Cudahy City Council
August 20, 2024

AGENDA

A REGULAR MEETING

OF THE CUDAHY CITY COUNCIL
and JOINT MEETING of the
CITY OF CUDAHY AS SUCCESSOR AGENCY and HOUSING SUCCESSOR AGENCY

TO THE CUDAHY DEVELOPMENT COMMISSION
Tuesday, August 20, 2024 – 6:30 P.M.

Written materials distributed to the City Council within 72 hours of the City Council meeting shall be available for public inspection at www.cityofcudahy.com In compliance with the Americans with Disabilities Act (ADA) if you need special assistance to participate in this meeting, you should contact the City Clerk’s Office at (323) 773-5143 at least 72 hours in advance of the meeting.

Rules of Decorum
Under the Government Code, the City Council may regulate disruptive behavior that impedes the City Council Meeting.

Disruptive conduct may include, but is not limited to:
• Screaming or yelling during another audience member’s public comments period; • Profane language directed at individuals in the meeting room; • Throwing objects at other individuals in the meeting room; • Verbal altercations with other individuals in the meeting room; and • Going beyond the allotted three-minute public comment period granted.

When a person’s or group’s conduct disrupts the meeting, the Mayor or presiding officer will request that the person or group stop the disruptive behavior and WARN the person or group that they will be asked to leave the meeting room if the behavior continues.

If the person or group refuses to stop the disruptive behavior, the Mayor or presiding officer may order the person or group to leave the meeting room and may request that those persons be escorted from the meeting room. Any person who, without authority of law, willfully disturbs or breaks up a City Council meeting is guilty of a misdemeanor. (Pen. Code, § 403.)
Jose R. Gonzalez, Mayor
Elizabeth Alcantar, Vice Mayor
Martin U. Fuentes, Council Member
Cynthia Gonzalez, Council Member
Daisy Lomelí, Council Member
This meeting will be conducted in
person.

Clara Street Park
Turner Hall
4835 Clara Street
Cudahy, CA 90201

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

1. CALL TO ORDER

2. ROLL CALL
Council / Agency Member Fuentes
Council / Agency Member Gonzalez
Council / Agency Member Lomelí
Vice Mayor / Vice Chair Alcantar
Mayor / Chair Gonzalez

3. APPROVAL OF AGENDA

4. PLEDGE OF ALLEGIANCE

5. LAND ACKNOWLEDGMENT
We would like to acknowledge that the land we inhabit today was once known as Tovangaar, the home of the Gabrieleño-Tongva people. We show our respects to the Gabrieleño-Tongva people, as well as all Indigenous people, past, present, and future, and honor their labor as original caretakers of this land. We commit to uplifting the Gabrieleño-Tongva people, invite you to acknowledge the history, and join us in caring for this land.

6. PRESENTATIONS
A. Strategic Plan Update

7. PUBLIC COMMENTS
(Each member of the public may provide a public comment, all participants who wish to make a public comment must submit a comment card. Only speakers that submit a comment card within the first 20 minutes of the meeting will be permitted to speak. Members of the public are permitted to speak for three (3) minutes.)
(Any person who, without authority of law, willfully disturbs or breaks up a City Council meeting is guilty of a misdemeanor. (Pen. Code, § 403).)

8. CITY COUNCIL COMMENTS / REQUESTS FOR AGENDA ITEMS (Each Council Member is limited to three minutes.)
(This is the time for the City Council / Agency to comment on any topics related to “City Business,” including announcements, reflections on city / regional events, response to public comments, suggested discussion topics for future council meetings, general concerns about particular city matters, questions to the staff, and directives to the staff (subject to approval / consent of the City Council majority members present, regarding staff directives). Each Council / Agency Member will be allowed to speak for a period not to exceed three (3) minutes. Notwithstanding the foregoing, the City Council

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

Members shall not use this comment period for serial discussions or debate between members on City business matters not properly agendized. The City Attorney shall be responsible for regulating this aspect of the proceeding.)

9. CITY MANAGER REPORT (information only)

10. REPORTS REGARDING AD HOC, ADVISORY, STANDING, OR OTHER COMMITTEE

MEETINGS

11. WAIVER OF FULL READING OF RESOLUTIONS AND ORDINANCES (Consideration to waive full text reading of all Resolutions and Ordinances by single motion made at the start of each meeting, subject to the ability of the City Council / Agency to read the full text of selected resolutions and ordinances when the item is addressed by subsequent motion.) (COUNCIL / AGENCY)
Recommendation: Approve the Waiver of Full Reading of Resolutions and Ordinances.

12. CONSENT CALENDAR
(Items under the Consent Calendar are considered routine and will be enacted by one motion, prior to the vote to approve the Consent Calendar, each Council Member shall have a maximum of three (3) minutes to comment on the Consent Calendar as a whole. There will be no separate discussion of these items unless a Council / Agency Member so requests specific item(s) be removed from the Consent Calendar for separate action. Items may only be considered as a separate action if either (1) a Council Member must recuse themselves due to a conflict of interest or (2) a Council Member has specific questions for City Staff. Items called for separate discussion will be heard as the next order of business.) A. Consideration to Review and Approve the Draft Minutes of July 16, 2024, for the Regular Meeting of the City Council and the Joint Meeting of the City of Cudahy as Successor Agency and Housing Successor Agency to the Cudahy Development Commission (page 9) Presented by the City Clerk
Recommendation: The City Council is requested to review and approve the City Council / Successor Agency Draft Minutes for July 16, 2024.

B. Approval of the Local Agency Investment Fund (LAIF) for the Month of July 2024 (page 27) Presented by the Finance Director
Recommendation: The City Council is requested to approve the Local Agency Investment Fund (LAIF) Report for the month of July 2024 in the amount of $13,009,745.74.

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

C. Approval of the City Demands and Payroll Including Statement of Investment for the Month of July 2024 (page 31)
Presented by the Finance Director
Recommendation: The City Council is requested to approve the Demands and Payroll in the amount of $3,641,311.49 including the Statement of Investments for the month of July 2024.

D. Adoption by Second Reading of Ordinance No. 750 repealing Ordinance No. 689, terminating Development Agreement No. 18-017C between the City of Cudahy and Nyce Guys, LLC. (page 45) Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 750 repealing Ordinance No. 689 terminating DA No. 18-017C, between the City of Cudahy and Nyce Guys, LLC.

E. Adoption by Second Reading of Ordinance No. 751 Repealing Ordinance No. 698, Terminating Development Agreement No. 18-001C between the City of Cudahy and VM Evergreen, LLC. (page 69)
Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 751 repealing Ordinance No. 698 terminating DA No. 18-001C, between the City of Cudahy and VM Evergreen, LLC.

F. Adoption by Second Reading of Ordinance No. 752 repealing Ordinance No. 676, terminating Development Agreement No. 18-019C between the City of Cudahy and Cuper Development, LLC. (page 95)
Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 752 repealing Ordinance No. 676 terminating DA No. 18-019C, between the City of Cudahy and Cuper Development, LLC.

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

G. Adoption by Second Reading of Ordinance No. 753 repealing Ordinance No. 677, terminating Development Agreement No. 18-012C, between the City of Cudahy and 420 Club, LLC. (page 123) Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 753 repealing Ordinance No. 677 terminating DA No. 18-012C, between the City of Cudahy and 420 Club, LLC.

H. Adoption by Second Reading of Ordinance No. 754 repealing Ordinance No. 701, terminating Development Agreement No. 18-014C between the City of Cudahy and Starcraft, LLC. (page 141) Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 754 repealing Ordinance No. 701 terminating DA No. 18-014C between the City and Starcraft, LLC.

I. Adoption by Second Reading of Ordinance No. 755 Repealing Ordinance No. 700, Terminating Development Agreement No. 18-015C between the City of Cudahy and Staple Room, LLC. (page 165)
Presented by the Community Development Director
Recommendation: City staff recommends that the City Council take the following action(s):

1. Adopt by second reading Ordinance No. 755 repealing Ordinance No. 700 terminating DA No. 18-015C between the City and Staple Room, LLC.

J. Adoption by Second Reading of Ordinance No. 741 Amending Cudahy Municipal Code Section

10.04.020 (Vehicle Weight Limits) by adding Patata Street to the list of streets where vehicles exceeding 6,000 pounds are prohibited. (page 189)
Presented by the Community Development Director
Recommendation: Staff recommends that the City Council adopt by second reading Ordinance No. 741, an amendment to the Cudahy Municipal Code (“CMC”) Section 10.04.020 (Vehicle Weight Limits) by adding Patata Street to the list of streets where vehicles exceeding 6,000 pounds are prohibited.

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

13. PUBLIC HEARING - NONE

14. BUSINESS SESSION
A. Approval of Professional Services Agreement for Comprehensive Fee Study Services (page 201) Presented by the Finance Director
Recommendation: The City Council is requested to award of a Professional Services Agreement (PSA) to Willdan Financial Services to provide Comprehensive Fee Study Services not to exceed $27,700.

B. Consideration to Approve a Product Order for Procurement of Cyber Defense System (page 233) Presented by the Finance Director
Recommendation: The City Council is requested to approve a product order for the renewal of the cyber defense system with Darktrace Holdings Limited with a notto-exceed amount of $30,000.00.

C. Republic Services Proposal for SB1383 Amendment Implementation and Compliance (page 237) Presented by the Assistant to the City Manager
Recommendation: The City Council is recommended to provide staff direction related to proposed options by Republic Services for SB1383 Implementation and Compliance.

D. Request to Install Holiday Decorations and Lighting (page 255) Presented by the Interim Public Works Director
Recommendation: The City Council is requested to:

1. Provide direction on the preferred location(s) to install Holiday Decorations; and

2. Direct staff to stay within the current budget of $50,00.00 or increase the amount as directed.

E. Discussion and Potential Approval of a Resolution Amending the Code of Ethics and Conduct for Elected Officials and Members of Appointed Boards, Commissions, and Committees (page 321)

City of Cudahy
City Council and Successor Agency
Regular Meeting Agenda
August 20, 2024, at 6:30 P.M.

Presented by City Attorney
Recommendation: The City Council is recommended to discuss and potentially approve Resolution No. 24-30, amending the Code of Ethics and Conduct for Elected Officials and Members of Appointed Boards, Commissions, and Committees.

15. COUNCIL DISCUSSION
A. Sister City Invitation to San Miguel el Alto

16. CLOSED SESSION
A. Closed Session Pursuant to Government Code Section 54957 – Public Employee Performance Evaluation
Title of Employee: City Manager

Closed Session Pursuant to Government Code Section 54957.6 – Conference with Labor Negotiator
City’s Designated Representative: Stephanie Arechiga, City Attorney Unrepresented Employee: City Manager
B. Conference with Legal Counsel Existing Litigation-Pursuant to Government Code § 54956.9(d)(1) – Cuper Development LLC et al. v City of Cudahy et al. Case No. 2:24-cv-02833

17. CLOSED SESSION ANNOUNCEMENT

18. ADJOURNMENT
I, Richard Iglesias, hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the City’s Website, City Hall, Clara Park, and Lugo Park not less than 72 hours prior to the meeting. A copy of said Agenda is on file in the City Clerk’sOffice.

Dated this 15th day of August 2024
Richard Iglesias
City Clerk

Blank Page

“Serving the People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 1 of 2

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor/Chair and City Council/Agency Members From: Alfonso Noyola, City Manager/Executive Director
By: Richard Iglesias, City Clerk
Subject: Consideration to Review and Approve the Draft Minutes of July 16, 2024, for the Regular Meeting of the City Council and the Joint Meeting of the City of Cudahy as Successor Agency and Housing Successor Agency to the Cudahy Development Commission

RECOMMENDATION
The City Council is requested to review and approve the City Council / Successor Agency Draft Minutes for July 16, 2024.

BACKGROUND / ANALYSIS
On December 12, 2016, the City Council of the City of Cudahy adopted Resolution No. 16-38, approving the use of summary action minutes, meant to allow the City Clerk's Office to write the minutes in brief, assuring a record of Council's actions, due to having a recording of the full Council Meeting on the City’s website.

Historically
The Municipal Clerk is one of the oldest professions in government, dating back to 1272 A.D., originating in England. The record keeper then was called Remembrancer, an English official whose job was to remind the Lord Treasurer and Barons of Court, of business pending.

Years later, in the 1600s, when early colonists came to America, the office of the Clerk was one of the first offices to be established. Over the years, the City Clerk’s office has become the core for local government, and the liaison to the residents of the Community. The Municipal Clerk (City Clerk) is the record keeper of a City’s recorded history.

Item Number
12A

“Serving the People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 2 of 2
William Bennett Munro, a Canadian historian, and political scientist, who taught at Harvard University and the California Institute of Technology, stated in one of his first textbooks written: “No other office in municipal service has so many contacts. It serves the Mayor, the City Council, the City Manager (when there is one), and all administrative departments, without exception. All of them call upon it, almost daily, for some service or information. Its work is not spectacular, but it demands versatility, alertness, accuracy, and no end of patience.

The public does not realize how many loose ends of city administration this office pulls together.”
Moving forward to the present time, the City Clerk’s office today is generally responsible for keeping a record of City Council meetings; agreements; recordings of official documents; legal advertisements; municipal elections; commissions and committees current files; claims against the city; and other legal or official documents.

City Clerks are required to keep record of the proceedings (minutes) of Council meetings (Government Code Sections 36814 and 40801). Minutes are the official record of a meeting which provides a history of the Council’s decisions and actions.

CONCLUSION
The City Council is requested to approve the attached City Council / Agency Draft Minutes of the proceedings of July 16, 2024.

STRATEGIC PLAN CORRELATION
No correlation to the strategic plan.

FINANCIAL IMPACT
No Financial Impact.

ATTACHMENT
A. July 16, 2024, Draft Minutes
B. Resolution No. 16-38, approving the City Clerk’s use of Summary Action Minutes as the Official Record of the City Council proceedings.

City Council/Successor Agency Minutes of 7/16/2024 Page 1 of 14

MINUTES
CUDAHY CITY COUNCIL REGULAR MEETING and
CITY OF CUDAHY AS SUCCESSOR AGENCY and

HOUSING SUCCESSOR AGENCY TO THE CUDAHY

DEVELOPMENT COMMISSION JOINT MEETING
July 16, 2024, 6:30 P.M.

1. CALL TO ORDER
Mayor / Chair J. Gonzalez called the meeting to order at 6:33 p.m.

2. ROLL CALL
PRESENT: Council / Agency Member Martin Fuentes
Council / Agency Member Cynthia Gonzalez
Council / Agency Member Daisy Lomelí (arrived at 6:53 p.m.) Vice Mayor / Vice Chair Elizabeth Alcantar
Mayor / Chair Jose R. Gonzalez
ABSENT: None
ALSO PRESENT: City Manager, Alfonso Noyola, City Attorney, Stephanie Arechiga, Assistant City Attorney, Paloma McVoy, City Clerk, Richard Iglesias, Assistant City Clerk, Estefania Zamora, Community Development Director, Juan Arauz, Finance Director, Joshua Calhoun, Interim Public Works Director, Ron Bow, Community Services Director, Brenda Rodriguez, Building Official, Raul Diaz, Assistant to the City Manager, John Peraza, Community Preservation Manager, Raul Mazariegos, Executive Assistant to the City Manager, Janet Andrade, and Administrative Analyst, Lisette Gonzalez.

3. APPROVAL OF AGENDA
City Manager, Alfonso Noyola, announced moving item 9. City Manager Report after item 5. Land Acknowledgement.

Motion: Council Member C. Gonzalez motioned to move item 9 after item 5, seconded by Vice Mayor Alcantar. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None
Attachment A Page 11 of 330
City Council/Successor Agency Minutes of 7/16/2024 Page 2 of 14

4. PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Council Member Fuentes.

5. LAND ACKNOWLEDGEMENT
The Land Acknowledgment was led by Council Member Lomelí.

We would like to acknowledge that the land we inhabit today was once known as Tovangaar, the home of the Gabrieleño-Tongva people. We show our respects to the Gabrieleño-Tongva people, as well as all Indigenous people, past, present, and future, and honor their labor as original caretakers of this land. We commit to uplifting the Gabrieleño-Tongva people, invite you to acknowledge the history, and join us in caring for this land.

9. CITY MANAGER REPORT (information only)

6. PRESENTATIONS
A. Finance Department Annual Update

7. PUBLIC COMMENTS
Lorenzo Garcia shared his concerns about trash pickup and trash containers and asked the City Council what can be done.

Gerardo Hernandez asked City Council to create a Resolution to support SB 1414.

Edwin Gonzalez congratulated the community for honoring July 7th as Rent Stabilization Day and spoke on the alleged political plan in the City of Bell.

8. CITY COUNCIL COMMENTS / REQUESTS FOR AGENDA ITEMS
Council Member Fuentes thanked City Council, City Manager, and staff for singing Happy Birthday, shared his participation at the 4th of July event, Sister City San Miguel el Alto events, attended Casino JPA, and attended LA Sanitation meeting.

Council Member C. Gonzalez congratulated the City for all the events occurring, asked for reports or feedback from Ad Hoc to the City Council, October approaching and would like to start planning for domestic violence prevention month, requested an update regarding formalizing with Scholar Match, and checked in with Inclusive Action.

City Council/Successor Agency Minutes of 7/16/2024 Page 3 of 14 Council Member Lomelí acknowledged staff and all the events occurring, shared her participation with Sister City San Miguel el Alto, shared the sports events happening, gave shoutout to Public Works staff, wants to reconnect on having more places to walk and places with shade, asked for an update on the investment policy, requested a Resolution in opposition of AB 2918 to be brought to the City Council.

Vice Mayor Alcantar shared her participation with Sister City San Miguel el Alto, requested to explore a more walkable community, thanked staff for the LAFC sports occurring, shared a resident concern regarding a stolen vehicle and asked staff to work with them on obtaining a new overnight permit.

Mayor J. Gonzalez gave kudos to Vice Mayor starting the work with LAFC, shared he is working to have Cudahy youth be the ones carrying the soccer ball at the upcoming Olympics, shared there were two letters of concerns sent to City Manager and City Clerk from water tract, asked for a backpack giveaway before back to school, and asked if we can work with VA office for a Veterans Day event.

10. REPORTS REGARDING AD HOC, ADVISORY, STANDING OR OTHER COMMITTEE MEETINGS – NONE

11. WAIVER OF FULL READING OF RESOLUTIONS AND ORDINANCES Motion: Vice Mayor Alcantar motioned to waive full reading of resolutions and ordinances, seconded by Council Member Lomelí. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None

12. CONSENT CALENDAR
A. Consideration to Review and Approve the Draft Minutes of July 2, 2024, for the Regular Meeting of the City Council and the Joint Meeting of the City of Cudahy as Successor Agency and Housing Successor Agency to the Cudahy Development Commission
Presented by the City Clerk
Recommendation: The City Council is requested to review and approve the City Council / Successor Agency Draft Minutes for July 2, 2024.

City Council/Successor Agency Minutes of 7/16/2024 Page 4 of 14 B. Approval of the Local Agency Investment Fund (LAIF) for the Month of June 2024 Presented by the Finance Director
Recommendation: The City Council is requested to approve the Local Agency Investment Fund (LAIF) Report for the month of June 2024 in the amount of $12,864,594.90.

C. Approval of the City Demands and Payroll Including Statement of Investment for the Month of June 2024
Presented by the Finance Director
Recommendation: The City Council is requested to approve the Demands and Payroll in the amount of $1,906,635.54 including the Statement of Investments for the month of June 2024.

