CC 05-19-2026 Searchable Packet.pdf — Cupertino City Council, May 19, 2026 (part 5 of 7)

Members of the City Council
AYES:

NOES:

ABSENT:

ABSTAIN:

SIGNED:
________
Kitty Moore, Mayor
City of Cupertino
________________________
Date
ATTEST:
________
Lauren Sapudar, City Clerk

________________________
Date
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CITY OF CUPERTINO
Agenda Item
25-14464 Agenda Date: 5/19/2026
Agenda #: 12.

Subject: Receipt of Single Audit and Agreed Upon Procedures (AUP) Reviews - GANN Limit, Investment Policy, Storm Drain
Receive the Single Audit and Agreed Upon Procedures (AUP) Reviews - GANN Limit, Investment Policy, Storm Drain
CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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ADMINISTRATIVE SERVICES DEPARTMENT

CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3220
CUPERTINO.GOV
1 CITY COUNCIL STAFF REPORT
Date: May 19, 2026
Subject
Receipt of Single Audit and Agreed Upon Procedures (AUP) Reviews - GANN Limit, Investment Policy, Storm Drain
Recommended Action
Receive the Single Audit and Agreed Upon Procedures (AUP) Reviews - GANN Limit, Investment Policy, Storm Drain
Reasons for Recommendation
The Single Audit and Agreed Upon Procedures (AUP) Reviews - GANN Limit, Investment Policy, Storm Drain reports are an annual routine report provided to City Council and is provided as Attachment A-D with this report.

Sustainability Impact
No sustainability impact.

Fiscal Impact
No fiscal impact.

City Work Program Item/Description
N/A
Council Goal
Fiscal Strategy
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Jonathan Orozco, Acting Director of Administrative Services and City Treasurer
Approved for Submission by: Tina Kapoor, City Manager
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2 Attachments:

A – City of Cupertino Single Audit Final Report
B – City of Cupertino Investment AUP Final Report
C – City of Cupertino Storm Drain AUP Final Report
D – City of Cupertino GANN Final Report
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City of Cupertino
Cupertino, California
Single Audit and
Independent Auditor’s Reports
For the Year Ended June 30, 2025
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City of Cupertino
Single Audit and Independent Auditor’s Reports
For the Year Ended June 30, 2025
Table of Contents
Page
Independent Auditor’s Reports:

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................ 1 Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance .............................................................................. 3 Schedule of Expenditures of Federal Awards ............................................................................................................ 7 Notes to the Schedule of Expenditures of Federal Awards ........................................................................................ 8 Schedule of Findings and Questioned Costs .............................................................................................................. 9 661
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Santa Ana, California 92707

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Independent Auditor’s Report
To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (“Government Auditing Standards”), the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cupertino, California (the “City”), as of and for the year ended June 30, 2025, and the related notes to the financial statements which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 3, 2025.

Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (“internal control”) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies.

Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. 663
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To the Honorable Mayor and the Members of the City Council of the City of Cupertino
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2 Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s basic financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Santa Ana, California
December 3, 2025
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REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF

FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE
Independent Auditor’s Report
To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City of Cupertino, California’s (the “City”) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2025. The City’s major federal program is identified in the summary of the auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2025.

Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (“GAAS”); the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (“Government Auditing Standards”), and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance"). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City’s federal programs. 665
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Cupertino, California

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4 Auditor’s Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City’s compliance with the requirements of each major federal program as a whole.

In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we  exercise professional judgment and maintain professional skepticism throughout the audit.  identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding City’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.  obtain an understanding of City’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of City’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control Over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. 666
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5 Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City’s basic financial statements. We issued our report thereon dated December 3, 2025, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with GAAS.

In our opinion, the Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole.

Santa Ana, California
March 19, 2026, except for the Schedule of Expenditures of Federal Awards, which is as of December 3, 2025 667
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City of Cupertino
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
See accompanying Notes to the Schedule of Expenditures of Federal Awards. 7 Assistance Grant
Listing Identification Federal Expenditures
Number Number Expenditures to Subrecipients
U.S. Department of Housing and Urban Development
Direct Program:

Community Development Block Grant Cluster Entitlement/Special Purpose Grants:

Community Development Block Grants/Entitlement Grants 14.218 B24MC060057 $ 96,667 $ 27,781 Community Development Block Grants/Entitlement Grants 14.218 B23MC060057 27,158 27,158 Community Development Block Grants/Entitlement Grants 14.218 B22MC060057 32,533 68,358 Community Development Block Grants/Entitlement Grants 14.218 B21MC060057 35,440 - Community Development Block Grants/Entitlement Grants 14.218 Program Income 7,942 - Total Community Development Block Grant Cluster Entitlement/Special Purpose Grants 123,297 199,740
Total U.S. Department of Housing and Urban Development 123,297 199,740 U.S. Department of Transportation
Passed through State of California Department of Transportation:

Highway Planning and Construction (Federal-Aid Highway Program) 20.205 BPMP-5318(029) 1,444,881 - Highway Planning and Construction (Federal-Aid Highway Program) 20.205 CML-5318 (033) 43,995 - Highway Planning and Construction (Federal-Aid Highway Program) 20.205 BRLS-5318 (037) 16,464 - Highway Planning and Construction (Federal-Aid Highway Program) 20.205 CML-5318 (036) 7,072 - Total Highway Planning and Construction 1,512,412 -
Total U.S. Department of Transportation - 1,512,412
U.S. Department of Energy
Direct Program:

Energy Efficiency and Conservation Block Grant Program (EECBG) 81.128 IA-0000000811 123,899 - Total U.S. Department of Energy - 123,899
U.S. Department of Health and Human Services
Passed through National Association of County and City Health Officials:

Medical Reserve Corps Small Grant Program 93.008 MRC RISE 22-0039 1,176 - Total U.S. Department of Health and Human Services - 1,176 Total Expenditures of Federal Awards $ 123,297 1,837,227 $ Federal Grantor/Pass - Through
Grantor/Program Title
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City of Cupertino
Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2025
8 Note 1 – Reporting Entity
The financial reporting entity, as defined by the Governmental Accounting Standard Board (“GASB”), consists of the primary government, which is the City of Cupertino, California (the “City”), organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.

The City Council acts as the governing body and is able to impose its will on the following organization, establishing financial accountability: The Cupertino Public Facilities Corporation.

Note 2 – Basis of Presentation
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal award activity of the City under programs of the federal government for the year ended June 30, 2025. Federal financial assistance received directly from federal agencies, as well as federal financial assistance passed through the State of California Department of Transportation, and National Association of County and City Health Officials, are included in the Schedule. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the “Uniform Guidance”). Because the Schedule presents only a selected portion of the operations of City, it is not intended to and does not present the financial position of the City.

Note 3 – Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

Note 4 – Indirect Cost Rate
The City has not elected to use the de minimis indirect rate as allowed under the Uniform Guidance (10 percent of modified total direct costs for awards issued prior to October 1, 2024 and 15 percent for awards issued or amended on or after October 1, 2024).

Note 5 – Subrecipients
During the year ended June 30, 2025, the City provided federal funds to the following subrecipients:

Assistance Amount Provided
Listing Number Program Name / Subrecipient Name to Subrecipients

14.218 Community Development Block Grant Cluster Entitlement/Special Purpose Grants:

Rebuilding Together Silicon Valley 96,238 $
West Valley Community Services 17,774
Live Oak Adult Day Services 9,285
$ 123,297
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City of Cupertino
Schedule of Findings and Questioned Costs
For the Year Ended June 30, 2025
9 Section I – Summary of Auditor’s Results
Financial Statements
Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting:
 Material weakness(es) identified? No
 Significant deficiency(ies) identified? None reported Noncompliance material to financial statements noted? No Federal Awards
Internal control over major programs:
 Material weakness(es) identified? No
 Significant deficiency(ies) identified? None reported Type of auditor’s report issued on compliance for major programs Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No
Identification of major programs:

Assistance Listing Number(s) Name of Federal Program or Cluster Expenditures

20.205 Highway Planning and Construction $ 1,512,412
Total Expenditures of All Major Federal Programs $ 1,512,412 Total Expenditures of Federal Awards $ 1,837,227
Percentage of Total Expenditures of Federal Awards 82.32% Dollar threshold used to distinguish between type A and type B programs $750,000 Auditee qualified as low-risk auditee in accordance with 2 CFR 200.520? No 671
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City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2025
10 Section II – Financial Statement Findings
A. Current Year Findings – Financial Statement Audit
No current year financial statement findings were noted.

B. Prior Year Findings – Financial Statement Audit
No prior year financial statement findings were noted.
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City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2025
11 Section III – Federal Award Findings
A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit No current year federal award findings were noted.

B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit 2024-001 – Procurement, Suspension, and Debarment – Internal Control over Procurement and Verification Against the System for Award Management (“SAM”) (Significant Deficiency) Identification of the Federal Program:

Assistance Listing Number: 20.205
Assistance Listing Title: Highway Planning and Construction Federal Agency: Department of Transportation
Pass-Through Entity: State of California Department of Transportation Federal Award Number and Award Year: CML-5318(033)
Condition:

During our audit, we noted that the City did not have documentation on verifying the vendors against the SAM to ensure that they were not suspended or debarred from federally funded purchases.

Recommendation:

We recommended that the City to establish internal control procedures to monitor compliance requirements to ensure vendors are not suspended or debarred from federally-funded purchases.

Status:

This finding was resolved during the year ended June 30, 2025. 673
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City of Cupertino
Schedule of Findings and Questioned Costs (Continued)
For the Year Ended June 30, 2025
12 Section III – Federal Award Findings (Continued)
B. Prior Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued) 2024-002 – Special Tests and Provisions – Internal Control over Quality Assurance Program (Significant Deficiency)
Identification of the Federal Program:

Quality Assurance Tests were performed during the fiscal year for the federal project; however, we found that the corresponding monitoring forms and checklists were not completed in a timely manner in accordance with the adopted QAP Manual. The Appendices K, E, and L checklists were all accomplished after the project completion which deviates from the intended purpose of the QAP.

Recommendation:

We recommended that the City to adhere with the QAP manual on the timely accomplishment of the above mentioned forms and checklists in line with the federal project timeline.

Status:

This finding was resolved during the year ended June 30, 2025. 674
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City of Cupertino
Cupertino, California
Independent Accountant’s Report on
Applying Agreed-Upon Procedures to
Investments
For the Year Ended June 30, 2025
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707

INDEPENDENT ACCOUNTANT’S REPORT ON

APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the investments of the City of Cupertino, California (the “City”) as of and for the year ended June 30, 2025. The City’s management is responsible for the investments.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose, which is assisting users in understanding the Investment Policy (the “Policy”) and assisting the City’s management in determining the City’s compliance with Policy. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1. Obtained the Policy, applicable for the fiscal year 2025, approved by the Honorable Mayor and the City Council, and compared the investments authorized by the policy with the investments listed in the June 2025 Treasurer’s Investment Report to determine if all investment types are allowed by the investment policy.

Findings: No exceptions were noted as a result of our procedures.

2. Compared the City’s Policy with California Government Code Section 53601 to determine whether the Policy complied with California Government Code Section 53601.

Findings: No exceptions were noted as a result of our procedures.

3. Compared the June 2025 Treasurer’s Investment Report with California Government Code Section 53646 to ensure that the June 2025 Treasurer’s Investment Report complied with California Government Code Section 53646.

Findings: No exceptions were noted as a result of our procedures. 676
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4. Inquired of the Finance Manager and verify whether investment performance statistics and activity reports are generated on a quarterly basis for presentation to the oversight (audit) committee, City Manager and the Honorable Mayor and the City Council, as required by the Investment Policy.

Findings: No exceptions were noted as a result of our procedures.

5. Inquired of the Finance Manager and document our understanding of the wire transfer procedures.

Findings: No exceptions were noted as a result of our procedures.

6. Randomly selected three investment sales/maturities from various quarters of Treasurer’s Reports and perform the following:
 Traced investment type to the supporting broker’s confirmation and the Chandler Report.  Traced the maturity date to the supporting broker’s confirmation and the Chandler Report.  Traced the amount of the investment sold to the supporting broker’s confirmation and the Chandler Report.

Findings: No exceptions were noted as a result of our procedures.

7. Randomly selected two investments purchased during the year from the City’s investment files, and performed the following:
 Traced the purchased investments to the corresponding Treasurer’s Investment Report for the month in which the investments were acquired.
 Agreed the amount, terms, and interest rate to the Treasurer’s Investment Report.  Verified that the investment type is authorized by the Investment Policy by comparing the type of investment to the allowable types per the Investment Policy.

Findings: No exceptions were noted as a result of our procedures.

8. Obtained the Chandler Asset Management report and confirm the investment details (investment description, par value/units, coupon rate), and the amounts reported in the Treasurer's investment report and verify the amount reported in the general ledger.

Findings: No exceptions were noted as a result of our procedures.

9. Traced three randomly selected Federal Agency investments that were purchased in fiscal year 2024 and traced the reported ratings to Moody’s rating online.

Findings: No exceptions were noted as a result of our procedures.

10. Obtained independently third-party corroborating evidence from Chandler and Principal of the City’s investments as of June 30, 2025, and verified that investment types are matching on the two (2) reports.

Findings: No exceptions were noted as a result of our procedures.

11. Randomly picked five (5) samples and determined if the type of investments, which occurred during the Fiscal Year, complied with the Investment Policy’s 'Authorized Investments' section.

Findings: No exceptions were noted as a result of our procedures. 677
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We were engaged by the City to perform this agreed-upon procedure engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on investments. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the Members of the City Council and management of the City and is not intended to be and should not be used by anyone other than those specified parties.

Santa Ana, California
March 19, 2026
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City of Cupertino
Cupertino, California
Independent Accountant’s Report on
Applying Agreed-Upon Procedures
on 2019 Clean Water and Storm Protection Fee
For the Calendar Year Ended December 31, 2025
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707
INDEPENDENT ACCOUNTANT’S REPORT ON

APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the City of Cupertino, California (the “City”) in evaluating whether the 2019 Clean Water and Storm Protection Fee is in accordance with the provisions for the calendar year ended December 31, 2025. The City’s management is responsible for receipt of 2019 Clean Water and Storm Protection fees.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose of assisting users in understanding the 2019 Clean Water and Storm Protection Fee. The City’s management has agreed to and acknowledged that the procedures performed are appropriate for its purposes. This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures and associated findings are as follows:

1. We selected 100% of the revenue transactions recorded in the Environmental Management/Clean Creeks Special Revenue Fund (Fund 230) and recorded in the Charges for Services General Service Fees (GL account #230-81-802-450-405) for the period January 1, 2025 through December 31, 2025 and performed the following procedures:
a. Observed the Clean Water and Storm Protection fees have been deposited and recorded in Fund 230 within the account #230-81-802-450-405 per Section 3.38.160A of the Cupertino Municipal Code. b. Obtained the County tax remittance statement for each specific receipt (as provided by the County) and observed the cash collected in total on the statement agrees to the amount deposited in Fund 230 in accordance with Section 3.38.070 of the Cupertino Municipal Code, which specifies that the City elects to have fees collection on the tax roll in the same manner as property taxes. c. Obtained the City support (e.g., schedule of fees billed to property owners in situation where the fee was not included in the annual tax assessment) and observed the cash collected in total per the Schedule agrees to the amount deposited in Fund 230 in accordance with Section 3.38.090 of the Cupertino Municipal Code, which specifies that the City Finance Department bills out fees to property owners in situations where the fee was not included in the annual tax assessment.

Findings: No exceptions were noted as a result of our procedures. However, the 2025 storm drain fees have not been fully collected, with an outstanding balance of $3,295. 680
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2. We selected 60% of the non-payroll expenditure transactions recorded in Fund 230 for the period January 1, 2025 thru December 31, 2025 and performed the following procedures:
a. Obtained the City invoices and purchase orders for the expenditures selected, and observed the description of expenditures on the invoice and purchase order, as well as the assigned object code on the purchase order from the City were for allowed purposes per Section 3.38.010B of the Cupertino Municipal Code, which specifies allowable activities are defined as acquisition, construction, reconstruction, maintenance, and operation of the storm drainage system of the City or related green infrastructure or other activities required by the City’s NPDES permits, to repay principal and interest on any bonds which may hereafter be issued for said purposes, to repay loans or advances which may hereafter be made for said purposes.
b. Obtained the City invoices and purchase orders for the nonpayroll expenditures selected and observed the description of expenditures on the invoice and purchase order were for allowed purposes per Section 3.38.0160A and 3.38.0160B of the Cupertino Municipal Code. Section 3.38.160A of the Cupertino Municipal Code specifies allowable from the overall perspective as direct costs and administrative costs, while 3.38.160B of the Cupertino Municipal Code specifically defines direct costs as wages and salaries and costs of employee fringe benefits and mileage reimbursement attributable to said collection activities, with administrative costs as all costs for computer service, materials, postage supplies and equipment.
c. Obtained the City documentation for all refunds issued and observed the Finance Director or equivalent authorized the refund through written approval in accordance with Section 3.38.170 of the Cupertino Municipal Code.

Findings: No exceptions were noted as a result of our procedures.

3. We sampled one pay period (selected on a haphazard basis) between January 1, 2025 and December 31, 2025 to recompute employee allocation in the general ledger for activity recorded in Fund 230 and compared to the City’s calculations as follows:
a. Sampled at least 10% of the time cards of applicable employees charged in Fund 230 to the selected payroll period (selected on a haphazard basis) and observed written approval by supervisors. b. Obtained documentation of the general ledger distribution for the payroll period selected and recalculated the distribution and agreed the results to the budgeted allocation and the functional allocation matrix established by management. The budgeted allocation shall be specified by Cityestablished allocation worksheets used to estimate the amount of actual time spent on the acquisition, construction, reconstruction, maintenance, and operation of the storm drainage system of the City or related green infrastructure or other activities required by the City’s NPDES permits.

