premises existed prior to the establishment of the applicable Day Care Center, Youth Center, or school that is located within 600 feet of such Premises.
(2) Co-Location. All Commercial Cannabis Activity shall fully comply with all l mandates set forth in State Law. To the extent not prohibited under State Law, a Cannabis Permittee may be located within the same unit of the same Premises or building, facility or real property parcel as another Cannabis Permittee.
(3) Development Agreement.
a) Prior to commencing operations, all Cannabis Permittees shall enter into a Development Agreement with the City.
b) All Premises shall be operated in accordance with the terms of the applicable Development Agreement for the specified parcel of real property (or sub-portion thereof) upon which the Premises is located. c) Except as specified, Commercial Cannabis Activities shall not exceed the square footage authorized pursuant to the applicable Development Agreement.
d) All Premises shall be located in the Permit Zone pursuant to the applicable Development Agreement.
(c) Commercial Cannabis Activity is allowed only within Fully Enclosed and Secure Structures that are inaccessible to minors.
(d) Signage for any business must be applied for through the City's Planning Division, which shall require review and approval prior to installation. Business identification signage shall be limited to that needed for identification only, and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered. No Cannabis Permittee shall advertise by having a person holding a sign and advertising the business to passersby, whether such person is on the Premises of the Cannabis Permittee or elsewhere including, but not limited to, the public right-of-way. (e) From any public right-of-way, there shall be no visible evidence of the consumption of any Cannabis Products. Commercial Cannabis Activity shall not adversely affect the health or safety of the nearby residents by creating dust, glare, heat, noise, smoke, traffic, vibration, odor or other impacts, and shall not be hazardous due to use or storage of materials, processes, products, or wastes. (f) Hours of operation limits, if any, shall be specified in terms mutually agreed upon in a Development Agreement.
(g) All Cannabis and Cannabis Products shall be kept in a secured manner during all business and nonbusiness hours.
(h) All Commercial Cannabis Activities shall operate within Premises that are compliant with all applicable State Laws and local laws.

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(i) Cannabis Permittees must pay all applicable taxes pursuant to all federal, State, and local laws, including, but not limited to, fees relating to infrastructure improvements within the Permit Zone.

U) Cannabis Permittees shall provide sufficient odor absorbing ventilation and exhaust systems so that odors outside the applicable Premises are not a nuisance on any adjacent property of public right-of-way. Any violation of this Section shall be remedied within thirty (30) days of the Cannabis Permittee receiving notice of such violation.
(k) Cannabis Permittees shall utilize product and inventory tracking software and accounting software that is consistent with reasonable business practices within the industry and the seed-to-sale tracking software being developed by the State. (I) Except permitted in this Chapter, on-site smoking, ingestion, or consumption of Cannabis or Cannabis Products shall be prohibited on Premises. Except to the extent otherwise permitted pursuant to this Chapter, the entrance of the Premises shall be clearly and legibly posted with a notice indicating that smoking, ingesting, or consuming Cannabis, Cannabis Products or alcohol on such Premises is prohibited.
(m) Signage for all Premises shall be in compliance with the City's sign code and application for all signs must be submitted to the City's Planning Division and comply with its sign permitting protocol.
(n) Alcoholic beverages and tobacco shall not be sold, stored, distributed, or consumed on the Premises. Cannabis Permittees shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages, or operate a business that sells alcoholic beverages or tobacco with respect to the Premises. In addition, alcohol shall not be provided, stored, kept, located, sold, dispensed, or used on the Premises.
(o) Physician Services shall not be provided at any Premises. (p) The Premises shall fully comply with all applicable rules, regulations, and laws including, but not limited to, zoning and building City Codes, the City's business license ordinances, the Revenue and Taxation Code, the Americans with Disabilities Act, and MAUCRSA.
(q) Each Cannabis Permittee shall provide the City Manager, or the City Manager's designee, with the name, phone number, facsimile number, and email address of an on-site representative of such Cannabis Permittee to whom the City and the public can provide notice if there are any operational problems associated with such Cannabis Permittee's Premises. Each Cannabis Permittee shall make reasonable and good faith efforts to encourage residents and the public to call this representative to resolve any operational problems before any calls or complaints are made to the City or law enforcement. (r) All Cannabis Permittees must comply with the following security requirements:
(1) General Security Requirements.

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a) Security cameras shall be installed and maintained in good working condition and used in a format approved by the City Manager. The cameras shall be in use 24 hours per day, 7 days per week. The areas to be covered by the security cameras include areas as determined by the City Manager, including, but not limited to, the area in which the primary Commercial Cannabis Activity occurs, e.g. the Cultivation area for a for a cultivator.
b) The Premises shall be alarmed with a reliable commercial alarm system that is operated and monitored by a security company or alarm business in a manner satisfactory to the City Manager.
c) Entrance to any storage areas shall be locked at all times and under the control of staff of the Cannabis Permittee.
d) The business entrance(s) and all window areas shall be illuminated during evening hours. The Applicant shall comply with the City's lighting standards regarding fixture type, wattage, illumination levels, shielding, etc., and secure the necessary approvals and permits, as necessary. e) All windows on the Premises shall be appropriately secured with all Cannabis and Cannabis Products securely stored.
f) Each Cannabis Permittee shall implement track and trace protocols, as noted above in this Section, in order to prevent diversion of Cannabis or Cannabis Products.
g) All waste and disposal containers shall be locked at all times and stored ins a secure area and, at all times, under the control of the Cannabis Permittee.
(2) Security Alarm Systems - Minimum Requirements.
a) Each Premises shall have a security alarm system installed by a licensed alarm company on all perimeter entry points and perimeter windows.
b) Each Premises must ensure that its location is continuously monitored. Premises may engage the services of outside vendors to fulfill this requirement, such as a private security firm.
c) Each Premises shall maintain up to date and current records and existing contracts on the Premises that describe the location and operation of each security alarm system, a schematic of security zones, the name of the licensed alarm company, and the name of any vendor monitoring the Premises.
(3) Lock Standards. At a minimum, all points of ingress and egress shall be secured with commercial-grade, non-residential door locks. (4) Video Surveillance Requirements.

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a) Prior to exercising the privileges of a Cannabis Permit issued under this Chapter, an Applicant must install fully operational video surveillance and camera recording system. The recording system must record in digital format and meet the requirements outlined herein.
b) All video surveillance records and recording must be stored in a secure area that is only accessible to the management staff of the Cannabis Permittee.
c) Video surveillance records and recordings must be made available upon request to the City Manager or designee for a purpose authorized by this Chapter or for any other State or local law enforcement purpose. d) Video surveillance shall be held in confidence by all employees and representatives of the City Manager, except that the City Manager may provide such records and recordings to any State or local law enforcement agency for any purpose authorized under this Chapter for any State or local law enforcement purpose.
e) A sign shall be posted in a conspicuous place near each point of public access, which shall not be less than 12 inches wide and 12 inches long, composed of letters not less than one inch in height, stating that "All Activities Monitored by Video Camera" or "These Premises Are Being Digitally Recorded" or otherwise advising of all persons entering the Premises that a video surveillance and camera recording system is in operation and recording all activity as provided in this Section. f) The Premises shall utilize video surveillance equipment and a camera system that shall be remotely accessible by the City and Los Angeles County Sheriff's Department.
(5) Video Surveillance Equipment.
a) Video surveillance equipment shall, at a minimum, consist of digital or network video recorders, cameras capable of meeting the recording requirements described in this Section, video monitors, digital archiving devices, and a color printable capable of delivering still photos. b) All video surveillance systems must be equipped with a failure notification system that provides prompt notification to a Cannabis Permittee of any prolonged surveillance equipment interruption and/or the complete failure of the surveillance.
c) Cannabis Permittees are responsible for ensuring that all surveillance equipment is properly functioning and maintained so that the playback quality is suitable for viewing and the surveillance equipment is capturing the identity of all individuals and activities in the monitored Premises.
d) All video surveillance equipment shall have sufficient battery backup to support a minimum of four hours of recording in the event of a power outage.

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(6) Placement of Cameras and Required Camera Coverage.
a) Camera placement shall be capable of identifying activity occurring within 20 feet of all points of ingress and egress and shall allow for the clear and certain identification of any individual and activities on the Premises.
b) All entrances and exits to the Premises shall be recorded from both indoor and outdoor vantage points.
c) The system shall be capable of recording all pre-determined surveillance areas in any lighting conditions. If the Premises has a medicinal cannabis cultivation area, a rotating schedule of lighted conditions and zero-illumination can occur as long as ingress and egress points to those areas remain constantly illuminated for recording purposes.
d) Areas where medicinal cannabis is grown, tested, cured, manufactured, or stored shall have a camera placed in the room facing the primary entry door at a height that will provide a clear unobstructed view of activity without sight blockage from lighting hoods, fixtures, or other equipment.
e) Cameras shall also be placed at each location where weighing, packaging, preparation, tagging activities occur, or other distribution preparation activities occur.
f) At least one camera must be dedicated to record the access points to the secured surveillance recording area.
(7) Location and Maintenance of Surveillance Equipment. a) Surveillance recording equipment must be housed in a designated, locked, and secured room or other enclosure with access limited to authorized employees, the City Manager or designee, Los Angeles County Sheriff's Department, as authorized by this Chapter, other State or local law enforcement purpose, and service personnel or contractors. b) Premises must keep a current list of all authorized employees and service personnel who have access to the surveillance system and/or surveillance system room on the Premises. Premises must keep a surveillance equipment activity log on the Premises to record all service activity, including the identity of all individuals performing services on system service, the service date and time, and the reason for such service to the surveillance system.
c) Off-site monitoring and video recording storage of the Premises by an independent third party may be authorized so long as standards exercised at the remote location meets or exceeds all of the standards applicable to onsite monitoring.