Motion: Vice Mayor Alcantar motioned to approve the Consent Calendar items, seconded by Council Member C. Gonzalez. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None

13. PUBLIC HEARING
A. Introduction and Adoption by First Reading of Ordinance No. 750 repealing Ordinance No. 689, terminating Development Agreement No. 18-017C between the City of Cudahy and Nyce Guys, LLC
Presented by the Senior Planner
Recommendation: City staff recommends that the City Council take the following action(s): Open the public hearing and receive public comment and testimony; and Make a determination that Nyce Guys, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-017C and find that the Operator is in default of contractual obligations set forth in the DA; and Introduce and adopt by first reading Ordinance No. 750 repealing Ordinance No. 689 terminating DA No. 18-017C, between the City of Cudahy and Nyce Guys, LLC; and Schedule the second reading of Ordinance No. 750 at the next regularly scheduled meeting on August 20, 2024; and Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:22 p.m. Mayor J. Gonzalez opened the public hearing.

City Council/Successor Agency Minutes of 7/16/2024 Page 5 of 14 Public Comment
Susie de Santiago shared her support of the termination.

At 7:24 p.m. Mayor J. Gonzalez closed public comment.

Motion: Council Member C. Gonzalez motioned to determine that Nyce Guys, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-017C and found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 750 repealing Ordinance No. 689 terminating DA No. 18-017C, between the City of Cudahy and Nyce Guys, LLC; and scheduled the second reading of Ordinance No. 750 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).seconded by Council Member Alcantar. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
B. 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
Presented by the Senior Planner
Recommendation: City staff recommends that the City Council take the following action(s): Open the public hearing and receive public comment and testimony; and 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 introduce and adopt by first reading Ordinance No. 751 repealing Ordinance No. 698 terminating DA No. 18-001C, between the City of Cudahy and VM Evergreen, LLC; and Schedule the second reading of Ordinance No. 751 at the next regularly scheduled meeting on August 20, 2024; and determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:30 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago shared her support of the termination.

City Council/Successor Agency Minutes of 7/16/2024 Page 6 of 14 At 7:31 p.m. Mayor J. Gonzalez closed public comment.

Motion: Council Member C. Gonzalez motioned to determine 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 found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 751 repealing Ordinance No. 698 terminating DA No. 18-001C, between the City of Cudahy and VM Evergreen, LLC; and scheduled the second reading of Ordinance No. 751 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies), seconded by Council Member Lomelí. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
C. Introduction and Adoption by First Reading of Ordinance No. 752 repealing Ordinance No. 676, terminating Development Agreement No. 18-019C between the City of Cudahy and Cuper Development, LLC
Presented by the Senior Planner
Recommendation: City staff recommends that the City Council take the following action(s):Open the public hearing and receive public comments and testimony; and Make a determination that Cuper Development, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18- 019C and find that the Operator is in default of contractual obligations set forth in the DA; and Introduce and adopt by first reading Ordinance No. 752 repealing Ordinance No. 676 terminating DA No. 18-019C, between the City of Cudahy and Cuper Development, LLC; and Schedule the second reading of Ordinance No. 752 at the next regularly scheduled meeting on August 20, 2024; and Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:37 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago shared her support of the termination.

At 7:39 p.m. Mayor J. Gonzalez closed public comment.

City Council/Successor Agency Minutes of 7/16/2024 Page 7 of 14 Motion: Council Member C. Gonzalez motioned to determine that Cuper Development, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18- 019C and found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 752 repealing Ordinance No. 676 terminating DA No. 18-019C, between the City of Cudahy and Cuper Development, LLC; and scheduled the second reading of Ordinance No. 752 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies), seconded by Council Member Lomelí. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
D. Introduction and Adoption by First Reading of Ordinance No. 753 repealing Ordinance No. 677, terminating Development Agreement No. 18-012C, between the City of Cudahy and 420 Club, LLC
Presented by the Assistant Planner
Recommendation: City staff recommends that the City Council take the following action(s): Open the public hearing and receive comments and testimony; and Make a determination that 420 Club, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-012C and find that the Operator is in default of contractual obligations set forth in the DA; and Introduce and adopt by first reading Ordinance No. 753 repealing Ordinance No. 677 terminating DA No. 18-012C, between the City of Cudahy (“City”) and 420 Club, LLC; and Schedule the second reading of Ordinance No. 753 at the next regularly scheduled meeting on August 20, 2024; and Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:44 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago shared her support of the termination.

At 7:45 p.m. Mayor J. Gonzalez closed public comment.

City Council/Successor Agency Minutes of 7/16/2024 Page 8 of 14 Motion: Council Member C. Gonzalez motioned to determine that 420 Club, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-012C and found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 753 repealing Ordinance No. 677 terminating DA No. 18-012C, between the City of Cudahy (“City”) and 420 Club, LLC; and scheduled the second reading of Ordinance No. 753 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies), seconded by Council Member Lomelí. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
E. Introduction and Adoption by First Reading of Ordinance No. 754 repealing Ordinance No. 701, terminating Development Agreement No. 18-014C between the City of Cudahy and Starcraft, LLC
Presented by the Assistant Planner
Recommendation: City staff recommends that the City Council take the following action(s): Open the public hearing and receive public comment and testimony; and Make a determination that Starcraft, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-014C and find that the Operator is in default of contractual obligations set forth in the DA; and Introduce and adopt by first reading Ordinance No. 754 repealing Ordinance No. 701 terminating DA No. 18-014C between the City and Starcraft, LLC; and Schedule the second reading of Ordinance No. 754 at the next regularly scheduled meeting on August 20, 2024; and Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:51 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago shared her support of the termination.

At 7:53 p.m. Mayor J. Gonzalez closed public comment.

City Council/Successor Agency Minutes of 7/16/2024 Page 9 of 14 Motion: Council Member C. Gonzalez motioned to determine that Starcraft, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-014C and found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 754 repealing Ordinance No. 701 terminating DA No. 18-014C between the City and Starcraft, LLC; and scheduled the second reading of Ordinance No. 754 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies), seconded by Vice Mayor Alcantar. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
F. Introduction and Adoption by First Reading of Ordinance No. 755 Repealing Ordinance No. 700, Terminating Development Agreement No. 18-015C between the City of Cudahy and Staple Room, LLC.

Presented by the Assistant Planner
Recommendation: City staff recommends that the City Council take the following action(s): Open the public hearing and receive public comment and testimony; and Make a determination that Staple Room, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-015C with the City and find that the Operator is in default of contractual obligations set forth in the DA; and Introduce and adopt by first reading Ordinance No. 755 repealing Ordinance No. 700 terminating DA No. 18-015C between the City and Staple Room, LLC; and Schedule the second reading of Ordinance No. 755 at the next regularly scheduled meeting on August 20, 2024; and Determine that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).

At 7:59 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago shared her support of the termination.

At 8:00 p.m. Mayor J. Gonzalez closed public comment.

City Council/Successor Agency Minutes of 7/16/2024 Page 10 of 14 Motion: Council Member C. Gonzalez motioned to determine that Staple Room, LLC (“Operator”) is not in compliance with the terms and conditions of Development Agreement (“DA”) No. 18-015C with the City and found that the Operator is in default of contractual obligations set forth in the DA; and introduced and adopted by first reading Ordinance No. 755 repealing Ordinance No. 700 terminating DA No. 18-015C between the City and Staple Room, LLC; and scheduled the second reading of Ordinance No. 755 at the next regularly scheduled meeting on August 20, 2024; and determined that these actions are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15321 (Enforcement Actions by Regulatory Agencies).), seconded by Vice Mayor Alcantar. Motion passed 4-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, and Alcantar
NOES: None
ABSENT: None
ABSTAIN: J. Gonzalez
G. Adoption by First Reading of Ordinance No. 741 Amending Cudahy Municipal Code Section 10.04.020 (Vehicle Weight Limits) by adding Patata Street to the list of streets where vehicles exceeding 6,000 pounds are prohibited.

Presented by the Community Development Director
Recommendation: Staff recommends that the City Council take the following actions:

Open the public hearing and receive comments; and adopt by first reading Ordinance No. 741 (Attachment A), an amendment to the Cudahy Municipal Code (“CMC”) Section

10.04.020 (Vehicle Weight Limits) by adding Patata Street to the list of streets where vehicles exceeding 6,000 pounds are prohibited; and Schedule a second reading of Ordinance No. 741 at the next regularly scheduled City Council meeting on August 20, 2024; and Find the Project exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3).

At 8:24 p.m. Mayor J. Gonzalez opened the public hearing.

Public Comment
Susie de Santiago supports this item but shared she is concerned since at times she drives a commercial vehicle and asked if there are exemptions.

Barrie Grinberg shared the zero-emission project they submitted and shared how a full truck ban will make their project infeasible.

At 8:32 p.m. Mayor J. Gonzalez closed public comment.

City Council/Successor Agency Minutes of 7/16/2024 Page 11 of 14 Motion: Council Member Lomelí motioned to adopt by first reading Ordinance No. 741 (Attachment A), an amendment to the Cudahy Municipal Code (“CMC”) Section

10.04.020 (Vehicle Weight Limits) by adding Patata Street to the list of streets where vehicles exceeding 6,000 pounds are prohibited; and Schedule a second reading of Ordinance No. 741 at the next regularly scheduled City Council meeting on August 20, 2024; and Find the Project exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3), seconded by Council Member Fuentes. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None
H. Adoption of Resolution No. 24-28 Memorializing a Public Hearing and Levying the Annual Assessment to Maintain the City of Cudahy Street Lighting District and Direct Staff to Forward the Resolution to the Los Angeles County Assessor Presented by the Finance Director
Recommendation: The City Council is requested to open the public hearing and receive comments; and adopt Resolution No. 24-28; memorializing a Public Hearing and Levying the Annual Assessment to maintain the City of Cudahy Street Lighting District for Fiscal Year (FY) 2024/25; and direct staff to forward Resolution No. 24-28 to the Los Angeles County Assessor before the August 10, 2024, deadline.

At 9:00 p.m. Mayor J. Gonzalez opened the public hearing, there being none, closed public comment.

Motion: Council Member C. Gonzalez motioned to adopt Resolution No. 24-28; memorializing a Public Hearing and Levying the Annual Assessment to maintain the City of Cudahy Street Lighting District for Fiscal Year (FY) 2024/25; and direct staff to forward Resolution No. 24-28 to the Los Angeles County Assessor before the August 10, 2024, deadline, seconded by Vice Mayor Alcantar. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None

City Council/Successor Agency Minutes of 7/16/2024 Page 12 of 14

14. BUSINESS SESSION
A. Request for Authorization to Execute LS-1 Option E Agreement and all Relevant Forms, with Southern California Edison to Replace High Pressure Sodium Vapor Street Lights with Light-Emitting Diode Street Lights District-Wide Presented by the Building Official
Recommendation: Staff recommends that the City Council of the City of Cudahy (the “City”) take the following actions: Adopt Resolution No. 24-29 (Attachment A) to Execute an LS-1 Option E authorization with SCE to replace high pressure sodium vapor (HPSV) streetlights with light-emitting diode (LED) street lights; and Authorize the City Manager to sign the agreement authorization and relevant form(s).

Motion: Council Member Fuentes motioned to adopt Resolution No. 24-29 (Attachment A) to Execute an LS-1 Option E authorization with SCE to replace high pressure sodium vapor (HPSV) streetlights with light-emitting diode (LED) street lights; and Authorize the City Manager to sign the agreement authorization and relevant form(s)., seconded by Council Member C. Gonzalez. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None
B. Consideration and Approval of Resolution No. 24-27, (1) Giving Notice of the Submission to the Qualified Voters for the City Of Cudahy of an Ordinance Relating to the Modification of Term Limits For the Council Members in the City of Cudahy; (2) Requesting The Board Of Supervisors of the County of Los Angeles Grant the City’s Request For Consolidation of Said General Municipal Election with the November 5, 2024 Statewide General Election Administered by the Registrar-Recorder/County Clerk of the County of Los Angeles; (3) Requesting the County Clerk Provide Specific Election Administration Services in Connection with the City’s General Municipal Election; and (4) Setting Rules and Deadlines For Arguments and Rebuttals For and Against the Ordinance
Presented by the City Attorney
Recommendation: The City Council is requested to adopt proposed Resolution No. 24- 27, giving notice of the submission to the Qualified Voters for the City of Cudahy of an Ordinance relating to the Modification of Term Limits For the Council Members in the City of Cudahy; (2) Requesting The Board of Supervisors of the County of Los Angeles Grant the City’s Request For Consolidation of Said General Municipal Election with the November 5, 2024 Statewide General Election Administered by the RegistrarRecorder/County Clerk of the County of Los Angeles; (3) Requesting the County Clerk Provide Specific Election Administration Services in Connection with the City’s General

City Council/Successor Agency Minutes of 7/16/2024 Page 13 of 14 Municipal Election; and (4) Setting Rules and Deadlines For Arguments and Rebuttals For and Against the Ordinance.

Motion: Vice Mayor Alcantar motioned to adopt proposed Resolution No. 24-27 with the ballot measure language changed to “Shall the ordinance limiting the number of fouryear terms that may be served by the members of the Cudahy City Council be limited to three (3) terms be adopted?”, giving notice of the submission to the Qualified Voters for the City of Cudahy of an Ordinance relating to the Modification of Term Limits For the Council Members in the City of Cudahy; (2) Requesting The Board of Supervisors of the County of Los Angeles Grant the City’s Request For Consolidation of Said General Municipal Election with the November 5, 2024 Statewide General Election Administered by the Registrar-Recorder/County Clerk of the County of Los Angeles; (3) Requesting the County Clerk Provide Specific Election Administration Services in Connection with the City’s General Municipal Election; and (4) Setting Rules and Deadlines For Arguments and Rebuttals For and Against the Ordinance, seconded by Council Member C. Gonzalez. Motion passed 5-0 by the following roll call vote:

AYES: Fuentes, C. Gonzalez, Lomelí, Alcantar, and J. Gonzalez NOES: None
ABSENT: None
ABSTAIN: None
C. Consideration and Discussion Regarding a letter opposing SB 549 (Newman) Presented by the City Clerk
Recommendation: The City Council is recommended to discuss the possible approval of a letter opposing SB 549 (Newman).

Motion: Mayor J. Gonzalez motioned to approve the letter and support opposing SB 549 (Newman), seconded by Council Member Fuentes. Motion passed 3-0 by the following roll call vote:

AYES: Fuentes, Alcantar, and J. Gonzalez
NOES: None
ABSENT: None
ABSTAIN: C. Gonzalez, Lomelí

15. COUNCIL DISCUSSION
Council Member Lomelí requested the creation of Street Vendor Ad Hoc.

Mayor J. Gonzalez requested the creation of Water Ad Hoc.

At 9:30 p.m., City Attorney, Stephanie Arechiga recessed to closed session.

City Council/Successor Agency Minutes of 7/16/2024 Page 14 of 14

16. CLOSED SESSION
A. Closed Session Pursuant to Government Code Section 54957 – Public Employee Performance Evaluation
Title of Employee: City Manager

Closed Session Pursuant to Government Code Section 54957.6 – Conference with Labor Negotiator
City’s Designated Representative: Stephanie Arechiga, City Attorney Unrepresented Employee: City Manager
At 10:29 p.m., Mayor J. Gonzalez, reconvene to open session.

17. CLOSED SESSION ANNOUNCEMENT
City Attorney Stephanie Arechiga announced all five council members were present, direction was given and no further reportable action.

18. ADJOURNMENT
The City Council / Agency meeting adjourned at 10:30 p.m.

Jose R. Gonzalez
Mayor
ATTEST:

Richard Iglesias
City Clerk

Attachment
B

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 1 of 2

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor/Chair and City Council/Agency Members From: Alfonso Noyola, City Manager/Executive Director
By: Joshua Calhoun, Finance Director
Subject: Approval of the Local Agency Investment Fund (LAIF) for the Month of July 2024

RECOMMENDATION
The City Council is requested to approve the Local Agency Investment Fund (LAIF) Report for the month of July 2024 in the amount of $13,009,745.74.

BACKGROUND

1. In 1955, the Pooled Money Investment Account (PMIA) started. LAIF became part of the PMIA. The oversight is provided by the Pooled Money Investment Board (PMIB) and an inhouse Investment Committee. The PMIB members consist of the State Treasurer, Director of Finance, and State Controller.

2. In 1977, LAIF was created as a voluntary program by Section 16429.1 et seq. of the California Government Code. The program was intended to be used as an investment alternative for California's local governments and special districts. The LAIF continues today under State Treasurer, Fiona Ma's administration.

3. On July 1, 2024, the balance in LAIF was $12,864,594.90 (See Attachment).

4. In July 2024, $145,150.84 in interest was received for the 2nd quarter of 2024.

5. On July 31, 2024, the balance in LAIF was $13,009,745.74 (See Attachment).

Item Number
12B

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 2 of 2

ANALYSIS
The voluntary program offers local agencies the opportunity to participate in a major portfolio, which invests hundreds of millions of dollars, using the investment expertise of the State Treasurer’s Office investment staff at no additional cost to the taxpayer.

All securities are purchased under the authority of Government Code Section 16430 and 16480.4. The State Treasurer's Office takes delivery of all securities purchased on a delivery versus payment basis using a third-party custodian.

Cudahy Municipal Code Section 3.04.080 indicates, "Except as otherwise provided, no warrant shall be drawn or evidence of indebtedness issued unless there shall be at the time sufficient money in the treasury legally applicable to the payment of the same."

CONCLUSION
Once the City Council approves the current LAIF, this balance may be relied upon when determining if the City has sufficient funds available to pay demands and payroll as required by Cudahy Municipal Code Section 3.04.080.

STRATEGIC PLAN CORRELATION
Strategy #2. Provide regular updates to the City Council and community about the city’s finances.

FINANCIAL IMPACT
None

ATTACHMENT
A. Local Agency Investment Fund (LAIF) Balance.

LOCAL AGENCY INVESTMENT FUND
General Account - City #98-19-225
Beginning Balance as of July 01, 2024 $12,864,594.90
LAIF Interest earned 145,150.84
Transfer from City operating account 0
Transfer to City operating account 0
Ending Balance as of July 31, 2024 $13,009,745.74
Attachment A Page 29 of 330
Blank Page

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 1 of 2

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor/Chair and City Council/Agency Members From: Alfonso Noyola, City Manager/Executive Director
By: Joshua Calhoun, Finance Director
Subject: Approval of the City Demands and Payroll Including Statement of Investment for the Month of July 2024

RECOMMENDATION
The City Council is requested to approve the Demands and Payroll in the amount of $3,641,311.49 including the Statement of Investments for the month of July 2024.

BACKGROUND

1. On December 13, 1993, Ordinance 476 was adopted and codified as Cudahy Municipal Code Section 3.04.080 indicating, "Except as otherwise provided, no warrant shall be drawn, or evidence of indebtedness issued unless there shall be at the time sufficient money in the treasury legally applicable to the payment of the same."

2. During the month, the Finance Department have completed the following demands and payroll:

A/P Demands $3,090,960.71
Payroll $550,350.78
Total: $3,641,311.49
Attachment A
Attachment B
Item Number
12C

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 2 of 2

ANALYSIS
The Check Register Report (Attachment A), Payroll Warrants including payroll taxes and insurance premiums (Attachment B), Statement of Investment (Attachment C) indicate that the cash and investment balance was sufficient for disbursements for the month, a summary of cash received and disbursed by month during Fiscal Year (FY) 2024-25 (Attachment D), and a summary of cash received and disbursed by month during FY 2023-24 (Attachment E).