Findings: No exceptions were noted as a result of our procedures. 681
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To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California

Page 3 ends

We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on the 2019 Clean Water and Storm Protection Fee.

Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the members of the City Council and the management of the City and is not intended to be and should not be used by anyone other than these specified parties.

Santa Ana, California
March 19, 2026
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City of Cupertino
Cupertino, California
Independent Accountant’s Report on
Applying Agreed-Upon Procedures to
Appropriations Limit Schedule
For the Fiscal Year Ending June 30, 2026
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6 Hutton Centre Drive, Suite 1200
Santa Ana, California 92707
INDEPENDENT ACCOUNTANT’S REPORT ON

APPLYING AGREED-UPON PROCEDURES
To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California
We have performed the procedures enumerated below on the accompanying Appropriation Limit Schedule of the City of Cupertino, California (the “City”) for the year ending June 30, 2026. The City’s management is responsible for the Appropriations Limit Schedule.

The City has agreed to and acknowledged that the procedures performed are appropriate to meet the intended purpose in meeting the requirements of Section 1.5 of Article XIII-B of the California Constitution , which was agreed to by the City and the League of California Cities (as presented in the publication entitled Agreed-upon Procedures Applied to the Appropriations Limitation Prescribed by Article XIII-B of the California Constitution). This report may not be suitable for any other purpose. The procedures performed may not address all the items of interest to a user of this report and may not meet the needs of all users of this report and, as such, users are responsible for determining whether the procedures performed are appropriate for their purposes.

The procedures performed and associated findings are as follows:

1. We obtained the completed worksheets used by the City to calculate its appropriations limit for the year ending June 30, 2026, and agreed that the limit and annual calculation factors were adopted by resolution of the City Council. We also verified that the population and inflation options were selected by a recorded vote of the City Council.

Findings: No exceptions were noted as a result of our procedures.

2. For the accompanying Appropriations Limit Schedule, we added the prior year’s limit to the total adjustments, and agreed the resulting amount to the current year’s limit.

Findings: No exceptions were noted as a result of our procedures.

3. We verified the current year information presented in the accompanying Appropriations Limit Schedule to corresponding information in worksheets used by the City.

Findings: No exceptions were noted as a result of our procedures.

4. We verified the appropriations limit presented in the accompanying Appropriations Limit Schedule to the appropriations limit adopted by the City Council.

Findings: No exceptions were noted as a result of our procedures. 684
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To the Honorable Mayor and the Members of the City Council of the City of Cupertino
Cupertino, California

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2 We were engaged by the City to perform this agreed-upon procedures engagement and conducted our engagement in accordance with attestation standards established by the American Institute of Certified Public Accountants. We were not engaged to and did not conduct an examination or review engagement, the objective of which would be the expression of an opinion or conclusion, respectively, on agreed-upon procedures applied to the appropriations limitation schedule. Accordingly, we do not express such an opinion or conclusion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.

We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements related to our agreed-upon procedures engagement.

This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties.

Santa Ana, California
March 19, 2026
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City of Cupertino
Appropriations Limit Schedule
For the Year Ending June 30, 2026
See accompanying Notes to the Appropriations Limit Schedule. 3 Amount Source
A. Appropriations Limit FY 2024-2025 $ 132,542,385 Prior year appropriation limit adopted by the City
B. Calculation Factors:
1) Population increase % 1.0644 California Department of Finance 2) Inflation increase % 1.0004 California Department of Finance 3) Total adjustment % 1.0648 (B1 x B2)
C. Annual Adjustment Increase 8,592,161 {(B3-1) x A}
D. Other Adjustments:
1) Loss responsibility (-) - N/A
2) Transfer to private (-) - N/A
3) Transfer to fees (-) - N/A
4) Assumed responsibility (+) - N/A
E. Total Adjustments 8,592,161 (C+D)
F. Appropriations Limit FY 2025-2026 $ 141,134,546 (A+E) 686
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City of Cupertino
Notes to the Appropriations Limit Schedule
For the Year Ending June 30, 2026
4 Note 1 – Purpose of Limited Procedures Review
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), California governmental agencies are restricted as to the amount of annual appropriations from proceeds of taxes. Effective for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to the agreed-upon procedures in connection with the annual audit.

Note 2 – Method of Calculation
Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, adjusted for the inflation and population factors discussed in Notes 3 and 4 below.

Note 3 – Population Factors
A California governmental agency may use as its population factor either the annual percentage change of the jurisdiction’s own population or the annual percentage change in population of the county where the jurisdiction is located. The factor adopted by the City for the year ending June 30, 2026, represents the annual percentage change in population for the County of Santa Clara.

Note 4 – Inflation Factors
A California governmental agency may use as its inflation factor either the annual percentage change in the 4th quarter per capita personal income (which percentage is supplied by the California Department of Finance) or the percentage change in the local assessment roll from the preceding year due to the change of local nonresidential construction. The factor adopted by the City for the year ending June 30, 2026, represents the annual percentage change for per capita personal income.

Note 5 – Other Adjustments
A California government agency may be required to adjust its appropriations limit when certain events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City had no such adjustments for the year ending June 30, 2026. 687
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CITY OF CUPERTINO
Agenda Item
26-14759 Agenda Date: 5/19/2026
Agenda #: 13.

Subject: Authorization of second amendment to agreement 311 with All City Management Services, Inc. to continue crossing guard services, increasing contract by $860,000 ($420,000 for FY 26-27, $440,000 for FY 27-28), for a total not to exceed amount of $2,548,879.04 and extending the agreement term to June 30, 2028.

Authorize the City Manager to execute a Second Amendment to the Agreement 311 with All City Management Services, Inc. (ACMS) to continue to provide Crossing Guard Services, increasing the contract amount by $860,000 ($420,000 for FY 26-27, $440,000 for FY 27-28) for a total not to exceed amount of $2,548,879.04 and extending the agreement term to June 30, 2028 (Attachment A).

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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PUBLIC WORKS DEPARTMENT

CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-5732
TELEPHONE: (408) 777-3354 • FAX: (408) 777-3333
CUPERTINO.GOV

CITY COUNCIL STAFF REPORT
Date: May 19, 2026
Subject
Authorization of second amendment to agreement 311 with All City Management Services, Inc. to continue crossing guard services, increasing contract by $860,000 ($420,000 for FY 26-27, $440,000 for FY 27-28), for a total not to exceed amount of $2,548,879.04 and extending the agreement term to June 30, 2028.

Recommended Action
Authorize the City Manager to execute a Second Amendment to the Agreement 311 with All City Management Services, Inc. (ACMS) to continue to provide Crossing Guard Services, increasing the contract amount by $860,000 ($420,000 for FY 26-27, $440,000 for FY 27-28) for a total not to exceed amount of $2,548,879.04 and extending the agreement term to June 30, 2028 (Attachment A).

Executive Summary
The proposed second amendment to agreement 311 with ACMS will extend the existing crossing guard agreement for a period of two years, from July 1, 2026, through June 30, 2028, allowing the City to continue to provide crossing services at 16 locations citywide. The agreement may be terminated by the City at any time during the extension term, with or without cause.

Background
The City has contracted with vendors to provide school crossing guard services at intersections throughout the City of Cupertino. The guards typically work the morning school drop-off and afternoon school pick-up times, with hours that vary depending on intersection, schools served, and day of the week. Guard locations are determined through warrant studies that are conducted typically every two years, and which are based on usage and traffic patterns at the intersections. The most recent warrant study was completed in 2024, with the next study anticipated for the Fall 2026. The Cupertino Union School District (CUSD) and the Fremont Union High School District (FUHSD) are kept informed regarding the results of warrant studies and are included in the final determination for crossing guard locations. 689
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In August 2021, after the City conducted an RFP solicitation, the City Council awarded an agreement with ACMS to provide school crossing guard services at 16 locations in the City of Cupertino for a period of three years. On June 18, 2024, City Council authorized a first amendment to the agreement, increasing the contract amount by $785,000 for a total not-toexceed amount of $1,688,879.04 and extending the agreement term to June 30, 2026. The first amendment also provided an option to renew the contract for two years thereafter.

In December 2025, staff initiated discussions with ACMS to negotiate contract pricing for the two-year extension of the contract. Contract negotiations resulted in a successful agreement on a billing rate of $42.70/hour for the 2026/27 school year and $44.20/hour for the 2027/28 school year. At this time, ACMS is the sole contractual provider of crossing guard services in the region. There is no change in service level being considered with the amendment.

Reasons for Recommendation and Available Options
Over the past five years, ACMS has met all contract expectations of performance, and has been very responsive to staff and community feedback and adjustments of school bell schedules.

The proposed pricing provides for a 3% cost-of-living increase annually, allowing ACMS to continue to draw and retain qualified staff.

Not approving the second amendment to the agreement will result in a lapse in crossing guard services for the 2026/27 school year.

Sustainability Impact
This contract encourages walking and bicycling by providing safer passage across streets for students traveling to school. This is consistent with both the Mobility Element of the General Plan, Goal M-3 (“Support a Safe Pedestrian and Bicycle Network for People of All Ages and Abilities”) and Measure C-T-1 of the Climate Action Plan (“Encourage multi-modal transportation, including walking and biking, through safety and comfort enhancements in the bicycle and pedestrian environment.”). Furthermore, students walking and bicycling to school reduces traffic congestion, which leads to reduced vehicle emissions, helping the City achieve air quality and greenhouse gas emission reduction goals.

Fiscal Impact
The Fiscal Year (FY) 25-26 Adopted Budget allocated $405,000 for Crossing Guard Contract Services (100-88-846 700-709).

The negotiated crossing guard program cost, based on approximately 9,078 annual hours under the current school bell schedule and guard staffing hours, is $387,620 in FY 26-27 (hourly rate of $42.70 a 3% increase) and $401,061 in FY 27-28 (hourly rate of $44.20, a further 3.5% increase).

To provide flexibility for potential adjustments to guard staffing hours due to changes in the school bell schedule, adjustments based on field observations or the warrant studies, staff recommends not-to-exceed amounts of $420,000 in FY 26-27 and $440,000 in FY 27-28. Staff has included the $420,000 contract amount in the proposed FY26-27 base budget for this program.

In FY 27-28 staff will include the increase of an additional $20,000 to the base budget for a total of $440,000 for this program.
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On June 7, 2022, the City entered into a five-year agreement with CUSD and FUHSD, whereby each agreed to contribute $20,000 per year to the City to help fund crossing guard services. This $40,000 in revenue is estimated to partially offset the City’s net general fund costs of approximately $380,000 in FY 26-27 and $400,000 in FY 27-28.

Considering the increasing cost of crossing guard services, staff will be engaging with CUSD and FUHSD to discuss additional cost-sharing options to help offset future increases before the current agreement expires.

City Work Program (CWP) Item/ Description:

N/A
Council Goal:

Quality of Life and Transportation
California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________
Prepared by: David Stillman, Transportation Manager
Reviewed by: Chad Mosley, Director of Public Works
Floy Andrews, Interim City Attorney
Approved for Submission by: Tina Kapoor, City Manager
Attachments:

A – Draft Second Amendment to the Agreement with All City Management Services, Inc. 691
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1 SECOND AMENDMENT TO AGREEMENT 311

BETWEEN THE CITY OF CUPERTINO AND ALL CITY

MANAGEMENT SERVICES FOR CROSSING GUARD

SERVICES AT VARIOUS SCHOOL LOCATIONS IN

CUPERTINO
This Second Amendment to Agreement 311 is by and between the City of Cupertino, a municipal corporation (hereinafter "City") and All City Management Services, a Corporation (“Contractor”) whose address is PO Box 847436, Los Angeles, CA 90084-7436, and is made with reference to the following:

RECITALS:

A. On August 05, 2021 Agreement 311 was entered into by and between City and Contractor for Crossing Guard Services at Various School Locations in Cupertino.

B. The City and the Consultant entered into a First Amendment to Agreement for Crossing Guard Services (“First Amended Agreement”) effective July 30, 2024, with a term expiring on June 30, 2026; and
C. The Agreement, First Amendment, and this Second Amendment to this Agreement are collectively referred to as the “Agreement” unless otherwise indicated.

D. City and Contractor desire to modify the Agreement on the terms and conditions set forth herein.

NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows:

1. Paragraph 2 of the Agreement is modified to read as follows: Services. Contractor agrees to provide the services and perform the tasks (“Services”) set forth in detail in Scope of Services, attached here and incorporated as Exhibit A-2. Contractor further agrees to carry out its work in compliance with any applicable local, State, or Federal order regarding COVID-19.

Exhibit A-1 of the Agreement is replaced with a new Exhibit A-2 attached hereto.

2. Paragraph 3.1 of the Agreement is modified to read as follows: Time of Performance This Agreement begins on the Effective Date and ends on June 30, 2028 (“Contract Time”) unless terminated earlier as provided herein. Contractor’s Services shall begin at the start of the Fall 2026 – 2027 school session and shall be completed by the conclusion of the 2027-2028 school session.
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2 3. Paragraph 3.2 of the Agreement is modified to read as follows: Schedule of Performance.

Contractor must deliver the Services in accordance with the Schedule of Performance.

Exhibit B-1 of the Agreement is replaced with a new Exhibit B-2 attached hereto.

4. Paragraph 4.1 of the Agreement is modified to read as follows: Maximum Compensation. City will pay Contractor for satisfactory performance of the Services an amount that will based on actual costs but that will be capped so as not to exceed $2,548,879.04 (“Contract Price”), based upon the scope of services in Exhibit A-2 and the budget and rates included in Exhibit C-2, Compensation attached and incorporated here. The maximum compensation includes all expenses and reimbursements and will remain in place even if Contractor’s actual costs exceed the capped amount. No extra work or payment is permitted without prior written approval of City.

Exhibit C-1 of the Agreement is replaced with a new Exhibit C-2 attached hereto.

5. Except as expressly modified herein, all other terms and covenants set forth in the Agreement shall remain the same and shall be in full force and effect.

SIGNATURES CONTINUE ON THE FOLLOWING PAGE
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3 IN WITNESS WHEREOF, the parties hereto have caused this modification of Agreement to be executed.

CITY OF CUPERTINO
By
Title
Date

APPROVED AS TO FORM
Senior Assistant City Attorney
ATTEST:

City Clerk
Date

ALL CITY MANAGEMENT SERVICES
By
Title
Date

EXPENDITURE DISTRIBUTION
Item PO Number Amount
Original Agreement 2022-140 903,879.04
Amendment 1 Increase Funding, Extend Term to 6/30/2026 $785.000.00 Amendment 2 Increase Funding, Extend Term to 6/30/2028 $860,000.00 TOTAL NTE $2,548,879.04
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CITY OF CUPERTINO
Agenda Item
26-14791 Agenda Date: 5/19/2026
Agenda #: 14.

Subject: Approval of Updated Council Grant Policy
Adopt Resolution No. 26-059 approving the updated Council Grant Policy CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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ADMINISTRATIVE SERVICES DEPARTMENT

CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3220
CUPERTINO.GOV

CITY COUNCIL STAFF REPORT
Date: May 19, 2026
Subject
Approval of Updated Council Grant Policy
Recommended Action
Adopt Resolution No. 26-XXX approving the updated Council Grant Policy Background
On July 6, 2023, Council considered and approved adoption of the City’s Council Grant Policy.

This policy was developed in response to Council inquiry on grant application and monitoring processes. Additionally, the policy established City Council and City Manager authority for the application, acceptance, and reporting of grants.

Following a June 2025 Council request to update the policy, in October 2025, Baker-Tilly developed an Internal Controls Review report with recommendations to strengthen the City’s grant management activities with relation to best practices. This updated policy addresses key recommendations to formalize grant application and approval workflows and encourage consistency across departments. Recommendations from the Enterprise Risk Assessment 2024 Report, approved by Council in July 2024, have also been considered.

In response to these efforts, and with the establishment of a Grants Analyst position, staff developed an updated policy to strengthen governance, improve consistency, and align with best practices (Attachments A and B).

Reasons for Recommendation and Available Options
The City’s current Council Grant Policy outlines the responsibility for City Council and City Manager authority for the application, acceptance, and reporting of grants. Additionally, the policy reflects best practices recommended by the California State Municipal Finance Officers (CSMFO), and implemented by other public agencies.

Summary of Changes in the Policy Update: The proposed updated policy retains the objective to affirmatively seek grant funding opportunities that add to the City's financial resources to help maintain, provide, and enhance quality services and improvements for Cupertino residents and 696
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businesses. It adds clarity to previously ambiguous statements, including specifying that grant applications not meeting criteria for city manager approval be approved via council resolution.

Similarly, council approval via resolution is now required for grant award acceptance with criteria outlined in the policy. Grant reporting has been updated to reflect quarterly changes. It adds language to recommend staff pursue funding with priority for one-time projects or programs that can be sustained without additional budget implications beyond the funding term.

It also adds terms for compliance with cybersecurity and data governance policies for technology projects.

The updated Council Grant Policy reflects recommendations from the City’s Enterprise Risk Assessment and the Grants Management Internal Controls Review.