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d) Each Premises located in a common or shred building must have a separate surveillance room/area that is dedicated to that specific Premises. The facility that does not house the central surveillance room is required to have a review station, printer, and map of camera placement on the Premises. All minimum requirements for equipment and security standards as set forth in this Section apply to such review station. (8) Video Recording Retention Requirements.
a) All camera views of all recorded areas must be continuously recorded 24 hours a day.
b) All surveillance recordings must be kept for a minimum of 30 days and be in a format that can be easily accessed for viewing. Video recordings must be archived in a format that ensures authentication of the recording as legitimately-capture video and guarantees that no alteration of the recorded image has taken place.
c) The surveillance system or equipment must have the capabilities to produce a color still photograph form any camera image, live, or recorded, of the Premises.
d) The date and time must be embedded on all surveillance recordings without significantly obscuring the picture. e) Time is to be measured in accordance with the official United States time established by the National Institute of Standards and Technology and the U.S. Naval Observatory at www.time.gov. f) After the 30-day surveillance retention schedule has lapsed, surveillance video recordings must be erased or destroyed prior to being discarded or disposed of for any other purpose. Surveillance video recordings shall not be destroyed if the Cannabis Permittee knows or should have known of a pending criminal, civil, or administrative investigation or any other proceeding sfor which the recording may contain relevant information.
(9) Other Records. All records applicable to the surveillance system and cannabis tracking system shall be maintained on the Premises. At a minimum, Premises shall maintain a map of the camera locations, directions of coverage, camera numbers, surveillance equipment maintenance activity log, user authorization list and operating instructions for the surveillance equipment.
(s) Audit. Each Cannabis Permittee shall maintain accurate books and records in an electronic format, which detail all revenues and expenses of the business, including, but not limited to, all assets and liabilities. On no less than an annual basis, or at any time upon reasonable request of the City, each Cannabis Permittee shall file a sworn statement detailing business activity during the previous 12-month period (or shorter period based upon the timing of the request). The statement shall include gross sales for each month and all

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applicable taxes and fees paid or due to be paid. On an annual basis, each owner and operator shall submit to the City a financial audit of the business's operations conducted by an independent certified public accountant. Each Cannabis Permittee shall be subject to a regulatory compliance review and financial audit as determined by the City Manager or designee. (t) Inspections. The City Manager, or designee, or Los Angeles County Sheriff's Department shall have the right to enter all Premises from time to time unannounced during a Cannabis Permittee's hours of operation for the purpose of making reasonable inspections to observe and enforce compliance with this Chapter, to inspect and copy records required to be maintained under this Chapter, or to inspect, view, and copy recordings made by security cameras, all without requirement for a search warrant, subpoena, or court order, and subject to appropriate fees, as specified in the Development Agreement, or adopted by the City.

5.20.060 Application and fee requirements.
(a) All applicants wishing to obtain a Cannabis Permit from the City shall file an application with the City upon a form approved by the City Manager and shall pay a permit application fee as established by the City. The fee may vary depending on the type of Cannabis Permit. The City Manager or designee may require and conduct background checks, as necessary, to process and evaluate Cannabis Permit applications.
(b) Prior to operating in the City, each Cannabis Permittee shall timely and fully pay all fees associated with the establishment of Commercial Cannabis Activity.

The fees shall be as set forth in the schedule and fees and charges established by the City Council, including, but not limited to, the following:
(1) Application fee for accepting a registration application, due and payable in full at the time an application is submitted;
(2) Processing fee for the cost to the City of processing an application and reviewing, investigating, and scoring each application in accordance with any evaluation system to determine eligibility for issuance of a Cannabis Permit, due and payable in full at the time a registration application is submitted;
(3) Permit issuance fee for the cost to the City of preparing a Development Agreement, Planning Commission and City Council review of the Development Agreement and the Cannabis Permit, and preparation and issuance of the Cannabis Permit, as authorized by the Cannabis Permit; (4) Amended registration fee for the cost to the City of reviewing amendments or changes to the registration form previously filed on behalf of an Applicant, due and payable in full at the time amendments or changes to any Cannabis Permit form is submitted to the City;

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(5) Permit renewal fee for the cost ot the City of processing an application to renew a Cannabis Permit, due and payable in full at the time application is made to renew a Cannabis Permit; and
(6) Any fees set forth in the applicable Development Agreement.

5.20.070 Permit conditions.
(a) A Cannabis Permit application may be denied and not awarded by the City if:
(1) The Applicant or the Applicant's agent(s) has made one or more false or misleading statements or omissions in the application or during the application process.
(2) The proposed Premises or Commercial Cannabis Activity at the Premises is not allowed by State Law or City law.
(3) The Applicant is not a legal representative of the proposed Cannabis Permittee.
(4) The Applicant or any of its officers, directors, owners, managers, or employees is under 21 years of age.
(5) The Applicant's facility or its location is in violation of any building, zoning, health, safety, or other provision of this Chapter or of any State or local law that substantially affects the public health, welfare, safety, or morals, or the facility or its location is not permitted in the proposed area, or the issuing or continuation of a Cannabis Permit would be contrary ro the public health, welfare, safety, or morals.
(6) The Applicant or any of its officers, directors, owners, managers, or employees has been sanctioned by the City, State, or any county for unauthorized cannabis activities or has had a registration revoked under this Chapter in the previous 3 years.
(7) The Applicant or the Applicant's agent(s) have engaged in unlawful, fraudulent, unfair, or deceptive business acts or practices. (8) The Applicant has not been or is not in good standing with the City related to other or previous business activities operated in the City. (9) The Applicant has not satisfied all requirement of this Chapter. (10) For Good Cause, as defined in this Chapter.
(b) A Cannabis Permit shall be awarded by the City to Applicants in accordance with the process established by the City Manager.
(c) Before a Cannabis Permit can be issued to an applicant, a Cannabis Permit fee must be paid to offset all related costs to the City, and the proposed Premises must pass all applicable inspections.

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(d) Each Cannabis Permit is subject to the conditions of approval in the applicable Development Agreement for the parcel of real property upon which the Premises is located.
(e) Each Cannabis Permit is subject to any additional conditions that may be applied by the City at the time of issuance or renewal as necessary to properly regulate the applicable Commercial Cannabis Activities and to protect the public. (f) Each Cannabis Permittee shall execute a Development Agreement with the City to, among other things, fully reimburse the City for all fiscal impacts, costs, expenses, fees, and attorneys' fees incurred by the City related to the Cannabis Permit and the related Commercial Cannabis Activity of such Cannabis Permittee.
(g) Each Cannabis Permittee shall:
(1) Carry liability insurance in the amounts and types set by the City Manager or the City Manager's designee, and name the City as an additional insured on all such insurance policies.
(2) Execute an Indemnification Agreement prepared by the City that fully indemnifies the City for all liabilities associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, and any action taken by the Cannabis Permittee pursuant to this Chapter. Such indemnification may be set forth in the applicable Development Agreement.
(3) Defend the City, at the Cannabis Permittee's sole expense, in any action against the City or its agents, officers, officials, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, or any action taken by the Cannabis Permittee pursuant to this Chapter. The City may, at its sole discretion, participate in the defense of any such action, but such participation shall not relieve the Cannabis Permittee of its indemnification and reimbursement obligations. (4) Reimburse the City for all costs, expenses, fees, and attorney's fees incurred by the City related to any action against the City or its agents, officers, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activity, or any action taken by the Cannabis Permittee pursuant to this Chapter.
(h) A Cannabis Permittee shall keep the City and law enforcement updated with the names, addresses, and relevant criminal histories of the Applicant's Agents.

Relevant criminal histories shall include any drug-related or felony convictions, the nature of such offenses, and the sentences received for such convictions. (i) Transfer.
(1) Any Cannabis Permittee may not sell, transfer, pledge, assign, grant an option, or otherwise dispose of his or her ownership interest in the Commercial Cannabis Business authorized pursuant to the Cannabis Permit.

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(2) In order for a Cannabis Permittee to transfer its Cannabis Permit to any Person, such Cannabis Permittee must submit a transfer application to the City Manager or City Manager's designee. The City Manager or designee may create a transfer application and reasonable transfer application process, including mandatory fee, that Cannabis Permittees and the City must follow and pay for Cannabis Permit transfer requests. Each transfer request of a Cannabis Permit and the related transfer application is subject to the prior approval of the City Manager or designee. (3) Applicants for Cannabis Permits must show proof of lawful possession of the applicable location. Evidence of lawful possession consists of properly executed deeds of trust, leases, and other written instruments, as may be accepted by the City.
(4) The location shall only be the geographical area that is specifically and accurately described in executed documents verifying lawful possession.

No Cannabis Permittee is authorized to relocate to other areas or units within a building structure without first filing a change of location application and obtaining approval form the City regardless of any possessory interest or right to possession to such additional space. No Cannabis Permittee shall add additional contiguous units or areas, thereby altering initially-approved Premises without filing an application to modify the location on forms prepared by the City Manager, including any applicable processing fee.
(5) No Cannabis Permittee is authorized to sublet any portion of any Premises for any purpose unless all necessary forms and applications to modify the existing location to accomplish any subletting have been approved by the City.
(6) The City Manager shall develop and promulgate a process for the renewal of Cannabis Permits and the establish related fees, in accordance with applicable laws.

U) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises. (k) Changing, Altering, or Modifying Location.
(1) After issuance of a Cannabis Permit, the Cannabis Permittee shall not make any physical change, alteration, or modification to the Premises that materially or substantially alters the location, production estimates, and/or usage of the location form the plans originally approved under the applicable Development Agreement, without the prior written approval of the City Council or designee. The Cannabis Permittee whose Premises are to be materially or substantially changed is responsible for filing an application with the City in order to obtain requisite approval.