Cudahy Municipal Code Section 3.04.070 indicates, "Budgeted demands paid by warrant prior to audit by the council shall be presented to the council for ratification and approval..."

CONCLUSION
The Finance Director certifies the accuracy and availability of funds for payment. A Demand/Warrant Register has been submitted to the City Council for approval in accordance with Cudahy Municipal Code Section 3.04.070.

STRATEGIC PLAN CORRELATION
Goal (Financial Stability and Transparency)
• Provide regular updates to the City Council and Community about the City’s finances.

FINANCIAL IMPACT
The Statement of Investments Report (Attachment C) indicates that there are sufficient funds within the City’s holdings to meet the City’s cash flow requirements.

ATTACHMENTS
A. Accounts Payable Check Register Report.

B. Payroll Warrants including payroll taxes and insurance premiums.

C. Statement of Investments
D. Summary of Cash Receipt / Disbursement by Month FY 2024-25 E. Summary of Cash Receipt / Disbursement by Month FY 2023-24 F. Credit Card Payment Detail

8/1/2024 11:38:05 AM Page 1 of 5
My Check Report
City of Cudahy, CA By Check Number
Date Range: 07/01/2024 - 07/31/2024
Vendor Number Vendor Name Payment Date Discount Amount Payment Type Payment Amount Number Bank Code: WF Checking-WF Checking
10804 Gabriel Cervantes 07/02/2024 Regular 0.00 650.00 55724 2378-3 8330 ATLANTIC AVE INC 07/03/2024 Regular 0.00 1,435.40 55725 5147 ABEL GLASS & SCREEN INC. 07/03/2024 Regular 0.00 495.08 55726 10603 ADVANCED IMAGING SOLUTIONS 07/03/2024 Regular 0.00 493.43 55727 7995 AMERICAN CITY PEST & TERMITE 07/03/2024 Regular 0.00 457.00 55728 10990 Ashley Valdovinos 07/03/2024 Regular 0.00 1,700.00 55729 8021 AT & T MOBILITY 07/03/2024 Regular 0.00 2,360.64 55730 10133 AVANT-GARDE, INC. 07/03/2024 Regular 0.00 63.75 55731 10964 BFS Landscape Architects 07/03/2024 Regular 0.00 9,677.50 55732 10520 CASTRO DISCOUNT TIRES INC 07/03/2024 Regular 0.00 20.00 55733 0136 CITY OF SOUTH GATE 07/03/2024 Regular 0.00 75.00 55734 1206-1 COUNTY OF LOS ANGELES 07/03/2024 Regular 0.00 252.50 55735 0186 COUNTY OF LOS ANGELES DEPT OF ANIMAL CA 07/03/2024 Regular 0.00 66,072.76 55736 1206 COUNTY OF LOS ANGELES IND WAST DEPT OF P 07/03/2024 Regular 0.00 2,329.35 55737 6086 EWING INC 07/03/2024 Regular 0.00 579.08 55738
8018 FERNANDO'S HARDWARE & LUMBER 07/03/2024 Regular 0.00 297.58 55739 10581 FIESTA TAXI COOPERATIVE INC. 07/03/2024 Regular 0.00 11,561.28 55740 5532 FLAGTIME U.S.A. 07/03/2024 Regular 0.00 1,580.88 55741 10617 GONZALEZ JOSE R 07/03/2024 Regular 0.00 152.75 55742 10403 INTERNATIONAL COATINGS 07/03/2024 Regular 0.00 3,561.08 55743 10868 Language Network, Inc. 07/03/2024 Regular 0.00 1,560.00 55744 6038 LGP EQUIPMENT RENTALS 07/03/2024 Regular 0.00 1,202.50 55745 10924 Lisette Gonzalez 07/03/2024 Regular 0.00 113.50 55746 10721 LOOMIS 07/03/2024 Regular 0.00 353.42 55747
10655 LUIS AGUILAR 07/03/2024 Regular 0.00 178.00 55748 7014 NATIONWIDE ENVIRONMENTAL SERVICES INC 07/03/2024 Regular 0.00 9,985.52 55749 9717 PCAM, LLC 07/03/2024 Regular 0.00 19,654.89 55750
5537 PSI PRINTING SYSTEM INC. 07/03/2024 Regular 0.00 281.51 55751 4502 PYRO SPECTACULARS, INC. 07/03/2024 Regular 0.00 9,600.00 55752 5949 QUINN COMPANY 07/03/2024 Regular 0.00 1,205.97 55753 2802 SAM'S CLUB 07/03/2024 Regular 0.00 4,982.69 55754
5617 SHEILA'S GIFT & FLOWERS 07/03/2024 Regular 0.00 335.16 55755 10467 STEAMX, LLC SIGNAL HILL 07/03/2024 Regular 0.00 775.91 55756 10745 TRAVELERS 07/03/2024 Regular 0.00 2,038.00 55757
9951 WILLDAN 07/03/2024 Regular 0.00 24,138.86 55758
10735 YUNEX, LLC. 07/03/2024 Regular 0.00 7,875.24 55759 0328 CALIF. PARK & RECREATION SOC. 07/03/2024 Regular 0.00 495.00 55760 10711 CLEARNETWORK, INC. 07/03/2024 Regular 0.00 395.84 55761 10877 Fifth Asset, Inc. 07/03/2024 Regular 0.00 8,000.00 55762 10742 GOVERNMENTJOBS.COM 07/03/2024 Regular 0.00 1,300.32 55763 0092-7 LEAGUE OF CALIFORNIA CITIES 07/03/2024 Regular 0.00 1,081.50 55764 0093-1 SOUTHERN CALIFORNIA ASSOCIATION OF GOV 07/03/2024 Regular 0.00 3,172.00 55765 2378-3 8330 ATLANTIC AVE INC 07/17/2024 Regular 0.00 846.02 55766 10841 American Global Security, Inc. 07/17/2024 Regular 0.00 9,072.00 55767 10680 AMERICAN PRIDE BUILDERS 07/17/2024 Regular 0.00 27,446.00 55768 11004 Angelica Mendeza 07/17/2024 Regular 0.00 25.00 55769 11005 Antonia Ortiz 07/17/2024 Regular 0.00 100.00 55770 10595 ARAMSCO INC 07/17/2024 Regular 0.00 4,891.99 55771 0057-4 AT & T 07/17/2024 Regular 0.00 371.34 55772
11006 Black Knight Patrol Inc 07/17/2024 Regular 0.00 1,860.00 55773 10777 Bureau Veritas Technical Assessments LLC. 07/17/2024 Regular 0.00 48,548.00 55774 10398 CALIFORNIA BUILDING STANDARDS COMMISSIO07/17/2024 Regular 0.00 117.00 55775 10871 California Department of Conservation 07/17/2024 Regular 0.00 327.18 55776 10490 CHARTER COMMUNICATIONS 07/17/2024 Regular 0.00 975.00 55777 Attachment A Page 33 of 330
My Check Report Date Range: 07/01/2024 - 07/31/2024
8/1/2024 11:38:05 AM Page 2 of 5
Vendor Number Vendor Name Payment Date Discount Amount Payment Type Payment Amount Number 0186 COUNTY OF LOS ANGELES DEPT OF ANIMAL CA 07/17/2024 Regular 0.00 18,543.84 55778 2514-1 COUNTY OF LOS ANGELES DEPT OF AUDITOR - 07/17/2024 Regular 0.00 551.20 55779 10872 CSLM Construction, Inc. 07/17/2024 Regular 0.00 1,290.00 55780 10779 Cynthia Gonzalez 07/17/2024 Regular 0.00 95.00 55781 10692 DS TECHNICIAN, INC. 07/17/2024 Regular 0.00 835.88 55782 10564 ELIZABETH ALCANTAR 07/17/2024 Regular 0.00 95.00 55783 10485 ENTERPRISE FM TRUST 07/17/2024 Regular 0.00 6,860.95 55784 10617 GONZALEZ JOSE R 07/17/2024 Regular 0.00 451.13 55785 2139 HINDERLITER DELLAMAS & ASST 07/17/2024 Regular 0.00 315.79 55786 10993 Jons Flags & Poles 07/17/2024 Regular 0.00 12,255.94 55787 11007 Juan Ruiz 07/17/2024 Regular 0.00 100.00 55788
10394 KEENAN ASSOCIATES 07/17/2024 Regular 0.00 555,101.11 55789 10868 Language Network, Inc. 07/17/2024 Regular 0.00 4,980.00 55790 10598 LEAF 07/17/2024 Regular 0.00 422.70 55791
6038 LGP EQUIPMENT RENTALS 07/17/2024 Regular 0.00 560.90 55792 10618 LOMELI, DAISY 07/17/2024 Regular 0.00 95.00 55793 11008 Melissa Gaspar 07/17/2024 Regular 0.00 25.00 55794 11009 Monsi Polanco 07/17/2024 Regular 0.00 100.00 55795 10201-1 OLIVAREZ MADRUGA LAW ORGANIZATION, LLP 07/17/2024 Regular 0.00 150.00 55796 9717 PCAM, LLC 07/17/2024 Regular 0.00 18,022.65 55797
10824 PlaceWorks, Inc. 07/17/2024 Regular 0.00 27,655.56 55798 9737 REGIONAL TAP SERVICE CENTER 07/17/2024 Regular 0.00 86.40 55799 10750 RUGAMAS CREATIVE SOLUTIONS 07/17/2024 Regular 0.00 127.20 55800 2802 SAM'S CLUB 07/17/2024 Regular 0.00 250.86 55801
8394 SANDLER BROTHERS 07/17/2024 Regular 0.00 407.79 55802 10483-1 SOUTHERN CALIFORNIA NEWS GROUP 07/17/2024 Regular 0.00 4,148.56 55803 0491 STATE CONTROLLER'S OFFICE DEPARTMENT AC 07/17/2024 Regular 0.00 640.96 55804 0079 TRACT 180 WATER COMPANY 07/17/2024 Regular 0.00 3,410.45 55805 0078 TRACT 349 MUTUAL WATER CO 07/17/2024 Regular 0.00 2,116.27 55806 9991 TRANSTECH ENGINEERING, INC. 07/17/2024 Regular 0.00 33,472.25 55807 5695 VISTA PAINT 07/17/2024 Regular 0.00 694.84 55808
9951 WILLDAN 07/17/2024 Regular 0.00 1,562.00 55809
10805 World Trip, Inc. 07/17/2024 Regular 0.00 2,450.00 55810 10735 YUNEX, LLC. 07/17/2024 Regular 0.00 1,793.29 55811 10618 LOMELI, DAISY 07/24/2024 Regular 0.00 295.71 55812 10603 ADVANCED IMAGING SOLUTIONS 07/31/2024 Regular 0.00 467.17 55813 1778 ALL CITY MANAGEMENT INC 07/31/2024 Regular 0.00 9,482.90 55814 7995 AMERICAN CITY PEST & TERMITE 07/31/2024 Regular 0.00 457.00 55815 10841 American Global Security, Inc. 07/31/2024 Regular 0.00 7,266.42 55816 10680 AMERICAN PRIDE BUILDERS 07/31/2024 Regular 0.00 38,446.00 55817 10680 AMERICAN PRIDE BUILDERS 07/31/2024 Regular 0.00 52,752.00 55818 11010 Angelica Mendoza 07/31/2024 Regular 0.00 100.00 55819 10595 ARAMSCO INC 07/31/2024 Regular 0.00 2,180.71 55820 9966 AT & T LONG DISTANCE SERVICE 07/31/2024 Regular 0.00 48.40 55821 8021 AT & T MOBILITY 07/31/2024 Regular 0.00 2,482.37 55822 10133 AVANT-GARDE, INC. 07/31/2024 Regular 0.00 1,440.00 55823 10964 BFS Landscape Architects 07/31/2024 Regular 0.00 12,442.50 55824 10397 CALIFORNIA CITIES FOR SELF -RELIANCE 07/31/2024 Regular 0.00 17,500.00 55825 10520 CASTRO DISCOUNT TIRES INC 07/31/2024 Regular 0.00 35.00 55826 10906 City Fabrick 07/31/2024 Regular 0.00 7,520.84 55827 5365 CITY OF BELL ATTN: ACCOUNTS PAYABLE 07/31/2024 Regular 0.00 7,716.50 55828 10895 City of Glendale 07/31/2024 Regular 0.00 7,220.00 55829 0136 CITY OF SOUTH GATE 07/31/2024 Regular 0.00 75.00 55830 9669 COMMERCIAL DOOR OF LOS ANGELES COUNTY 07/31/2024 Regular 0.00 1,390.22 55831 10723 DIONICIO SALAZAR 07/31/2024 Regular 0.00 450.00 55832 11011 East Los Angeles Referee Academy 07/31/2024 Regular 0.00 1,405.00 55833 4042 EBERHARD EQUIPMENT 07/31/2024 Regular 0.00 141,436.30 55834 11012 Elizabeth Carazos 07/31/2024 Regular 0.00 100.00 55835 10581 FIESTA TAXI COOPERATIVE INC. 07/31/2024 Regular 0.00 18,415.81 55836 5532 FLAGTIME U.S.A. 07/31/2024 Regular 0.00 126.20 55837 10804 Gabriel Cervantes 07/31/2024 Regular 0.00 1,550.00 55838

My Check Report Date Range: 07/01/2024 - 07/31/2024
8/1/2024 11:38:05 AM Page 3 of 5
Vendor Number Vendor Name Payment Date Discount Amount Payment Type Payment Amount Number 10617 GONZALEZ JOSE R 07/31/2024 Regular 0.00 136.52 55839 11013 Gyovanna Barrozo 07/31/2024 Regular 0.00 200.00 55840 2139-2 HDL COREN & CONE 07/31/2024 Regular 0.00 1,677.89 55841 2139 HINDERLITER DELLAMAS & ASST 07/31/2024 Regular 0.00 1,807.29 55842 5934 HUMAN SERVICES ASSOC 07/31/2024 Regular 0.00 3,713.86 55843 10893 Katie Helen Hume 07/31/2024 Regular 0.00 450.00 55844 0197 LA COUNTY SHERIFF'S DEPARTMENT 07/31/2024 Regular 0.00 765,749.95 55845 10868 Language Network, Inc. 07/31/2024 Regular 0.00 2,040.00 55846 10721 LOOMIS 07/31/2024 Regular 0.00 384.55 55847
10655 LUIS AGUILAR 07/31/2024 Regular 0.00 145.00 55848 11014 Matrina Hernandez 07/31/2024 Regular 0.00 200.00 55849 10720 MISSION SQUARE RETIREMENT 07/31/2024 Regular 0.00 250.00 55850 7014 NATIONWIDE ENVIRONMENTAL SERVICES INC 07/31/2024 Regular 0.00 9,985.52 55851 10826 Omar Barragan 07/31/2024 Regular 0.00 2,560.00 55852 10826 Omar Barragan 07/31/2024 Regular 0.00 -2,560.00 55852 10732 OMEGA INDUSTRIAL SUPPLY, INC. 07/31/2024 Regular 0.00 925.00 55853 10436 ONTARIO REFRIGERATION 07/31/2024 Regular 0.00 7,904.00 55854 0095 PETTY CASH 07/31/2024 Regular 0.00 517.34 55855
10934 Rosa Bustos 07/31/2024 Regular 0.00 200.00 55856
7039 STANLEYACCESS TECH LLC 07/31/2024 Regular 0.00 1,077.50 55857 10853 SWA Group, Inc. 07/31/2024 Regular 0.00 6,960.00 55858 9991 TRANSTECH ENGINEERING, INC. 07/31/2024 Regular 0.00 201,608.15 55859 **Void** 07/31/2024 Regular 0.00 0.00 55860
**Void** 07/31/2024 Regular 0.00 0.00 55861
2859 UNDERGROUND SERVICE ALERT-SC SOUTHERN 07/31/2024 Regular 0.00 71.25 55862 10662 UNEXPECTED ATTRACTIONS 07/31/2024 Regular 0.00 3,000.00 55863 10862 Victor M. Sanchez 07/31/2024 Regular 0.00 2,000.00 55864 5631 WELLS LOCK & KEY 07/31/2024 Regular 0.00 441.00 55865 9951 WILLDAN 07/31/2024 Regular 0.00 15,118.60 55866
10805 World Trip, Inc. 07/31/2024 Regular 0.00 2,325.00 55867 10844 Zagami, Inc. 07/31/2024 Regular 0.00 52,831.84 55868 0643 ZUMAR INDUSTRIES. INC. 07/31/2024 Regular 0.00 8,278.15 55869 10081-2 QUADIENT FINANCE USA, INC. 07/03/2024 Bank Draft 0.00 900.00 DFT0000525 0070 SOUTHERN CALIFORNIA EDISON 07/03/2024 Bank Draft 0.00 5,526.61 DFT0000526 0070 SOUTHERN CALIFORNIA EDISON 07/03/2024 Bank Draft 0.00 49.63 DFT0000527 0070 SOUTHERN CALIFORNIA EDISON 07/03/2024 Bank Draft 0.00 781.91 DFT0000528 8363 TIME WARNER CABLE 07/03/2024 Bank Draft 0.00 319.98 DFT0000529 10729 WELLSONE COMMERCIAL CARD 07/08/2024 Bank Draft 0.00 68,145.30 DFT0000538 10640 AMAZON CAPITAL SERVICES, INC. 07/17/2024 Bank Draft 0.00 5,418.76 DFT0000541 0059-2 CALPERS FINANCIAL REPORTING & 07/17/2024 Bank Draft 0.00 355,301.00 DFT0000542 10490 CHARTER COMMUNICATIONS 07/17/2024 Bank Draft 0.00 229.98 DFT0000543 10490 CHARTER COMMUNICATIONS 07/17/2024 Bank Draft 0.00 229.98 DFT0000544 10053 HAULAWAY STORAGE CONTAINERS 07/17/2024 Bank Draft 0.00 89.04 DFT0000545 2724 HOME DEPOT CREDIT SERVICES 07/17/2024 Bank Draft 0.00 16,197.53 DFT0000546 0071-1 SO CAL GAS 07/17/2024 Bank Draft 0.00 70.82 DFT0000547 0071-1 SO CAL GAS 07/17/2024 Bank Draft 0.00 50.08 DFT0000548 0071-1 SO CAL GAS 07/17/2024 Bank Draft 0.00 35.82 DFT0000549 0070 SOUTHERN CALIFORNIA EDISON 07/17/2024 Bank Draft 0.00 5,901.98 DFT0000550 0070 SOUTHERN CALIFORNIA EDISON 07/17/2024 Bank Draft 0.00 33.39 DFT0000551 0070 SOUTHERN CALIFORNIA EDISON 07/17/2024 Bank Draft 0.00 14,918.98 DFT0000552 0069-2 SIEMENS INDUSTRY, INC. 07/18/2024 Bank Draft 0.00 126,389.11 DFT0000553 10643 STATE COMPENSATION INS FUND 07/18/2024 Bank Draft 0.00 35,087.92 DFT0000554 0126-1 GOLDEN STATE WATER COMPANY 07/31/2024 Bank Draft 0.00 8,599.23 DFT0000560 10053 HAULAWAY STORAGE CONTAINERS 07/31/2024 Bank Draft 0.00 89.04 DFT0000561 10081-2 QUADIENT FINANCE USA, INC. 07/31/2024 Bank Draft 0.00 1,000.00 DFT0000562 10586 QUADIENT LEASING 07/31/2024 Bank Draft 0.00 235.74 DFT0000563 0070 SOUTHERN CALIFORNIA EDISON 07/31/2024 Bank Draft 0.00 766.29 DFT0000564 0070 SOUTHERN CALIFORNIA EDISON 07/31/2024 Bank Draft 0.00 5,711.93 DFT0000565 10643 STATE COMPENSATION INS FUND 07/31/2024 Bank Draft 0.00 18,971.28 DFT0000566