The Enterprise Risk Assessment recommended a citywide grant strategy to leverage grant funding opportunities and improve grants management controls through policies, procedures, training and monitoring. This policy update contributes to the Citywide grant strategy that allows alignment of application approval, award acceptance and reporting to Council. The funding opportunity review processes encourage consideration of federal, state, regional and foundation grant opportunities to fund City projects and programs, aligned with Council-approved policies and plans. Additionally, staff are establishing administrative grants management procedures to define responsibilities and provide guidelines for processes from funding opportunity identification through grant close-out. Staff will be trained on use of this policy and associated procedures. The Internal Controls Review recommended formal grant application and approval processes. The updated Council Grant Policy mostly retains the authority for the City Manager and City Council as it is under the original policy. Procedures will follow to support documented approval processes.

The updated policy maintains current policy language that has proven effective in designating authority for the application, acceptance, and reporting of grants. The updated policy integrates recommendations and provides clarity on City Council Authorization of grant applications and award acceptance; reporting guidelines; and grant application approval parameters.

The updated Council Grant Policy, if adopted per the recommended action, clearly delineates City Manager and Council authorization for grant application and acceptance. This added clarity encourages thoughtful consideration of grant opportunities and submission of funding applications in alignment with the policy’s grant application parameters, creating more opportunities for funding awards that would increase the City’s financial resources.

Sustainability Impact
There is no sustainability impact associated with the recommended action.

Fiscal Impact
No fiscal impact
City Work Program (CWP) Item/Description The City Work Program FY 2025 – 2027 includes a priority to explore a grants analyst position. The action recommended in this staff report was a priority for completion by the newly hired grants analyst. 697
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Council Goal:

Public Engagement and Transparency, Fiscal Strategy
California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________
Prepared by: Veena Raghavan, Grants Analyst
Reviewed by: Jonathan Orozco, Acting Director of Administrative Services Floy Andrews, Interim City Attorney
Approved for Submission by: Tina Kapoor, City Manager
Attachments:

A – Draft Cupertino City Council Grant Policy Update (clean) B – Draft Cupertino City Council Grant Policy Update (redline) 698
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RESOLUTION NO. 26-xxxx

A RESOLUTION OF THE CUPERTINO CITY COUNCIL AMENDING THE

CUPERTINO CITY COUNCIL GRANT POLICY
WHEREAS, the Cupertino City Council has identified a need to amend the policy governing the application of, acceptance of, and reporting of grants; and
WHEREAS, a Cupertino City Council Grant Policy was adopted on July 6, 2023; and
WHEREAS, on May 19, 2026, the City Council considered proposed amendments to the Policy at a duly noticed regular meeting of the City Council.

NOW, THEREFORE, BE IT RESOLVED that:

The City Council hereby adopts the amended Cupertino City Council Grant Policy attached hereto as Exhibit A. The Policy shall be effective on May 19, 2026.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of May, 2026, by the following vote:

Members of the City Council
AYES:

NOES:

ABSENT:

ABSTAIN:

SIGNED:
________
Kitty Moore, Mayor
City of Cupertino
________________________
Date
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ATTEST:
________
Lauren Sapudar, City Clerk
________________________
Date
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3 Exhibit A

COUNCIL GRANT
POLICY
Citywide Policy Manual
Policy #TBD
Attachments:

N/A
Effective Date:

May 19, 2026 per Resolution #26-TBD
Responsible Department:

Administrative Services
Related Policies & Notes:

N/A
City Council or Administrative Policy:

City Council
Purpose
To establish City Council and City Manager authority for the application, acceptance, and reporting of grants.

A grant is an external funding source that is awarded for a specific purpose, is valid within a defined timeframe, and typically imposes contractual obligations on the City. The method of grant disbursement is determined by the granting agency and the use of the funds may be subject to audit by the granting agency.

Scope
This policy applies to city staff employees pursing grant opportunities.

Policy
This policy, including any amendments, shall be approved by City Council resolution and applies to all grants for which the City may apply.

It is the objective of the City to affirmatively seek grant funding opportunities that add to the City's financial resources to help maintain, and provide and enhance quality services and capital improvements for Cupertino residents and businesses.

City Manager Authorization
All grant application submittals must be approved by the City Manager or designee.

Based on the following circumstances, City Council delegates to the City Manager, or a designee, the ability to approve submittal of a grant application if all of the following criteria are met:
• The Council has a policy, goal, or plan in place supporting the program or project the funds would be used for
• the grant or application does not require any staff time which will not be funded by the grant or program applied for.The staff time commitment for completing the application and facilitating the 701
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4 on-going reporting and compliance if awarded is reasonable and justified given the proposed benefits to the City should the grant be awarded.
• tThe grant or application does not require any additional City funds not already budgeted.

City Council approval must be obtained via a resolution to approve application for grant funds to apply for a grant that does not meet the conditions set forth above or if the granting agency requires governing body approval prior to applying for grant funds.

When considering the submittal of a grant application, the City Manager will consider the Grant Application Parameters referenced at the end ofin this policy.

In addition, City Manager is authorized to accept or reject all grant awards that do not fall under City Council Aauthorization described in the following sectionoutlined in this policy..

City Council Authorization
Council approval via resolution is required approval for acceptance of grant awards is required when any of the following apply:
• Funding for the project is not already not approved in the amended operating or capital budget(s). • Funds will be used to purchase or lease real property. • The City acts as a fiscal agent for another agency.
• Appropriation of additional funds to serve as matching funds is required, beyond approved budgets. • The granting agency requires governing body approval.

City Council Reporting Guidelines
The Director of Administrative Services or designee will report to Council as follows:
• As part of the Quarterly Financial Reports, staff will include the following for all active grants and grants closed-out during the fiscal yearthe quarter:
o Purpose of the grant
o Granting agency
o Grant amount awarded
o Grant amount spent
o Grant amount remaining
Grant Application/Approval Parameters

1. The funding amount for pursuing grant funds from both Federal/State government agencies and private agencies should generally be the following based on funding source:
• Federal $500,000
• State $100,000
• Private and Other Local Agencies $5,000

2. Grant funding below these levels can be considered when there are minimal administrative tasks (i.e., financial/project reporting, maintaining receipts, vouchers etc.) imposed on the City by the granting agencyor .there is significant value to the City and residents.

3. Programs and projects proposed for grant funding should be those that are consistent with the City's 702
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5 Mission Statement and Strategic Goals as identified as part ofin the City Work Program, Capital Improvement Program, General Plan, or adopted Master Plans or similar planning documents.

4. Grant consideration should prioritize projects that are one-time in nature or that can be sustained without reliance on additional General Fund support not already approved in the budget. Staff should confirm that acceptance of the grant does not create unfunded mandates or obligate the City to ongoing service levels beyond available resources. Require an internal sustainability plan to outline alternative funding sources after the grant term and an exit strategy to conclude a program that cannot be sustained longterm.

5. Grant City(?) programsPrograms and projects awarded funding must comply with rules established by the granting agency. If the requirements by the granting agency conflict with City policies, the granting agency requirements prevail. No grant may be accepted if grant program requirements conflict with State or Federal law or with any City ordinance.

6. The submission of a grant application, unless required by the granting agency and with approvals detailed in this policy, does not commit the City to appropriating matching funds or funds for ongoing costs not covered by the grant.

7. Projects involving technology must align with the City’s enterprise systems, cybersecurity standards, and data governance policies.

Definitions
Grant - an external funding source that is awarded for a specific purpose, is valid within a defined timeframe, and typically imposes contractual obligations on the City. The method of grant disbursement is determined by the granting agency and the use of the funds is generally subject to audit by the granting agency.

Granting Agency – a public, private or otherwise governed entity that provides financial assistance in the form of competitive grants, formula grants, or funding allocations.

Matching Funds – funds set aside to be paid in defined proportion to granted funds; calculated either as real dollar amounts or as estimates from in-kind support.

Revisions: 7/6/23
23-02 City Council Grant Policy - 07.06.2023 (1).pdf
City Manager’s Signature: ________________________________ Date:______________________________
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RESOLUTION NO. 26 - xxxx

A RESOLUTION OF THE CUPERTINO CITY COUNCIL AMENDING THE

COUNCIL GRANT POLICY
WHEREAS, the Cupertino City Council has identified a need to amend the policy governing the application of, acceptance of, and reporting of grants; and
WHEREAS, a Cupertino City Council Grant Policy was adopted on July 6, 2023; and
WHEREAS, on May 19, 2026, the City Council considered proposed amendments to the Council Grant Policy at a duly noticed regular meeting of the City Council.

NOW, THEREFORE, BE IT RESOLVED that:

The City Council hereby adopts the amended Cupertino Council Grant Policy attached hereto as Exhibit A. The Policy shall be effective on May 20, 2026.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of May, 2026, by the following vote:

Members of the City Council
AYES:

NOES:

ABSENT:

ABSTAIN:

SIGNED:
________
Kitty Moore, Mayor
City of Cupertino
________________________
Date
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ATTEST:
________
Lauren Sapudar, City Clerk
________________________
Date
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3 Exhibit A

COUNCIL GRANT
POLICY
Citywide Policy Manual
Policy #TBD
Attachments:

N/A
Effective Date:

May 20, 2026 per Resolution #26-TBD
Responsible Department:

Administrative Services
Related Policies & Notes:

N/A
City Council or Administrative Policy:

City Council
Purpose
To establish City Council and City Manager authority for the application, acceptance, and reporting of grants.

Scope
This policy applies to city employees pursing grant opportunities.

Policy
This policy, including any amendments, shall be approved by City Council resolution and applies to all grants for which the City may apply.

It is the objective of the City to affirmatively seek grant funding opportunities that add to the City's financial resources to help maintain, provide and enhance quality services and capital improvements for Cupertino residents and businesses.

City Manager Authorization
City Council delegates to the City Manager or a designee, the ability to approve submittal of a grant application if the following criteria are met:
• The Council has a policy, goal, or plan in place supporting the program or project the funds would be used for.
• The staff time commitment for completing the application and facilitating the on-going 706
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4 reporting and compliance is reasonable and justified given the proposed benefits to the City should the grant be awarded.
• The grant does not require any additional City funds not already budgeted.

City Council approval must be obtained via resolution to approve application for grant funds that does not meet the conditions set forth above or if the granting agency requires governing body approval prior to applying for grant funds.

When considering the submittal of a grant application, the City Manager will consider the Grant Application/Approval Parameters referenced in this policy.

In addition, City Manager is authorized to accept or reject all grant awards that do not fall under City Council Authorization in this policy.

City Council Authorization
Council approval via resolution is required for acceptance of grant awards when any of the following apply:
• Funding for the project is not approved in the operating or capital budget(s). • Funds will be used to purchase or lease real property. • The City acts as a fiscal agent for another agency.
• Appropriation of additional funds to serve as matching funds is required, beyond approved budgets.
• The granting agency requires governing body approval.

City Council Reporting Guidelines
The Director of Administrative Services or designee will report to Council as follows:
• As part of the Quarterly Financial Report, staff will include the following for all active grants and grants closed-out during the quarter:
o Purpose of the grant
o Granting agency
o Grant amount awarded
o Grant amount spent
o Grant amount remaining
Grant Application/Approval Parameters

1. The funding amount for pursuing grant funds should generally be the following based on funding source:
• Federal $500,000
• State $100,000
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5 • Private and Other Local Agencies $5,000

2. Grant funding below these levels can be considered when there are minimal administrative tasks (i.e., financial/project reporting, maintaining receipts, vouchers etc.) imposed on the City by the granting agency or there is significant value to the City and residents.

3. Programs and projects proposed for grant funding should be those that are consistent with the City's Mission Statement and Strategic Goals as identified in the City Work Program, Capital Improvement Program, General Plan, or adopted Master Plans or similar planning documents.

5. Programs or projects awarded funding must comply with rules established by the granting agency. No grant may be accepted if grant program requirements conflict with State or Federal law or with any City ordinance.

6. The submission of a grant application, unless required by the granting agency and with approvals detailed in this policy, does not commit the City to appropriating Matching Funds or funds for ongoing costs not covered by the grant.

7. Projects involving technology must align with the City’s enterprise systems, cybersecurity standards, and data governance policies.

Definitions
Granting Agency – a public, private or otherwise governed entity that provides financial assistance in the form of competitive grants, formula grants, or funding allocations.

Matching Funds – funds to be paid in defined proportion to granted funds; calculated either as real dollar amounts or as estimates from in-kind support.

Revisions: 7/6/23
23-02 City Council Grant
Policy - 07.06.2023 (1).pdf
City Manager’s Signature: ________________________________ Date:______________________________
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CITY OF CUPERTINO
Agenda Item
26-14895 Agenda Date: 5/19/2026
Agenda #: 15.

Subject: Award of contract to Snapology of Los Gatos DBA SV Kids Corp for STEAM Lego Enrichment Programs for a total not-to-exceed amount of $222,000; Authority to Extend for Two Additional Years for Five-Year Total Not to Exceed $370,000.

1. Award a three-year contract to Snapology of Los Gatos to provide STEAM Lego Enrichment Programs in the amount not to exceed $74,000 per year, totaling $222,000;

2. Authorize the City Manager to execute the contract with Snapology of Los Gatos when all conditions have been met; and

3. Authorize the City Manager to extend the contract for up to two additional years, at an annual amount not to exceed $74,000, for a five-year total not-to-exceed $370,000, provided pricing and services remain acceptable.

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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CITY COUNCIL STAFF REPORT
Meeting: May 19, 2026

Subject
Award of contract to Snapology of Los Gatos DBA SV Kids Corp for STEAM Lego Enrichment Programs for a total not-to-exceed amount of $222,000; Authority to Extend for Two Additional Years for Five-Year Total Not to Exceed $370,000

Recommended Action

1. Award a three-year contract to Snapology of Los Gatos to provide STEAM Lego Enrichment Programs in the amount not to exceed $74,000 per year, totaling $222,000;

2. Authorize the City Manager to execute the contract with Snapology of Los Gatos when all conditions have been met; and

3. Authorize the City Manager to extend the contract for up to two additional years, at an annual amount not to exceed $74,000, for a five-year total not-toexceed $370,000, provided pricing and services remain acceptable.

Background
Since 2020, the City has been offering Lego STEAM (Science, Technology, Engineering, Arts, and Math) programs that provide children with hands-on learning experience in robotics, engineering, science exploration, and mechanical design through building using Lego® bricks. The classes deliver students a highly impactful learning environment designed to stimulate creativity, critical thinking, problem solving, and spark an interest in learning. Classes and camps are offered year-round at various city facilities. Classes and programs currently offered include an assortment of topics from building to robotics and coding using Lego®.

The City Manager awarded a three-year contract to Snapology of Los Gatos in September 2020. The City Council approved an amendment on November 7, 2023, which extended the contract expiration date to August 31, 2026.

Request for Proposal
On March 20, 2026, the City issued a Request for Proposal (RFP) seeking a qualified vendor to provide STEAM Lego classes and camps. The RFP sought proposals for 710
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a three-year contract commencing on September 1, 2026. The RFP included the option to extend the term for up to two additional years, not exceeding a total of five years.

The RFP process was conducted in accordance with applicable City policy and the Municipal Code while following standard best practices for this process. The RFP was posted on the City’s website (https://apps.cupertino.org/details/837), which included notifications to registered vendors, local plan rooms and builders exchanges.

Additionally, it was advertised on Euna OpenBids, a publicly available procurement site for government contracts with thousands of registered vendors.

On April 24, 2026, the City received two proposals, one from Snapology of Los Gatos DBA SV Kids Corp and the other from Rocketology LLC DBA Professor Egghead Science Academy.

Reasons for Recommendation
Staff evaluated both proposals based on the submitted instructor team qualification and experience, experience with similar contractors, work plan and approach, and the proposed number of program activities and the cost to participants. After the evaluation, staff determined that Snapology of Los Gatos (Snapology) provided the highest-ranked proposal as explained below. As is typical with an RFP, the compensation/proposal amount is not the determining factor.

Snapology’s proposal demonstrated a thorough understanding of the City’s work request and included a clear explanation of the methodologies used regarding program offerings, procedures, and the on-site staff organization and duties. The proposal outlined a clear instructional model that emphasized hands-on, Lego-based STEAM learning supported by consistent program structure and age-appropriate curriculum.

Snapology provides a franchise with multiple locations in the Bay Area providing STEAM programs, camps, and workshops, possessing the expertise necessary to deliver an engaging learning experience for students in the City’s unique technology-driven environment.

Snapology currently provides year-round Lego-based STEAM programming, including after-school enrichment classes, in-school workshops, and summer camps for the Town of Los Gatos and has done so successfully for the past five years. Additionally, Snapology has provided STEAM enrichment programs that serve the Cupertino community for over five years. Their team has proven a strong commitment to quality instruction, safety, and innovation. Snapology has maintained a successful partnership with the City demonstrating reliability, responsiveness, and the ability to meet or exceed program expectations. Snapology has built a personalized brand over the years of working with the community to provide structured, organized, and creative programs which are supported with a high level of participant satisfaction and continued program expansion.

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The proposal includes an estimated annual total revenue of $116,872.00 based on the current program’s average numbers, which projects a contractor payment of $70,123.20 and $46,748.20 in City net revenue. This breakdown reflects contractor compensation at 60% revenue of the resident fee based on final class/camp rosters with the City receiving 40% of the revenue. The City is estimated to receive a total of approximately $140,000 in net revenue over the 3-year contract based on the proposed programming.

Proposer Estimated Annual
Total Revenue
Annual Contractor
Payment
Annual City Net
Revenue
Snapology of Los Gatos
DBA SV Kids Corp
$116,872.00 $70,123.20 $46,748.80

Snapology will administer the program including hiring and training instructors and providing all class and camp materials. The City provides the facility, registration, and a listing in the recreation class schedule. Offering specialty recreation classes and programs through contracts such as these are an industry standard and occur commonly in surrounding cities such as Sunnyvale, Santa Clara, Mountain View and Campbell.