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(2) Material or substantial changes, alterations, or modifications requiring approval include, but are not limited to, the following: (i) an increase or decrease in the total physical size or capacity of the location; (ii) the sealing off, creation of or relocation of a common entryway, doorway, passage, or other such means of public ingress and/or egress, when such common entryway, doorway, or passage alters or changes limited access areas; or (iii) the installation or replacement of electric fixtures or equipment, the lowering of a ceiling, or electrical modifications made for the purpose of increasing power usage ..
(3) The City Council or designee may grant approval for the types of changes, alterations, or modifications described herein upon the filing of an application by the Cannabis Permittee and payment of any applicable fee, subject to any requisite amendments to the applicable Development Agreement. The Cannabis Permittee must submit all information requested by the City Council or designee including, but not limited to, documents that verify the following: (i) the Cannabis Permittee will continue to have the exclusive possession of the Premises, as changed, by ownership, lease, rental agreement, or other means, and sole control over all activities; and (ii) the proposed change conforms to any and all City restrictions related to the time, manner, and place of regulation of the applicable Commercial Cannabis Activity.
(I) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises.

5.20.080 Enforcement and Appeals.
(a) Any Commercial Cannabis Activity within the City in violation of this Chapter is hereby declared to be unlawful and a public nuisance. (b) Any Person who willfully or knowingly (i) engages in a violation of this Chapter or (ii) owns, possesses, controls, or has charge of any parcel of real property in the City upon which a violation of this Chapter is maintained and who has actual knowledge of such violation ( or would have actual knowledge of such violation after a reasonable inquiry), shall be subject to the penalties and remedies provided by this Chapter.
(c) Any violation of this Chapter shall constitute a separate offense for each and every day the violation occurs or persists.
(d) Any Person in violation of any provision of this Chapter or who causes another Person to be in violation of this Chapter shall have committed a misdemeanor. In addition which shall be punishable by a fine of up to one thousand dollars ($1,000) for each violation and for each day the applicable violation continues to persist.

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(e) Any person in violation of any provision of this Chapter shall be punishable by an administrative fine of up to a $1,000 per offense.
(f) Any material violation of this Chapter or any other relevant City law or State Law by a Cannabis Permittee, or a Cannabis Permittee's agent, is grounds for suspending or revoking the relevant Cannabis Permit. In addition, the City Manager or the City Manager's designee may suspend or revoke a Cannabis Permit, disqualify an Applicant from the application process, or elect not to renew a Cannabis Permit if any of the following occur:
(1) The City Manager or the City Manager's designee determines that the Cannabis Permittee has failed to comply with this Chapter, any condition of approval, or any agreement or covenant as required pursuant to this Chapter.
(2) The Cannabis Permittee's Commercial Cannabis Activities cease for more than ninety (90) calendar days.
(3) Ownership of the Cannabis Permittee is changed without approval from the City.
(4) The licensed Commercial Cannabis Activity moves from the licensed Premises to a different, unauthorized location.
(5) The Cannabis Permittee fails to provide remote access to the security cameras to the City Manager, the City Manager's designee, or Los Angeles County Sheriff's Department, or fails to allow inspection of the security recordings, the activity logs, or of the Premises by authorized City officials.
(g) Any decision regarding the suspension or revocation of a Cannabis Permit, disqualification of an Applicant from the application process, or election not to renew a Cannabis Permit may be appealed to an independent neutral third-party administrative hearing officer appointed by the City Manager or the City Manager's designee (the "Hearing Officer"). Said appeal shall be made by a notice of appeal from the Person appealing within thirty (30) days from the date of the City's decision. The appeal shall be accompanied by a written verified declaration setting forth the basis for the claim that the City's decision was improper. The Hearing Officer's decision shall be final and binding upon the City and the appellant Cannabis Permittee or Applicant. Alternatively, the City Manager may provide for the appeal to be made to the City Council, in lieu of a hearing officer. In such case, the City Council's decision shall be final and binding upon the City and the appellant.
(h) These penalties and remedies are cumulative, and in addition to any other penalties and remedies available to the City.

5.20.090 State Medicinal License Requirement.
(a) Cannabis Permittees must obtain a State Medicinal License in accordance with State Law, including, but not limited, to the temporary and permanent State Medicinal Licenses provided for in MAUCRSA.

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(b) Each Cannabis Permittee must expeditiously provide proof of receipt of the applicable State Medicinal License by such Cannabis Permittee to the City Manager or designee.

5.20.100 Medicinal Cannabis Cultivation.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Cultivation in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates the medicinal Cannabis Cultivation pursuant to State Law, including MAUCRSA.

Subject to the terms of this Chapter, Cultivation Permits may be issued by the City for medicinal Cannabis Cultivation pursuant to and in accordance with State Law, including MAUCRSA.
(c) Outdoor Cultivation is prohibited within the City.
(d) Indoor Cultivation is permitted only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements. (e) Indoor Cultivation may include growing Cannabis plants, harvesting Cannabis plants, and drying Cannabis flowers but shall not include the Manufacturing or of Cannabis Products, unless otherwise authorized pursuant to this Chapter. (f) Entrance to the Cultivation area, and all storage areas, of the applicable Premises shall be locked at all times and under the control of the staff of such Premises.

5.20.110 Medicinal Cannabis Products Manufacturing.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Products Manufacturing to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates medicinal Cannabis Products Manufacturing pursuant to State Law, including MAUCRSA.

Subject to the terms of this Chapter, Manufacturing Permits may be issued by the City for medicinal Cannabis Products Manufacturing, pursuant to and in accordance with State Law, including MAUCRSA.
(c) Medicinal Cannabis Products Manufacturing is a permitted use only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements.
(d) A Manufacturing Permittee must employ at least one (1) member of its personnel dedicated full time to quality control.
(e) The Manufacturing Permittee must establish standard operating procedures and batch records that comply with current good manufacturing practices and applicable State Law, including MAUCRSA.

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(f) All Cannabis Products produced by a Manufacturing Permittee must be labeled in compliance with applicable State Law, including MAUCRSA. (g) All Cannabis Products produced by a Manufacturing Permittee must be packaged in child resistant containers prior to leaving the Premises fOf such Manufacturing Permittee in accordance with applicable State Law, including MAUCRSA.
(h) Manufacturing Permittees may conduct Manufacturing using any type of solvents, including Volatile Solvents, or Manufacturing processes if such Manufacturing complies with the requirements of this Chapter and State or local law, including but not limited to Health and Safety Code Section 11362.775 (or any successive State Law) all applicable fire and building codes in the City and any other laws of the City designed to ensure the safety of such operation. (i) Manufacturing Permittees using Volatile Solvents for Manufacturing Cannabis Products must operate in a manner to reduce the risk of explosion or danger to public health, including through the use of a close-loop · or solvent dispersion system consistent with the requirements of Health and Safety Code Section 11362.775 (or any successive State Law).

U) If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in California Fire Code Section 202, are to be used in the processing of medicinal Cannabis, then the provisions of California Fire Code Section 407 shall be applicable where hazardous materials are subject to permits under California Fire Code Section 50 (Hazardous Materials) are located on the Premises or where required by the applicable building or fire official.
(k) Storage, use, and handling of compressed gases in compressed gas containers, cylinders, tanks, and systems shall comply with California Fire Code Chapter 53. Partially full compressed gas containers, cylinders, or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with California Fire Code Chapter 50 for general requirements and California Fire Code Chapter 53 addressing specific hazards, including California Fire Code Chapter 58 (Flammable Gases), California Fire Code Chapter 60 (Highly Toxic and Toxic Materials), California Fire Code Chapter 63 (Oxidizers, Oxidizing Gases and Oxidizing Cryogenic Fluids, and California Fire Code Chapter 64 (Pyrophoric Materials). Prevention, control, and mitigation of dangerous conditions related to storage, use, dispensing, mixing, and handling of flammable and combustible liquids shall be in accordance with California Fire Code Chapters 50 and 57.
(I) Labeling Requirements - Edibles.
(1) Before a Manufacturing Permittee prepares any edible Cannabis or edible Cannabis Product for retail sale, it shall be labeled and placed in tamperevident packaging which at least meets the requirements of State Law, including, but not limited to, MAUCRSA.

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ATTACHMENT B Page 655 of 3559
(2) All items to be sold or distributed shall be individually wrapped at the original point of preparation by the Cannabis Permittee. (3) Labeling must include a warning if nuts or other known allergens are used, and must include the total weight (in ounces or grams) of Cannabis in the package, not to exceed ten (10) milligrams of tetrahydrocannabinol (THC) per serving.
(4) A warning that the item is a medication and not a food must be clearly legible on the front of the package and/or must comply with state packing requirements.
(5) The package must have a label warning that the product is to be kept away from children.
(6) The label must also state that the product contains Cannabis and must specify the date of Manufacture and the Manufacture Permittee's information, including, but not limited to, address, and phone number. (7) Distributions must be in a properly labeled opaque package when distributed.
(8) The City Manager, or designee, may impose additional packaging and labeling requirements on Cannabis or Cannabis Products.