My Check Report Date Range: 07/01/2024 - 07/31/2024
8/1/2024 11:38:05 AM Page 4 of 5
Vendor Number Vendor Name Payment Date Discount Amount Payment Type Payment Amount Number 8363 TIME WARNER CABLE 07/31/2024 Bank Draft 0.00 319.98 DFT0000567 Regular Checks
Manual Checks
Voided Checks
Discount
Payment
Payment Type Count
Bank Code WF Checking Summary
Bank Drafts
EFT's
144
0 3
28 0

0.00 0.00

0.00 0.00

0.00 175 0.00
Payment
2,422,149.40

0.00 -2,560.00
671,371.31

0.00 3,090,960.71
Payable
Count
244
0 0
30 0
274

My Check Report Date Range: 07/01/2024 - 07/31/2024
8/1/2024 11:38:05 AM Page 5 of 5
All Bank Codes Check Summary
Payment Type Discount
Payment
Count Payment
Payable
Count
Regular Checks
Manual Checks
Voided Checks
Bank Drafts
EFT's
144
0 3
28 0

0.00 0.00

0.00 0.00

0.00 175 0.00
2,422,149.40

0.00 -2,560.00
671,371.31

0.00 3,090,960.71
244
0 0
30 0
274
Fund Name Period Amount
Fund Summary
998 Pooled Cash 7/2024 3,090,960.71
3,090,960.71

07/15/24 07/18/24 07/31/24 Total
(a) Direct Deposits 141,900.66 67,259.36 131,836.68 340,996.70 (b) ICMA & Union Dues 2,655.00 - 2,655.00 5,310.00
(c) CalPERS Ret & 457 Plan - 24,149.13 6,963.80 31,112.93 (d) Payroll taxes 30,786.30 12,522.80 47,080.96 90,390.06 (e) CalPERS Medical 70,507.47 70,507.47
(f) Medical 6,876.49 - 5,157.13 12,033.62
Total Amount 269,998.56 79,782.16 193,693.57 550,350.78 (a) Employees / Council Members / Commissioners
(b) ICMA & Union Dues
(c) CalPERS Retirement & 457 Plan
(d) Federal / State payroll taxes and unemployment
(e) CalPERS Medical (active and retired)
(f) Medical Insurance - Active and Retired employees

CITY OF CUDAHY
Payroll - including payroll taxes and insurance premiums:

Attachment B Page 38 of 330
Type Issuer Amount % of Total
Deposit - 4588 Wells Fargo 3,460,777.38 15.53%
Successor Agency - 0688 Wells Fargo 4,750,763.01 21.31% Checking - 7128 Wells Fargo 423,601.09 1.90%
Payroll - 4570 Wells Fargo 300,306.92 1.35%
Savings - 4752 Wells Fargo 332,974.44 1.49%
Money Market Account Bank of New York (BNY) (a) 10,809.16 0.05% Pooled Savings State Local Agency 13,009,745.74 58.37%
Investment Fund (LAIF)
Total 22,288,977.74 100.00%
Pursuant to California Government Code Section 53646(b), I hereby certify that all investments held by the Authority are in compliance with state law and the agency's Statement of Investment Policy, and that there are sufficient funds within the agency's investment holdings to meet the Authority's cash flow requirements for the next six (6) months.

Respectfully submitted,
Joshua Calhoun
Joshua Calhoun
Finance Director

CITY OF CUDAHY
Statement of Investments
July 31, 2024
Attachment C Page 39 of 330
Month
Receipts Disbursement
July 2024 $ 1,537,864.08 $ 3,641,311.49 (a)
August 2024
September 2024
October 2024
November 2024
December 2024
January 2025
February 2025
March 2025
April 2025
May 2025
June 2025
Total: $ 1,537,864.08 3,641,311.49
Note (a) - City liab. & workers comp insurance, and PERS unfunded pension liab.

Month
Cash Receipts Disbursement
July 2024 $ 963,942.68 $ 2,896,825.05 (1)
August 2024
September 2024
October 2024
November 2024
December 2024
January 2025
February 2025
March 2025
April 2025
May 2025
June 2025
Total: $ 963,942.68 $ 2,896,825.05
Note (1) - City liab. & workers comp insurance, and PERS unfunded pension liab.

All Funds
General Fund
City of Cudahy
Summary of Cash Receipt/Disbursement by Month - FY 2024-2025 Attachment D Page 40 of 330
Month
Receipts Disbursement
July 2023 $ 1,698,263.55 $ 2,043,188.80 (a)
August 2023 1,570,904.87 3,148,357.16 (b)
September 2023 1,125,855.21 1,693,834.27
October 2023 1,259,614.45 848,009.43
November 2023 1,061,252.71 1,514,985.44
December 2023 770,294.89 1,120,942.42
January 2024 3,400,198.28 (c) 2,880,738.20 (d)
February 2024 1,189,496.91 1,382,500.65
March 2024 846,479.31 1,818,213.76 (e)
April 2024 1,764,923.25 1,399,214.40
May 2024 2,994,309.17 (f) 1,090,538.63
June 2024 1,114,305.30 1,906,535.54
Total: $ 18,795,897.90 20,847,058.70
Note (a) - City liab. & workers comp insurance, and PERS unfunded pension liab.

Note (b) - Includes $1,893,444 to Siemens Industries
Note (c) - Includes $1,786,952 in Motor Vehicle In-lieu fees Note (d) - Includes $1,141,928 paid to LA County Sheriff - 3 invoices Note (e) - Includes $158,445 paid to National Auto Fleet - vehicle Note (f) - Includes $1,786,952 in Motor Vehicle In-lieu receipt Month
Cash Receipts Disbursement
July 2023 $ 913,951.26 $ 1,604,912.00 (1)
August 2023 1,069,666.17 2,784,467.93 (2)
September 2023 797,120.38 1,543,754.51
October 2023 759,320.17 710,945.37
November 2023 632,862.51 1,244,543.67
December 2023 526,471.62 679,307.44
January 2024 2,671,465.70 (3) 2,421,667.28 (4)
February 2024 740,080.40 1,107,319.93
March 2024 563,376.03 1,261,506.18
April 2024 1,187,411.21 1,169,015.14
May 2024 2,640,204.13 (5) 567,429.42
June 2024 872,580.09 1,373,988.45
Total: $ 13,374,509.67 $ 16,468,857.32
Average Per Month: 1,114,542.47 1,372,404.78
Note (1) - City liab. & workers comp insurance, and PERS unfunded pension liab.

Note (2) - Includes $1,893,444 to Siemens Industries
Note (3) - Includes $1,786,952 in Motor Vehicle In-lieu fees Note (4) - Includes $158,445 paid to National Auto Fleet - vehicle Note (4) - Includes $1,786,952 in Motor Vehicle In-lieu receipt.

City of Cudahy
Summary of Cash Receipt/Disbursement by Month - FY 2023-2024 All Funds
General Fund
Attachment E Page 41 of 330
Supplier - Name Amount G/L Account
Eaglematflo 6,175.00 Mats for sister city visit
Www.Stagefront.Com 4,950.00 Tickets to LA. Galaxy game - Thursday, July 4th. Dignitaries Visit.

Birthworkers Of Col 4,900.00 Birth workers of color- option one services to 4 future moms Bkm Officeworks 4,284.17 Desk and bookshelves for rec office spaces Sator Soccer Say Soccer 4,019.70 Goal post purchase for youth sports United Rentals #15618 3,691.17 Siemens project (a/c rental) Aprint Co 3,091.18 Signage for SELA Pride
Office Depot #5125 2,805.80 Chairs for recreation facilities.

Ecornell 2,730.00 Project management certification program for recreation coordinator Taradel 2,702.04 Mailed Postcard to Cudahy Residents. Requested by Mayor League Of California Cit 1,950.00 YEO Network for Council Member Daisy Lomeli hotel stay.

Moon Valley Ca25 R0012 1,847.22 Registered Mayor to the League of California Cities Annual Conference Los Angeles Dodgers I 1,560.10 Special Excursion - Dignitaries Visit.

Staples Inc 1,552.56 General Office Supplies
Alldayshirts.Com 1,326.49 shirts for SELA Pride celebration In *i And O Party Rentals 1,164.69 fencing for the beer garden American Air 1,164.00 Flight Council Member Lomeli. Attending YEO Network National Conv.

Bellagio - Adv Dep 1,075.12 Hotel for Council Member Fuentes. Attending NALEO 41st Annual Conf.

Acmetools.Com 785.01 Irrigation tools
The Home Depot #6627 732.85 Decoration for June Pride Event.

Msft * E0300shuhv 699.60 Microsoft 365 Monthly Subscription Hertz #0220311 683.30 SHRM Conference 2024, Car Rental Fee Amazon Mktpl 673.99 Lights for new flag poles.

Adobe *adobe 671.72 Adobe Acrobat Monthly Subscription
Yeonetwork.Org 622.05 Council Member Daisy Lomeli -YEO Network National Convening 2024.

Icma Online 605.00 ICMA conference registration for Comm services Director Ms* Freehandchicago 604.56 SHRM 2024, Hotel Fees
Bsn Sports Llc 570.23 Game soccer balls for recreational sport season Vivint Inc/Us 522.18 Alarm company
Hollywood City Tours 499.00 Special Event
Delta Air 393.96 Special Events July 4th
Msft * E0300shui0 338.25 Subscription
Fedex Offic10200010249 331.39 Special Events July 4th
Golden Openings 326.24 Special Event
Localprog* 2024 Nation 300.00 Special Events July 4th
McMaster-Carr 292.41 Park Maintenance & Supplies
Wave - *radius Maps 4 Les 280.00 Advertising
Www.Ui.Com 250.36 Office Equipment
Sq *agua Y Salud 243.96 Recreation Supplies
Southwes 239.95 Special Events July 4th
5451 El Pollo Loco 206.38 Office Supplies
Classic Parking - Rose Bo 204.00 Special Event
Full Source, Llc 202.55 Uniforms
The Home Depot #0684 195.42 Park Maintenance & Supplies Portos Bakery Downeycl 168.08 Office Supplies
Puntip Cuisine Llc 154.00 Travel and meetings
Hp *instant Ink 142.12 Office Supplies
Credit Card Payment Detail
Jul, 01, 2024 to Jul, 31, 2024, paid on Aug, 06, 2024

Attachment F Page 42 of 330

ATTACHMENT F
Supplier - Name Amount G/L Account
Credit Card Payment Detail
Jul, 01, 2024 to Jul, 31, 2024, paid on Aug, 06, 2024
Business.Apple.Com 140.53 Subscription
Party City 1521 137.94 Senior Activities
The Green Olive Santa Fe 136.47 Travel and meetings
Fsp*cindys Jumpers, Llc 130.70 Special Event
Municipal Management Asso 125.00 Professional Membership Dropbox*34rtvhpj5whn 119.88 Office Supplies
Jersey Mikes Online Uc 109.95 Office Supplies
Samsclub.Com 105.72 Park Maintenance & Supplies
Superior Super Whse 104.16 Employee Recognition
Cheapairportparking 99.68 Travel and meetings
Cke*la Casita Mexicana Be 99.00 Travel and meetings
Flagsexpres 98.94 Special Event
Amzn Mktp Us 92.60 Park Maintenance & Supplies
71930 - Mlk Self Park 75.00 Travel and meetings
Staples 00113670 73.83 Advertising
North Bridge 10 E. Gra 60.00 Travel and meetings
Sprouts Farmers Mar 55.93 Travel and meetings
Epic Wings 54.24 Travel and meetings
Coldstone #20649 50.99 Office Supplies
Cudahy 50.97 Vehicle Maintenance
Sp Ace Flag&visual P 50.06 Special Event
Interpark Llc 49.00 Travel and meetings
Idrive.Com* Overuse Ch 46.95 Subscription
Zoom.Us 888-799-9666 40.00 Subscription
Msft * E0300shqt8 32.00 Subscription
Starbucks Store 67663 31.50 Travel and meetings
Starbucks 800-782-7282 22.00 Office Supplies
Smart And Final 319 21.88 Office Supplies
Dollar Tree 16.64 Office Supplies
La Princessa Bakery Cafe 15.60 Special Events July 4th
Digitalspace 14.00 Telephone
Msft * E0300shui1 8.00 Subscription
Facebk *52hws6g6e2 6.54 Advertising
Msft * E0300shtgh 5.00 Subscription
Apple.Com/Bill 4.99 Subscription
Wm Supercenter #3180 2.21 Training and Education
Grand 65,215.70

Blank Page

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 1 of 14

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor and Council Members
From: Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Subject: Adoption by Second Reading of Ordinance No. 750 repealing Ordinance No. 689, terminating Development Agreement No. 18-017C between the City of Cudahy and Nyce Guys, LLC.

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

1. Adopt by second reading Ordinance No. 750 (Attachment A) repealing Ordinance No. 689 terminating DA No. 18-017C, between the City of Cudahy and Nyce Guys, LLC.

SUMMARY
Pursuant to the terms and conditions of DA No. 18-017C and Commercial Cannabis Permit (“CCP”) No. 18-0017, 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. 689 and terminate DA No. 18-017C through the adoption of Planning Commission Resolution No. 2024-13. On July 16, 2024, the City Council voted X-X to adopt Ordinance No. 750.

Item Number
12D

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 2 of 14

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 June 25, 2018, the Planning Commission recommended approval of CCP No. 18-0017 (Attachment F, pp. 59-71) for cannabis cultivation, manufacturing, and distribution activities at 4907 Cecilia Street (“Subject Site”), as illustrated in Figure 1 and 2, below. As discussed in further detail below, the conditions of approval of CCP No. 18-0017 require the Operator to make timely payments of the fees due under the Development Agreement among other requirements.

Figure 1 – Aerial of the Subject Site

3. On July 17, 2018, the City Council adopted Resolution No. 18-37 (Attachment C) approving the issuance of CCP No. 18-0014 with conditions of approval to the Operator, subject to the execution of a development agreement with the City.

4. On August 7, 2018, the City Council adopted Ordinance No. 689 (Attachment D) approving DA No. 18-017C by and between the Operator and the City authorizing commercial cannabis cultivation, manufacturing, and distribution activities at the Site as illustrated in Figures 2 and 3, below (See also, Attachment F, pp. 142 and 143). The DA requires the Operator to make timely payments for Community Benefit Fees; Cost Recovery Fees; and Site
4907 Cecilia Street

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 3 of 14

Non-Operating Fees.1
Figure 2 – Floor Plan
Figure 3 – Site Plan

5. On October 2, 2019, the City provided the Operator with a Notice of Delinquency (Attachment F, pp. 161) due to failure to pay the various fees due under CCP No. 18-0017 and DA No. 18-017C, 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 $97,720.74. The Operator was given no later than October 17, 2019, to cure the amount, however, the delinquency was not timely cured.

6. On April 15, 2021, the Building and Safety Division issued Permit No. 8221 (Attachment F, pp. 168-169) for the installation of a perimeter fence.

7. On May 4, 2021, the City provided the Operator with a Notice of Default (Attachment F, 1 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 4 of 14

pp. 163-164) due to non-compliance with the payment of fees (Community Benefit Fees, Cost Recovery Fees, and Non-Operating Fees) and associated penalties in the amount of $291,333.54. The Operator was given no later than 30 days to cure the default, however, the default was not timely cured.

8. On September 2, 2021, the City notified the Operator of their failure to sign the DA (Attachment F, pp. 166).

9. During November 2022, the City’s Building & Safety Division received the plan check submittal for interior tenant improvements as demonstrated in Figures 4 and 5, below (See also Attachment F, pp. 171-203). The plans did not conform to the floor plans or site plan approved and incorporated with DA-18-017C as shown in Figures 2 and 3, above.

Condition of Approval No. 49 of CCP18-0017 (Attachment F, pp. 59-71) requires the Operator to obtain a Zoning Clearance prior to commencing construction.

Figure 4 - Non-Conforming Floor Plan
Figure 5 - Non-Conforming Site Plan

10. On November 29, 2021, the City’s Building & Safety Division issued a Plumbing Permit for the installation of floor drains, trench drains, and rough plumbing (Attachment F, p. 169).

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 5 of 14

11. On December 13, 2022, the City’s third-party plan check consultant approved the submitted plans.

12. Pursuant to City Council direction, on December 7, 2022, the City Manager offered a Deferment and Payment Program (Attachment F, pp. 205-206) 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 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 and participate in the Deferment and Payment Program (Attachment F, pp. 205-206). The City received interest from the Operator and due to the good faith negotiations between both parties, the City extended the opportunity for the Operator to participate.

13. Under Article 5(d) of DA18-015C the City Manager, his/her designee(s), and the Sheriff’s Department designee 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. Condition of Approval 47 also permits the City Building Official, City Cannabis Enforcement staff, and Planning Department staff the authority to conduct periodic site inspections to ensure compliance with CCP conditions (Attachment F, p. 69).

14. On March 8, 2023, City staff conducted an inspection of the Subject Site. During this inspection several violations of City’s Building, Electrical, and Mechanical Codes were observed (Attachment F, pp. 207-210). 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. 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” (Attachment F, pp. 212-225). Correspondence from the City also reminded the Operator that it was currently under “default” status. The City has no record of the Operator submitting applications for building permits for unpermitted work.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 6 of 14

15. On April 10, 2023, the City presented the Operator with a Letter Agreement agreeing to the Deferment and Payment Program to forbear the outstanding payments due (“Letter Agreement”) (Attachment F, pp. 227-234). The Operator accepted the proposed terms and executed the Letter Agreement on April 13, 2023, and agreed to commence payments on May 1, 2023. The Letter Agreement stated that the Operator had an outstanding balance of $570,785.55 in past due fees. 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 the 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 F, p. 230).

Pursuant to the terms of the Letter Agreement, the Operator agreed to maintain current payments for Community Benefits Fees and Cost Recovery Fees as they become due under the Development Agreement, effective May 1, 2023, and to commence a 12-month payment schedule for past-due Community Benefits Fees and Cost Recovery Fees beginning April 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.

16. Operator made payments on April 13, 2023, for February and March 2023 totaling $15,145.80 as agreed upon in the Letter Agreement. However, the Operator failed to make the May and June 2023 payments. Between May and June 2023, the City provided the Operator with two Notices of Delinquency (Attachment F, pp. 236-245) and provided an opportunity for the Operator to cure outstanding payments due. However, the default on the Letter Agreement was not timely cured and therefore was terminated and no longer in full force and effect as of June 16, 2023. 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.

17. On April 25, 2023, the Operator requested assistance to remedy the red tag status of the Subject Site. 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 F, pp. 247-279). This amount was to be paid by the Operator to obtain all necessary permits and remove the red tag from the building.

The Operator 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 F, pp. 247-279). The Operator did not entertain this option and failed to remediate the red tag status. The Operator 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 this report.