Based on the findings outlined above, staff recommend awarding a three-year contract to Snapology of Los Gatos for a total not-to-exceed amount of $222,000, with the option to execute annual extensions to the contract for two additional years for a total of five years, provided the services and pricing remain acceptable (Attachment A).

Sustainability Impact
No sustainability impact.

Fiscal Impact
The Fiscal Year 2026-2027 Parks and Recreation Youth Teen Recreation budget (GL 580- 62-613 700-702) includes a projected allocation of $74,000 for this contract and is adequate for funding this contract.

City Work Program (CWP) Item/Description
None.

Council Goal:

Quality of Life

California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________

Prepared by: Jacinta Liang, Management Analyst
Reviewed by: Rachelle Sander, Director of Parks and Recreation Floy Andrews, City Attorney
Approved for Submission by: Tina Kapoor, City Manager
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Attachments:

A – Draft Agreement
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No. ___________
FY 2027 - 2030

RECREATION SERVICES AGREEMENT

1. Parties. This contract is made by and between the City of Cupertino, a municipal corporation (“City”), and Snapology of Los Gatos DBA SV Kids Corp, a Corporation for Enrichment STEAM Programs and is effective on 09/01/2026 (Effective Date”).

2. Services. Contractor agrees to provide the Services included in the Scope of Work and in accordance with the Schedule of Performance attached in Exhibit A.

3. Term. This contract begins on the Effective Date and ends on 08/31/2029 (“Contract Time”), unless extended or terminated as provided herein. Time is of the essence and Contractor must have sufficient time, resources, and qualified staff to deliver the Services as required. Contractor must promptly notify City of any actual or potential delays to afford the Parties adequate opportunity to address or mitigate such delays. The City’s appropriate department head or the City Manager may extend the Contract Time through a written amendment to this Agreement, provided such extension does not include additional contract funds. Extensions requiring additional contract funds are subject to the City’s purchasing policy.

4. Compensation. City will pay Contractor for satisfactory performance of the Services an amount that will be based upon actual costs but that will be capped so as not to exceed $222,000 (“Contract Price”), based upon the Scope of Services, budget, performance schedule, and rates included in Exhibit A. The maximum compensation includes all costs, expenses, and reimbursements and will remain in place even if Contractor’s actual costs exceed the capped amount. Contractor must submit invoices and the information required in Exhibit A in order to receive payment. City will compensate Contractor within thirty (30) days after approval of written invoices.

Invoices are subject to review and audit by City during regular business hours upon 24 hours’ notice. Contractor must maintain complete and accurate records of payrolls, expenditures, disbursements and other cost items charged to City or establishing the basis for an invoice, for a minimum of four (4) years from the date of the final payment.

5. Independent Contractor.

5.1 Contractor is an independent Contractor and not an employee, partner, or joint venture of City. Contractor is solely responsible for the means and methods of performing the Services and for the persons hired to work under this Agreement. No civil service status or other right of employment will be acquired by virtue of Contractor’s performance of the Services. Contractor is not entitled to City’s health benefits, worker’s compensation or any other benefit. Contractor must have the skills and qualifications to perform the Services in a competent and professional manner.

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Services under this Contract. Contractor is responsible for obtaining permits and licenses required by law and must obtain a City business license, if required by the Cupertino Municipal Code.

5.2 Contractor is solely responsible for the payment of employment taxes incurred under this Agreement and any similar federal or state taxes. Contractor and any of its employees, agents, and subcontractors shall not have any claim under this Agreement or otherwise against City for seniority, vacation time, vacation pay, sick leave, personal time off, overtime, health insurance, medical care, hospital care, insurance benefits, social security, disability, unemployment, workers compensation or employee benefits of any kind. Contractor shall be solely liable for and obligated to pay directly all applicable taxes, fees, contributions, or charges applicable to Contractor’s business including, but not limited to, federal and state income taxes.

City shall have no obligation whatsoever to pay or withhold any taxes or benefits on behalf of Contractor.

Should any court, arbitrator, or administrative authority, including but not limited to the California Public Employees Retirement System (PERS), the Internal Revenue Service or the State Employment Development Division, determine that Contractor, or any of its employees, agents, or subcontractors, is an employee for any purpose, then Contractor agrees to a reduction in amounts payable under this Agreement, or to promptly remit to City any payments due by the City as a result of such determination, so that the City’s total expenses under this Agreement are not greater than they would have been had the determination not been made. In the event that Contractor or any employee, agent, or subcontractor of Contractor providing services under this Agreement is determined by a court of competent jurisdiction or PERS to be eligible for enrollment in PERS as an employee of City, Contractor shall indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions for PERS benefits on behalf of Contractor or its employees, agents, or subcontractors, as well as for the payment of any penalties and interest on such contributions, which would otherwise be the responsibility of City, and actual attorney’s fees incurred by City in connection with the above.

6. Proprietary/Confidential Information. To the extent Contractor may have access to private or confidential information owned or controlled by the City, Contractor agrees to treat it as confidential and use it solely to perform this Agreement. Contractor must exercise the same standard of care to protect City information as a reasonably prudent Contractor would use to protect its own proprietary data.

7. Ownership of Materials. To the extent Contractor prepares written material, drawings, or data in connection with this contract, City will have the property rights to those materials and all copyrights, if any, to such work product will, to the extent requested by City, constitute City property upon completion of the work to be performed hereunder or upon termination of this Agreement.

8. Records. Contractor must maintain complete, accurate, and detailed accounting records relating to its performance in accordance with generally accepted accounting principles and procedures. The records must include detailed information about Contractor’s services, benchmarks, 715
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deliverables, and costs/fees, and must be made reasonably available to City. The records and supporting documents must be kept separate from other files and maintained for four (4) years from the date of City’s final payment.

9. Assignment. This Contract is not assignable. Contractor may not substitute another or transfer any rights or obligations under this Contract without prior written approval of City. Only those persons whose names are included in Exhibit A may perform the Services.

10. Publicity and Signs. Any publicity generated by Contractor related to this contract or the Services during the Contract Time and for one (1) year thereafter must reference City contributions.

The words “City of Cupertino” shall be displayed in all pieces of publicity, including flyers, press releases, posters, brochures, public service announcements, interviews, and newspaper articles. No signs may be posted, exhibited, or displayed on or about City property, except signage required by law or under this Agreement, without prior written approval from City.

11. Indemnification. To the fullest extent allowed by law and except for losses caused by the sole and active negligence or willful misconduct of City personnel, Contractor agrees to indemnify, defend, and hold harmless the City, its City Council, boards and commissions, officers, officials, employees, agents, servants, volunteers, and contractors (collectively, “Indemnitees”), through legal counsel acceptable to City, from and against any liability for damages, claims, actions, causes of action, demands, charges, losses, costs, and expenses (including attorney fees, legal costs, and expenses related to litigation, arbitrations, administrative, and regulatory proceedings), of every nature, arising out of or in any way related to Contractor’s or Contractor’s agents performance of this contract or the Services.

This includes but is not limited to Liability resulting in personal injury, death, property damage, or economic losses. Contractor must pay any costs City may incur in enforcing this provision and must accept a tender of defense upon receiving notice from City. Contractor’s payments may be deducted or offset to cover any money the City lost due to a claim or counterclaim arising out of this Contract. This Section 11 shall survive termination of the Agreement.

12. Insurance. Contractor shall comply with the insurance requirements in Exhibit B. City will not execute the Agreement until it has received and approved satisfactory certificates of insurance and endorsements evidencing the type, amount, and dates of coverage. Alternatively, City in its sole discretion, may purchase insurance and deduct the costs from payments to Contractor, or terminate the Agreement.

13. Compliance with Laws and Other City Requirements.

Requirements for all Contracts. This contract is subject to local, state and federal laws and regulations prohibiting discrimination, including Title VII of the Civil Rights Act of 1964, the California Fair Employment Practices Act, the Americans with Disabilities Act of 1990, and other laws that pertain to fair employment and anti-discrimination practices. Contractor agrees to provide records and documentation to the City on request necessary to monitor compliance with this provision.

Contractor must comply with labor laws pertaining to prevailing wages, working hours, overtime, payroll records, and other requirements imposed by the Department of Industrial Relations.

If Contractor does not have employees, it must sign the Affidavit of No Employees, attached as Exhibit C. Contractor is responsible for verifying employment eligibility of employees pursuant to the Immigration Reform and Control Act of 1986. Contractor must comply with conflict of interest laws 716
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and regulations applicable to this Agreement and avoid conflicts of interest. Contractor may be required to file a conflict of interest form for engaging in governmental decisions or serving in a staff capacity, and is hereby advised to review the requirements of California Political Reform Act and the California Code of Regulations. Services may only be performed by persons who are not employed by City and who do not have a contractual relationship with City other than this contract. Contractor agrees to abide by City policies and administrative rules prohibiting gifts to City officials and employees.

Additional Requirements for Services Provided to Minors. Contractor and its employees who provide services under this Agreement must comply with these additional requirements:

A. Undergo fingerprints and a criminal background and verify all employees providing services under this contract have met this requirement.

B. Complete a Tuberculosis screening test as required by law and as set forth in Exhibit D.

C. Comply with the Mandatory Reporting under California Penal Code 11164-11174.3 and with the protocols, reporting, and training required under California Health and Safety Code Section 124235, AB 2007, and other laws pertaining to concussion evaluation, removal from play, and return to play protocols. (Refer to Center for Disease Control & Prevention, https://www.cdc.gov/headsup/index.html).

D. Submit required forms and acknowledgments included in Exhibit D, and ensure its each participant is provided with a concussion information sheet, signs and returns the forms to the City as required by Health and Safety Code Section 124235.

Require coaches and administrators to successfully complete the concussion and head injury education at least once either online or in person, before supervising a participant.

Contractor shall offer training, educational materials, or both to each Contractor administrator on a yearly basis. (Training resources are available at the Center for Disease Control & Prevention (link cited above).

E. If providing instruction, Contractor must acknowledge and comply with all requirements set forth in the Parks & Recreation Services Instructor Manual.

14. Coordination of Services. The Parties designate the following persons as Services Coordinators with the responsibility to oversee the delivery of Services in accordance with the terms of this Agreement. Contractor’s designation and any substitution are subject to City approval.

For City:

Name: Mariah Greene
Position: Recreation Coordinator
Contact: [email protected]
For Contractor:

Name: Vaishali Dubal
Position: CEO
Contact: [email protected]

15. Abandonment. City may abandon or postpone the Activity or Program and will notify Contractor as soon as possible. Contractor will be paid for satisfactory Services rendered through the date of abandonment upon submission of final invoices approved by City.

16. Termination. City may terminate this contract for cause or without cause at any time and will notify Contractor as soon as possible. Contractor will be paid for satisfactory services rendered through the date of termination upon submission of final invoices approved by City. 717
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17. Governing Law, Venue, and Dispute Resolution. This contract is governed by the laws of the State of California. Any legal actions or proceedings filed against City in connection with this contract must comply with the government claims filing requirements and must be filed with the Superior Court for the County of Santa Clara, State of California. At City’s request, Contractor is required to continue to provide Services pending resolution of any dispute. If the Parties elect arbitration, the arbitrator’s award must be supported by law and substantial evidence and include detailed written findings of law and fact.

18. Attorney Fees. If City is required to pursue litigation, arbitration or other administrative or regulatory proceeding to enforce its rights or the terms of this Agreement, the prevailing party will be entitled to reasonable attorney fees and costs. This Section 18 survives this Agreement.

19. Third Party Beneficiaries. There are no third party beneficiaries under this Contract.

20. Waiver. Neither acceptance of Services nor payment thereof constitutes a waiver of any contract provision. City waiver of a breach shall not constitute waiver of another term, provision, covenant, or condition, or a subsequent breach, whether the same or a different character.

21. Entire Agreement. This Agreement and all referenced Exhibits are hereby attached and incorporated into the Agreement by this reference and represent the full and complete understanding as to those matters contained herein, and supersede any other contract or understanding, either oral or written, between the Parties. This Agreement may not be modified or amended except in writing signed by both Parties. If there is any inconsistency between any term, clause, or provision of the main contract and any term, clause, or provision of the attachments or exhibits thereto, the terms of the main contract shall prevail and be controlling.

22. Inserted Provisions. Each provision or clause required by law or this contract is deemed to be included and will be inferred herein. Either party may request an amendment to cure any mistaken insertion or omission of a required provision.

23. Headings. The headings are for convenience only and are not a part of the contract or intended to affect, limit, or amplify the terms or provisions of this Agreement.

24. Severability/Partial Invalidity. If any contract term or provision, or their application to a particular situation, is found by the court to be void, invalid, illegal, or unenforceable, such term or provision shall remain in force and effect to the extent allowed by such ruling. All other contract terms and provisions and their application to specific situations will remain in full force and effect.

25. Survival. All provisions which by their nature must continue after the Agreement ends, including without limitation Indemnification, Insurance, Ownership of Materials, Records, Governing Law, and Attorney Fees, will survive the expiration or termination of this Agreement.

26. Notices. All notices and instruments pertaining to material provisions of this contract or significant disputes which are required by law or under this contract to be in writing must be sent to the persons listed below. The notices will be deemed effective on the date of personal delivery or the date confirmed by a reputable overnight delivery service, on the fifth (5th) calendar day after deposit in the United States Mail, postage prepaid, registered or certified, or the next business day following electronic submission.
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To City of Cupertino:

Office of the City Manager
10300 Torre Ave., Cupertino, CA 95014
Cc: Representative/Coordinator: Mariah Greene
Email: [email protected]
To Contractor: Snapology of Los Gatos DBA SV
Kids Corp.
1147 Holly Ann Place, San Jose, CA 95120
Cc: Representative/Coordinator: Vaishali Dubal
Email: [email protected]

27. Execution. The person executing this contract on behalf of Contractor represents and warrants that Contractor has full right, power, and authority to execute this contract and to carry out all actions and services required. This contract constitutes a legally binding obligation of Contractor, and may be executed in counterparts, each one of which is deemed an original and all of which, taken together, constitute a single binding instrument.

SIGNATURES CONTINUE ON THE FOLLOWING PAGE
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IN WITNESS WHEREOF, the parties have caused this contract to be executed.

CONTRACTOR
By ________________________
Name______________________
Title ______________________
Date_______________________
Tax I.D. No.: {---Tax ID---}

CITY OF CUPERTINO
A Municipal Corporation
By ________________________
Name______________________
Title ______________________
Date_______________________
APPROVED AS TO FORM:
_____________________________
MICHAEL K. WOO
Senior Assistant City Attorney
ATTEST:
_____________________________

LAUREN SAPUDAR
City Clerk
Date_______________________
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EXHIBIT A

SCOPE OF WORK AND SCHEDULE OF PERFORMANCE
The CONTRACTOR will provide STEAM Lego Enrichment Programs in, but not limited to, the following:

Contractor provides year-round STEAM (Science, Technology, Engineering, Arts, and Math) - based enrichment classes and camps for youth ages 5-11. Programs will deliver hands-on learning experiences in robotics, engineering, science exploration, and mechanical design through the use of LEGO® building systems (including brick-based and themed builds) and age-appropriate coding and robotics platforms such as LEGO® WeDo, Scratch, and Cubelets.

Instruction shall promote creativity, critical thinking, collaboration, and problem-solving in a structured and engaging learning environment.

Location and Time of CONTRACTOR Services:

Refer to the City’s Publications for agreed upon dates, times, and locations of a class, camp, activity, program, or service (“class”). The City, at its sole discretion, may change the agreed dates, times and locations of a class, or may cancel a class.

Compensation for CONTRACTOR Services:

Contractor shall be compensated for services performed pursuant to this Agreement.

For a class taught in person, compensation is 60% of the resident fee based on final class rosters.

City and Contractor may mutually agree for Contractor to teach a class online rather than in person, provided that City and Contractor reach agreement for compensation for that online class. Compensation for that online class shall be specified in writing in a separate side agreement before online instruction for a class begins.

Eligible Participant Minimum and Maximums for CONTRACTOR Services:

Minimum: 5
Maximum: 20
If less than the required minimum number of participants enroll in and pay for a particular class as identified in the schedule before the class is scheduled to start, the City may cancel the particular class and/or terminate this Agreement without additional notice or payment to Contractor.
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Performance of CONTRACTOR Services:

Class Cancellation
Contractor will only receive compensation for a class that is performed. If performance of a class is cancelled by the City or Contractor before instruction begins, Contactor will not receive compensation for the class. If the City or Contractor cancels performance of certain meetings of a class, Contractor will only receive compensation for those meetings of the class that are performed.

In the case Contractor unilaterally cancels performance of a class without City approval, City reserves the right to immediately and without notice cancel the remainder of classes offered and or performed by Contractor.

Registration, Enrollment, and Supervision
The Contractor shall follow all guidelines pertaining to registration procedures as listed in the quarterly recreation schedule. Participants may not take part in the program unless they are listed on the class roster or can show proof of enrollment. All participants and volunteers need to complete the City’s Waiver of Liability form prior to taking part in the program. If applicable, contractors who are responsible for supervising minors must remain with the class until a parent of legal guardian has arrived and all minors are released to them.