5.20.120 Medicinal Cannabis and Cannabis Products Retail Delivery (Retail Delivery Only, Dispensaries Prohibited).
(a) Purpose. The purpose and intent of this Section is to regulate the Retail Delivery of medicinal Cannabis and Cannabis Products in order to promote the health, safety, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to the State Law. (b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Retail Delivery Permits may be issued by the City for the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. The point-of-sale sale of Cannabis or Cannabis Products is strictly prohibited.
(c) Retail Delivery of Cannabis and Cannabis Products is a permitted use only on properties within the applicable Permit Zone with a valid Retail Delivery Permit and other requisite permits and entitlements.
(d) The Retail Delivery of medicinal Cannabis and Cannabis Products may only include the Retail Delivery of Cannabis and Cannabis Products by a Retail Delivery Permittee to a customer, patient or primary caregiver, in accordance with State Law, including MAUCRSA.
(e) Retail Delivery Permittees shall implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing Cannabis

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ATTACHMENT B Page 656 of 3559
and Cannabis Products and theft of Cannabis and Cannabis Products from the Retail Delivery Establishment or employees participating in Retail Delivery. (f) All Cannabis and Cannabis Products shall be stored in a secured and locked room, safe, or vault, and in a manner as to prevent diversion, theft, or loss. (g) Individuals shall not be allowed to remain on the Premises comprising of the Retail Delivery Establishment unless they are engaging in activity expressly related to the operations of the Retail Delivery Establishment or are a customer. (h) A Retail Delivery Permittee shall notify the City Manager or the City Manager's designee within 24 hours of discovering any of the following:
(1) Significant discrepancies identified during inventory. The level of significance shall be determined by the City Manager or the City Manager's designee.
(2) Diversion, theft, loss, or any criminal activity involving the Retail Delivery Establishment or any agent or employee of the Retail Delivery Establishment.
(3) The loss or unauthorized alteration of records related to Cannabis, Cannabis Products, registered qualifying patients, primary caregivers, or Retail Delivery Establishment agents or employees.
(4) Any other material breach of security.
(i) The Retail Delivery of medicinal Cannabis and Cannabis Products shall comply with all State and local Law, including all laws requiring presentment of government-issued identification card, physician's recommendation, or medicinal Cannabis identification card at the time of initial purchase.

U) With respect to medicinal Cannabis, physicians' recommendations for medicinal cannabis use shall be verified by a Retail Delivery Permittee prior to the Retail Delivery any medicinal Cannabis to a qualified patient or primary caregiver and at least every six months thereafter.
(k) A Retail Delivery Establishment may not employ or enter into any agreements with any physicians who recommend medicinal Cannabis; Physician Services are prohibited from any and all Retail Delivery Establishments. (I) A Retail Delivery Permittee shall inspect all Cannabis and Cannabis Products received for quality assurance prior to the Retail Delivery to any Person. (m) The Retail Delivery of Cannabis and Cannabis Products shall occur only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA. (n) Each Retail Delivery Establishment shall do regular monthly inventories and record the total quantity of Cannabis and Cannabis on the Premises. These records shall be maintained for three years from the date created and shall be open to inspection by the City Manager, the City Manager's Designee, and law enforcement.

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ATTACHMENT B Page 657 of 3559
(o) A Retail Delivery Permittee shall register with the City each location where Cannabis or Cannabis Products are stored for purposes of Retail Delivery by such Retail Delivery Permittee within the City.
(p) A Retail Delivery Establishment shall maintain customer and patient and other business records in a secure location (including electronically or cloud-based) j. that is compliant with, as applicable, HIPAA and other federal and state privacy laws.
(q) During the Retail Delivery of Cannabis or Cannabis Products, each vehicle driver shall carry a copy of the Retail Delivery Permit, a copy of the Retail Delivery request, a form of government-issued identification, and all other information required by State and local Law. The driver shall present these documents upon the request of law enforcement, the City Manager, or the City Manager's designee.
(r) Prior to Retail Delivery of Cannabis and Cannabis Products, such Cannabis and Cannabis Products shall be labeled and placed in a tamper-evident package.

Labels and packages of Cannabis and Cannabis Products shall, at minimum, meet the requirements specified under State Law, including MAUCRSA. (s) All Retail Delivery vehicles shall:
(1) Be equipped with, and utilize, a vehicle alarm system. (2) Have and utilize a direct communication system with the related Retail Delivery Establishment.
(3) Keep all Cannabis and Cannabis Products in a secure and locked container.
(4) Have an internal partition between the driver and all passengers from the Cannabis and Cannabis Products storage containers that prevents access by the driver and passengers to all cannabis products from inside the vehicle.
(5) Not carry more Cannabis and Cannabis Products than allowed by State and local Law and required to fulfill all immediate Retail Delivery requests (6) Not display any logo, signage, or other information that identifies, advertises, or lists the services or the products offered.

5.20.130 Medicinal Cannabis and Cannabis Products Distribution. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Distribution of Cannabis and Cannabis Products between Cannabis Permittees in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Commercial Cannabis Activity of Distribution of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Distribution Permits may be issued by the City for the

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\
\
j
ATTACHMENT B Page 658 of 3559
)
j
Distribution of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. Distribution of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. -,
(c) Distribution activities includes the receiving and releasing of Cannabis and Cannabis Products for inspection, Testing, and quality assurance, as required under applicable State Law and such other activities as are permitted pursuant to State Law.
(d) A Distribution Permittee shall only Distribute Cannabis and Cannabis Products between Cannabis Permittees or to facilities or portions of facilities wholly controlled by such Distribution Permittee to the extent permitted by State Law.
(e) A Distribution Permittee shall inspect all Cannabis and Cannabis Products received by it for quality assurance prior to Distributing to any Cannabis Permittee, as required under applicable State Law.
(f) In addition to the application requirements in Section 0, a Distribution Permittee shall register with the City each location within the City where Cannabis and Cannabis Products are stored for purposes of Distribution activities within the City.
(g) A Distribution Permittee shall Distribute Cannabis and Cannabis Products to Cannabis Permittees only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA.
(h) A Distribution Permittee may also hold any other Permit type to the extent permitted by State Law. To the extent permitted by State law, a Distribution Permittee that also holds another Permit type may self-distribute its Cannabis Products.

5.20.140 Medicinal Cannabis and Cannabis Products Microbusiness. (a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis and Cannabis Products Microbusiness in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law, including MAUCRSA.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Microbusinesses, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Microbusiness Permits may be issued by the City pursuant to and in accordance with State Law, including MAUCRSA. (c) All Microrobusinesses shall require a Development Agreement with the City and must be located within the applicable Permit Zone.
(d) All components of a Microbusiness (i.e., Cultivation, Manufacturing, etc.) must be in compliance with the provisions of this Chapter and State Law, including MAUCRSA.

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ATTACHMENT B Page 659 of 3559
(e) The City may authorize the smoking, vaporizing, and ingestion of Cannabis or Cannabis Products on the Premises of a Microbusiness if all of the following are met:
(1) Access to the area where Cannabis consumption is allowed is restricted to persons 21 years of age and older.
(2) Cannabis consumption is not visible from any public place or nonagerestricted area. (3) Sale or consumption of alcohol or tobacco is not allowed on the Premises.

5.20.140 Medicinal Cannabis and Cannabis Products Testing. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Testing of medicinal Cannabis and Cannabis Products in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City intends to be on the forefront of medicinal Cannabis research and Testing. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Cannabis and Cannabis Products Testing, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Testing Permits may be issued by the City for the Testing of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. (c) Testing of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. (d) Each Testing Permittee must employ at least one (1) full time quality control personnel employee.
(e) Testing Permittees must operate, and all Cannabis and Cannabis Products must be properly tested by Testing Permittees, in accordance with applicable State Law.
(f) All Testing devices used by a Testing Permittee must be "UL listed," and/or otherwise approved for the intended use by the City's Building Official, the Fire Department or other person designated by the City Manager or designee. (g) Each Testing Permittee must notify the State Department of Public Health and the City Manager, or the City Manager's designee, within one business day after the receipt of notice of any kind that its accreditation has been denied, suspended, or revoked.

SECTION 10. Recognizing that there is a potential conflict between federal and State law, it is the City Council's intention that this Ordinance shall be deemed to comply with applicable State Law and shall defer to such applicable State Law through preemption.

SECTION 11. The City Council determines that it is in the best interest of the residents of the City to allow Commercial Cannabis Activities in compliance with applicable State Law, including MAUCRSA, to be established and operated as permitted uses within certain areas of the City subject to the regulations and restrictions provided in this

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J
ATTACHMENT B Page 660 of 3559
Ordinance. It is the City Council's intention that nothing in this Ordinance shall be construed to:

1. Allow a Person to engage in conduct that endangers others or causes a public nuisance.

2. Allow any activity relating to Cannabis that is otherwise not permitted under State law.

SECTION 12. The City Council finds that the actions contemplated by this Ordinance are exempt from the California Environmental Quality Act pursuant to Section 15061 (b )(3) and 15305 of the Guidelines, in that the Ordinance alone does not have the potential for causing a significant effect on the environment. Further permits and approvals will be required before any activity that will affect the environment will be permitted. In addition, Business and Professions Code Section 26055 exempts local ordinances from CEQA that authorizes commercial cannabis activity through discretionary review and approval.

SECTION 13. If any section or provision of this Ordinance is for any reason held to be invalid, unconstitutional, illegal, or unenforceable by any court of competent jurisdiction, or contravened by reason of any preemptive legislation, then such section or provision shall be severed and shall be inoperative, and the remainder of this Ordinance shall remain in full force and effect.

SECTION 14. By regulating Commercial Cannabis Activity, the City is only undertaking to preserve the general welfare through implementing the MAUCRSA. The City Council is not assuming, nor is it imposing on its officers and employees, an obligation for which a breach thereof would expose the City to liability in money damages to any Person who claims that such breach proximately caused injury. To the fullest extent permitted by law, the City shall assume no liability whatsoever, and expressly does not waive sovereign immunity, with respect to any provision of this Ordinance or for the activities of any Cannabis Permittee. To the fullest extent permitted by law, any actions taken by a public officer or employee under the provisions of this Ordinance shall not become a personal liability of any public officer or employee of the City. Nothing in this Ordinance shall be deemed or considered in any respects to constitute authorization to violate any law.

SECTION 15. Inconsistent Provisions. Any provision of the Cudahy Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to the extent necessary to implement the provisions of this Ordinance.