18. On June 23, 2023, the City sent a Final Demand Letter (Attachment E) demanding

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 7 of 14

Operator to respond to the following demands: 1) Payment for the total past due amounts under the CCP and DA; 2) Payment of a $34,013.20 citation to remove “red tag” status 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 Operator did not respond in a timely manner and has failed to make any attempt to cure the 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.

19. On August 9, 2023, the City issued an Escrow Account Letter (Attachment F, pp. 286-287) 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.

20. On October 10, 2023, City staff conducted an inspection of the Subject 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 (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 F, pp. 289-297). As of the writing of this report, the violations in this notice have not been corrected.

21. On October 17, 2023, the Operator’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 F, pp. 299-301). The City Council directed the City Attorney to respond to the Operator’s legal counsel as to the reasons why legal counsel’s arguments were not supported by the law (Attachment F, pp. 302-313).

22. On October 24, 2023, the City issued a letter (Attachment F, pp. 315-316) 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, which was applied to the Operator’s outstanding balance of $656,116.19 as of October 1, 2023.

23. As of December 1, 2023, Operator owed the City $682.331.88. The Operator has continued to fail to make payments (Attachment F, pp. 315-316). Community Benefit Fees, Cost-Recovery and Non-Operating Fees plus penalties continue to accrue.

24. On November 27, 2023, the City issued the Operator a Notice of Review Hearing (Attachment F, pp. 318-319) with the date, time, and place. The notice informed the Operator that the Review Hearing was being held pursuant to Article 19 of DA No. 18- 017C, requesting the Operator to timely submit evidence of compliance and submit

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 8 of 14

payment for the estimated cost.2

25. On December 29, 2023, the City sent a follow-up notice to the Notice of Review (“Follow Up Notice”) to the Operator confirming that it had not received any communication from the Operator confirming attendance at the Review Hearing and that the ability to present before the hearing officer had been waived (Attachment H). The City did not receive a timely response from the Operator.

26. 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 Section 19 of the DA No. 18-017C to hear and consider information and evidence submitted by City staff through an Administrative Record (Attachment F) and the Operator. No representation from the Operator was present at the hearing nor did the Operator submit any information or evidence for consideration.

27. On February 15, 2024, the Hearing Officer issued a written decision and order (the “Decision”) (Attachment G) 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 repeal Ordinance No. 689 terminating DA No. 18-017C and revoke the related interest in CCP No. 18-0017.

28. 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. 689 and terminate DA No. 18-017C. 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. 2024-13 (Attachment K), recommending the City Council repeal Ordinance No. 689 and terminate related DA No. 18-017C.

29. On July 16, 2024, pursuant to State law and the CMC, the City Council held a duly noticed public hearing to consider the recommendation by the Planning Commission to repeal Ordinance No. 689 and terminate DA No. 18-017C. After consideration of 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 public hearing, the City Council voted X-X to introduce and adopt by first reading Ordinance No. 750.
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 well over 30 days’ notice of the estimated cost.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 9 of 14

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 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(c). 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. 18-0017 and DA No. 18-017C. 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 G, the Hearing Officer issued a written decision making several findings of fact and conclusions and determined that Nyce Guys, LLC breached the terms and conditions pursuant to DA No. 18-017C and CCP No. 18-0017, 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). The Operator is also obligated to make the fees due under the DA pursuant to CCP Condition of Approval No. 45; and timely payment for non-operating fees pursuant to Condition of Approval No. 8, 13, and 37 (Attachment F, pp. 59-71). Conditions of Approval 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Pursuant to the terms of the DA, Operators that are more than 30 days past due with Operating Fees are subject to a penalty equal to twenty-five percent (25%). In addition, a ten percent (10%) penalty shall be added to the first day of each calendar month following the imposition of the initial 25% penalty, if the fee remains unpaid in whole or in part, up to a maximum of the one hundred percent (100%) of the payable fee.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 10 of 14

The Operator’s duty to comply with the CCP conditions of approval are incorporated into the DA No. 18-015C under Section 18.3 Conditions 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Conditions 3, 13, and 37 all require timely payment of fees due under the Development Agreement. The City has regularly sent monthly invoices for Community Benefits Fees, Cost Recovery Fees, Non-Operating Fees, and appliable late penalties since 2019 (Attachment F, pp. 336-449).

The City executed a Letter Agreement to grant 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. The Operator did not make any timely payments in the months that followed the execution of the Letter Agreement in May and June 2023. As of December 1, 2023, the City reported that the Operator is past due in the amount of $682,331.88 and past-due payments continue to accumulate, including late payment penalties. The Operator continues to fail to make payments and as of June 13, 2024, $767,969.24 is due and owing (Attachment I).

Table 1. Summary of Past and Current Amounts Due as of June 13, 2024 Fee Type Payment Amount Due
Community Benefit Program $356,001.88
Cost Recovery Fees $105,591.14
Non-Operating Fees $236,488.56
Penalties (Late Payments) $69,887.66
TOTAL $767,969.24
Based on the evidence submitted by the City, the Hearing Officer found that “based on the unrefuted evidence presented by the City...a preponderance of the evidence shows that [Operator] breached multiple conditions of the DA and CCP. Despite multiple attempts and notices by the City to gain compliance, the evidence shows that [Operator] failed to comply with their payment obligations, which constitutes the necessary grounds for termination of the DA and revocation of the CCP under the CMC” (Attachment G).

The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-13 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-017C and repeal Ordinance No. 689 and terminate the related DA.

2. Violation #2: Breach of Condition of Approval No. 51 (Time Limits). Failure to Implement the Project Under Prescribed Time Limits under CCP No. 19-0017. The Operator’s duty to comply with the CCP’s conditions of approval are incorporated into DA No. 18-017C under 3 Section 18 of DA No. 18-017C states “Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council.” The Regulatory Permit is CCP No. 18-0017.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 11 of 14

Section 18. CCP Condition of Approval No. 51(A)(i) sets a 90-day time frame in which the Operator needs to obtain a Zoning Clearance. Condition of Approval No. 51(A)(ii) sets a 90-day time frame in which the Operator must complete construction of Phase I of the Project. CCP Condition of Approval 51(A)(iii) sets a 180-day time limitation from the effective date of the CCP to complete all tenant improvements, construction and obtain a certificate of occupancy from the Building Department. Failure to obtain a Zoning Clearance within 90 days of the effective date of the CCP, renders the CCP to “expire and become null and void” (Attachment F, p. 73). The City Manager’s ability to grant an extension of time for a Zoning Clearance if the Operator has made diligent efforts to implement the project is stated in Conditions of Approval 30(A)(i), (ii), and (iii).

The Operator was given a notice of default and opportunity to cure pursuant to the City’s Final Demand Letter to the Operator (Attachment E), with no response from the Operator.

The Operator has failed to provide any evidence that it has obtained a Zoning Clearance, completed construction of Phase I, or completed the tenant improvements, obtained a certificate of occupancy, or otherwise complete Phase II within the prescribed time periods. Nor does the City have any record of any request by the Operator for an extension of time to the City Manager and there is no evidence to demonstrate the Operator has made substantial progress, such as submitting an application for a Zoning Clearance or following through with building permit plan check.

Based on the evidence submitted by the City, the Hearing Officer found that, “the [Operator] 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….without an extension, the deadlines expired in late 2018 and early 2019. The City has no record of any request by the [Operator] 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 permits. Despite the [Operator] submitting for building plan check the [Operator] remains in breach of its conditions of approval by failing to implement the Project within the time limits…” (Attachment G).

The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-13 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-017C and repeal Ordinance No. 689 and terminate the related DA.

3. Violation #3: Breach of Condition of Approval No. 49 (Construction Activities) under CCP 18-0017. The Operator’s duty to comply with the CCP’s conditions of approval are incorporated into DA No. 18-017C under Section 18. Condition of Approval No. 49 “states that prior to any construction, the [Operator] shall obtain a Zoning Clearance for construction from the Planning Division and a Building Permit from the Building and Safety Division.” The City has no record of any requisite applications, approvals, inclusive of a Zoning Clearance, for permits obtained by the Operator for some limited work described above. Additionally, the City contacted the Los Angeles Fire Department,

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 12 of 14

Special Occupancy Inspection Unit and no building permits record were found for the fire sprinklers (Attachment F, pp. 451-452). 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.

Based on the evidence submitted by the City, the Hearing Officer found that “[t]he [Operator] failed to obtain any requisite approvals, inclusive of a Zoning Clearance, and permits from the City Planning Division and Building & Safety Division prior to the installation of fire sprinklers, electrical wiring, recessed lighting, interior framing walls with mezzanine, and HVAC ducts. Therefore, the [Operator] breached [Condition of Approval No. 49] (Attachment G).”
The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-13 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-017C and repeal Ordinance No. 689 and terminate the related DA.

4. Violation #4: Noncompliance with State Law. Failure to Obtain State-Issued Cannabis Licenses for Cultivation, Manufacturing, and Distribution. 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. The Owner has breached the DA because the Owner has not obtained a State-issued Cannabis license for the facility. As of December 18, 2023, search of the term “Nyce Guys” on the Department of Cannabis Control’s website shows that the Operator’s had no record of an active cannabis license issued by the state (Attachment F, p. 321).

Based on the evidence submitted to the City, the Hearing Officer found that “[b]ased on a preponderance of the evidence presented by the City as noted above, [Operator] 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).”
The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-13 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-017C and repeal Ordinance No. 689 and terminate the related DA.

5. Violation #5: Breach of Conditions of Approval No. 48 (Commercial Cannabis Permit Modifications) under CCP 18-0017. CCP18-0017 Condition of Approval No. 48 states “prior to undertaking any operational or construction-related activity which is not expressly described in the CCP conditions, the [Operator] 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, requires the Operator to file a

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 13 of 14

written and/or mapped description of the proposed activity in order to determine if a permit modification is required.”
On November 18, 2021, the Operator submitted building permit plans for interior tenant improvements at the Subject Site to the City’s plan check consultants without first obtaining a Zoning Clearance from the Planning Division and payment of the required fees. Furthermore, the plans submitted by the Operator to the City’s Plan Check Consultants do not conform to the original site plan and floor plans approved by the City in the Operator’s CCP and DA. The Operator 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 Plan and Floor Plan approved by the City in the Operator’s CCP and DA.

Based on the evidence submitted by the City, the Hearing Officer found that the “[Operator] 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 (Attachment G).”
The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-13 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-017C and repeal Ordinance No. 689 and terminate the related DA.

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 J). 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 applies 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. 750 to repeal Ordinance No. 689 and terminate DA No 18-017C., it would be an enforcement action. Therefore, the action(s) are categorically exempt from the provisions of CEQA.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 14 of 14

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. 689 and DA No. 18-017C through the adoption of Planning Commission Resolution No. 2024-13. 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. 750 repealing Ordinance No. 689 terminating DA No. 18-017C.

ATTACHMENT
A. Ordinance No. 750

ORDINANCE NO. 750

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY REPEALING ORDINANCE NO. 689 AND

TERMINATING RELATED DEVELOPMENT AGREEMENT
NO. 18-017C BETWEEN NYCE GUYS, 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 June 25, 2018, the City Planning Commission (“Planning Commission”) conducted a properly noticed public hearing to consider an application by Nyce Guys, LLC (“Operator”) for approval of a Commercial Cannabis Permit to allow nonstore front commercial cannabis manufacturing activities at 4907 Cecilia Street (“Site”); and
WHEREAS, at this hearing, the Planning Commission heard and considered verbal and written testimony and evidence, and recommended approval of the Commercial Cannabis Permit subject to the Operator’s execution of a development agreement with the City; and
WHEREAS, on July 17, 2018, the City Council conducted a properly noticed public Attachment A - Draft Ordinance No. 750 Page 59 of 330
Ordinance No. 750

hearing to consider the issuance of the Commercial Cannabis Permit (“CCP”) No. 18-0017 and Development Agreement (“DA”) No. 18-017C at which the City Council heard and considered both written and oral testimony and evidence and subsequently approved, and adopted Resolution No. 18-37 for CCP No. 18-0017; and
WHEREAS, at the same hearing, the City Council considered and approved CCP No. 18-0017, it also conducted the first reading of Ordinance No. 689 which authorized the execution of DA No. 18-017C between the Operator and the City; and WHEREAS, on August 7, 2018, the City Council adopted, on second reading, Ordinance No. 689, approving DA No. 18-017C and authorizing the Mayor to execute the DA on behalf of the City; and
WHEREAS, the effective date of the Development Agreement is September 7, 2018 (“Effective Date”); and
WHEREAS, upon the Effective Date of Ordinance No. 689, the Operator was granted the permission to conduct commercial cannabis cultivation, manufacturing, and distribution 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 and conditions of approval under the CCP 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- 017C which informed the Operator of the burden to prove compliance with the DA and CCP; and
WHEREAS, the Operator never provided a timely response to the City’s notice for a Review Hearing; and
WHEREAS, on December 29, 2023, the City sent a follow up notice informing the Operator it had not received any response to the Review Hearing Notice; and WHEREAS, the Operator did not respond to the follow up notice; 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 Attachment A - Draft Ordinance No. 750 Page 60 of 330
Ordinance No. 750

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 Operators noncompliance with the DA and CCP based on a preponderance of the evidence; and WHEREAS, the Hearing Officer determined that Operator breached the DA and CCP in five material respects by a preponderance of the evidence; and WHEREAS, the Hearing Officer determined that Operator had breached its payment obligations due to the Operator’s non-payment of fees and penalties due and owed to the City totaling $682,331.88, which continue to accumulate; and WHEREAS, the Operator continues to fail to meet its payment obligations and the total amount due to the City as of June 13, 2024, is $767,969.24; and WHEREAS, the Operator’s duty to comply with the CCP No. 18-0017’s conditions of approval are incorporated into DA No. 18-017C under Section 18; and WHEREAS, the Operator breached its obligation to implement the project within the prescribed time periods contained with CCP No. 18-0017 Condition of Approval Nos. 49 (Zoning Clearance) and 51 (Time Limits), because there is no evidence that the Operator has made a diligent effort to implement the Project in any fashion inclusive of an application for a Zoning Clearance to permit the commercial cannabis activities; and WHEREAS, the Operator breached CCP No.18-0017 Condition of Approval No. 49 (Construction Activities) due to the Operator’s unpermitted work and improvements at the Site and failure to receive the requisite approvals or permits; and WHEREAS, the Operator failed to comply due to the Operator’s failure to maintain all its necessary licenses to operate under the DA in violation of Article 21 of the DA; and WHEREAS, the Operator breached CCP No. 18-0017 Condition of Approval No. 48 (Commercial Cannabis Permit Modification) due to the Operator’s failure to receive City Manager approval for the design changes made to the facility WHEREAS, the Hearing Officer has recommended that the City Council adopt an ordinance repealing Ordinance No. 689 terminating DA No. 18-017C and revoke the related interest in CCP No. 18-0017; 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 Attachment A - Draft Ordinance No. 750 Page 61 of 330
Ordinance No. 750

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. 689; and
WHEREAS, after the close of such public hearing, the Planning Commission adopted Resolution No. 2024-13, attached hereto and incorporated by reference as Exhibit “C,” recommending the City Council repeal Ordinance No. 689 and terminate related DA No. 18-017C; 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. 689; and
WHEREAS, after the close of such public hearing, the City Council introduced and adopted by first reading Ordinance No. 750, repealing Ordinance No. 689 and terminating related DA No. 18-017C.

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 Nyce Guys, LLC is not in compliance with the terms and conditions of the Development Agreement No. 18-017C and finds that Nyce Guys, LLC is in default of its contractual obligations set forth in said Development Agreement and has breached its Conditions of Approval for CCP No. 18-0017 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.18-017C in its entirety. For the reasons stated in Attachment A - Draft Ordinance No. 750 Page 62 of 330
Ordinance No. 750

the Decision, and as recommended by the Planning Commission, the City Council hereby adopts this Ordinance repealing Ordinance No. 689 terminating DA No. 18-017C 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 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. 689 and termination of DA No. 18-017C 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
Attachment A - Draft Ordinance No. 750 Page 63 of 330
Ordinance No. 750

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. 750 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
Attachment A - Draft Ordinance No. 750 Page 64 of 330
Ordinance No. 750

EXHIBIT “A”
EVIDENCE SUBMITTED BY THE CITY (“ADMINISTRATIVE RECORD”) Attachment A - Draft Ordinance No. 750 Page 65 of 330
Ordinance No. 750

EXHIBIT “B”

HEARING OFFICER DECISION AND ORDER
Attachment A - Draft Ordinance No. 750 Page 66 of 330
Ordinance No. 750

EXHIBIT “C”
PLANNING COMMISSION RESOLUTION NO. 2024-13
Attachment A - Draft Ordinance No. 750 Page 67 of 330
Blank Page

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 1 of 16

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor and Council Members
From: Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Subject: Adoption by Second 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. Adopt by second reading Ordinance No. 751 (Attachment A) repealing Ordinance No. 698 terminating DA No. 18-001C, between the City of Cudahy and VM Evergreen, LLC.

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. On July 16, 2024, the City Council voted X-X to adopt Ordinance No. 751.

Item Number
12E

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 2 of 16

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.

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.

Site
8222 Atlantic Ave

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 3 of 16

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
Figure 2 – Floor Plan(s)
1 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 4 of 16

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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 5 of 16

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).

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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 6 of 16

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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 7 of 16

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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 8 of 16

‘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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 9 of 16

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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 10 of 16

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.

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 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.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 11 of 16

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. On July 16, 2024, pursuant to State law and the CMC, the City Council held a duly noticed public hearing to consider the recommendation by the Planning Commission to repeal Ordinance No. 698 and terminate DA No. 18-001C. After consideration of 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 public hearing, the City Council voted X-X to introduce and adopt by first reading Ordinance No. 751.

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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 12 of 16

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 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 13 of 16

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 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).

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.

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.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 14 of 16

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 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).

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.

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),

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 15 of 16

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).

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.

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.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 16 of 16

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. Ordinance No. 751

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

Ordinance No. 751

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

Ordinance No. 751

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

Ordinance No. 751

“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

Ordinance No. 751

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

Ordinance No. 751

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

Ordinance No. 751

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

Ordinance No. 751

EXHIBIT “B”

HEARING OFFICER DECISION AND ORDER

Ordinance No. 751

EXHIBIT “C”

PLANNING COMMISSION RESOLUTION

Blank Page

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 1 of 18

STAFF REPORT
Date:

To:

From:

Subject:

August 20, 2024
Honorable Mayor and Council Members
Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Adoption by Second Reading of Ordinance No. 752 repealing Ordinance No. 676, terminating Development Agreement No. 18-019C between the City of Cudahy and Cuper Development, LLC.

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

1. Adopt by second reading Ordinance No. 752 (Attachment A) repealing Ordinance No. 676 terminating DA No. 18-019C, between the City of Cudahy and Cuper Development, LLC.

SUMMARY
Pursuant to the terms and conditions of DA No. 18-019C and Commercial Cannabis Permit (“CCP”) No. 18-0019, 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. 676 and DA No. 18-019C through the adoption of Planning Commission Resolution No. 2024-14. On July 16, 2024, the City Council voted X-X to adopt Ordinance No. 752.