Injury of a Class Participant
In the event of an injury occurring to a participant, the Contractor will notify the City within 1 hour and complete an Incident Report in the form approved by the City. The Incident Report must be submitted to the City within 24 hours of the injury occurring. 722
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Exh. B Insurance for Recreation Contracts Updated August 2024 1 Exhibit B
Insurance Requirements for Recreation Contracts
As required by the Agreement, Contractor shall procure prior to commencement of Services and maintain the following insurance for the duration of the Agreement against claims arising from or in connection with Contractor, its agents, representatives, employees or subcontractors Services under this Agreement.

Minimum Scope and Limit of Insurance. Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including property damage, bodily injury and personal & advertising injury with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, it must apply separately to this project/location (CG 25 03 or 25 04) or be twice the required occurrence limit. a. It shall be a requirement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits shall be made available to the Additional Insured and shall be (i) the minimum coverage/limits specified in this agreement; or (ii) the broader coverage and maximum limits of coverage of any insurance policy, whichever is greater. b. Additional Insured coverage under Consultant's policy shall be "primary and non-contributory," will not seek contribution from City’s insurance/self-insurance, and shall be at least as broad as ISO Form CG 20 01 (04/13).
c. The limits of insurance required may be satisfied by a combination of primary and umbrella or excess insurance, provided each policy complies with the requirements set forth in this Contract. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary basis for the benefit of City before the City’s own insurance or selfinsurance shall be called upon to protect City as a named insured.

2. Automobile Liability: ISO CA 0001 covering Code 1 (any auto), or if Contractor has no owned autos, Code 8 (hired) and 9 (non-owned), with limits no less than $1,000,000 per accident for bodily injury and property damage; or proof of Contractor’s personal auto insurance with limits required by state law. (Contractor shall not transport or use its personal vehicle to transport participants or perform work under this contract.)

3. Workers’ Compensation: As required by the State of California, with Statutory and Employer’s Liability Insurance limits of no less than $1,000,000 per accident for bodily injury or disease; or contractor must sign affidavit of no employees.

4. Sexual Abuse/Molestation: Insurance or the equivalent as required for activities/services involving minors, (i.e., after school activities, recreational programs, athletics, study/training events and transportation of minors). Coverage may be included under General Liability or be obtained in a separate policy, such as Educators Legal Liability (ELL) policy, with a limit of no less than $1,000,000 per occurrence. If a general aggregate limit applies, it must apply separately to this contract or be twice the required occurrence limit.

Insurance coverage required may be satisfied by a combination of Primary and Excess/Umbrella insurance.

OTHER INSURANCE PROVISIONS
The aforementioned insurance shall be endorsed and have all the following conditions and provisions:
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Exh. B Insurance for Recreation Contracts Updated August 2024 2 Additional Insured Status
The City of Cupertino, its City Council, officers, officials, employees, agents, servants and volunteers (“Additional Insureds”) are to be covered as additional insureds on Consultant’s CGL and automobile liability policies. General Liability coverage can be provided in the form of an endorsement to Consultant’s insurance (at least as broad as ISO Form CG 20 10 (11/ 85) or both CG 20 10 and CG 20 37 forms, if later editions are used).

Primary Coverage
Coverage afforded to City/Additional Insureds shall be primary insurance. Any insurance or self-insurance maintained by City, its officers, officials, employees, or volunteers shall be excess of Consultant’s insurance and shall not contribute to it.

Notice of Cancellation
Each insurance policy shall state that coverage shall not be canceled or allowed to expire, except with written notice to City 30 days in advance or 10 days in advance if due to non-payment of premiums.

Waiver of Subrogation
Consultant waives any right to subrogation against City/Additional Insureds for recovery of damages to the extent said losses are covered by the insurance policies required herein. Specifically, the Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of City for all work performed by Consultant, its employees, agents and subconsultants. This provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

Deductibles and Self-Insured Retentions
Any deductible or self-insured retention must be declared to and approved by the City. At City’s option, either: the insurer must reduce or eliminate the deductible or self-insured retentions as respects the City/Additional Insureds; or Consultant must show proof of ability to pay losses and costs related investigations, claim administration and defense expenses. The policy shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the insured or the City.

Acceptability of Insurers
Insurance shall be placed with insurers admitted in the State of California and with an AM Best rating of AVII or higher.

Verification of Coverage
Consultant must furnish acceptable insurance certificates and mandatory endorsements (or copies of the policies effecting the coverage required by this Contract), and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements prior to commencement of the Contract. City retains the right to demand verification of compliance at any time during the Contract term.

Subconsultants
Consultant shall require and verify that all subconsultants maintain insurance that meet the requirements of this Contract, including naming the City as an additional insured on subconsultant’s insurance policies.

Higher Insurance Limits
If Consultant maintains broader coverage and/or higher limits than the minimums shown above, City shall be entitled to coverage for the higher insurance limits maintained by Consultant.

Adequacy of Coverage
City reserves the right to modify these insurance requirements/coverage based on the nature of the risk, prior experience, insurer or other special circumstances, with not less than ninety (90) days prior written notice.
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EXHIBIT C

AFFIDAVIT OF NO EMPLOYEES
State of California
County of Santa Clara
City of Cupertino
I, the undersigned, declare as follows:

I am an independent contractor and the owner of Snapology of Los Gatos DBA SV Kids Corp.

I wish to enter into a services contract with the City of Cupertino. I am fully aware of the provisions of section 3700 of the California Labor Code, which requires every employer to provide Workers' Compensation coverage for employees in accordance with the provisions of that Code. I am also aware that I must provide proof of workers’ compensation insurance to the City of Cupertino for any and all employees I may have, pursuant to Section 12 of the City of Cupertino’s contract.

I hereby certify that I do not have any employees nor will I have any employees working for me or my business during the term of any service contract with the City of Cupertino. I am not required to have Workers’ Compensation insurance.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on this ____day of ____________, 2026, at , California.

______________________________

PRINT NAME
______________________________

SIGNATURE
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EXHIBIT D
Contractor’s Mandated Reporter Declaration
The undersigned does hereby certify that:

1. I am a representative of Snapology of Los Gatos DBA SV Kids Corp; that I am familiar with the facts herein and am authorized and qualified to execute this declaration.

2. I declare that Snapology of Los Gatos DBA SV Kids Corp. has complied with fingerprinting and criminal background investigation requirements with respect to all Contractor’s employees who may have contact with minors in the course of providing services pursuant to the Agreement, and the California Department of Justice has determined that none of those employees has been convicted of a felony, as that term is defined in California Penal Code Section 11105.3.

3. I declare that each coach and administrator shall be required to successfully complete concussion and head injury education at least once, either online or in person, before supervising a participant, as required by California Health and Safety Code Section 124235, et seq.

4. On a yearly basis, all participants shall be required to sign and return a concussion and head injury information sheet in compliance with California Health and Safety Code Section 124235, which may be in the form attached as D-1.

5. That a complete and accurate list of Contractor’s employees, who may come in contact with minors during the course and scope of the Agreement, are included below.

6. All of the below mentioned employees have tested negative for TB, or X-ray results for TB, and have current documentation on file with Contractor.

7. All of the below mentioned employees have received training and understand their responsibilities under the Mandated Reporter laws of this state and are willing and able to comply.

List of all Contractor Employees working for the City (if no Employees, identify “self”):

List of Employees or Self

8. The Contractor will notify the City of Cupertino in writing of any new employees and will be added to the above list prior to beginning work at the City of Cupertino.

I declare under penalty of perjury that the foregoing is true and correct.

CONTRACTOR
By
Name
Title
Date
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CITY OF CUPERTINO
Agenda Item
26-15029 Agenda Date: 5/19/2026
Agenda #: 16.

Subject: Authorization to execute amendment to Greenwood Court Community Development Block Grant (CDBG) loan agreement to extend affordability restrictions by ninety-nine (99) years.

Authorize the City Manager to execute the amendment to extend the term of the CDBG loan agreement to the West Valley Community Services (WVCS) for rehabilitation of the low-income rental units at Greenwood Court to preserve affordability restrictions for an additional ninety-nine (99) years.

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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CITY COUNCIL STAFF REPORT
May 19, 2026
Subject
Authorization to execute amendment to Greenwood Court Community Development Block Grant (CDBG) loan agreement to extend affordability restrictions by ninety-nine (99) years.

Recommended Action
Authorize the City Manager to execute the amendment to extend the term of the CDBG loan agreement to the West Valley Community Services (WVCS) for rehabilitation of the low-income rental units at Greenwood Court to preserve affordability restrictions for an additional ninety-nine (99) years.

Executive Summary
On June 14, 1996, the City of Cupertino executed a 30-year CDBG loan agreement with the WVCS (previously known as Cupertino Community Services) in the amount of $320,000 to rehabilitate the apartment building at 10311 Greenwood Court. In return, the agreement included affordability restrictions for the four (4) units in the property to be rented only to low- and very low-income households (defined by the Department of Housing and Urban Development (HUD) as below 80% Area Median Income and 50% Area Median Income, respectively) for the term of the loan. The loan was set to accrue interest at a rate of 3%, bringing steady program income to the City of Cupertino in the amount of approximately $7,500 per year. The loan is currently set to expire on June 14, 2026, resulting in the remainder of the loan to be due and payable and the affordability restriction to expire on the expiration date. A proposal (Attachment A) was made to WVCS to amend the agreement by extending the terms of the loan for an additional 99 years. This would subsequently extend the affordability terms until 2125 for no additional cost to the City, while bringing an overall net gain of approximately $35,000 to CDBG program income due to additional interest collected on future payments.

Reasons for Recommendation
CDBG affordability restrictions on the four (4) units at 10311 Greenwood Court will remain active until 2125 with the execution of the loan extension. This will allow the City to continue to collect payment on the remaining balance, which also continue to accrue 3% interest. This will net an overall gain for the City’s CDBG program income as opposed to allowing the agreement to expire and collecting the remainder due on June 14, 2026. A 728
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mutually beneficial amendment between WVCS and the City for extension has been proposed. Furthermore, executing an amendment to extend the loan will contribute to the City’s affordable housing preservation goals in the Housing Element (Strategy HE 3.3.2, Preservation of At-Risk Housing Units), without incurring any additional costs.

Background
CDBG Loan
HUD annually allocates CDBG funding to local jurisdictions for community development activities. Cupertino is one of nine entitlement jurisdictions within Santa Clara County.

Jurisdictions typically must have a population of 50,000 or more to qualify as an “entitlement jurisdiction” that receives grant funding directly from HUD. Entitlement grants are largely allocated on a formula basis, based on several objective measures of community needs, including the extent of poverty, populations, housing overcrowding, age of housing, and extent of population growth lag in relationship to other metropolitan areas.

On June 14, 1996, the City of Cupertino executed a loan (Attachment B) with Cupertino Community Services (now known as West Valley Community Services) to rehabilitate four (4) units at 10811 Greenwood Court. The terms of the loan included a $320,000 contribution from the City’s CDBG fund. The loan would accrue 3% interest in the course of 30 years. The agreement included affordability restrictions, which maintained that the units at the property may only be occupied by low- and very low-income households throughout the life of the agreement. Since execution of this loan, the City has received steady program income payments from WVCS of approximately $7,500 per year. As of January 2026, $106,919.61 of the original loan principle remains. 10811 Greenwood Court
Upon execution of the agreement, the property has been continuously occupied by Cupertino households below the required income thresholds for two low-income and two very-low income units. To ensure affordability, tenants are only charged up to 30% of their monthly income for rent, per the agreement. Tenants of the property are also offered supportive services through West Valley Community Service’s multiple social assistance and case management programs, effectively making it one of Cupertino’s few transitional housing. In 2017, the City of Cupertino executed a BMR grant agreement (Attachment C) with WVCS to deepen the affordability restrictions of 10811 Greenwood Court, to two very low-income units and two extremely low-income (below 30% Area Median Income) units and extended affordability restrictions to 2116. In addition to extending the term of the loan to 2125, amendment of the CDBG loan will also revise the CDBG affordability restrictions to match the deepened affordability restrictions of the new agreement, removing any inconsistencies.

In 2010, WVCS received a $100,000 grant from the Housing Trust of Silicon Valley (HTSV), then known as the Housing Trust of Santa Clara County, for capital improvements to the property. The Housing Trust has agreed to subordinate their grant position on the deed 729
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of trust to the proposed extension of the City’s CDBG loan and to the affordability covenant restriction to maintain the property as affordable for a term of 99 years.

Execution of the proposed amendment will be conditioned on HTSV fulfilling their agreement to subordinate to the City.

Housing Element
In the 2023-2031 City of Cupertino Housing Element, Strategy HE 3.2.2 (Preservation of At-Risk Housing Units) explicitly identifies 10811 Greenwood Court as an at-risk property to be preserved for low-income housing. Execution of an amendment to extend the existing loan will concurrently extend affordability restrictions, which will further demonstrate the City’s commitment to furthering the goals of this strategy, without needing to incur the high costs of rehabilitation or acquisition, typically associated with affordable housing preservation.

Discussion
Fiscal Benefit
WVCS is in good standing with the City of Cupertino in regard to upholding expectations of the initial CDBG loan. They have made annual payments to the City based on the terms of the original agreement, which has brought regular program income to supplement the City’s CDBG entitlement from HUD, therefore benefiting the City’s housing and public service programs. Regular payments would be expected to continue with the extension of the loan, and the remaining principle would continue to collect 3% interest. Overall, this would allow the City to continue to collect a steady stream of approximately $35,000 of additional program income over a long-term period, resulting in a net gain in total funds received. Conversely, allowing the initial loan to expire would result in the City receiving a single payment on the remainder of the loan balance and forgoing the additional proceeds from potential interest collected. Furthermore, it is administratively beneficial to the City to avoid large lump sum payments for the CDBG program, as HUD regulations penalize cities who maintain large unexpended funding reserves.

California Environmental Quality Act
No California Environmental Quality Act impact.

Sustainability Impact
No sustainability impact.

Fiscal Impact
An increase in additional program income received by the City of approximately $35,000 in interest collected, for a grand total of approximately $142,000 over the life of the loan.

City Work Program (CWP) Item/Description
Preserve existing and develop new BMR/ELI Housing.

City Council Goal
Housing.
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_____________________________________
Prepared by: Nicky Vu, Senior Housing Coordinator
Reviewed by: Luke Connolly, Assistant Director of Community Development Benjamin Fu, Director of Community Development
Floy Andrews, Interim City Attorney
Approved for Submission by: Tina Kapoor, City Manager
Attachments:

A – Draft CDBG Loan Amendment for 10311 Greenwood Court B – Greenwood Court CDBG Rehab Loan Agreement
C – Greenwood Court BMR Grant Agreement
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1018/206/32034.01

AMENDMENT TO AGREEMENT AND

PROMISSORY NOTE SECURED BY DEED OF TRUST

THIS FIRST AMENDMENT TO AGREEMENT AND PROMISSORY NOTE
SECURED BY DEED OF TRUST ("Amendment") is entered into as of ______, 2026, by and between the CITY OF CUPERTINO, a municipal corporation ("City"), and WEST VALLEY COMMUNITY SERVICES OF SANTA CLARA COUNTY, INC., a California Non-Profit Corporation formerly known as Cupertino Community Services ("WVCS"), with reference to the following facts:

R E C I T A L S
A. WVCS is the owner of that certain real property ("Property") located in the City of Cupertino, County of Santa Clara, State of California, commonly known as 10311 Greenwood Court, Cupertino, California 95014 (APN 369-14-25).

B. City and WVCS previously entered into that certain Agreement dated as of June 14, 1996 (the "Agreement"). Pursuant to the Agreement, the City made a loan to WVCS a loan in the original principal amount of Three Hundred and Twenty Thousand Dollars ($320,000) for the purpose of funding acquisition of the Property in exchange for certain occupancy and affordability restrictions ("City Loan"). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

C. The Loan was evidenced by that certain Promissory Note Secured by Deed of Trust dated June 14, 1996, executed by WVCS in favor of City ("Note"), and are secured by that certain Deed of Trust, Securing City Loan with Assignment of Rents dated as of June 14, 1996, executed by WVCS in favor of City and recorded with the Santa Clara County Recorder's Office on June 19, 1996, as Instrument No. 13336671, encumbering the Property (the "Deed of Trust").

D. On November 23, 2010, WVCS received a grant in the original principal amount of One Hundred Thousand Dollars ($100,000) from Housing Trust Silicon Valley, a California nonprofit public benefit corporation formerly known as the Housing Trust of Santa Clara County ("2010 Grantor") to fund capital improvements to the Property subject to certain use restrictions pursuant to that certain Safety Net Capital Improvement Revocable Grant Agreement ("2010 Grant"). The 2010 Grant was secured by a Deed of Trust With Assignment of Rents and Security Agreement executed on November 23, 2010 and recorded with the Santa Clara County Recorder's Office on December 16, 2010, as Instrument No. 21008779.

E. On July 1, 2016, the City and WVCS entered into that certain Below Market Rate Affordable Housing Fund City/Non-Profit Contract, as amended on July 1, 2017, pursuant to which the City provided a grant to WVCS in the amount of Three Hundred and Twenty Thousand Dollars ($320,000) for rehabilitation of the Property. In connection therewith, that certain Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants dated July 1, 2017, and recorded with the Santa Clara County Recorder's Office on November 14, 2017, as Instrument No. 23800312 ("Affordability Covenant"). 732
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F. The City and WVCS desire to amend the City Loan to extend the maturity date in order to align the term of the City Loan with the term of the Affordability Covenant, thereby supporting the continued provision of affordable housing at the Property and furthering the City’s housing objectives.

G. The parties now desire to enter into this Loan Modification Agreement to extend the maturity date of the City Loan and to otherwise reaffirm the terms of the City Loan, subject to the terms and conditions set forth herein.