SECTION 16. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subs,ection, subdivision, paragraph, sentence, clause or phrase thereof,

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ATTACHMENT B Page 661 of 3559
irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase would be subsequently declared invalid or unconstitutional.

SECTION 17. Publication and Effective Date. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in a newspaper of general circulation within fifteen (15) days after its adoption. This Ordinance shall become effective thirty (30) days after adoption.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Cudahy at the / ." ,_, regular meeting of this 11th day of September, 2017. ,.,_,,,_ /4. ~VY

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

CITY OF CUDAHY
)
)
)
SS:

Chris Garcia
Mayor
I, Richard Iglesias, Deputy City Clerk of the City of Cudahy, hereby certify that the foregoing Ordinance No. 673 was introduced for a first reading on the 14th day of August 2017 and approved for a second reading and adopted by said Council at its regular meeting held on the 11th day of September, 2017 by the following vote, to-wit:

AYES: Markovich, Hernandez, Garcia
)
I
l
NOES: Guerrero
ABSTAIN: None
ABSENT: Sanchez
.. --;' ~ j ~~----'~ -

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Richard lgles~a~ / 7 · · · ·-:---___ __
Deputy City B r:I<
ATTACHMENT B Page 662 of 3559
EXHIBIT "A": OVERLAY ZONE
IIABI! NA~ l'!ATIJRl!B
,-.... I._.J Cuclohy Boundary
-Railroad, EXISTING ZONING - Boundaries of Overlay Zone .,r Portion of High Density Residential Zone which shall be available for Medicinal Commercial Cannabis Activity upon rezoning by the City Council by General Plan Amendment, Zoning Map Amendment, or other means.

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CUDAHY GENERAL PLAN
ATTACHMENT B Page 663 of 3559
ORDINANCE NO. 698
AN ORDINANCE OF THE CiTY COUNCIL OF THE CITY OF
CUDAHY, CALIFORNIA, APPROVING: (:i) A DEVELOPMENT
AGREEMENT [NO" DAl 8-00lCJ BY AND BET\iVEEN THE CITY OF CUDAHY AND VM EVERGR.EENY LLC, A 'WYOMING LIMITED
LIABILITY COMPANY AND (2) TI-0::: ISSUANCE OF A COMfviERCIAL

CANNABIS PERMIT
WHEREAS, to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California adopted Section 65864 et seq. of the California Government Code (the Devdopment Agreement Statute"); and
'WHEREAS, the Development Agreement Statute authorizes the City to enter into a property development agreement with any person having legal or equitable interest in real property for the development of such property in order to establish certain development rights; and WHEREAS, in accordance with California law, the City of Cudahy has adopted Municipal Code Chapter 20.28 (Development Agreements) [Renumbered as Part 9 of the Zoning Code §20.84.530-20.84.640 adopted by the City Council on 7/17/18] establishing the procedures and requirements for the consideration of development agreement with the City; and WHEP.EAS, on September 11, 2017, the City Council for the City of Cudahy passed Ordinance No. 673 establishing regulations and a discretionary review process for the allowance of medicinal-only commercial cannabis activities (cultivation, distribution, manufacturing, deliveries, micro-business and laboratory testing) in a specified Overlay Zone through a development agreement; and
WfIEREAS, all procedures of the California Environmental Quality Act ("CEQA"), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the Califomia Code of Regulations, chapter 3, §15000 et seq. have been satisfied. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 1530 I - Existing Facilities.

This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301;
"WHEREAS, the City of Cudahy Planning Commission ("Planning Commission") conducted a properly noticed public hearing to consider approval of a Commercial Cannabis Permit and a Development Agreement (as defined below), at which testimony and evidence, both written and oral, were presented to and considered by the Planning Commission; and WHEREAS, the City Council shall approve a development agreement by ordinance; and WHER"tAS, subsequent to receipt of a report on the Planning Commission's actions, the City Council conducted a properly noticed public hearing to consider the approval of a Commercial Cannabis Permit and Development Agreement, at which testimony and evidence, both written and

ATTACHMENT C

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O,·dinanc;e No. 698
r.>age 2 ot4
oral, were presented to and co~1Sidered by the City CounciL NOW THEREFORFE) THE CITY COUNCIL 0 11' THE CITY OF CUDAHY DOES ORDAIN AS FOLLOWS:

S]~CTION 1. RECITALS
That the above Recitals are true and correct and are incorporated as though fully set forth herem.

SECTION 2, APPROVAL OF DEVELOPMENT AGREEMENT
That the City Council he::-eby approves the Development Agreement By and Eetv.reen the City of Cudahy and VIVI Evergreen, LLC a Wyoming limited liability company ("Development Agreement11 ) [DA#13-G01C], a copy of which is attached. hereto and incorporated. herein by this reference as Exhibit "A," subject to the terms and conditions stated therein.

SECTION 3. APPROVAL OF COMMERCIAL CANNABIS PERMIT
That the City Council hereby approves Commercial Cannabis Permit No. CC.P 18-0001, subject to th':! terms and conditions stated therein, to allow a Commercial Ca1mabis Facility for the Site located at 8222 Atfantic Avenue, City of Cudahy, CA as set forth in the Development Agreement. A copy of the permit is attached hereto and incorporated herein by this reference as Exhibit "B." The Commercial Cannabis Permit shall be issued upon execution by the City of the Development Agreement.

SECTOI\'! 4. SEVERARILITY
That the City Council declares that, should any provision, section, paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Ordinance as hereby adopted shall remain in full force and effect.

SECTION 5. EFFECTIVE DATE OF ORDINANCE
That this Ordinance shall w.ke effect t.'1..irty (30) days after its second reading by the City Council.

SECTION 6. EXECUTION OF DEVELOPMENT AGRE:E~1ENT
The Development Agreement shrJl not be executed by the City until on or after the effective date of the Ordinance.

SECTION 7. RECORDATION OF DEVELOPMENT AGREEEl\/J'.ENT
That the City Clerk is hereby directed to record the fully executed Development

ATTACHMENT C

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()rdin;:1r;ce -~ io. 6~}g
Pa.t/~ 3 of ,t
Agreement ,vi.th the County Recorder for the County of Les A11geles no later than ten (10) days after its execution.

SECTION ft CERTIFICi\. TION
That the City Clerk shall certify to the passage of this Ordina.1ce and shall cause the same to be published, in full or in summary format, according to law.

PASSEU, APPROVED AND ADOPTED by the City Council of the City of Cudahy at the regular meeting of this 18th day of December, 2018.

ATTEST:

Chris Garcia
Mayor

ATTACHMENT C

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Ordinance No. 698

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STATE OF CALIFORNIA

COUNTY OF LOS ANGELES
CITY OF CUDAB:Y
) ) )

CERTIFICATION
SS:

I, Richard Iglesias, Deputy City Clerk of i:he City of Cudahy, hereby certify that the foregoing Ordinance No. 698 was introduced for a first reading on the 4th day of December, 2018 and approved for a second reading and adopted by said Council at its regular meeting held on the 18th day of December, 2018 by the following vote, to-wit:

AYES: Gonzalez, Hernandez, and Garcia
NOES: Sanchez
ABSENT: None
ABSTAIN: Markovich

ATTACHMENT C

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Page | 1
5220 Santa Ana Street
Cudahy, CA, 90201
Phone: (323) 773-5143
Fax: (323) 771-2072
www.cityofcudahy.com
Mayor
Elizabeth Alcantar
Vice Mayor
Jose R. Gonzalez
Councilmember
Jack M. Guerrero
Councilmember
Blanca Lozoya
Councilmember
Daisy Lomeli
City Manager
Alfonso Noyola, ICMA-CM
Incorporated November 10, 1960
February 22, 2023
SENT VIA EMAIL ([email protected])

VM EVERGREEN, LLC
Attn: Javier Barajas, Operator’s Representative
RE: FINAL DEMAND
8222 Atlantic Avenue – VM Evergreen, LLC
Development Agreement No. DA18-001C
Commercial Cannabis Permit No. 18-0001
Dear Mr. Barajas
On October 10, 2022, City of Cudahy officials, along with officials from other agencies, conducted a site inspection of the subject site. During this inspection, several violations of Building, Mechanical, Electrical, and Plumbing Codes were observed, including occupation of the building without a certificate of occupancy, which rendered the structure unsafe for occupancy. As a result of the unpermitted construction at the subject site, the Building and Safety Division declared the structure, its use, and occupancy unsafe and dangerous and said property 8222 Atlantic Avenue was “red tagged”.

Subsequently, on October 24, 2022, a meeting was scheduled with you, your legal counsel, City staff, and the City’s legal counsel to discuss next steps. City staff and the City’s legal counsel provided you with the first necessary steps to bring your operation back on track to achieve compliance. City Staff and the City’s legal counsel asked for an updated project description and site plan.

On November 7, 2022, City staff received an updated project description and site plan from your legal counsel.

On November 21, 2022, City staff reviewed and denied updated project description and site plan and provided the following comments:

Plan Review Comments
Based on our previous inspection of the site and our city records, we have not been able to find any permits showing the approval of the mezzanine or the drywall of the areas above them (ex. attic spaces). Therefore, those improvements appear to have been made without any permits or city approval. If the applicant is representing those existing areas as permitted, then applicant will have to provide the city with proper documentation (ex. permits) showing the approval of those areas. Property documentation may include showing records from the Los Angeles County Assessor’s office showing permits and final approval of the areas in question.

Project Description Comments
Additionally, during our site visit we observed work and alterations made to the site without permits or approval from Planning or Building and Safety Department including Plumbing, Electrical, ATTACHMENT D Page 668 of 3559

ATTACHMENT D

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ATTACHMENT D

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ATTACHMENT D

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ATTACHMENT D

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ATTACHMENT D

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ADMINISTRATIVE RECORD FOR

REVIEW HEARING
VM Evergreen, LLC
January 8, 2024
1 of 1055 ATTACHMENT E Page 674 of 3559
“Serving The People” "Sirviendo A La Comunidad"
Review Hearing Staff Report
01/08/2023 Page 1 of 13

REVIEW HEARING STAFF REPORT
Date:

To:

From:

Subject:

January 8, 2024
Hearing Officer, Steve Napolitano Esq.