Item Number
12F

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 2 of 18

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 April 30, 2018, the Planning Commission recommended approval of CCP No. 18-0019 (Attachment F - pp. 62-77) for cannabis manufacturing and cultivation at 4916 Cecilia Street, Unit A (“Subject Site”), as illustrated in Figure 1 below. The Operator is one of seven tenants at the Site which all have separate development agreements with the City but share an interest in CCP No. 18-0019 and are subject to the same conditions of approval. As discussed in further detail below, the conditions of approval of CCP No. 18- 0019 require the Operator to make timely payments of the fees due under the Development Agreement, among other requirements.

Figure 1 – Aerial of the Subject Site

3. On May 15, 2018, the City Council adopted Resolution No. 18-17 (Attachment C) approving the issuance of CCP No. 18-0019 with conditions of approval to the Operator, subject to the execution of a development agreement with the City.

4. On June 5, 2018, the City Council adopted Ordinance No. 676 (Attachment D) approving Development Agreement No. 18-019C by and between the Operator and the City authorizing commercial cannabis manufacturing and cultivation activities at the Site as illustrated in Figures 2 and 3, below. The DA requires 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
4916 Cecilia St

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 3 of 18

Figure 2 – Floor Plan
Figure 3 – Site Plan

5. On October 2, 2019, the City provided the Operator with a Notice of Delinquency (Attachment F, p. 234) due to failure to pay the various fees due under CCP 18-0019 and DA No. 18-019C, 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 $170,140.66. The Operator was given no later than October 17, 2019 to cure the amount, however the delinquency was not timely cured.

6. On May 4, 2021, the City provided the Operator with a Notice of Default (Attachment F, Unit A
4916 Cecilia Street

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 4 of 18

pp. 236-237) due to non-compliance with the payment of fees and associated penalties in the amount of $575,356.45. The Operator was given no later than 30 days to cure the default, however, the default was not timely cured.

7. On October 19, 2021, the City provided the Operator with a Final Demand Letter (Attachment F, pp. 239-240) due to payment non-compliance informing the Operator that fees and penalties had accumulated to $639,004.09. This letter included a list of prior efforts by the City to achieve compliance. The Operator was given no later than 30 days to cure the default and comply with payment obligations, however, the default was not timely cured.

8. On October 12, 2022, a meeting was scheduled with the Operator’s legal counsel, the Operator’s representative, City staff, and the City’s Special Counsel. City staff and the City’s Special Counsel provided the Operator with the necessary steps and information to bring their operation back on track to achieve compliance both verbally and by email (Attachment F, pp. 242-244). Prior to the meeting, City staff had visited the Subject Site and observed substantial work activity. Additionally, the City's Building Official observed that the work underway did not conform to the original site and floor plans approved by the City in the Operator’s CCP and DA. The City made an immediate request for the Operator to provide revised and updated site and floor plans to conform with work underway at the Subject Site. CCP No. 18-0019 requires that prior to undertaking any operational or construction-related activity which is not expressly described in the CCP conditions, the Operator shall first contact the City Manager, or his designee, to determine if the proposed activity requires a modification of their CCP. The City Manager may, at his sole discretion, require the Operator to file a written and/or mapped description of the proposed activity in order to determine if a permit modification is required. The Operator was given no later than October 21, 2022 to provide revised plans and complete required documents for the City Manager's consent of design changes. The revised plans and required documents were not timely submitted.

9. Pursuant to City Council direction, on December 7, 2022, the City Manager offered a Deferment and Payment Program (Attachment F, pp. 246-247) 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 accumulated Non-Operating Fees within 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

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 5 of 18

later than January 31, 2023, to execute an agreement and participate in the Deferment and Payment Program. The City received interest from the Operator and due to the good faith negotiations between both parties, the City extended the opportunity for the Operator to participate.

10. On January 10, 2023, the City presented the Operator with a Letter Agreement agreeing to the Deferment and Payment Program to forbear the outstanding payments due (“Letter Agreement”) (Attachment F, pp. 249-256). The Operator accepted the proposed terms and executed the Letter Agreement on February 2, 2023, and agreed to commence payments on March 2, 2023. The Letter Agreement stated that the Operator had an outstanding balance of $402,707.00. in past due fees. 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 the 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 F, p. 251).

Pursuant to the terms of the Letter Agreement, the Operator agreed to maintain current payments for Community Benefits Fees and Cost Recovery Fees as they become due under the Development Agreement, effective March 1, 2023, and to commence a 12- month payment schedule for past-due Community Benefits Fees and Cost Recovery Fees beginning April 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.

11. On January 30, 2023, the Operator provided City Staff with the revised plans that were requested on October 21, 2022 (Attachment F, pp. 258-260). However, the Operator did not complete nor submit the proper documentation to City Staff to determine if a permit modification was required based on the proposed facility design changes. As of the writing of this report 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 Operator’s CCP and DA.

12. The Operator executed the Letter Agreement on February 2, 2024 (Attachment F, p. 254).

13. Between March and May 2023, the City provided the Operator with three Notices of Delinquency (Attachment F, pp. 261-276) under the Letter Agreement and provided an opportunity for the Operator to cure outstanding payments due. However, the default on the Letter Agreement was not timely cured and therefore was terminated and no longer in full force and effect as of June 16, 2023. Accordingly, the total of all past due amounts at the time the Letter Agreement was terminated and an amount of $1,272,382.53 and was due and owing.

14. On June 23, 2023, the City sent a Final Demand Letter (Attachment E) demanding the Operator to respond to the following demands: 1) Forwarding payment for the total past

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 6 of 18

due amounts and 2) Contact City staff for a meeting to revise the CCP’s Schedule of Performance and for further information to become compliant with the DA and CCP. The Final Demand Letter provided 30 days for the Operator to comply, so that no further action would be necessary. The Operator did not respond in a timely manner and has failed to make any attempt to cure any defaults.

15. On August 9, 2023, the City issued an Escrow Account Letter (Attachment F, pp. 282-283) 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.

16. On October 24, 2023, the City issued a letter (Attachment F, pp. 285-286) 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 the Operator a credit in the amount of $14,950.50, which was applied to the Operator’s outstanding balance of 1,456,692.52 as of October 1, 2023.

17. On November 27, 2023, the City issued the Operator a Notice of Review Hearing (Attachment F, pp. 288-289) with the hearing date, time, and place. The notice informed the Operator that the Review Hearing was being held pursuant to Article 19 of DA No. 18- 0019C, requesting the Operator to timely submit evidence of compliance and to submit payment for an estimated cost2 of the Review Hearing (Attachment F, pp. 288-289). The notice also requested the Operator to contact staff to confirm appearance at the Review Hearing and advised the Operator to respond within ten days of the date of the letter to confirm appearance at the Review Hearing other otherwise waive the right to present evidence at the hearing (Attachment H).The notice also informed the Operator to deliver a cashier’s check three days prior to the scheduled hearing and that failure to do so would constitute further default under the DA. The City did not receive any response, reply, documents evidencing compliance, or payment for the cost of the Review Hearing.

18. On December 29, 2023, the City sent follow up to the Notice of Review (“Follow Up Notice”) to the Operator confirming that it had not received any communication from the Operator confirming attendance at the Review Hearing and that the ability to present before the hearing officer had been waived (Attachment H). The City did not receive a timely response from the Operator.

19. Two days before the Review Hearing, on January 6, 2024, an attorney who appears to represent the Operator submitted a letter to the City alleging the City was in default with the terms of DA No. 18-019C (“Notice to Cure Breach”) (Attachment I). The Notice to Cure Breach alleged the City had breached DA No. 18-019C by (a) failing to waive fees pursuant to the Article 23.i of the DA (Force Majeure); (b) failing to “expedite” approvals and by seeking fees for delays allegedly caused by the City; (c) requiring the Operator to pay Non2 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 over 30 days’ notice of the estimated cost.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 7 of 18

Operating Fees as required by the DA; (d) implementing fees that violate The Mitigation Fee Act (Govt Code § 65864-65869.5); and (e) failing to conduct an annual hearing to determine compliance with the DA No. 18-019C. The Notice to Cure Breach also alleged the City was liable under the Civil RICO statute. The Operator demanded that the City (i) waive all accumulated Non-Operating Fees for a period of 15 months; (ii) “waive all fees during any delays caused by the City[;]” (iii) “waive all fees when the City was in default under the agreements[;]” (iv) issue certificate of occupancy to the Operator; (v) halt the hearing process before the third-party Hearing Officer; and (vi) expedite the processing of all permit applications.

20. 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 Section 19 of the DA No. 18-019C to hear and consider information and evidence submitted by City staff through an Administrative Record (Attachment F) and the Operator. No representation from the Operator was present at the hearing nor did the Operator submit any information or evidence for consideration for the hearing.

21. On January 8, 2024, after the Review Hearing had been completed, the City received a request to submit the Notice to Cure Breach into the administrative record for the hearing that took place on January 8, 2024 (Attachment K).

22. On February 15, 2024, the Hearing Officer issued a written decision and order (the “Decision”) (Attachment G) 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 repeal Ordinance No. 676 terminating DA No. 18-019C and revoke the related interest in CCP No. 18-0019.

23. 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. 676 and terminate DA No. 18-019C. 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 public hearing, the Planning Commission adopted Resolution No. 2024-14 (Attachment N), recommending the City Council repeal Ordinance No. 676 and terminate related DA No. 18-019C.

24. On July 16, 2024, pursuant to State law and the CMC, the City Council held a duly noticed public hearing to consider the recommendation by the Planning Commission to repeal Ordinance No. 676 and terminate DA No. 18-019C. After consideration of 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 public hearing, the City Council voted X-X to introduce and adopt by first reading Ordinance No.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 8 of 18

752.

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 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 the 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. 18-0019 and DA No. 18-019C. 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 G, the Hearing Officer issued a written decision making several findings of fact and conclusions and determined that Cuper Development, LLC breached the terms and conditions pursuant to DA No. 18-019C and CCP No. 18-0019, 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)). The Operator is also obligated to make the fees due under the DA pursuant to CCP Condition of Approval No. 45; and timely payment for non-operating fees pursuant to Condition of Approval No. 13 (Attachment F, pp. 62-77). Conditions of Approval Nos. 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Pursuant to the terms of the DA, Operators that are more than 30 days past due operating fees are subject to a penalty equal to twenty-five percent (25%). In addition, a ten percent (10%) penalty shall be

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 9 of 18

added to the first day of each calendar month following the imposition of the initial 25% penalty, if the fee remains unpaid in whole or in part, up to a maximum of the one hundred percent (100%) of the payable fee.

The Operator’s duty to comply with the CCP conditions of approval are incorporated into the DA No. 18-019C under Section 18.3 Conditions 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Conditions 13, 37, and 45 all require timely payment of fees due under the Development Agreement. The City has regularly sent monthly invoices for Community Benefits Fees, Cost Recovery Fees, Non-Operating Fees, and appliable late penalties since 2019 (Attachment F, pp. 310-426).

The City executed a Letter Agreement to grant 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. The Operator did not make a single timely payment in the three months that followed the execution of the Letter Agreement between March to May 2023. As of October 24, 2023, the City reported that the Operator is past due in the amount of $1,456,692.52 and past-due payments continue to accumulate, including late payment penalties. The Operator continues to fail to make payments and as of June 13, 2024, $1,775,764.90 is due and owing.

Table 1. Summary of Past and Current Amounts Due as of June 13, 2024 Fee Type Payment Amount Due
Community Benefit Program $41,254.35
Cost Recovery Fees $75,090.55
Non-Operating Fees $1,285,200.00
Penalties (Late Payments) $374,220.00
TOTAL $1,775,764.90
Based on the evidence submitted by the City, the Hearing Officer found that “based on the unrefuted evidence presented by the City...a preponderance of the evidence shows that [Operator] breached multiple conditions of the DA and CCP. Despite multiple attempts and notices by the City to gain compliance, the evidence shows that [Operator] failed to comply with their payment obligations, which constitutes the necessary grounds for termination of the DA and revocation of the CCP under the CMC” (Attachment G). The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-14 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-019C and repeal Ordinance No. 678 and terminate the related DA.

2. Violation #2: (a) Failure to Implement the Project Consistent with Prescribed Timelines in Condition of Approval No. 51 (Time Limits) and (b) Breach of Condition of Approval No. 3 Section 18 of DA No. 18-019C states “Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council.” The Regulatory Permit is CCP No. 18-0019.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 10 of 18

48 (CCP Modification) under CCP No. 18-0019.
(a) The Operator’s duty to comply with the CCP’s conditions of approval are incorporated into DA No. 18-019C under Section 18. CCP Condition of Approval No. 51(A)(i) sets a 90-day time frame in which the Operator needed to obtain a Zoning Clearance. Condition of Approval No. 51(A)(ii) sets a 90-day time frame in which the Operator must complete construction of Phase I of the Project. CCP Condition of Approval 51(A)(iii) sets a 180-day time limitation from the effective date of the CCP to complete all tenant improvements, construction, and obtain a certificate of occupancy from the Building Department. Failure to obtain a Zoning Clearance within 90 days of the effective date of the CCP, renders the CCP to “expire and become null and void” (Attachment F, p. 73). The City Manager’s ability to grant an extension of time for a Zoning Clearance if the Operator has made diligent efforts to implement the project is stated in Conditions of Approval 30(A)(i), (ii), and (iii). The Operator was notified of the failure to implement the project within the prescribed timelines and provided an opportunity to cure pursuant to the City’s Final Demand Letter (Attachment E).

The Operator was given a notice of default and opportunity to cure pursuant to the City’s Final Demand Letter to the Operator (Attachment F, pp. 278-280), with no response from the Operator. The Operator has failed to provide any evidence that it has obtained a Zoning Clearance, completed construction of Phase I, or completed the tenant improvements, obtained a certificate of occupancy, or otherwise complete Phase II within the prescribed time periods. Nor does the City have any record of any request by the Operator for an extension of time to the City Manager and there is no evidence to demonstrate the Operator has made substantial progress, such as submitting an application for a Zoning Clearance or building permit plan check.

Based on the evidence submitted by the City, the Hearing Officer determined that “[a] preponderance of the evidence shows that [Operator] remains in breach of its conditions of approval under CCP18-0019 by failing to implement the Project within the time frames set forth in Condition of Approval No. …51.” (b) As previously stated, the CCP conditions of approval are incorporated into the DA through Section 18. Regarding the unpermitted work at the Subject Site, CCP18- 0019 Condition of Approval No. 48 states prior to undertaking any operational or construction-related activity which is not expressly described in the CCP conditions, the Operator 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 Operator to file a written and/or mapped description of the proposed activity in order to determine if a permit modification is required. In this case, the City was made aware of the unpermitted changes the Operator made to the facility without City Manager approval through a site inspection. As a good faith effort, the City provided the Operator with the

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 11 of 18

necessary information and documentation to cure the violation discovered by City staff on October 12, 2022 (Attachment F, pp. 242-244). The Operator has never filed a written or mapped description of the design changes made to the facility as Condition of Approval No. 48 requires. Based on the evidence submitted by the City, the Hearing Officer determined that “[a] preponderance of the evidence shows that [Operator] remains in breach of its conditions of approval under CCP18-0019 by failing to implement the Project within the time frames set forth in Condition of Approval No. 48...”
The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-14 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-019C and repeal Ordinance No. 678 and terminate the related DA.

3. Violation #3: Failure to Obtain State-Issued Cannabis Licenses for Cultivation and Manufacturing. Recital I of the DA states the Owner has applied for three (3) licenses: 1) Cultivation; 2) Manufacturing and 3) Distribution. Article 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 “Cuper Development” shows that the Operator has no record of an active cannabis license for Cultivation or Manufacturing. The state records show that the Operator only has an active C11- license as a Commercial-Distributor – Adult Use and Medicinal. Based on the evidence submitted by the City, the Hearing Officer determined that based on “[a] preponderance of the evidence presented by the City, as noted [in the Decision and Order] the [Operator] 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, pp. 8-9).

4. The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-14 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-019C and repeal Ordinance No. 678 and terminate the related DA.

Allegations of Default on Behalf of the City:

As an initial matter, the Notice of City Default offered as evidence to demonstrate compliance with the DA and CCP was untimely submitted, nor does it actually offer evidence of Operator’s compliance with the CCP and DA. The request to submit the Notice of Default was submitted after the Review Hearing took place on January 8, 2024, after providing the Operator with multiple notices, and need not be considered. However, the City shall respond to the allegations made by the Operator’s representative which are largely unsupported by the evidence, the law, or both.

1. Operator is not Excused for Performance Pursuant to Force Majeure. The DA provides a

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 12 of 18

Force Majeure clause at Article 23(i), which applies to unforeseen events that include “war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party’s control, or any default by the City hereunder, which Force Majeure event substantially interferes with the development, construction or operation of the Project” (emphasis added).

Operator has failed to make a showing that the circumstances of Force Majeure were present during the time of default. The City provided the Operator with the first notice that it was in breach of the DA and CCP in October 2019 (Attachment F, p. 234), approximately five months prior to the Governor’s issuance of Executive Order N-33-20 to shelter in place in response to the COVID-19 pandemic (Attachment J). The Operator was provided 30 days to cure the default pursuant to Article 14(a) of the DA (Attachment F – p. 109). The Operator did not cure the default, nor take diligent efforts to cure the default. The City issued a subsequent notice to Operator on May 4, 2021 (Attachment F, pp. 236-237) during the Operator’s unsupported allegation of the City’s 15-month closure. As an initial matter, City Hall was not closed for a 15-month period. 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, inclusive of cannabis manufacturing, and commercial construction were permitted by the authority granted to the State Public Health Officer pursuant to Executive Order N-33-20 (Attachment F, pp. 298-308). The state permitted cannabis activities and construction to continue through the height of the pandemic and operators were able to continue processing applications, such as building permits, during this time.

The Notice of City Default alleges that the Operator has invested $10 million from the onset of the COVID-19 pandemic to present day. Operator has not provided any evidence to demonstrate that it has expended $10 million in resources. However, if the Operator was prohibited from engaging in activities that would have allowed them to pursue the operation of a cannabis business, it is unclear how the Operator could have invested $10 million and still been prohibited from moving forward with the implementation of the project at the same time.

Even assuming arguendo that there was an event of Force Majeure, Article 23(i)4 does not excuse performance, but only provides the Owner with an extension of time. There is no excusal or waiver of performance under Force Majeure nor does Article 23(i) grant the City the ability to waive fees. Any allegation that City “agreed” not to charge fees during the COVID-19 pandemic or other delays are unsupported by any documents approved, ratified, or otherwise executed by the City. To the contrary, the City offered 4 In full, Article 23(i) states “If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events (‘Force Majeure’) shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party’s control, or any default by the City hereunder, which Force Majeure event substantially interferes with the development, construction or operation of the Project.”

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 13 of 18

all cannabis operators an opportunity to participate in a Deferment and Payment Program in 2022 that would have provided the deferment of certain fees and a payment plan to accommodate any impacts that may have been sustained as a result of the COVID-19 pandemic. The Operator acknowledged all fees, inclusive of Cost-Recovery Fees, Community Benefit Fees, and Non-Operating Fees accrued upon signing a Letter Agreement with the City on February 2, 2023, in which the Operator 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 the 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 F – pp. 248-256)
Operator Has Failed to Demonstrate How the City has Failed to Expedite Approvals. The Notice of City Default asserts the City has delayed in approving certain plans, however the City has no record of the Operators attempt to apply for and obtain a Zoning Clearance or implement the multiple phases of the Project in accordance with the proper procedures as described in Violation #2 above. Operator failed to offer any evidence that it complied with the timelines and requirements set forth in the CCP and DA. Further, as stated above, the Operator has been in default since 2019. Any allegation by the Operator that the City’s duty to review building plans was limited by the annual review process under Article 19 of the Development Agreement is unfounded. Further the duty to accept any applications or grant any permits is expressly contradicted in the Article 14(f) of the DA. 5 Despite this, the City provided a pathway to achieve compliance with multiple defaults, including the schedule of performance, which the Operator did not timely attempt to cure any default.