AGREEMENT
NOW THEREFORE, in consideration of the foregoing Recitals which are incorporated herein by this reference, City and WVCS hereby agree as follows:

1. Loan Extension. The following language shall hereby be substituted in lieu of, and shall supersede and replace in its entirety, Section IV.A.1.a. of Exhibit B to the Agreement:
"July 1, 2116; or"

2. Note Amendment. The following language shall hereby be substituted in lieu of, and shall supersede and replace in its entirety, paragraphs three and four of the Note:
"This Note shall, at the option of CITY any time prior July 1, 2116, become immediately due and payable upon: (a) a change in the use of the Project Property without the prior written consent of CITY; or (b) the sale, transfer, lease or other disposition of the Project Property by CONTRACTOR without the prior written consent of CITY; or (c) failure of CONTRACTOR to file reports as required in EXHIBIT A of the CONTRACT; or (d) acceptance by CONTRACTOR of any tenants who do not meet the income limits set forth in EXHIBIT B of the CONTRACT; or (e) failure of CONTRACTOR to set Project Property rents as described in EXHIBIT B of the CONTRACT; or (f) failure of CONTRACTOR to make repayments of the City Loan as set forth in EXHIBIT B of the CONTRACT; or (g) any other material contract noncompliance with the CONTRACT and its exhibits.

The entire principal balance shall be considered paid in full if any of the contingencies set forth in (a), (b), (c), (d), (e), (f), and (g) above have not occurred or have occurred but been cured any time prior to July 1, 2116."

3. Subordination Agreement. As a condition to the effectiveness of the loan extension contemplated herein, the City requires that the 2010 Grantor execute and deliver a subordination agreement, in form acceptable to the City, subordinating its interest to the lien of the City Loan, as amended ("Subordination Agreement")

4. Event of Conflict. In the event of conflict or inconsistency between the terms and conditions of the Agreement or the Note, on the one hand, and the terms and conditions of this Amendment, on the other hand, the terms and conditions of this Amendment shall control.

5. All Other Provisions of Agreement and Note to Remain in Effect. Except as specifically modified herein, all of the other remaining and provisions of the 733
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Agreement, and the Note, and the terms, conditions, and covenants contained therein, shall remain unchanged and in full force and effect and shall not be amended, modified, or in any way affected hereby.

IN WITNESS WHEREOF, City and WVCS have executed this Amendment as of the date first written above.
"City"
City of Cupertino,
a Municipal Corporation
By: _________________________
Kitty Moore, Mayor
"WVCS"
West Valley Community Services Of Santa
Clara County, Inc.,
a California nonprofit corporation
formerly known as Cupertino Community
Services
By: __________________________________
Sujatha Venkatraman, Executive Director
ATTEST:
_____________________________
Lauren Sapudar, City Clerk
APPROVED AS TO FORM:
_____________________________
Floy Andrews, Interim City Attorney
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AGREEMENTBYANDBETWEENTHE

CITY OF CUPERTINO, CALIFORNIA

AND CUPERTINO COMMUNITY SERVICES
Tllis agreement 01erein "AGREEMENT"), is made and entered into on tllis __j_j_ day of \vt.v,~l619~by and between the CITY OF CUPERTINO, CALIFORNIA, a municipal ~n (herein "CITY"), and CUPERTINO COMMUNITY SERVICES, a non-profit housing developer Q1erein "CONTRACTOR") and assigns. CITY and CONTRACTOR may herein be referred to individually as a "Party" or collectively as "Parties".

RECITALS
The Parties agree as follows:

WHEREAS,
A. CITY has received Community Development Block Grant funds Qlerein "CDBG") through a Joint Powers Agreement with the County of Santa Clara, which is an Urban County entitled to CDBG funds from the United States Department of Housing and Urban Development (herein "HUD"); and
B. CITY has appropriated funds in an amount not to exceed THREE HUNDRED TWENTY THOUSAND DOLLARS ($320,000), to be utilized during the time period between June 1, 1996 and May 31, 1997 (herein "Utilization Period") for the purpose of meeting the goals and objectives outlined in EXHIBIT A, SCOPE OF AFFORDABLE HOUSING PROJECT (herein "PROJECT"), attached hereto and incorporated herein by reference, primarily benefiting very low and low income Cupertino residents.

AGREEMENT PROVISIONS
In consideration of the following mutual covenants, agreements, and obligations, the Parties agree as follows:

1. DEFINITIONS
Whenever used in tllis AGREEMENT and its attachments, the terms below, when initially capitalized, shall have tl1e following meanings:

A. Affordability : Shall mean the lengtl1 of time tills AGREEMENT is in effect and rents are limited as described in EXHIBIT B, BUDGET, RENTS AND REIMBURSEMENT OF CITY LOAN, attached hereto and incorporated herein 735
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by reference. This period shall be for at least thirty (30) years after the Effective Date.

B. Annual Income: Shall mean the income of all household members as defined in Federal regulations 24 CFR 570.3.

C. Clients: Shall mean very low and low income households who reside in CDBG assisted Units and at Project Property, either at the time of occupancy or the Effective Date, whichever is later.

D. Effective Date: Shall mean the date that CONTRACTOR talces title to Project Property. The first payment to CONTRACTOR by CITY may occur before this date.

E. CDBG: Shall mean the federal regulations (24 CFR Part 570) governing the CDBG Program. These regulations include HUD memos and other correspondence explaining or otherwise conm1enting on CDBG regulations.

F. CDBG Rent: Shall mean the maximum rents allowable by HUD for the CDBG Program. These rents will be periodically revised by CITY.

G. Very Low Income Household: Shall mean a household whose Annual Income does not exceed 50% of the area median income, adjusted for household size, as determined and made available by HUD. CITY shall provide CONTRACTOR with a cunent schedule of income linlits, adjusted for household size.

H. Low Income Household-, Shall mean a household whose Annual Income does not exceed 80% of the area median income, adjusted for household size, as determined and made available by HUD- CITY shall provide CONTRACTOR with a cunent schedule of income limits, adjusted for household size.

I. OMB: Shall mean the Federal Office of Management and Budget.

J. Project Property: Shall mean the four-unit multi-family structures located at 10311 Greenwood Court, Cupertino, California (APN 369-14-25).

K. Conventional Loan: Shall mean the loan of funds to CONTRACTOR through Sumitomo Bank of California in the original principal an1ount of $225,000 to be used to pay a portion of the acquisition costs, secured by a first deed of trust on the Project Property.

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L. Unit: Shall mean a dwelling unit occupied or available to be occupied by a low or very low income household.

2. PROJECT COORDINATION
A. CITY: Planner II (Housing Services) or his/her designee, shall be the PROGRAM MANAGER for CITY and shall render overall supervision of the progress and perfom1ance of this AGREEMENT by CITY. All services agreed to be performed by CITY shall be under the overall direction of the PROGRAM MANAGER.

B. CONTRACTOR: CONTRACTOR shall assign a single PROJECT DIRECTOR who shall have overall responsibility for the progress and execution of this AGREEMENT. Should circumstances or conditions subsequent to the execution of this AGREEMENT require a substitute PROJECT DIRECTOR, CONTRACTOR shall notify CITY inrmediately of such occurrence. PROJECT DIRECTOR and CONTRACTOR staff will cooperate with CITY's PROGRAM MANAGER relating to the PROJECT, areas of concern, and the impact of PROJECT on residents of CITY.

C. NOTICES: All notices or other correspondence required or contemplated by this AGREEMENT shall be sent to the Parties at the following addresses:

CITY: Planner II (Housing Services)
City of Cupertino
10300 Torre Avenue
Cupertino, California 95014
CONTRACTOR: Executive Director
Cnpertino Community Services
10185 North Stelling Road
Cupertino, CA 95014

3. OBLIGATION OF CONTRACTOR
A. Organization of CONTRACTOR:

CONTRACTOR shall:
1) Provide CITY with:

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a) A copy of Articles of Incorporation under the laws of the State of California;
b) A copy of current Bylaws of CONTRACTOR;
c) Verification and documentation of Internal Revenue Service nonprofit status under Title 26, Section 501(c) of the Internal Revenue Code of 1986;
d) Verification and documentation of State of California Franchise Tax Board tax exempt status under Section 23 701 (d), Revenue and Taxation Code;
e) Names and addresses of current Board of Directors of CONTRACTOR;
f) A copy of the adopted personnel policies and procedures including an Affirmative Action Plan if staff exceeds fifteen (I 5) employees; g) An organizational chart and staffmg profile; and,
h) Any other documents required by HUD
2) Report in writing any changes in the CONTRACTOR's Articles of Incorporation, Bylaws, tax exempt status and/or Board membership within thirty (30) calendar days to the CITY's PROGRAM MANAGER.
3) Abide by the conflict of interest provisions OMB Circular A-ll 0. These rules apply to any person currently being compensated by the CONTRACTOR for services rendered to it within the previous twelve (12) months, whether as a full or part time employee, officer, independent contractor or otherwise. Any such persons who have exercised or exercise any decision-making functions or responsibilities with respect to CITY's administration of CDBG or gain inside information with regard to that process, are prohibited from obtaining any financial interest or benefit for themselves or those with whom they have family or business ties during their tenure with CONTRACTOR and for one year thereafter.
4) Include on the Board of Directors representation from a broad cross section of the community, including: those with expertise and interest in the CONTRACTOR's services, representatives from community organizations interested m CONTRACTOR's services, and users of CONTRACTOR's services.

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5) Open to the public all meetings of the Board of Directors, except meetings, or portions thereof, dealing with personnel or litigation matters or to instruct negotiators.
6) Keep minutes, approved by the Board of Directors, of all regular and special meetings.
7) Encourage public participation in planning and implementing services provided under this AGREEMENT.
8) Utilize minority and/or female owned businesses, vendors, suppliers, and CONTRACTOR's to the maximum extent feasible, for items funded under this AGREEMENT.

B. Assumption of Ownership of Project Property by CONTRACTOR:

Title to tl1e Project Property shall be transferred to CONTRACTOR upon initial payment from CITY under this AGREEMENT. Title shall be transferred clear of all liens on said Project Property other than the conventional loan as described in EXHIBIT B. CITY investment in the PROJECT shall be secured by a Promissory Note (EXHIBIT E) and Deed of Trust (EXHIBIT F), attached hereto and incorporated herein by reference.

C. Project Performance of CONTRACTOR
During fue Affordability Period, CONTRACTOR shall:
1) Submit to CITY all documentation required by CITY to assure compliance with CDBG Affordability Period requirements of the PROJECT as described in EXHIBIT A;
2) Beginning in 2001, pay to the CITY by July 15 of each year during the Affordability Period, an annual mortgage payment as described in EXHIBIT B; 3) Submit to CITY by July 15 of each year an annual report, that:
a) Lists all vacancies that occurred in the designated Units during fue previous fiscal year ( defmed herein as the period July I through the next June 30), as well as the demographics and Annual Income of tl1e new tenants filling such vacancies, and,

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b) Lists all current tenants in the designated Units with an update of their demographics, Annual Income and rent;
4) Collect all required data on new tenants of the designated Units. Such data shall be on forms approved by the CITY and shall be made available to CITY by CONTRACTOR for review during the monitoring process;
5) Affirmatively market all vacancies consistent with the CITY's Housing Procedural Manual, provided to CONTRACTOR by CITY's PROGRAM MANAGER.

CITY shall provide CONTRACTOR with any and all updates or changes to this guide to assist CONTRACTOR in complying with this Policy; 6) Cooperate with CITY staff conducting on-site inspection to determine compliance with the standards established by the Uniform Housing Code as adopted by CITY. CITY shall conduct such inspections during normal business hours after providing one (1) working day's prior notice;
7) Maintain all required insurance coverage as specified in EXHIBIT C, INSURANCE REQUIREMENTS, attached hereto and incorporated herein by reference;
8) Maintain the appearance of Project Property consistent with surrounding properties and undertalce major repairs as necessary to maintain the habitability of the Project Property;
9) Cooperate, when appropriate, with the CITY's Tenant-Landlord Rent Mediation Program to resolve disputes with any tenants;
1 0) Assist CITY in notifying all tenants of their rights under the Uniform Relocation Assistance and Real Property Act of 1970, as an1ended, including noticing of any new tenants who move into Project Property during and after the escrow period.

CITY shall provide CONTRACTOR with any and all written materials to be distributed to tenants regarding relocation assistance; 11) Include an acknowledgment of CITY funding and support on all appropriate PROJECT publicity and publications using words to the effect that services are funded by City of Cupertino; and,
12) In1plement any changes required by CITY or HUD to maintain compliance with CDBG requirements and any other applicable statutes or regulations. CITY and CONTRACTOR will seek remedies to address any required changes that impact

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the financial viability of the PROJECT, including, but not limited to reduced installment payments on the mortgage described in EXHIBIT B.

D. Fiscal Responsibilities of CONTRACTOR:

CONTRACTOR shall:
1) Appoint and submit the name of a Fiscal Officer who shall be responsible for the financial and accounting activities of the CONTRACTOR, including the receipt and disbursement of CONTRACTOR funds;
2) Establish and maintain a system of accounts that shall be in conformance with generally accepted principles of accounting for budgeted funds. Such system of accounts shall be subject to review and approval by CITY and shall be consistent with the requirements of EXHIBIT B. Any CITY review of CONTRACTOR's accounting system shall be done during normal business hours after one (1) working day's prior written notice;
3) Document all costs by maintaining complete and accurate records of all financial transactions, including, but not limited to, contracts, invoices, time cards, cash receipts, vouchers, canceled checks, bank statements, and/or other official documentation evidencing in proper detail the nature and propriety of all charges; 4) Perform an independent fiscal audit at least every year, in conformance with the generally accepted standard accounting principles. Such audits mast identify the total funds received and disbursed and funds granted and expended relating to tllis AGREEMENT. The costs for such audits shall be at CONTRACTOR's expense, unless otherwise provided for in this AGREEMENT. Copies of the completed audits must be provided to the CITY; and,
5) Be liable for any expenses charged to. the PROJECT that are disallowed by CITY.

Disallowed expenses shall be any that do not fall witllin the definition of Operating Expenses in EXHIBIT B. CITY shall notify CONTRACTOR, in writing, of any expense it intends to disallow and the reason( s) for the disallowance. CONTRACTOR shall have seven (7) working days from receipt of said notice of disallowance to appeal the CITY's decision. Said appeal shall be in writing and set forth CONTRACTOR's reasons for considering the expense in question allowable under the AGREEMENT. Upon receipt of said appeal, CITY shall have fourteen (14) working days to respond in writing. Said response shall state the final decision of CITY to allow or disallow, in whole in part, the expense(s) submitted for review, witl1 the reasons for the CITY's decision.

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E. Records, Reports and Audits of CONTRACTOR:
1) CONTRACTOR shall comply with all applicable federal Uniform Administrative Requirements as defeated in 24 CFR 570.502.
2) Establishment and Maintenance of Records: CONTRACTOR shall maintain records, including but not limited to books, fmancial records, supporting documents, statistical records, personnel, property and all other pertinent Records sufficient to reflect properly (a) all direct and indirect costs of whatever nature claimed to have been incurred and anticipated to be incurred to perform this AGREEMENT, and (b) all other matters covered by this AGREEMENT. 3) Preservation of, Records: CONTRACTOR shall preserve and mal'e its records available during normal business hours upon one (I) working day's prior written notice from CITY:
a) Until the expiration of three (3) years from the armiversary of the Effective Date that immediately follows the activity that produced the record; b) For such longer period, if any, as is required by applicable law; or c) If this AGREEMENT is completely or partially terminated, the records relating to the work terminated shall be preserved and made available for a period of three years from the date of any resulting final settlement. 4) Examination of Records and Facilities: At any tin1e during normal business hours and as often as may be deemed necessary, with at least one working day notice by CITY, CONTRACTOR agrees that CITY, and/or any duly authorized representatives of CITY shall, until expiration of (a) three years after the conclusion of the Affordability Period, or (b) such longer period as may be prescribed by law, have access to and the right to examine its offices and facilities engaged in performance of this AGREEMENT and all its records with respect to all matters covered by this AGREEMENT, excepting those falling within the attorney-client privilege and those falling within the attorney work - product privilege, provided that in the event of a dispute regarding the applicability of the attorney work-product privilege to specific records, the Parties agree to submit the dispute to an in1partial arbitrator agreeable to both Parties. Agreement regarding the arbitrator shall not be withheld unreasonably. Costs of such arbitration shall be divided equally between the Parties.

CONTRACTOR also agrees that the CITY, or any duly authorized representatives, have the right to audit examine and malce excerpts or transcripts

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of and from, such records, and to make audits of all contracts and subcontracts, invoices, payrolls, records of personnel, conditions of employment, materials and all other data relating to matters covered by this AGREEMENT.

CONTRACTOR or its representatives shall be given access to and the cooperation of CITY, including all excerpts, transcripts and audits made during any examination of CONTRACTOR's records or facilities.
5) City Audits: The CITY may require an independent audit. Such audits may cover PROJECT compliance as well as fiscal matters regarding the operation of the PROJECT. CONTRACTOR will be notified at least one (I) working day in advance that an audit will be conducted. Cost of such audits will be borne by the CITY.

If CONTRACTOR chooses to respond to any audit finding, CONTRACTOR or its representative shall be given access to and the cooperation of CITY's auditors, including all working papers of said auditors. CONTRACTOR shall then have a reasonable time within which to review the audit and its findings, and have its responses included in the fmal audit report.