Juan Arauz, AICP, Community Development Director
Prepared by: Cecilia Madrigal-Gonzalez, Senior Planner
Concurrence: Raul Diaz, Building Official, Joshua Calhoun, Finance Director, Glenn Ward Calsada, Special Counsel, Paloma McEvoy, Assistant City Attorney.

Compliance Hearing relating to Development Agreement (“DA”) 18-001C between VM Evergreen, LLC (“Operator”) and the City of Cudahy (“City”).

RECOMMENDATION
Staff recommends that the Hearing Officer take the following action(s):

1. Hear the evidence presented by the City and the Operator; and

2. Make a determination that the Operator is not in compliance with the terms and conditions of DA18-001C with the City and find that the Operator is in default of contractual obligations set forth in the DA; and

3. Make a recommendation to the City Manager for the Planning Commission and City Council to adopt an ordinance repealing Ordinance No. 698 and terminate DA18-001C and revoke the Operator’s interest under CCP 18-001.

BACKGROUND
On September 11, 2017, the City adopted Ordinance No. 673 (Attachment A) establishing the City’s Cannabis regulations which added Chapter 5.20 to the Cudahy Municipal Code (“CMC”).

CMC Section 5.20.040 authorizes medicinal commercial cannabis activities within a designated overlay zone/permit area and pursuant to the development agreement adopted in accordance with the Development Agreement Law (Gov. Code § 65864 et seq.) and CMC Chapter 20.28.

On November 19, 2018, the Planning Commission conducted a properly noticed public hearing to consider a commercial cannabis permit application for cannabis cultivation, manufacturing, distribution, delivery and non-cannabis café activities proposed at 8222 Atlantic Ave (“Site”).

On a 2-1 vote, the Planning Commission continued the item to a date uncertain. 2 of 1055 ATTACHMENT E Page 675 of 3559
“Serving The People” "Sirviendo A La Comunidad"
Review Hearing Staff Report
01/08/2023 Page 2 of 13
On November 23, 2018, the City received a formal written correspondence (Attachment Z) in the nature of an appeal from the Operator requesting that the City Council hold an immediate hearing on their applications for a CCP and a DA. The Operator cited that the Planning Commission’s failure to timely act on their applications was for no legitimate land-use reason and its continuation of a decision on the matter to an unspecified future hearing date is an unjustified delay in the processing of the CCP and DA resulting in substantial injury and significant competitive disadvantage. Furthermore, in such circumstances, the Planning Commission’s indecision and/or purposeful delay resulted in a defacto denial of the applications for the commercial cannabis permit and development agreement without expressed findings of facts as required by law.

On December 4, 2018, the City approved and issued the CCP18-001 to the Operator and the conducted the first reading to adopt Ordinance No. 698 (“Ordinance”) (Attachment B) approving DA18-001C (Attachment C) inclusive of Exhibits A-F (Attachment D) between Operator and the City authorizing commercial cultivation, manufacturing, distribution, delivery activities and non-cannabis cafe at the Site as illustrated in Figures 1 and 2 below. Furthermore, the City Council instructed the Planning Commission to finish the November 19, 2018, public hearing for the CCP (Attachment AA). On December 17, 2018, the Planning Commission approved the CCP subject to the approval of the DA. The second reading of the Ordinance was conducted and approved on December 18, 2018, with an effective date of January 17, 2019.

On February 11, 2019, Javier Barajas, the Operator’s Managing Member, executed DA18-001C.

Recital I of the Development Agreement permits the Operator to utilize approximately 4,120 square feet (“sf”) for cultivation activities, 6,050 sf for manufacturing, 2,810 sf for distribution, 400 sf for delivery, and 4,120 sf for non-cannabis use such as a lounge café and office.

FIGURE 1 – AERIAL OF SITE
Site
8222 Atlantic Ave
3 of 1055 ATTACHMENT E Page 676 of 3559
“Serving The People” "Sirviendo A La Comunidad"
Review Hearing Staff Report
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FIGURE 2 – BUILDING SITE PLAN LAYOUT
On October 2, 2019, the City provided the Operator with a Notice of Delinquency due to payment non-compliance (Attachment E) with the Development Agreement and Commercial Cannabis Permit, inclusive of the payment of Community Benefit Fees, Cost Recovery Fees, and NonOperating Fees1 in the amount of eight thousand fifty-seven dollars and five cents ($8,357.05).

The Operator was given no later than October 17, 2019, to cure the past due amounts, however, the default was not timely cured.

On June 23, 2021, the City received a request from the Operator to update the floor plans as described in Attachment F. The City has no record of approval or denial of this request.

Under Section 5.d of DA18-001C the City Manager or his/her designee(s) have the right to enter the Site from time to time unannounced for the purpose of making reasonable inspections to observe and enforce compliance with the Development Agreement and state and local laws and regulations without the requirement of a search warrant, subpoena, or court order. On September 29, 2022, City staff had a scheduled site inspection at the Site, however, City staff were refused entry by the Operator. On October 10, 2022, City staff conducted a follow-up inspection of the Site and found several violations as detailed in Attachment G which resulted in a determination that the unpermitted construction and improvements resulted in an unsafe and dangerous structure and further required all building violations to be remedied before people could re-enter or occupy the structure, more commonly known as “red-tagging.” On October 24, 2022, a meeting was scheduled with the Operator, their legal counsel, City staff, and the City’s legal counsel to discuss the Operator’s default status next steps to get back into 1 As used herein, the terms Operating Fees and Non-Operating Fees are used interchangeably. 4 of 1055 ATTACHMENT E Page 677 of 3559
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compliance. City staff and the City’s legal counsel verbally provided the Operator with the first necessary steps to bring their operation back on track to achieve compliance which included an updated project description and site plan.

On November 7, 2022, the City received an updated project description and site plan (Attachment H) for City staff to review. City staff, including the Building & Safety and Planning Divisions, reviewed the plans and provided comments resulting in a denial on November 21, 2022 (Attachment H) because the submitted plans proposed to maintain previously unpermitted work and alterations without seeking the proper modifications of the development agreement, building permits and approvals to ensure that work is carried out in accordance with building code requirements.

On November 30, 2022, City staff reached out to the Operator for a status update on the project description and site plan and instructed the Operator to contact the Building and Safety Division for further permit application requirements (Attachment H). The Operator did not show substantial progress on remediating their building red-tag status. In fact, the City did not hear back from the Operator until February 2023.

On December 6, 2022, the City Manager presented the City Council with a proposed Cannabis Deferment and Payment Program (“Payment Agreement”) to assist cannabis operators with the accumulated non-operating and other fees by deferring and providing additional time for payment without penalty. All cannabis operators interested in participating in this program were given no later than January 31, 2022, to execute a Payment Agreement (Attachment I). The City Manager did not receive a request from the Operator to participate in the Payment Agreement.

On February 17, 2023, the Operator reached out to the City requesting the removal of the redtag status at the Site and a request to modify the DA (Attachment H). On February 22, 2023, the City issued a Final Demand Letter (Attachment J) summarizing the previous discussions between City staff and the Operator, reminding the Operator of its default status under DA18-001C, and provided the Operator with thirty (30) days to cure outstanding violations.

On or about March 2, 2023, the Operator requested to enter into a Payment Agreement (Attachment H).

On March 6, 2023, the Operator provided an updated site plan for City staff to review (Attachment H). The site plan provided was identical to the one previously provided to the City on November 7, 2022, and thus the City’s prior comments for unpermitted improvements were still applicable. Additionally, the submitted plans, which only included a site plan, were not adequate because they did not include information on framing, electrical, and mechanical plans.

The Operator was instructed to reach out to the Building & Safety Division for further assistance.

In fact, the Operator was not able to adequately address all deliverables outlined in the Final Demand Letter (Attachment J).
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On or about March 21, 2023, the City’s Finance Department presented the Operator with a draft payment plan (Attachments K and CC), which offered the following terms:
• Deferral of Payment of Non-Operating Fees until six (6) months after a Temporary Certificate of Occupancy and then twelve (12) months to repay the amounts due; and • Repayment of past due Community Benefits Fees and Cost Recovery Fees over a twelve (12) month period; and
• Payment of fees due for February 2023 at the time of executing a payment plan with the City.

The Operator rejected the proposed terms and instead countered the offer (Attachment L), claiming the Operator had suffered “huge financial losses” and “multiple break-ins when hundreds of thousands of dollars' worth of equipment was stolen.” The City obtained reports made to law enforcement which reflected several thousand dollars worth of losses, but not in the hundreds of thousands as alleged by the Operator (Attachment FF). The City rejected the offer (Attachment M) on March 22, 2023.

On April 12, 2023, the Operator requested to meet with City staff to discuss the Operator’s payment plans, financial situation and the appropriate steps moving forward. The City’s legal counsel met with the Operator’s legal counsel on May 3, 2023.

On May 8, 2023, the Operator submitted a revised request for a payment agreement for the past due fees under DA18-001C (Attachment N) to the City.