Any allegation by the Operator that the City’s duty to review building plans was limited by the annual review process under Article 19 of the Development Agreement is unfounded and expressly contradicted in the DA terms. It’s unclear why the Operator is under the impression that its Project would be constructed and operated without any review of permit applications, etc., other than the reviews contemplated under Section 19 of the Development Agreement and is contrary to law. CMC Section 15.04.010 requires all development projects to comply with the Los Angeles Building Code requirements. Title 15 of the CMC also requires projects to comply with Los Angeles County’s Electrical Code requirements (Chapter 15.08), Plumbing Code requirements (Chapter 15.12), and Mechanical Code (Chapter 15.16). Providing comments to ensure that a project applicant complies with such state and local requirements does not constitute a delay on the City’s part, but enforcement of the Operator’s requirement to comply with state, local and federal regulations. At no time does the Notice of City Default allege the City refused to accept or review plans or other submissions by the Operator. If anything, this assertion cuts against Operator’s own argument and would 5 Article 14(f) provides that “[n]o building permit shall be issued or building permit application accepted for any structure on the [Subject Site] after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City.”

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 14 of 18

result in further delays for the Operator to implement the Project.

2. There is No Evidence in the Administrative Record to Support a Finding that the City Did Not Intend for the Non-Operating Fees Not to Apply. To support the notion that NonOperating Fees would not apply the Operator’s representative submitted statements by a former councilmember who now acts as a consultant to many of the defaulting operators and other persons affiliated with the Operator.6 Any assertion that Non-Operating Fees were not intended to apply is directly contradicted by language in Article 7(c)(1) which states the Operator shall be charged a “monthly operating fee of [.42 x total square foot of the “Premises”] until Owner is operating on the Premises and selling product under its City Regulatory Permit and State Regulatory Permit. Once Owner is operational and generating revenue, the monthly operating fee is [.42 x total square foot of “Production Space”] or a monthly operating fee based on gross receipts.” (Attachment F, p. 102 (emphasis added)). The Development Agreement further provides that “Operating Fees shall begin to accrue ninety (90) days after the end of the month of the Effective Date of the Agreement.” Id. The language provided in the DA plainly states a formula that applies for Operating Fees for when the Operator is operating based on square footage or gross receipts or a formula based on square footage when the Operator is not operating or in “non-operation.” To argue that there is no such thing as Non-Operating Fees merely because those exact words do not appear in the DA, is a matter of semantics. There is no language that discusses or implies the intent for such fees to apply only to operators who “squat” on licenses as represented in a declaration submitted by the consultant and squarely contradicts the plain language in the DA.

Failure to pay such fees are out of compliance with Conditions of Approval Nos. 1(a) and (b), requiring payment of all City-issued invoices within thirty days of receipt. Nonpayment of Non-Operating Fees is also in violation of Conditions of Approval 13, 37, and

45. 3. The Assertion that Non-Operating Fees are Illegal Impact Fees is Not Supported by the Law. Non-Operating Fees are a part of the Development Agreement entered into between the City and the Operator and was 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. (Govt. 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, the fees agreed to by the Operator through the execution of the DA and subsequent Letter Agreement are not subject to the Mitigation Fee Act.
6 The Operator’s representative offered a statement by Daffodil Tyminski that was submitted to the City pursuant to Evidence Code Section 1152 and 1154, which protects the confidentiality of statements made during settlement or negotiation discussions. Based on this submitted statement it appears that the Operator has waived that privilege afforded by those previous statements.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 15 of 18

Even if the Mitigation Fee Act was applicable to the past due fees, inclusive of NonOperating Fees, to properly contest these 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. (Govt. 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 into the Development Agreement on June 5, 2018. The 90-day statute of limitations to protest such fees ended on September 3, 2018, and Operator never 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.

Further, as stated above, Operator does not contest that it has previously acknowledged that all of the fees due, inclusive of Non-Operating Fees, were presently due and owing at the time is signed a Letter Agreement.

4. There is No Requirement to Perform an Annual Review. Operator points to CMC Section

20.84.600 and Government Code Section 65865.1 to assert the City is in breach of the Development Agreement by failing to conduct a periodic review of the Operator’s compliance with the Development Agreement. However, Operator’s assertion is directly contradicted by the express language in the Development Agreement. Article 19(f) of the Development Agreement expressly provides that “City’s failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement.” Nor does the City have any record of the Operator requesting an annual review to demonstrate compliance with the DA or CCP.

5. The City Has Not Breached the Ability for the City Council to Make a Final Determination on the Operator’s Compliance with the Development Agreement and Whether to Modify or Terminate the DA, or Otherwise Find the Operator in Compliance. The plain language in Article 19(d) of the Development Agreement provides that “[a]t the time and place set for the Review Hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of the City.” The City has retained a Hearing Officer for the purpose of hearing the evidence and making a recommendation to the City Manager, Planning Commission and City Council to “adopt an ordinance repealing Ordinance No. 676 and terminate Development Agreement No. 18-019C and revoke Operator’s interest under CCP18- 0019.” (Attachment F, pp. 2-14) The Operator has been provided an opportunity to be heard at the administrative hearing conducted by the Hearing Officer, whose findings and determinations have been sent to the Planning Commission, City Manager and also and City Council. No one has denied the Operator the opportunity to be “heard” before the City Council. To the contrary, the City has provided a Notice of Review that outlined the requirements for the Operator to demonstrate compliance, as well as a Follow Up Notice to confirm the City had not received any response from Operator. The Operator has

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 16 of 18

chosen to ignore the procedural requirements that require the repeal of an ordinance to terminate a development agreement, and instead submitted a request to submit a Notice of Default into the record after the Review Hearing took place. The Hearing Officer’s Decision was forwarded to the Planning Commission and now the City Council, both of which are public forums in which the Operator may address decision making bodies.

Further, there is nothing in Article 19(d) or the CMC that prohibits the City from appointing a third-party hearing officer from conducting the initial hearing and forwarding findings to City decisionmakers for the purpose of determining whether to take any action to modify or terminate the DA or CCP so long as the City Council’s determination and actions are supported by substantial evidence. All such findings and recommendations made by the Hearing Officer have been and shall continue to be forwarded to the appropriate decisionmakers for final disposition. The City has provided Operator with more than 30 days’ notice of the January 8, 2024 hearing, requesting Operator to provide evidence of compliance at least 10 days prior to the hearing (Attachment H). The Operator did not provide a timely response and the City sent a follow up communication informing Operator that it did not submit any documentation and has waived its rights at the review hearing (Attachment I). Operator instead submitted a Notice of City Default over the weekend prior to the Monday Review Hearing alleging the City is in default of DA18-019C.

Pursuant to Article 14(d) of DA18-019C, Operator’s remedies for a default are limited to a termination of the Development Agreement.

CMC Section 5.20.080(6)(a) permits the City Manager to revoke an operator’s interest in a CCP upon a determination “that the cannabis permittee has failed to comply with [Chapter 5.20], any condition of approval, or any agreement or covenant as required pursuant to this chapter.” The City Manager’s decision to revoke the operator’s interest in a CPP may be appealed to a third-party hearing officer or to the City Council. CMC §

5.20.080(7). As determined by the Hearing Officer, there is a preponderance of evidence to support a finding that the Operator is out of compliance with the DA and CCP. Should the City Manager revoke the Operator’s interest in CCP 18-0019, the Operator may appeal the decision to the City Council.

6. Operator’s Assertion for Damages under the Development Agreement are Improper.

Even if the City were in default of the DA, which it is not, the Operator’s remedies are limited under the DA. Pursuant to Articles 14(a) of the DA, “[i]t is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as herein provided.” Further, Article 14(b) provides that the Operator may only seek monetary damages if there is a showing of “bad faith intentional acts [or] the grossly negligent or malicious acts of City and its officials, officers, agents and employees.”
Pursuant to Article 14(d) of the DA, even if the City were in default, which it is not, the Operator’s remedies would otherwise be limited to a cancellation of the Development Agreement after providing a 60-day notice of default. Operator’s notice did not provide

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 17 of 18

60-day notice, but 30-day notice.

Based on the evidence provided by the City, which was unrefuted at the time of the Review Hearing, the Hearing Officer found that the Operator “has breached the terms and conditions of DA 18-019C and [Operator’s] portion of its CCP and recommends to the Planning Commission and/or City Council repeal Ordinance No. 676 and terminate DA [No.] 18-019C...” (Attachment G). Pursuant to CMC Section 20.84.070, DA 18-019C and CCP No. 18-0019 were processed concurrently and approved collectively under Ordinance No. 676. To repeal Ordinance No. 676, the repeal shall occur in the same manner as the original proceedings and pursuant to CMC Section 20.84.500.

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 M). 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. 752 to repeal Ordinance No. 676 and terminate DA No 18-019C, 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 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. 676 and DA No. 18-019C through the adoption of Planning Commission Resolution No. 2024-14. 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. 752 repealing Ordinance No. 676 terminating DA18-019C.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 18 of 18

ATTACHMENT
A. Ordinance No. 752

ORDINANCE NO. 752

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY REPEALING ORDINANCE NO. 676 AND

TERMINATING RELATED DEVELOPMENT AGREEMENT
NO. 18-019C BETWEEN CUPER DEVELOPMENT, 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 April 30, 2018, the City Planning Commission (“Planning Commission”) conducted a properly noticed public hearing to consider an application by Cuper Development, LLC (“Operator”) for approval of a Commercial Cannabis Permit to allow non-store front commercial cannabis cultivation and manufacturing activities at 4916 Cecilia Street, Unit A (“Site”); and
WHEREAS, at this hearing, the Planning Commission heard and considered verbal and written testimony and evidence, and recommended approval of the Commercial Cannabis Permit subject to Operator’s execution of a development agreement with the City; and
WHEREAS, on May 15, 2018, the City Council conducted a properly noticed public hearing to consider the issuance of the Commercial Cannabis Permit (“CCP”) No. 18-0019 ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 113 of 330
Ordinance No. 752

and Development Agreement (“DA”) No. 18-019C at which the City Council heard and considered both written and oral testimony and evidence and subsequently approved, and adopted Resolution No. 18-17 for CCP No. 18-0019; and
WHEREAS, at the same hearing the City Council considered and approved CCP No. 18-0019, it also conducted the first reading of Ordinance No. 676 which authorized the execution of DA No. 18-019C between the Operator and the City; and WHEREAS, on June 5, 2018, the City Council adopted, on second reading, Ordinance No. 676, approving DA No. 18-019C and authorizing the Mayor to execute the DA on behalf of the City; and
WHEREAS, the effective date of the Development Agreement is July 6, 2018 (“Effective Date”); and
WHEREAS, upon the Effective Date of Ordinance No. 676, the Operator was granted the permission to conduct commercial cannabis cultivation and manufacturing 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 and conditions of approval under the CCP 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- 019C which informed the Operator of the burden to prove compliance with the DA and CCP; and
WHEREAS, the Operator never provided a timely response to the City’s notice for a Review Hearing; and
WHEREAS, on November 29, 2023, the City sent a follow-up notice informing the Operator it had not received any response to the Review Hearing Notice; and WHEREAS, the Operator did not respond to the follow up notice; 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 hearing, and the Hearing Officer heard and considered information and evidence by City ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 114 of 330
Ordinance No. 752

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 15, 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 and CCP based on a preponderance of the evidence; and WHEREAS, the Hearing Officer determined that Operator breached the DA and CCP in five material respects by a preponderance of the evidence; WHEREAS, The Operator’s duty to comply with the CCP No. 18-0019’s conditions of approval are incorporated into DA No. 18-019C under Section 18; and WHEREAS, the Hearing Officer determined that Operator had breached its payment obligations under DA No. 18-019C and CCP No. 18-0019 due to the Operator’s non-payment of fees and penalties due and owed to the City totaling $1,496,137.70, which continue to accumulate; and
WHEREAS, the Operator continues to fail to meet its payment obligations and the total amount due to the City as of June 13, 2024, is $1,775,764.90; and WHEREAS, the Operator had breached its obligation to implement the project within the prescribed time periods contained with CCP No. 18-0019 Condition of Approval No. 20 (Time Limits), because there is no evidence that the Operator has made a diligent effort to implement the Project in any fashion inclusive of an application for a Zoning Clearance to permit the commercial cannabis activities; and WHEREAS, the Operator breached CCP No. 18-0019 Condition of Approval No. 18 (Construction Activities) for failing to obtain any requisite approvals from the City Planning Division and Building & Safety Division prior to conducting construction activities; and
WHEREAS, the Operator breached CCP No. 18-0019 Condition of Approval No. 17 (Commercial Cannabis Permit Modification) due to the Operator’s failure to receive City Manager approval for the design changes made to the facility; and WHEREAS, the Operator failed to comply due to the Operator’s failure to maintain all its necessary licenses to operate under the DA; and WHEREAS, the Hearing Officer has recommended that the City Council adopt an ordinance repealing Ordinance No. 676 terminating DA No. 18-019C and revoking the related interest in CCP No. 18-0019; and
WHEREAS, pursuant to state law and the CMC, the Planning Commission duly ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 115 of 330
Ordinance No. 752

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. 676; and
WHEREAS, after the close of such public hearing, the Planning Commission adopted Resolution No. 2024-14, attached hereto and incorporated by reference as Exhibit “C,” recommending the City Council repeal Ordinance No. 676 and terminate related DA No. 18-019C; 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. 676; and
WHEREAS, after the close of such public hearing, the City Council introduced and adopted by first reading Ordinance No. 752, repealing Ordinance No. 676 and terminating related DA No. 18-019C.

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 15, 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 Cuper Development, LLC is not in compliance with the terms and conditions of the Development Agreement No. 18-019C and finds that Cuper Development, LLC is in default of its contractual obligations set forth in said Development Agreement and has breached its Conditions of Approval for CCP No. 18-0019 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 ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 116 of 330
Ordinance No. 752

terminate Development Agreement No.18-019C 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. 676 terminating DA No. 18-019C 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 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. 676 and termination of DA No. 18-019C 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
ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 117 of 330
Ordinance No. 752

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. 752 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
ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 118 of 330
Ordinance No. 752

EXHIBIT “A”
EVIDENCE SUBMITTED BY THE CITY (“ADMINISTRATIVE RECORD”) ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 119 of 330
Ordinance No. 752

EXHIBIT “B”

HEARING OFFICER DECISION AND ORDER
ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 120 of 330
Ordinance No. 752

EXHIBIT “C”

PLANNING COMMISSION RESOLUTION
ATTACHMENT A - DRAFT ORDINANCE NO. 752 Page 121 of 330
Blank Page

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 1 of 9

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor and City Council Members
From: Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Subject: Adoption by Second Reading of Ordinance No. 753 repealing Ordinance No. 677, terminating Development Agreement No. 18-012C, between the City of Cudahy and 420 Club, LLC.

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

1. Adopt by second reading Ordinance No. 753 (Attachment A) repealing Ordinance No. 677 terminating DA No. 18-012C, between the City of Cudahy and 420 Club, LLC.

SUMMARY
Pursuant to the terms and conditions of DA No. 18-012C and Commercial Cannabis Permit (“CCP”) No. 18-0019, 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 third-party 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. 677 and DA No. 18-012C through the adoption of Planning Commission Resolution No. 2024-04. On July 16, 2024, the City Council voted X-X to adopt Ordinance No. 753.

Item Number
12G

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 2 of 9

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 April 30, 2018, the Planning Commission recommended approval of CCP No. 18-0019 (Attachment F - pp. 160-175) for cannabis delivery at 4916 Cecelia Street, Unit G (“Subject Site”), as illustrated in Figure 1, below. The Operator is one of seven tenants at the Site which all have separate development agreements with the City but share an interest in CCP No. 18-0019 and are subject to the same conditions of approval. As discussed in further detail below, the conditions of approval of CCP No. 18-0019 require the Operator to make timely payments of the fees due under the Development Agreement, among other requirements.

Figure 1 – Aerial of the Subject Site

3. On May 15, 2018, the City Council adopted Resolution No. 18-17 (Attachment C) approving the issuance of CCP No. 18-0019 with conditions of approval to the Operator subject to the execution of a development agreement with the City.

4. On June 5, 2018, the City Council adopted Ordinance No. 677 (Attachment D) approving Development Agreement No. 18-012C between the Operator and the City authorizing nonstore front commercial cannabis delivery activities at the Site as illustrated in Figures 2 and 3, below. The DA requires the Operator to make timely payments for Community Benefit

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 3 of 9

Fees; Cost Recovery Fees; and Non-Operating Fees.1
Figure 2 – Floor Plan
Figure 3 – Site Plan

5. Pursuant to City Council direction, on December 7, 2022, the City Manager offered a Deferment and Payment Program (Attachment F, pp. 190-191) to assist cannabis operators with accumulated Community Benefit, 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 accumulated Non-Operating Fees within 12 months; and
1 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably.

Unit G
4916 Cecilia Street

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 4 of 9

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 and participate in the Deferment and Payment Program. The Operator did not respond or execute an agreement to participate in the Deferment and Payment Program.

6. On October 19, 2021, the City sent the 420 Club, LLC a final notice of default (Attachment F, pp. 177-178) with a balance of $21,119.92 through July 16, 2021. The Operator did not respond and failed to make any attempt to cure the default.

7. On October 27, 2022, the City sent the Operator a notice (Attachment F, pp. 180-181) to act on their intention to complete their project and outstanding compliance issues. The Operator did not respond and failed to cure the default in a timely manner.

8. On or around January 2023, the City spoke with the Operator to discuss transfer membership interests in the 420 Club, LLC. On February 17, 2023 (Attachment F, pp. 183- 185), the City sent the Operator a notice to provide adequate documentation for the transfer and to immediately address the LLC’s entity status with the State. The Operator did not respond and failed to cure the default in a timely manner.

9. On April 12, 2023, the City sent a Final Demand Letter (Attachment E) demanding the Operator to respond to the following demands: 1) amend the operating agreement for the LLC to show the addition of new members; 2) amend the operating agreement made by a resolution of the LLC adding in the new members; 3) provide proof of revival of the LLC’s entity status with the state; 4) Forward payment for all past due amounts or enter into a repayment arrangement with the City; and 5) contact the City to revise the CCP’s Schedule of Performance pursuant to Condition No. 51. The Operator did not respond in a timely manner and has failed to make any attempt to cure the defaults.

10. On August 9, 2023, the City issued an Escrow Account Letter (Attachment K) requiring all cannabis operations 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.

11. On August 8, 2023, the City issued the Operator a Notice of Review Hearing (Attachment F, pp. 229-230) with the hearing date, time, and place. The notice informed the Operator that the Review Hearing was being held pursuant to Article 19 of DA No. 18-012C, requesting the Operator to timely submit evidence of compliance and to submit payment for an

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 5 of 9

estimated cost2 of the Review Hearing (Attachment F, pp. 229-230). The notice also requested the Operator to contact staff to confirm appearance at the Review Hearing and advised the Operator to respond within ten days of the date of the letter to confirm appearance at the Review Hearing otherwise waive the right to present evidence at the hearing (Attachment F – pp. 228-230). The notice also informed the Operator to deliver a cashier’s check three days prior to the scheduled hearing and that failure to do so would constitute further default under the DA. The City did not receive any response, reply, documents evidencing compliance, or payment for the cost of the Review Hearing.