F. Non-Religious Activity :In addition to, and not in substitution for, other provisions of this AGREEMENT regarding the provision of services with CDBG funds, the CONTRACTOR:
1) Agrees that, in connection with such services:
a) It will not discriminate against any employee or applicant for employment on the basis of religion and will not limit employment or give preference in employment to persons on the basis of religion;
b) it will not discriminate against any person applying for housing on the basis of religion and will not limit such services or give preference to persons on the basis of religion;
c) It will provide no religious instruction or cmmseling, conduct, no religious worship or services, engage in no religious proselytizing, and exert no other religious influence on or in the Project Property; and, d) The common portion of the Project Property shall contain no sectarian or religious symbols or decorations.

4. CONTRACT COMPLIANCE:

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A. Monitoring and Evaluation of PROJECT:

Evaluation of the PROJECT perfom1ance shall be the mutual responsibility of both Parties. CONTRACTOR shall furnish all tenant and service data, statements, records, information and reports necessary for PROGRAM MANAGER to monitor, review and evaluate the performance of CONTRACTOR with respect to the PROJECT and its components. CITY shall have the right to request the services of an outside agent to assist in any such evaluation. Such services shall be paid for by CITY.

B. Contract Noncompliance:

With receipt by CITY of any information that evidences a failure or deficiency by CONTRACTOR to comply with any provision of this AGREEMENT, the CITY shall have the right to require corrective action to enforce compliance with such provision. Corrective action shall be taken if any of the following, as examples only, occur:
1) If CONTRACTOR (with or without lmowledge) has made any material misrepresentation of any nature with respect to any information or data furnished to CITY in connection with the PROJECT;
2) If there is pending litigation with respect to the performance by CONTRACTOR of any of its duties or obligations under this AGREEMENT which may materially jeopardize or adversely affect the undertaking of or the carrying out of the PROJECT;
3) If CONTRACTOR shall have talcen any action pertaining to the PROJECT which requires CITY approval without haviog obtained such approval;
4) If CONTRACTOR IS io material default under the provisions of this AGREEMENT;
5) If CONTRACTOR makes improper use of CDBG funds and PROJECT income;
6) If CONTRACTOR fails to comply with any of the terms and conditions of this AGREEMENT in such a manner as to constitute material breach thereof, or,

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7) If CONTRACTOR submits to CITY any reports which are incorrect or incomplete in any material respect.

C. Corrective Action:

After all administrative remedies have been exhausted, CITY shall have the right to require the presence of any of CONTRACTOR's officers at any hearing or meeting called for the purpose of considering corrective action within seven (7) working days of issuing such notice. CONTRACTOR will be informed of and have an opportunity to participate fully in corrective action deliberations.

Upon completion of corrective action deliberations, CITY shall notify CONTRACTOR, in writing, of any noncompliance and shall provide to CONTRACTOR a set of specific corrective action recommendations relative to PROJECT noncompliance and a timetable for implementing the specified corrective action recommendations; such timetable shall allow CONTRACTOR not less than seven (7) working days to comply with the specified corrective action recommendations. If CONTRACTOR wishes to appeal any finding of ' noncompliance, it shall have seven (7) working days from receipt of said notice of noncompliance to appeal the CITY's decision. Said appeal shall be in writing and set forth CONTRACTOR's reasons for considering the action or inaction cited by CITY as complying with the AGREEMENT. Upon receipt of said appeal, CITY shall have fourteen (14) working days to respond in writing. Said response shall state the fmal decision of CITY to require corrective action and the timetable for implementation. During this appeal process, CONTRACTOR shall make good faith effort to cure the noncompliance issues that are not in question.

Following implementation of the corrective actions, CONTRACTOR shall forward to CITY, within the time specified by CITY, any documentary evidence required by CITY to verify that the corrective actions have been taken. In the event CONTRACTOR does not implement the corrective action recommendations in accordance with the corrective action timetable, CITY may disallow all or part of the cost of the activity or action in noncompliance, provide notice of intent to terminate tllis AGREEMENT as specified in Section 14, and/or talce other remedies that may be legally available.

5. OBLIGATIONS OF CITY
A. Contract Compliance:

CITY staff shall provide assistance to CONTRACTOR in connection with:

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1) Obtaining conformity of the PROJECT with the CITY's policies and procedures and all CITY codes, ordinances, directives and laws; activities conducted by contractor( s ); and
2) Obtaining conformity of the PROJECT with CDBG requirements; and, 3) Review of AGREEMENT for compliance purposes and evaluating PROJECT based on annual reports received from CONTRACTOR and on-site monitoring of tenant and Project Property data.

B. Method ofPayment:

CITY shall pay CONTRACTOR a total sum not to exceed THREE HUNDRED TWENTY THOUSAND DOLLARS ($320,000). CITY shall malce its initial payment of CDBG funds directly into an escrow account for acquisition of the Project Property, in a manner specified by the title company administering the transfer oftitle. The loan shall be utilized for the acquisition of subject property.

All tenants residing in Units during tl1e Affordability Period must be of an income level as described in EXHIBIT B. Tenants, who meet this standard at the begim1ing of their residency at the Project Property, but later exceed this standard shall be considered in compliance as long as they are in continuous residence at the Project Property. Failure of CONTRACTOR to achieve this standard shall be considered contract noncompliance. In the event of such noncompliance, any and all payments made by CITY to CONTRACTOR under tl1is AGREEMENT shall be considered disallowed costs and subject to full repayment to CITY by CONTRACTOR within thirty (30) calendar days of such notice by CITY of noncompliance.

6. PROJECT
A. All rents collected from PROJECT tenants during the Affordability Period shall be retained by tl1e CONTRACTOR. These PROJECT rents shall be expended as described in EXHIBIT B.

B. Rents collected tl1at remain unspent at the conclusion of the Affordability Period shall be available to CONTRACTOR to use as described in EXIDBIT B.

C. Rent received subsequent to the Affordability Period shall not be subject to this AGREEMENT.

7. DISCLOSURE OF CONFIDENTIAL TENANT INFORMATION

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CITY agrees to maintain the confidentiality of any information regarding tenants or applicants for tenancy under this PROJECT, or their immediate families, pursuant to this AGREEMENT, which may be obtained through application forms, interviews, tests, reports, from public agencies or counselors, or any other source. Without the written permission of the applicant, such information shall be divulged only as necessary for purposes related to the performance or evaluation of the services and work to be provided pursuant to this AGREEMENT, and then only to persons having responsibilities under the AGREEMENT, including those furnishing services under the PROJECT through subcontracts.

8. ASSIGNABILITY AND INDEPENDENT CONTRACTOR REQUIREMENTS A. The relationship of CONTRACTOR to CITY is that of an independent contractor. CONTRACTOR has full rights to manage its employees and tenants subject to the requirements of the law. All persons employed by CONTRACTOR in cmmection with this AGREEMENT shall be employees of CONTRACTOR and not employees of CITY in any respect. CONTRACTOR shall be responsible for all employee benefits, including, but not limited to, statutory worker's compensation benefits.

B. None of the work or services to be performed hereunder shall be delegated or subcontracted to third parries without prior written CITY approval, which approval shall not be unreasonably withheld.

C. No subcontractor of CONTRACTOR will be recognized by CITY as having any employment relationship with CITY. For the protection of both CONTRACTOR and CITY, CONTRACTOR agrees that, prior to allowing subcontractor(s) to enter unto the Project Property to perform services, such subcontractor(s) shall be required to acquire, or show proof that he/she has purchased and is maintaining commercial general liability, automobile, and workers' compensation (if applicable) insurance policies, with coverage limits which meet or exceed the requirements for CONTRACTOR set forth in Exhibit C.

9. COMPLIANCE WITH LAW
A. Compliance: CONTRACTOR shall become familiar and comply with and cause all its subcontractor's and employees, if any, to become familiar and comply with all applicable federal, state and local laws, ordinances, codes, regulations, and decrees, including but not limited to, those federal rules and regulations outlined in EXHIBIT D, ASSURANCES, attached hereto and incorporated herein by reference.

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B. Assurances: Failure of CONTRACTOR, in any manner, to observe and adhere to law as described herein or as amended shall in no way relieve CONTRACTOR of its responsibility to adhere to same and CONTRACTOR herein acknowledges this responsibility. CONTRACTOR shall hold CITY, its City council, officers, employees and boards and commissions harmless from CONTRACTOR's failure(s) to comply with any requirement imposed on CONTRACTOR by virtue of the utilization of CITY funds. CONTRACTOR shall reimburse CITY for any disallowed costs and/or penalties imposed on CITY because of CONTRACTOR's failure to comply with all applicable federal, state and local laws, ordinances, codes, regulations and decrees.

10. TERMS AND AMENDMENTS
Amendments to the terms and conditions of this AGREEMENT shall be requested in writing by the Party desiring such revision, and any such adjustment to tilis AGREEMENT shall be determined and effective only upon the mutual agreement in writing of the Parties hereto unless the amendments are made by HUD, in which case they will be adopted as ordered.

11. INTEGRA TED DOCUMENT
This AGREEMENT embodies the agreement between CITY and CONTRACTOR and its terms and conditions. No verbal agreements or conversations with any officer, agent or employee of CITY prior to execution of this AGREEMENT shall affect or modify any of the terms or obligations contained in any documents comprising tllis AGREEMENT.

Any such verbal agreement shall be considered as unofficial infom1ation and in no way binding upon CITY.

12. HOLD HARMLESS
CONTRACTOR hereby releases and agrees to protect, defend, hold harmless and indenulify CITY, its City Council, its officers, employees and elected officials, boards and conunissions, from and against all claims, injury, liability, loss, cost and expense, or damage, however san1e may be caused, including all cost and reasonable attorney's fees in providing tl1e defense to any claim arising therefrom, for any loss of or damage to property( real and/or personal) or for personal injury to or deatl1 of any person or persons arising out of, occuning by reason of, or in anyway connected with CONTRACTOR's PROJECT activities, or in consequence of CONTRACTOR's negligence or willful misconduct.

13. WHEN RIGHTS AND REMEDIES WAIVED

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In no event shall any payment by CITY or any acceptance of payment by CONTRACTOR heretmder constitute or be construed to be a waiver by CITY or CONTRACTOR of any breach of covenants or conditions of this AGREEMENT or any default which may then exist on the part of CITY or CONTRACTOR, and the making of any such payment willie any such breach or default exists shall in no way impair or prejudice any right or remedy available to CITY or CONTRACTOR with respect to such breach or default.

14. TERMINATION
A. Termination for Cause:

CITY may terminate this AGREEMENT for cause if:
1) CONTRACTOR fails to comply with material existing conditions of the AGREEMENT; or,
2) CONTRACTOR refuses to accept any additional conditions that may be imposed by CITY or the Federal government, except those which would impose an undue financial burden on CONTRACTOR; or,
3) CONTRACTOR fails to implement required corrective actions in a timely and sufficient fashion.

Before terminating this AGREEMENT for cause, CITY shall provide notice to CONTRACTOR, in writing, of the reasons for tennination.

Upon receipt of such termination notice, CONTRACTOR shall have seven (7) working days to provide a written appeal of CITY's termination decision. Such written appeal shall state CONTRACTOR's reasons for considering the tennination improper or invalid tmder the AGREEMENT.

Upon receipt of such appeal, CITY shall have fourteen (14) working days to respond to the appeal, in writing, and malce a final decision regarding its reasons for terminating the AGREEMENT.

B. Termination for Convenience:

CITY and CONTRACTOR may terminate or suspend tlus AGREEMENT in whole or in part when both Parties agree that the continuation of the PROJECT would not produce beneficial results connnensurate witl1 the further expenditure of funds. The two Parties shall agree upon the termination conditions, including

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the effective date and, in the case of partial termination, the portion to be terminated.

C. Upon Termination CONTRACTOR Shall:
1) Not incur new obligations and shall cancel as many outstanding obligations as possible; and,
2) Pay to the CITY any remaining principal plus interest on the CITY Loan.

D. Termination does not impair the CITY's right to subsequently require repayment by CONTRACTOR for disallowed costs or other adjustments determined by audit fmdings.

15. MISCELLANEOUS PROVISIONS
A. The Captions: The captions of the various sections, paragraphs, and subparagraphs of the AGREEMENT are for convenience only and shall not be considered nor referred to for resolving questions of interpretation.

B. No Third Party Beneficiary: This AGREEMENT shall not be construed or deemed to be an agreement for the benefit of any third party or parties, and no third party or parties shall have any claim or right of action hereunder for any cause whatsoever.

C. Severability Clause: In case any one or more of the provisions contained herein shall, for any reason, be held invalid, illegal, or unenforceable in any respect, it shall not affect the validity of the other provisions which shall remain in full force and effect.

D. No Pledging CITY's Credit: Under no circumstances shall CONTRACTOR have the authority or power to pledge the credit of CITY or incur any obligation in the name of CITY. CONTRACTOR shall save and hold harmless CITY, its City Council, its officers, employees, and boards and commissions for expenses arising out of this AGREEMENT.

E. Corporation Financial Disclosure Requirements: CONTRACTOR services to be rendered under the provisions of this AGREEMENT are excluded from the requirement of filing a Financial Disclosure Statement by Title 2, California Code of Regulations, Section 18,700(2) (A) and (B).

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16. ENTIRE AGREEMENT
Tlus AGREEMENT, consisting of 45 pages, contains the entire agreement between the CITY and CONTRACTOR respecting the matters herein set forth and supersedes any prior agreement between the CITY and CONTRACTOR respecting such matters.

CONTRACTOR has executed this AGREEMENT on this ) '-( day of /lu.~J:uZ .. .-,- 199&. CJ
By: "CUPERTINO COMMUNITY SERVICES"
CITY has executed thls AGREEMENT on thls /0~ day of_,~ld)\fl_>O.yJ'~~-' 19...9..!.£.

APPROVED AS TO FORM:
6~,d Charles Kilian, City Attorney
ATTESTED BY:

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EXHIBIT A

CUPERTINO COMMUNITY SERVICES
10311 GREENWOOD COURT, CUPERTINO, CALIFORNIA

SCOPE OF AFFORDABLE HOUSING SERVICES
I. PURPOSE OF PROJECT
CONTRACTOR shall implement this AGREEMENT in accordance with the provisions of federal CDBG regulations as set forth in 24 CF Part 570, and all other rules and regulations pertaining thereto. All these elements shall be collectively called CDBG.

The purpose of this PROJECT is to provide affordable housing for very low and low income households. The Project Property, 10311 Greenwood Court, Cupertino, California, shall be used for this purpose for a period of thirty (30) years. During that period, the CITY investment shall be secured by a Deed of Trust and a Promissory Note.

City funds will be used to assist in the acquisition of the Project Property by CONTRACTOR.

II. ACTIVITIES TO BE PERFORMED BY CONTRACTOR
A. Except as specifically defined, restricted, or otherwise limited by the terms of this AGREEMENT, CONTRACTOR shall be considered owner and landlord of Project Property, with all of the rights and responsibilities normally associated with those terms.

B. Client Selection Criteria: CONTRACTOR shall adopt written tenant selection criteria and submit san1e to CITY for approval prior to receiving funds for the Down payment from CITY. These criteria shall, at minimum:
1 . Affinnatively market the units according to the CITY's Housing Procedural Manual, provided to CONTRACTOR by CITY's PROGRAM MANAGER;

2. Be consistent with the purpose of providing affordable housing for low income households;

3. Be reasonably related to the purposes of the PROJECT and the applicant s ability to perform the obligations of the lease;

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4. Give reasonable consideration to the housing needs of families who would have priority according to the CITY's Housing Procedural Manual, provided to CONTRACTOR by CITY's PROGRAM MANAGER;

5. Select tenants from CONTRACTOR's written waiting list in the chronological order of application, in so far as possible; and,

6. Give prompt, written notice to any rejected applicant with grounds for rejection.

C. Tenant Lease: CONTRACTOR shall adopt a standard tenant lease and submit same to CITY for approval prior to the Effective Date. This lease must be for not less than one year, unless reduced by mutual, written agreement of CONTRACTOR and Client. The lease must allow for rent increases as described in EXHIBIT B.

CONTRACTOR may not terminate the tenancy or refuse to renew the lease of a Client except for serious or repeated violations of the terms of the lease; violation of applicable federal, state, or local law; other good cause. Any termination or refuse to renew must be preceded by not less than three (3) calendar days by the CONTRACTOR's service of a written notice upon the Client specifYing the grounds for the action.

D. Tenant Participation Plan: CONTRACTOR shall establish a fair lease and grievance procedure and provide a plan for and follow a program of tenant participation in management decisions.

E. Maintenance: CONTRACTOR shall maintain the Project Property in compliance with all federal, state, and local housing quality standards and code requirements.

CONTRACTOR shall cooperate with CITY staff conducting on-site inspections to determine compliance with tins section.

In addition, CONTRACTOR must maintain ti1e appearance of the Project Property consistent with surrounding properties and undertake major repairs as necessary to maintain the habitability of the Project Property.

F. Rents: CONTRACTOR shall set rents as required in EXHIBIT B. As landlord, CONTRACTOR shall be responsible for ti1e collection of all rents due. Failure of CONTRACTOR to collect rents due shall in no way reduce CONTRACTOR's obligation to repay ti1e CITY Loan as described in EXHIBIT B.

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III. REPORTING REQUIREMENTS
A. Corporate Documents: As specified in Section 2, Paragraph A (2) of this AGREEMENT, CONTRACTOR shall report to CITY in writing within thirty (30) days of effective change in any one of the following documents: Articles of Incorporation, bylaws, tax-exempt Statns, Board of Director membership, Personnel Policies and Procedures, Affirmative Action Plan, Organizational Chart and other documents that may be required to verifY as the owner of the Project Property.