On May 12, 2023, the Operator and the City entered into a Letter Agreement on Payment of Outstanding Fees and Costs (“Letter Agreement”) (Attachment O). The Letter Agreement’s terms required the Operator to maintain current on Community Benefit and Cost Recovery payments but deferred the payment of Non-Operating Fees until six (6) months after the Operator received a Temporary Certificate of Occupancy for the Site. In the Letter Agreement, the Operator also acknowledged and agreed “that the past due amounts stated are true and correct and are in fact presently due and owing. The parties agree that the Operator is in status’ on its obligations under its Development Agreement with the City...[and would] remain in ‘default status’ on its Development Agreement until all past due fees set forth in [the] Letter Agreement have been paid and Operator is in full compliance with all terms of its Development Agreement.” The Letter Agreement also provided that if the Operator is more than thirty (30) days late on any of the forbearance payments due under the Letter Agreement or fees and costs under the Development Agreement would be deemed a material breach of the Letter Agreement.” The Letter Agreement that in the event of a material breach under the Letter Agreement, the Letter Agreement would be deemed “null and void, and the City shall be entitled to full payments and sums due and owing to the City at the time of the breach.” 6 of 1055 ATTACHMENT E Page 679 of 3559
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From June 2023 through October 2023 the City notified the Operator with invoices as well as two (2) notices of delinquency (Attachment P) and provided an opportunity to cure outstanding payments due. However, the breach on the Letter Agreement was not cured and therefore was terminated and no longer in full force. Accordingly, the total of all past due amounts at the time the Letter Agreement was terminated was due and owed.

On August 9, 2023, the City issued letters(Attachment Q) requiring all cannabis operators to open an escrow account to ensure payment of cost recovery fees consistent with the escrow accounts required to be opened and maintained by all project developers within the City. As of the writing of this report, the Operator has not opened an escrow account nor made any payments into the account.

On September 6, 2023, the Operator requested a new payment plan arrangement due to financial hardship but did not provide any terms for a new payment agreement (Attachment R).

On October 17, 2023, the City Council, at a regularly scheduled council meeting, considered the request from the Operator for a forgiveness of fees and repayment plan request citing financial hardship. City Staff recommended denial of the repayment plan based on the Operator’s (1) “redtag” status at the site due to noncompliant and unpermitted work; (2) failure to open an escrow account for cost recovery fees; and (3) failure to pay the fees due pursuant to the DA executed between the City Council and Operator and previous payment plan arrangements made between the City and Operator. After public comment and deliberation by the City Council, the City Council tabled further discussion of the item, requesting more information regarding amounts paid to the City: (1) from the execution of the Development Agreement until the start of the COVID-19 pandemic (April 2018-March 2020); (2) during the COVID-19 pandemic (April 2020-June 2021); (3) from the end of the COVID-19 pandemic and the burglary that was reported by the Operator (July 2021-January 2023); (4) from the time of the burglary to present (February 2023-November 2023); and (5) the terms of the repayment and the exact amount Operator is seeking the City to waive. The City Council agenda and staff report from the October 17, 2023, meeting is provided as Attachment S.

On October 24, 2023, the City issued a letter (Attachment T) updating the Operator on their payment and fees related to the DA by correcting the amount due to an error in the total amount billed. The City provided a credit in the amount of fourteen thousand nine hundred fifty dollars and fifty cents ($14,950.50).

On November 7, 2023, the City Council, at a regularly scheduled meeting, continued deliberations with the payment information requested above. The Operator failed to provide further information regarding the amount the Operator requested to waive or any other documentation regarding the Operator’s payment history nor did the Operator have any representatives present at the November 7, 2023, City Council meeting. After an opportunity for public comment and deliberations, the City Council voted to deny the Operator’s request. The City Council agenda, 7 of 1055 ATTACHMENT E Page 680 of 3559
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staff report and PowerPoint from the November 7, 2023, Council meeting is provided as Attachment U and X.

On November 27, 2023, the City sent a letter to the Operator (Attachment V) formally denying their request for a new payment plan arrangement and forgiveness of fees. Furthermore, the letter stated the Operator continues to be in default status along with other outstanding violations. Community Benefit Fees, Cost-Recovery and Non-Operating Fees plus penalties continue to accrue and the total amount due may be higher as of the date of the Review Hearing on January 8, 2023.

On November 27, 2023, the City issued to the Operator a Notice of Review Hearing with the hearing date, time, and place (Attachment W).

On December 19, 2022, the City received correspondence from the Operator stating they would be out of town and would not be able to attend the hearing (Attachment GG).

DISCUSSION/ANALYSIS
Under Section 19 of the Development Agreement, if the “City finds and determines based on substantial evidence that, Owner or Landlord executing [the] Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of the Agreement, City may terminate or modify [the] Agreement (except that no modification shall increase Owner’s liability nor reduce Owner’s rights).”
Pursuant to the CMC Section 5.20.080(6)(a), “[a]ny material violations of this chapter or any other relevant city law by a cannabis permittee, or cannabis permittee’s agent, is grounds for suspending or revoking the relevant cannabis permit.” To suspend or revoke a cannabis permit the City Manager must determine “that the cannabis permittee has failed to comply with any conditions of approval, or any agreement or covenant.”
City staff recommend the Hearing Officer review the material violations and evidence and make the following findings in support of finding the Operator to be in default of DA18-01C.

Violation #1. Breach of Payment Obligations. Pursuant to the DA Section 5.b (Community Benefit Fees), Section 7.c (Operating Fees) and Section 8 (Cost Recovery Fees), the Operator must pay the City an annual Community Benefit Fee in the amount of $66,667.00 ($13,333.40 down payment and monthly payments in the amount of $5,333.36), a Cost Recovery Fee, and an Operating [or Non-Operating] Fee each year since March 2018. Table 1 below provides a full accounting of the payments submitted by the Operator from the execution of DA18-001C from 2018 to the present.
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TABLE 1 – SCHEDULE OF PAYMENT MADE
Payment Date Payment Amount
04/15/2019 $13,333.40
04/25/2019 $5,333.36
06/05/2019 $5,333.36
10/21/2019 $15,000.00
11/18/2019 $15,000.00
03/01/2021 $13,333.40
1/12/2021 $51,008.035
04/12/2021 $161,331.98
06/10/2021 $27,297.24
07/16/2021 $5,333.36
08/13/2021 $9,099.08
07/05/2023 $1,781.91
07/05/2023 $5,333.36
As demonstrated in Table 2 above, between April 2019 to November 2023, the Operator made thirteen (13) payments out of the possible fifty-five (55) payments. Operator and City entered into a second repayment plan on May 12, 2023 (Letter Agreement) (Attachment O). The terms of the Letter Agreement required the Operator to start making payments in June 2023 and remain current on Community Benefits and Cost Recovery Fees, but deferred the payment of Non-Operating Fees until six months after the Operator received a temporary certificate of occupancy for the Site. During this time, the Operator made two (2) payments.

The Operator has not made the required timely payments and as of December 12, 2023, is past due in the amount of $441,068.48 as shown in Table 2 below. The total amount due continues to accumulate, inclusive of Cost Recovery Fees, Non-Operating Fees, Community Benefit Fees, and late payment penalties. Accordingly, the Operator is in breach of its payment obligation under DA No. 18-001C and the Letter Agreement. The Operator must pay all required DA fees in accordance with DA terms. Failure to pay fees constitutes a breach of the DA and may result in suspension or immediate revocation of the DA.

TABLE 2 – SUMMARY OF PAST AND CURRENT AMOUNTS DUE AS OF DECEMBER 12, 20232 Fee Type Payment Amount Due
Community Benefit Program $154,667.44
Cost Recovery Fee $65,729.86
Non-operating Fee $168,704.25
2 The amount due at the time of the Review Hearing may differ than the amount presented in Table 2. The City reserves the right to present updated information reflecting the actual amounts owed at the time of the Review hearing.
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Late Penalties $51,966.93
TOTAL: $441,068.48
Finding 1. The Operator breached the terms of DA18-001C by failing to make all required payments to the City that are required pursuant to the terms of DA18-001C.

Evidence: On February 11, 2019, VM Evergreen, LLC executed Development Agreement No. 18- 001C, which is a legally binding contract between the Operator and the City requiring payment of fee pursuant to Section 5.b (Community Benefit Fees), Section 7.c (Operating Fees) Section 8 (Cost Recovery Fees). In addition, in accordance with Section 7.c(1), late payment of NonOperating Fees is subject to penalties that begin to accrue once a payment is more than thirty (30) days late. In December 2022, the City offered a Payment Agreement to the Operator but the City did not receive any interest from the Operator. On February 22, 2023, the City issued the Operator a Final Demand Letter declaring a default status due to noncompliance with DA18- 001C. Shortly after, the Operator requested a payment plan and on March 21, 2023, the City presented the Operator with a payment plan offer. The Operator was not in agreement with the proposed terms of the offer and countered the payment plan to a reduced amount. The City did not accept the terms of the proposed amount but continued good-faith negotiations and met with the Operator to discuss their financial situation. On May 12, 2023, the Operator entered into a new payment agreement (Letter Agreement) (Attachment O) and the first payment was due in June 2023. The Operator did not make the required payments and did not cure the default and as a result, the payment plan was null and void on October 13, 2023 (Attachment P). Proper notice of default was given with the opportunity to cure, although such notice and opportunity were not required under the Letter Agreement, but the Operator has failed to fulfill its monetary obligations owed to the City. This failure is a material breach of the DA and grounds for termination of the DA.

Furthermore, as requested by the Operator, City staff presented their September 6, 2023, request for an additional payment plan and forgiveness of fees to the City Council (Refer to Attachments S, U and X). The Operator failed to express their proposed amount to be waived or a repayment schedule as requested by the City Council. Additionally, the Operator did not attend the November 7, 2023, City Council meeting and thus the City Council voted in favor of denying the payment plan request and forgiveness of fees.

In the event that the Operator asserts that City Officials previously made representations that nonretail cannabis operators would not have to pay Non-Operating Fees – no such authority is granted under the CMC nor the Development Agreement.