12. On September 7, 2023, a duly appointed third party hearing officer (“Hearing Officer”), Steve Napolitano, conducted a Review Hearing as authorized under the Cudahy Municipal Code (CMC) Section 5.20.080(7) to hear and consider information and evidence submitted by City staff through an Administrative Record (Attachment F) and the Operator. No representation from the Operator was present at the hearing nor did the Operator submit any information or evidence for consideration for the Review Hearing.

13. On September 25, 2023, the Hearing Officer issued a written decision and order (Attachment G) finding evidence showing the Operator, despite considerate 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 repeal Ordinance No. 677 terminating DA No. 18-012C and revoke the related interest in CCP No. 18-0019.

14. On November 20, 2023, 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. 677 and terminate DA No. 18-012C. 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 nor did the Operator submit any information or evidence for consideration. After closing public hearing, the Planning Commission adopted Resolution No. 2023-04 (Attachment H), recommending the City Council repeal Ordinance No. 677 and terminate related DA No. 18-012C.

15. On July 16, 2024, pursuant to State law and the CMC, the City Council held a duly noticed public hearing to consider the recommendation by the Planning Commission to repeal Ordinance No. 677 and terminate DA No. 18-012C. After consideration of 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 public hearing, the City Council voted X-X to introduce and adopt by first reading Ordinance No. 753. 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 over 30 days’ notice of the estimated cost.

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 6 of 9

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 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 the Hearing Officer to conduct a review of the Operator’s compliance with CPP No. 18-0019 and DA No. 18-012C. 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 G, the Hearing Officer issued a written decision making several findings of fact and conclusions and determined that 420 Club, LLC breached the terms and conditions pursuant to DA No. 18-012C and CCP No. 18-0019, 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)). The Operator is also obligated to make the fees due under the DA pursuant to CCP Condition of Approval No. 45; and timely payment for non-operating fees pursuant to Condition of Approval No. 21 (Attachment F, pp. 160-175). Conditions of Approval Nos. 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Pursuant to the terms of the DA, Operators that are more than 30 days past due with operating fees are subject to a penalty equal to twenty-five percent (25%). In addition, a ten percent (10%) penalty shall be added to the first day of each calendar month following the imposition of the

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 7 of 9

initial 25% penalty, if the fee remains unpaid in whole or in part, up to a maximum of the one hundred percent (100%) of the payable fee.

The Operator’s duty to comply with the CCP conditions of approval are incorporated into the DA No. 18-012C under Section 18.3 Conditions 1(a) and 1(b) require the Operator to pay all City-issued invoices within 30 days of receipt. Conditions 21 and 45 all require timely payment of fees due under the Development Agreement. The City has regularly sent monthly invoices for Community Benefit Fees, Cost Recovery Fees, Non-Operating Fees, and appliable late penalties since 2019 (Attachment F, pp.193-225).

As of August 1, 2023, the Operator was past due in the amount of $111,410.07 and pastdue payments continue to accumulate, including late payment penalties. The Operator continues to fail to make payments and as of June 13, 2024, $132,288.32 is due and owing.

Table 1. Summary of Past and Current Amounts Due as of June 13, 2024 Fee Type Payment Amount Due
Community Benefit Program $29,333.53
Cost Recovery Fees $87,248.22
Non-Operating Fees $10,326.12
Penalties (Late Payments) $5,380.45
TOTAL: $132,288.32
Based on the unrefuted evidence submitted by the City, the Hearing Officer found that “preponderance of the evidence shows that Respondent 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.” As previously stated, the CCP conditions of approval are incorporated into the DA through Section 18. The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-04 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-012C and repeal Ordinance No. 677 and terminate the related DA.

2. Violation #2: Non-compliance with State Law. Under DA Article 4(a) [Facility Operations], Operator must be a lawful entity capable of operating in accordance with a state-issued cannabis license at all times. Operators’ entity status remains “FTB/SOS” suspended by the California Secretary of State and, as such, the entity is unable to operate in the State of California.

Based on the unrefuted evidence submitted by the City, the Hearing Officer found that “a preponderance of the evidence shows that Respondent is not a current legal entity capable of operating in California in violation of DA Article 4(a).” The Hearing Officer’s 3 Section 18 of DA No. 18-012C states “Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council.” The Regulatory Permit is CCP No. 18-0019.

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 8 of 9

determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-04 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-012C and repeal Ordinance No. 677 and terminate the related DA.

3. Violation #3: Failure to Implement the Project Under Prescribed Time Limits under CCP No. 18-0019. The Operator’s duty to comply with the CCP’s conditions of approval are incorporated into DA No. 18-012C under Section 18. CCP Condition of Approval No. 51(A)(i) sets a 90-day time frame in which the Operator needed to obtain a Zoning Clearance. Condition of Approval No. 50(A)(ii) sets a 90-day time frame in which the Operator must complete construction of Phase I of the Project. CCP Condition of Approval 51(A)(iii) sets a 180-day time limitation from the effective date of the CCP to complete all tenant improvements, construction, and obtain a certificate of occupancy from the Building Department. Failure to obtain a Zoning Clearance within 90 days of the effective date of the CCP, renders the CCP to “expire and become null and void” (Attachment F, p. 173). The City Manager’s ability to grant an extension of time for a Zoning Clearance if the Operator has made diligent efforts to implement the project is stated in Conditions of Approval 51(A)(i), (ii), and (iii). The Operator was notified of the failure to implement the project within the prescribed timelines and provided an opportunity to cure pursuant to the City’s Final Demand Letter (Attachment E). The CCP conditions of approval are incorporated into the DA through Section 18.

The Operator was given a notice of default and opportunity to cure pursuant to the City’s Final Demand Letter to the Operator (Attachment E), with no response from the Operator.

The Operator has failed to provide any evidence that it has obtained a Zoning Clearance, completed construction of Phase I, or completed the tenant improvements, obtained a certificate of occupancy, or otherwise demonstrated substantial progress to complete Phase II within the prescribed time periods nor does the City have any record of any request by the Operator for an extension of time to the City Manager and there is no evidence to demonstrate the Operator has made substantial progress, such as submitting an application for a Zoning Clearance or building permit plan check. Based on the evidence submitted by the City, the Hearing Officer found that “[t]o the extent the [Operator] has obtained building permits and constructed any improvements, these permits were obtained in violation of Condition of Approval No. 28 under CCP No. 18- 0019. The [Operator] has not obtained a Zoning Clearance pursuant to Chapter 20.84 of the CMC, nor has the [Operator] applied for all the required building permits to complete tenant improvements or otherwise obtained a certificate of occupancy.

Based on the unrefuted evidence submitted by the City, the Hearing Officer found that “a preponderance of the evidence shows that Respondent has failed to meet its conditions of approval for CCP No. 18-0019 by failing to implement the Project within the time limits set forth in Conditions of Approval No. 51.” As previously stated, the CCP

“Serving The People” "Sirviendo A La Comunidad"
Staff Report
08/20/2024 Page 9 of 9

conditions of approval are incorporated into the DA through Section 18. The Hearing Officer’s determination was ratified by the Planning Commission through the adoption of Resolution No. 2024-04 which recommends that the City Council find that Operator is in default of the terms set forth in DA No. 18-012C and repeal Ordinance No. 677 and terminate the related DA.

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. 753 to repeal Ordinance No. 677 and terminate DA No. 18-012C, 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 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. 677 and DA No. 18-012C through the adoption of Planning Commission Resolution No. 2024-04. 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. 753, repealing Ordinance No. 677 and terminating DA No. 18-012C.

ATTACHMENT
A. Ordinance No. 753

ORDINANCE NO. 753

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CUDAHY REPEALING ORDINANCE NO. 677 AND

TERMINATING RELATED DEVELOPMENT AGREEMENT
NO. 18-012C BETWEEN 420 CLUB, 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 agreements 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 April 30, 2018, the City of Cudahy Planning Commission (“Planning Commission”) conducted a properly noticed public hearing to consider an application by 420 Club, LLC (“Operator”) for approval of a Commercial Cannabis Permit to allow nonstore front commercial cannabis delivery activities at 4916 Cecelia Street, Unit G (“Site”); and
WHEREAS, at this hearing, the Planning Commission heard and considered verbal and written testimony and evidence, and recommended approval of the Commercial Cannabis Permit subject to Operator’s execution of a development agreement with the City; and
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 132 of 330
City Council Ordinance No. 753

WHEREAS, on May 15, 2018, the City Council conducted a properly noticed public hearing to consider the issuance of the Commercial Cannabis Permit (“CCP”) No. 18-0019 and Development Agreement (“DA”) 18-012C at which the City Council heard and considered both written and oral testimony and evidence and subsequently approved, and adopted Resolution No. 18-17 for CCP No. 18-0019; and
WHEREAS, at the same hearing the City Council considered and approved CCP No. 18-0019, it also conducted the first reading of Ordinance No. 677 which authorized the execution of DA No. 18-012C between the Operator and the City; and WHEREAS, on June 5, 2018, the City Council adopted, on second reading, Ordinance No. 677 approving the DA No. 18-012C and authorizing the Mayor to execute the DA on behalf of the City; and
WHEREAS, the effective date of the Development Agreement is July 5, 2018 (“Effective Date”); and
WHEREAS, upon the Effective Date of Ordinance No. 677, the Operator was granted the permission to conduct commercial cannabis retail delivery 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 and conditions of approval under the CCP 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 August 8, 2023, the City provided notice to the Operator that it would be conducting a Review Hearing (“Review Hearing”) under Article 19 of DA No. 18-012C, which informed the Operator of the burden to prove compliance with the DA and CCP; and WHEREAS, the Operator never provided a timely response to the City’s notice for a Review Hearing; and
WHEREAS, on November 29. 2023, the City sent a follow up notice informing the Operator is had not received any response to the Review Hearing Notice; and WHEREAS, the Operator did not respond to the follow up notice; and WHEREAS, on September 7, 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 hearing, and the Hearing Officer heard and considered information and evidence by City ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 133 of 330
City Council Ordinance No. 753

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 September 25, 2023, 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 and CCP based on a preponderance of the evidence; and WHEREAS, the CCP’s conditions of approval are incorporated into the DA through Article 18 of DA No. 18-012C; and
WHEREAS, the Hearing Officer determined that the Operator breached the DA and CCP in three material respects; 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 $111,410.07, which continue to accumulate; and WHEREAS, the Operator continues to fail to meet its payment obligations and the total amount due to the City as of June 13, 2024, is $132,288.32; and WHEREAS, the Hearing Officer determined that Operator breached its obligation to remain a lawful entity capable of operating in accordance with a state-issued cannabis license at all times and; state of California, as the Operator’s LLC entity status has been suspended by the State of California in violation of Article 4(a) of the DA; and WHEREAS, the Operator had breached its obligation to implement the project within the prescribed time periods contained with CCP No. 18-0019 Condition of Approval No. 51 (Time Limits), because there is no evidence that the Operator has made a diligent effort to implement the Project in any fashion inclusive of an application for a Zoning Clearance to permit the commercial cannabis activities; and WHEREAS, the Hearing Officer has recommended that the City Council adopt an ordinance repealing Ordinance No. 677 terminating DA No. 18-012C and revoke the related interest in CCP No. 18-0019; and
WHEREAS, pursuant to state law and the CMC, the Planning Commission duly noticed, agendized, and conducted a public hearing on this matter on November 20, 2023; 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. 677; and
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 134 of 330
City Council Ordinance No. 753

WHEREAS, after the close of such public hearing, the Planning Commission adopted Resolution No. 2024-04, attached hereto and incorporated by reference as Exhibit “C”, recommending the City Council repeal Ordinance No. 677 and terminate related DA No. 18-012C; 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. 677; and
WHEREAS, after the close of such public hearing, the City Council introduced and adopted by first reading Ordinance No. 753, repealing Ordinance No. 677 and terminating related DA No. 18-012C.

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 September 25, 2023, 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 420 Club, LLC is not in compliance with the terms and conditions of the Development Agreement No. 18-012C and finds that 420 Club, LLC is in default of its contractual obligations set forth in said Development Agreement and has breached its Conditions of Approval for CCP No. 18-0019 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.18-012C 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. 677 terminating DA No. 18-012C in its entirety.

ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 135 of 330
City Council Ordinance No. 753

SECTION 4. SEVERABILITY
If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council 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. 677 and termination of DA No. 18-012C 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
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 136 of 330
City Council Ordinance No. 753

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. 753 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
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 137 of 330
City Council Ordinance No. 753

EXHIBIT “A”
EVIDENCE SUBMITTED BY THE CITY (“ADMINISTRATIVE RECORD”) ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 138 of 330
City Council Ordinance No. 753

EXHIBIT “B”

HEARING OFFICER DECISION AND ORDER
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 139 of 330
City Council Ordinance No. 753

EXHIBIT “C”

PLANNING COMMISSION RESOLUTION
ATTACHMENT A - DRAFT ORDINANCE NO. 753 Page 140 of 330
“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 1 of 15

STAFF REPORT
Date: August 20, 2024
To: Honorable Mayor and City Council Members
From: Alfonso Noyola, City Manager
By: Juan Arauz, AICP, Community Development Director
Subject: Adoption by Second Reading of Ordinance No. 754 repealing Ordinance No. 701, terminating Development Agreement No. 18-014C between the City of Cudahy and Starcraft, LLC.

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

1. Adopt by second reading Ordinance No. 754 (Attachment A) repealing Ordinance No. 701 terminating DA No. 18-014C between the City and Starcraft, LLC.

SUMMARY
Pursuant to the terms and conditions of DA No. 18-014C and Commercial Cannabis Permit (“CCP”) No. 18-0014, 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. 701 and DA No. 18-014C through the adoption of Planning Commission Resolution No. 2024-15. On July 16, 2024, the City Council voted X-X to adopt Ordinance No. 754.

Item Number
12H

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 2 of 15

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, at 4925 Cecelia Street (“Subject Site”) shown in Figure 1, below. On a 2-1 vote, the Planning Commission continued the item to a date uncertain.

Figure 1 – Aerial of the Subject Site

3. On December 4, 2018, the City Council adopted Resolution No. 18-57 to hear an application for a development agreement by Operator. The City Council also instructed the Planning Commission to make a final decision and recommend to the City Council regarding the CCP no later than December 17, 2018. The minutes are provided in Attachment C.

4. On December 4, 2018, the City Council introduced and conducted the first reading to adopt Ordinance No. 701 (Attachment D) approving DA No. 18-014C (Attachment F – pp. 77-119) inclusive of Exhibits A-F (Attachment F, pp. 132-161) between Operator and the Site
4925 Cecelia Street

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 3 of 15

City authorizing commercial cannabis manufacturing and distribution activities at the Subject Site as illustrated in Figures 2 and 3, below. The City Council minutes are provided in Attachment C. The CCP and the DA require the Operator to make timely payments for Community Benefit Fees; Cost Recovery Fees; and Non-Operating Fees.1

5. On December 17, 2018, the Planning Commission recommended the City Council approve DA No. 18-014C and subsequently approved the issuance of CCP No. 18-0014.

6. On December 18, 2018, the City Council approved and issued the CCP No. 18-0014 to the Operator and conducted the second reading to adopt Ordinance No. 701 (Attachment D) approving DA No. 18-014C (Attachment F, pp. 77-119) inclusive of Exhibits A-F (Attachment F, pp. 135-164) between Operator and the City authorizing commercial cultivation activities at the Subject Site as illustrated in Figures 2 and 3, below. The City Council minutes are provided in Attachment L. The CCP and the DA require the Operator to make timely payments for Community Benefit Fees; Cost Recovery Fees; and NonOperating Fees.2 Figure 2 – Floor Plan
1 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably. 2 As used herein, the term Non-Operating Fees and Operating Fees are used interchangeably.

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 4 of 15

Figure 3 – Site Plan

7. On October 2, 2019, the City provided the Operator with a Notice of Delinquency (Attachment F, p. 166) due to failure to pay the various fees due under CCP No. 18-0014 and DA No. 18-014C, prior to placing the Operator in default status due to payment noncompliance, inclusive of the non-payment of Community Benefit Fees, Cost Recovery Fees, and Non-Operating Fees in the amount of $55,305.25. The Operator was given no later than October 17, 2019, to cure the amount, however, the delinquency was not timely cured.

8. On March 22, 2021, the City provided the Operator with a Monthly Operating Fees, Community Benefit Fees, and Cost Recovery Fees (Attachment F, pp. 289-290), which is a summary statement providing the Operator all past due amounts under the DA and CCP, in the amount of $200,368.48.

9. On May 4, 2021, the City provided the Operator with a Notice of Default (Attachment F, pp. 168-169) due to non-compliance with the payment of fees (Community Benefit Fees, Cost Recovery Fees, and Non-Operating Fees) and associated penalties in the amount of $200,368.48. The Operator was given no later than 30 days to cure the default, however, the default was not timely cured.

10. On August 3, 2021, the Building and Safety Division issued Permit No. 8308 (Attachment F, pp. 171-174) for an electrical permit panel and circuit, installation of exterior metal panels, interior demolition and tenant improvements.

11. On October 19, 2021, the City provided the Operator with a Final Demand Letter (Attachment F, pp. 176-177) due to payment non-compliance informing the Operator that Community Benefit Fees, Cost Recovery Fees, Non-Operating Fees and any applicable penalties had accumulated to $240,179.48. This letter included a list of prior efforts by the City to achieve compliance. The Operator was given no later than 30 days to cure the default and comply with payment obligations, however, the default was not timely cured.

12. Pursuant to City Council direction, on December 7, 2022, the City Manager offered a

“Serving The People” "Sirviendo A La Comunidad"
City Council
08/20/2024 Page 5 of 15

Deferment and Payment Program (Attachment F, pp. 179-180) to assist cannabis operators with accumulated Community Benefit, 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 accumulated Non-Operating Fees within 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 and participate in the Deferment and Payment Program. The City received interest from the Operator and due to the good faith negotiations between both parties, the City extended the opportunity for the Operator to participate.

13. From January 2022 through November 2022, the City’s Building & Safety Division received the following plan check submittals and/or issued building permits for the Subject Site:
• On January 4, 2022, the Operator submitted building permit plans for interior tenant improvements at the Subject Site to the City’s Plan Check Consultants as demonstrated in Figures 4 and 5, below (See also Attachment F, pp. 182-217). These plans did not conform to the original site plan and floor plan approved by the City as shown in Figures 2 and 3 above, and showed 200 square feet of cannabis distribution activities which were outside of the scope of the approved activities at the Subject Site (See also, Attachment F, pp. 182). These plans were submitted without first obtaining a Zoning Clearance from the Planning Division as required by the CCP and DA. Additionally, the Operator was required to submit all required plan check fees but failed to do so. The plan check submittal received approval on October 10, 2022. The Operator was authorized by the City for commercial cannabis cultivation activities only. Pursuant to Condition of Approval 17, prior to undertaking any operational or construction-related activity that is not expressly described in the CCP conditions, the Operator shall first contact the City Manager, or his designee, to determine if the proposed activity requires a modification of their CCP. The City has no record of having received any proposed changes to the Operator’s site plan and floor plan for the Subject Site.