Forgiveness of fees due to a government agency, if not for a public purpose, constitutes an unlawful gift of public funds in violation of Article XVI, Section 6 of the California Constitution. The Operator agreed to pay the Non-Operating Fees through the execution of DA18-001C, which is further reinforced through the execution of a Letter Agreement which acknowledged the amounts due under DA18-001C.
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Second, if the Operator asserts that it was unable to move forward with its project due to closures at City Hall caused by the COVID-19 pandemic and performance under DA18-001C is excused under Section 23.i (Force Majuere), this argument would also fail. Any argument that the Operator was unable to move forward with its project due to closures at City Hall caused by the COVID-19 pandemic also fails. During the height of the pandemic, City Hall’s physical premises were closed to the public, however, the City continued to conduct business, and process requests, including applications for building permits which could be dropped off at the front of City Hall. Additionally, both commercial cannabis activities and commercial construction were permitted by the authority granted to the State Public Health Officer pursuant to Executive Order N-33-20 (Attachment EE.) Lastly, the Operator’s default and failure to comply with DA18-001C began prior to the onset of the COVID-19 pandemic in March 2020 and continues as of the writing of this report.

Third, if the Operator asserts that any of the fees due under DA18-001C are subject to the Mitigation Fee Act, such assertion is not supported by the law. These fees are a part of the Development Agreement entered into between the City and the Operator and were enacted via ordinance pursuant to Development Agreement Law (Gov. Code §§ 65864-65869.5). Fees imposed by development agreements are expressly exempt from the Mitigation Fee Act. Gov.

Code § 66000(b) (“‘Fee’ means a monetary exaction other than a tax or special assessment…but does not include…fees collected under development agreements adopted pursuant to Article 2.5 (commencing with Section 65864) of Chapter 4…”). Therefore, these fees are not subject to the Mitigation Fee Act and are due and owed to the City.

Further, even if the Mitigation Fee Act were applicable to the Contested Fees, to properly contest the Contested Fees, the Operator would have been required to tender the required payment, in full and serve written notice to the City that informs the City that payment has been tendered under protest accompanied by a statement of facts. Gov. Code § 66020(a). However, such protests must be filed at the time of the approval of the development or within ninety (90) days of the imposition of fees. The City and Operator entered the Development Agreement on February 11, 2019. The 90-day statute of limitations to protest such fees ended on May 12, 2019, and has Operator tendered payment in full as required by Government Code Section 66020(a).

Therefore, any opportunity to protest under the Mitigation Fee Act has long since passed.

Fourth, if the issue is raised by the Operator, the holdings in Nollan v. California Coastal Commission and Dolan v. City of Tigard do not apply to the Contested Fees. Nollan, (1987) 483 U.S. 825; Dolan, (1994) 512 U.S. 374. The U.S. Supreme Court holding in Nollan requires exactions to (1) bear a nexus to the burdens imposed by development; and (2) substantially advance a legitimate state interest. The 5-4 U.S. Supreme Court decision in Dolan refines the second prong of the Nollan test and requires development conditions to have a “rough proportionality” to a proposed development’s impact. Dolan at p. 391. 11 of 1055 ATTACHMENT E Page 684 of 3559
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However, the holdings in these cases are inapplicable to the fees due under DA18-001C, which was adopted by ordinance. Here, the Court notably limited the holding to adjudicative decisions, and not legislative decisions. Id., at p. 385; see also Lingle v. Chevron U.S.A., (2005) 544 U.S. 528, 547 (reaffirming that the rough proportionality requirement applies to adjudicative decisions and not legislative decisions), Leroy Land Development v. Tahoe Regional Planning Agency (1991) 939 F.2d 696, 698 (holding that separately negotiated agreements are not subject to an unconstitutional “takings” analysis because the agreements were entered into voluntarily, in good faith and supported by consideration). In consideration for the fees due under the development agreement, Operator received a ten (10) year term with an option to renew for another ten (10) year term to operate a medicinal commercial cannabis facility.

Finding 2: Pursuant to the Letter Agreement, “[t]he failure to pay the past due delinquency as required by the notice shall be deemed an uncured event of default and a basis for termination of the Development Agreement. Nothing in this provision abrogates any other remedies available to the City under the Development Agreement for an event of default.” Evidence: As stated above, the Letter Agreement contained language in which the Operator, Operator “acknowledge[d] and agree[d] that past due amounts stated are true and correct and are in fact presently due and owing.” Operator made only two payments under the Letter Agreement. Pursuant to the foregoing evidence, the Operator’s non-payment of fees due under the Letter Agreement are grounds for termination of DA18-001C.

Violation #2. Failure to comply with Section 5.b of DA18-001C. Section 5.b permits the City Manager or his/her designee to enter the premises for the purpose of determining the Operator’s compliance with the DA terms, state and local laws and regulations.

Finding 3: Operator failed to comply with the terms of DA18-001C when it failed to permit City staff enter onto the premises on September 29, 2022.

Evidence: As previously stated, City staff gave the Operator reasonable notice that it intended to enter the premises to determine whether the Site was in compliance with the terms of DA18- 001C. Despite giving prior approval, city staff were denied entry onto the site on September 29, 2022. Staff were provided access to the Site on October 10, 2022 which resulted in the discovery of unpermitted work that was inconsistent with the Site Plan and Floor Plan approved in conjunction with DA18-001C.

NOTICE
Pursuant to Section 22 of the Development Agreement the City sent a Review Hearing notice via certified mail, and a courtesy email notice, to all concerned parties on November 27, 2023. The notice advised that the Review Hearing would be held on the hearing date at such location designated in (Attachment W). Proof of certified mailing is provided in (Attachment Y). 12 of 1055 ATTACHMENT E Page 685 of 3559
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ENVIRONMENTAL ANALYSIS
The action(s) have been assessed in accordance with the California Environmental Quality Act (“CEQA”) (Pub. Res. Code § 21000 et seq.) and the environmental regulations of the City. The Project is expected to be categorically exempt from the requirements to prepare additional environmental documentation per CEQA Guidelines Section 15321. Class 21 (Enforcement Actions by Regulatory Agencies) is applicable to “Actions by regulatory agencies to enforce or revoke a lease, permit, license, certificate, or other entitlement for use issues, adopted, or prescribed by the regulatory agency or enforcement or a law, general rule, standard, or objective, administered or adopted by the regulatory agency.” Therefore, the action(s) are categorically exempt from the provisions of CEQA.

CONCLUSION
It is the City’s purpose and intent to regulate cannabis activities within the City in a responsible manner to protect the health, safety, and welfare of the residents of Cudahy and to enforce rules and regulations consistent with California Cannabis laws. CMC §5.20.010. Cannabis Operators with development agreements are obligated to comply with all provisions of the CMC, obligations of DA18-001C and conditions of approval under CCP18-0001. As discussed above and based on the evidence attached to this report, the Operator has failed to comply with their obligations despite being provided with ample notice and opportunities to achieve compliance. Therefore, staff recommends the Hearing Officer after independent review, consideration, analysis of staff’s report and the information presented, oral and written testimony by all parties and their witnesses, and the record as a whole – make a determination the Operator, VM Evergreen, LLC, has breached the terms and conditions DA No. 18-001C and recommend that the Planning Commission and City Council repeal Ordinance No. 698 and terminate DA18-001C and revoke their related interest in CCP18-001.

ATTACHMENT(S)
A. Ordinance No. 673
B. Ordinance No. 698
C. Development Agreement (DA) 18-001C
D. Exhibits A-F
E. October 2, 2019 – Notice of Delinquency
F. June 23, 2021 – Floor Plan Update Request from Operator G. October 10, 2022 – Building Violation Letter to Operator H. Correspondence between the City and Operator
I. December 6, 2022 – City Manager Payment Plan Offer
J. February 22, 2023 – Final Demand Letter
K. Draft Payment Plan Offer – Correspondence
L. Operator Correspondence to Draft Payment Plan
M. City Correspondence – Rejection of Draft Payment Plan terms N. May 8, 2023 – Correspondence on revised payment plan O. Letter Agreement on Payment of Outstanding Fees & Costs 13 of 1055 ATTACHMENT E Page 686 of 3559
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P. Invoices & Letter of Delinquency
Q. Escrow Account Correspondence
R. Operator correspondence for Payment Plan
S. October 17, 2023 - City Council Agenda & Staff Report T. October 24, 2023 – Letter Correspondence of update of outstanding payments and fees U. November 7, 2023 – City Council Agenda & Staff Report V. November 27, 2023 – City Correspondence of Deny of Payment Plan W. Notice of Review Hearing
X. November 7, 2023 – City Council PowerPoint
Y. Proof of Certified Mailing
Z. Operator Letter of Request to City Council to consider approval of CCP AA. December 4, 2018 – City Council Agenda & Staff Report BB. March 6, 2023 – Update to Site Plan from Operator
CC. Correspondence – Proposed draft payment plan between City and Operator DD. California Department of Cannabis Control Website as of December 23, 2023 EE. Executive Order N-33-20
FF. Los Angeles Sheriff's Department Incident Reports
GG. December 19, 2023 – Correspondence from Operator
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ATTACHMENT A.

Ordinance No. 673
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ORDINANCE NO. 673

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY AMENDING TITLE 5 (BUSINESS LICENSES AND
REGULATIONS) AND TITLE 20 (ZONING) OF THE

CUDAHY MUNICIPAL CODE TO PROHIBIT CANNABIS

RETAILERS/DISPENSARIES CITYWIDE AND TO

ESTABLISH REGULATIONS AND A DISCRETIONARY

REVIEW PROCESS FOR THE ALLOWANCE OF

MEDICINAL-ONLY COMMERCIAL CANNABIS ACTIVITIES
(CULTIVATION, DISTRIBUTION, MANUFACTURING,

DELIVERIES, MICROBUSINESS, AND LABORATORY

TESTING) IN A SPECIFIED OVERLAY ZONE THROUGH A

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Cudahy City CouncilJuly 16, 2024

Cudahy City Council
July 16, 2024