B. Budget, Revenue and Expenditure Documents

1. By September 15 of each year during the Mfordability Period, CONTRACTOR shall submit to CITY a Statement of all revenues and expenses of the PROJECT during the succeeding fiscal year.

C. Tenant Incomes, Demographics and Rents

1. By March 15 of each year during the Affordability Period, CONTRACTOR shall submit to CITY a report of all tenants in Units current as of February of that same year. This report shall be submitted on fom1s provided by the CITY and shall include a list of current tenants with an update of their Ammal Income and demographics.

2. By September 15 of each year during the Affordability Period, CONTRACTOR shall submit to CITY a list of all vacancies that occurred in Units and during the immediately preceding period of July 1 to June 30.

This list shall include the Ammal Income of the new tenants as well as their demographics.

3. CONTRACTOR shall maintain a waiting list of applicants for tenancy in the Project Property. This waiting list shall be available at CONTRACTOR's administrative office for CITY review at any tin1e.

4. CONTRACTOR shall maintain a list of all applicants rejected for tenancy in the Project Property with a statement of the reason for rejection and documentation that the applicant was properly notified of the reasons for the rejection. This list shall be available at CONTRACTOR's administrative office for CITY review at any time.

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D. Other Reporting Requirements: In order to comply with CDBG and other applicable federal, state, and local requirements and to efficiently monitor compliance with this AGREEMENT, CITY may require additional reporting elements from CONTRACTOR.

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EXHIBITB

CUPERTINO COMMUNITY SERVICES
10311 GREENWOOD COURT DRIVE, CUPERTINO, CA 95014

BUDGET AND BASIS FOR REPAYMENT OF CITY LOAN
I. PROJECT FISCAL YEAR
A. The PROJECT Fiscal Year shall run from July 1 to the next June 30 of each calendar year during the Affordability Period.

II. APPROPRIATION BUDGET
A. The CITY appropriation of $320,000 is from the CDBG portion of the Affordable Housing Fund. These funds shall be used to assist the acquisition of Project Property. This appropriation of funds is provided as a secured loan to CONTRACTOR.

B. Acquisition funds may be used for any expense nommlly related to the close of escrow. CITY shall make its payment of CDBG funds directly into the escrow account for purchase of the Project Property, in a matter designated by the title company administering the transfer of title.

C. It is the CITY's intention that CONTRACTOR maintain and operate the Project Property in a self-supporting manner. To this end, CITY shall be under no obligation to provide additional funds to maintain and operate the Project Property except for rehabilitation funds to be provided in 1997.

III. PROJECT RENTS
A. During the Affordability Period, CONTRACTOR may charge, depending on the type of unit, maximum rents as described below.

B. Initial-rents must be set at a level that does not trigger economic displacement under the Uniform Relocation Assistance and Real Property Act of 1970, as amended. This Act states that rents charged to existing tenants can only be

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increased to a level not to exceed 30% of the Almual Income of those tenants, less adjustments for utility payments as described below.

C. Unit Rents: These maximum rents are defmed by HUD as serving Low and Very Low Income families or individuals under the CDBG Program. Four (4) Units must be designated as Units serving Low Income families on the Effective Date.

1. These units must be initially occupied by Low Income Households; tenants filling vacancies in these units must also be Low Income Households.

2. Low income rents shall not exceed 30% of the individual or household in,come including a utility allowance.
3 On an annual basis, CITY shall provide CONTRACTOR with the most recent HUD Income guidelines and a utility allowance schedule.

4. The "Schedule of Allowances for Tenant Purchased Utilities and other Services for Santa Clara County" shall be used for purposes of detennining utility allowances.

IV. THE CITY LOAN
A. Terms of the Loan

1. The CITY Loan shall be evidenced by a Promissory Note, attached hereto as EXHIBIT E and incorporated herein by reference. Two hundred and twenty thousand dollars ($220,000) of the CITY Loan shall accrue interest at the rate of three percent (3%). The remaining one hundred thousand dollars ($100,000.00) shall accrue interest at a rate percent (3%) and be deferred until the entire loan amonnt becomes due and payable under the terms that follow. The principal balance and all accrued interest shall be due and payable on the earlier of the following:
a. Thirty (30) years from the Effective Date; or,
b. The date the Project Property or any portion thereof or interest therein is sold, transferred, assigned, leased (except for leases of individual Units pursuant to the terms of this AGREEMENT) or refinanced, without the prior written approval of CITY.

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2. In addition, the CITY, at its option, may declare the entire CITY Loan due and payable if there is a Termination of this AGREEMENT and its attached exhibits, the Promissory Note and the Deed of Trust, attached hereto as EXHIBIT F and incorporated herein by reference.

3. Starting with the fiscal year beginning July I, 2001, and throughout the term of the CITY Loan, CONTRACTOR shall repay the loan
in annual installments as provided below.

4. The Promissory Note evidencing the CITY Loan shall be secured by the Deed of Trust on the Project Property. Such Deed of Trust shall be recorded prior to any other interest in the Project Property (except the Deed of Trust securing the Sumitomo Bank of California conventional loan), and CONTRACTOR shall not place any inferior lien on the Project Property without the prior written consent of CITY.

The CITY shall not subordinate its position to any future loans on subject property.

B. Amortized Loan Payments

1. CITY shall defer $100,000 of the original CITY loan until the loan becomes due and payable as described in Section IV, Paragraph A.

However, the $100,000 shall accrue interest at a rate of three percent (3%). ~-

2. CONTRACTOR shall malce annual amortized payments on the $220,000 portion of the CITY Loan beginning on July 1, 2001.

3. The CITY Loan shall be due and payable as follows:
a. Commencing in 2001, CONTRACTOR installment payments shall be due on the 15th day (herein the "Payment Date") of each month that an outstanding loan balance exists. The interest acrrued during loan years one through five shall be calculated at three percent (3%) simple interest. The total accrued interest amount of $33,000 shall be divided into monthly payments over the remaining 25 years of the loan and added to the amortized loan payment. Payments shall be made in arrears. A penalty of one percent ( 1%) of the payment shall be charged for every seven (7) calendar days, or part thereof, CITY receives payment after the Payment Date.
b. The amount paid to CITY shall be amortized payments calculated at 3% interest on the partial loan amount ($220,000.00) plus an

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additional interest payment of $110.00 per month. The total monthly payment is $1,153.26.
c. Annually, not later than the Payment Date, CONTRACTOR shall submit to CITY a Statement of all revenues and expenses of the PROJECT during the preceding fiscal year.
d. CONTRACTOR shall not be required to make loan payments greater than the remaining loan balance plus accrued interest. e. All loan payments made by CONTRACTOR to CITY shall be applied first to accrued interest, and then to reduce the principal balance owed. In the event that the amount of the loan payment is insufficient to pay the accrued interest, any unpaid interest shall be added to the CITY Loan balance.
g. The CITY Loan shall be due and payable innnediately if an Event of Default, as described in the Promissory Note occurs. h. In the event of any sale, transfer, or refinancing prior to the time the CITY Loan is paid in full (whether or not approved by CITY), the proceeds of such sale, transfer or refinancing, less reasonable and normal costs of such transaction, shall be paid as follows:

1. Repayment of the Conventional Loan; then,

2. Repayment of the CITY Loan; then,

3. To CONTRACTOR.

1. The CITY Loan shall be a nonrecourse loan and no judgment, or execution thereon, entered in any action, legal or equitable, on any note evidencing such loan or deed of trust securing such loan shall be enforced personally against CONTRACTOR or any principals of CONTRACTOR, but shall only be enforced against the Project Property.

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EXHIBITC

CUPERTINO COMMUNITY SERVICES
10311 GREENWOOD COURT, CUPERTINO, CA 95014

INSURANCE REQUIREMENTS
Insurance Requirements for CONTRACTOR.

A. CONTRACTOR, at its sole cost and expense and for the Effective Period of this AGREEMENT or any renewal thereof, shall purchase and maintain not less than the following minimum insurance coverage and limits of insurance which shall be maintained with insurers and under forms of policies satisfactory to CITY.

1. An EXTENDED BROAD FORM COMPREHENSIVE GENERAL
LIABILITY INSURANCE POLICY covering Bodily Injury and Property Damage including an all risk property dan1age policy, with a combined single linlit of at least Two Million Dollars ($2,000,000) per occurrence providing the following coverages:
a) Premises operations
b) Independent CONTRACTOR's
c) Broad Form Property Damage Endorsement
d) Personal Injury Endorsement

2. A COMPREHENSIVE AUTOMOBILE POLICY with a minimum
combined single linlit of not less than One Million Dollars ($! ,000,000) for bodily injury and/or property damage, applicable to vehicles used in pursuit of any of the activities associated with this AGREEMENT and providing the following coverages (without deductibles) :
a) All owned vehicles
b) Employer's Non-ownership Liability
c) Hired Automobiles

3. A WORKERS' COMPENSATION AND EMPLOYERS., LIABILITY
POLICY (if required by State law) written in accordance with the laws of the State of Califonlia and providing the following coverages for any and all employees of CONTRACTOR:

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a) Statutory Workers' Compensation Coverage A (statutory limit) b) Employers' Liability Insurance - Coverage B. Not less than: one Million Dollars ($1,000,000) each accident/Bodily Injury (BI), One Million Dollars ($1 ,000,000) policy limit BI by disease, and One Million Dollars ($1 ,000,000 each employee BI by Disease.

4. A FIRE AND CASUALTY INSURANCE POLICY with coverage
amonnts adequate to cover full replacement cost of Project Property in the event the Project Property is damaged or destroyed by causes or events such as, but not limited to: fire, wind, earthquake, flood, etc. Flood insurance shall be obtained only to the degree required by CDBG rules and regulations.

5. ENDORSEMENTS. All of the following clauses and endorsements, or similar provisions, are required to be made a part of each of the above required policies:
a) The City of Cupertino, and their respective officers, employees, agents and CONTRACTOR's are hereby added as additional
named insured as respects all liabilities arising out of CONTRACTOR's performance of work under this
AGREEMENT; and
b) This policy shall be considered primary insurance as respects to any other valid and collectible insurance the CITY may possess, including any self-insured retention the CITY may have, and any other insurance the CITY does possess shall be considered excess insurance only; and
c) No cancellation or non-renewal of this policy, or modification of the coverage afforded under the tllis endorsement, shall be effective until written notice has been given at least tlllrty (30) days prior to the effective date of such modification or cancellation to tl1e

COMMUNITY DEVELOPMENT DEPARTMENT, CITY OF
CUPERTINO, 10300 TORRE AVENUE, CUPERTINO,
CALIFORNIA 95014.

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B. PROOF OF INSURANCE COVERAGE AND COVERAGE VERlFICATION. A copy of the Certificate of Insurance and completed coverage verification shall be provided to CITY by each of the CONTRACTOR's insurance companies as evidence of the stipulated coverages within thirty (30) days of the effective date of this AGREEMENT.

The Certificate(s) oflnsurance and coverage verification shall be mailed to:

Conununity Development Department
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014

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EXHIBITD

CUPERTINO COMMUNITY SERVICES
10192 and 10194 GREENWOOD COURT DRIVE, CUPERTINO, CA 95014

ASSURANCES
The Recipient of CDBG monies hereby assures and certifies compliance with the regulations, policies, guidelines and requirements (including federal OMB Circulars No. A-87, A-102, A-llO, and A-122), as they relate to the application, acceptance and use of Federal funds for this assisted project. Also the CONTRACTOR assures and certifies to the CITY that:
1 . It possesses legal authority to make a grant or loan submission and to execute a community housing services program;

2. Its governing body has duly adopted or passed as an official act a resolution, motion or similar action authorizing the person identified as the official representative of the corporation to submit the final statement and all understandings and assurances contained therein, and directing and authorizing the person identified as the official representative of the CONTRACTOR to act in connection with the submission of the final application and to provide such additional infonnation as may be required;

3. The grant will be conducted and administered in compliance with:
a. Title VI of the Civil Rights Act of 1964 (Pub. L.88-352; 42 U.S.C. 2000d et seq.)* and b. Title VIII oftl1e Civil Rights Act of 1968 (Pub. L. 90-284; 42 U.S.C. 3601 et seq.);

4. It will affirmatively further fair housing.

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Recording Requested by and
When Recorded Mail to:

THE CITY OF CUPERTINO
Community Development Department
10300 Torre Avenue
Cupertino, CA 95014
Attention: Vera Gil
OFFICIAL BUSINESS: Document entitled to free recording per Government Code Section 6103
SPACE ABOVE TillS LINE

FOR RECORDING USE

DEED OF TRUST
Securing City Loan
with Assignment of Rents
This Deed of Trust is made thisfl day of ~A vN {19?:; by and between CUPERTINO COMMUNITY SERVICES, a non-profit caJ(fornia corporation (herein "Contractor/Trustor"), Commonwealth Title Company, Inc., a California corporation (herein Trustee"), and THE CITY OF CUPERTINO, CALIFORNIA, a chartered, California municipal corporation, organized and existing in the County of Santa Clara under and by virtue of the laws of the State of California, (herein "City/Beneficiary").

Contractor/Trustor grants, transfers and assigns to Trustee in trust, upon the trusts, covenants, conditions and agreements and for the uses and purposes hereinafter contained, with power of sale, and right of entry and possession all of its title and interest in that real property (herein "Project Property") in the City of Cupertino, Santa Clara County, State of California, described in Attachment I, attached hereto and incorporated herein by reference, together with City/Beneficiary's interest in all buildings, structures and improvements of every nature whatsoever now or hereafter situated on the Project Property; and together with the following:
1 . The rents, issues and profits thereof; and

2. All buildings and improvements of every kind and description now or hereafter erected or placed thereon, and all fixtures, including but not limited to, all gas and electric fixtures, engines and machinery, radiators, heaters, furnaces, heating

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equipment, laundry equipment, steam and hot-water boilers, stoves, ranges, elevators and motors, bathtubs, sinks, water closets, basins, pipes, faucets and other plumbing and heating fixtures, mantles, cabinets, refrigerating equipment and refrigerators, whether mechanical or otherwise, cooking apparatus and appurtenances, and all shades, awnings, screens, blinds and other furnishings, it being hereby agreed that all such fixtures and furnishings shall to the extent permitted by law be deemed to be permanently affixed to and a part of the realty; and

3. All building materials and equipment now or hereafter delivered to said premises and intended to be installed therein; and

4. All plans, drawings, specifications, etc., and articles of personal property now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Project Property which are necessary to the completion and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or fumished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner.

To have and to hold the property hereinbefore described (including the site and all appurtenances), all such property being referred to collectively herein as the "Project Property", to Trustee, its successors and assigns forever.

FOR THE PURPOSE OF SECURING:

1. Payment of indebtedness of Contractor/Trustor to the City in the principal sun1 of THREE HUNDRED TWENTY THOUSAND DOLLARS AND N0/100 ($320,000.00) or so much thereof as shall be advanced by City to Contractor/Trustor, 01erein the "City Loan") , evidenced by a promissory note of same date herewith between Contractor/Tmstor and City, together with all sun1s due thereunder including interest and other charges;

2. TI1e perfonnance of each agreement of Contractor/Trustor in tllis Deed of Trust and the City Loan Promissory Note (herein "Note");

3. The performance of each agreement of Contractor/Trustor under that certain "AGREEMENT BY AND BETWEEN THE CITY OF CUPERTINO, CALIFORNIA AND CUPERTINO COMMUNITY SERVICES, dated fuv>'-Q. fil ;990, to acquire .. ) . Page31 of45 G:/Planning/ Agree ].doc
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multi-family residential property at 10311 Greenwood Court, Cupertino, California 95014, and to provide affordable, rental housing for low income and very-low income households (herein "CONTRACT"), by and between Contractor/Trustor ("CORPORATION" therein) and City/Beneficiary ("CITY" therein), on file in the office of City;

4. All extensions, amendments, modifications or renewals of the CONTRACT and Promissory Note, however evidenced, and additional advances evidenced by a note reciting that it is secured hereby.

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TO PROTECT THE SECURITY OF THIS DEED OF TRUST,
CONTRACTORffRUSTOR COVENANTS AND AGREES:

1. That it will pay the City Loan at the time and in the manner provided therein;

2. That it will not permit or suffer the use of any of the Project Property for any purpose other than the use for which the same was intended at the time this Deed of Trust was executed;

3. That the Note and the CONTRACT, including attached exhibits, are incorporated herein and made a part of this Deed of Trust. Upon default under the Note or this Deed of Trust or upon violation of the covenants contained in the CONTRACT, City/Beneficiary, at its option, may declare the whole of the indebtedness secured hereby to be due and payable. Provided, however, that the CONTRACT shall only be effective until the issuance by city of a Certificate of Completion as therein provided;

4. That all rents, profits and income from the Property covered by this Deed of Trust are hereby assigned to City/Beneficiary for the purpose of discharging the debt hereby secured. Permission is hereby given to Contractor/Tmstor so long as no default exists hereunder, to collect such rents, profits and income, as specified in the CONTRACT and its attachments;

5. That upon default hereunder or under the Note or the CONTRACT, City/Beneficiary shall be entitled to the appointment of a receiver by any court having jurisdiction, without notice, to talce possession and protect tl1e Project Property described herein and operate san1e and collect tl1e rents, profits and income therefrom;

6. That Contractor/Trustor will keep the Project Property including any improvements now existing or hereafter erected insured against loss by fire and such other hazards, casualties and contingencies as may be required in writing from tin1e to time by City/Beneficiary, and all such insurance shall be evidenced by standard fire and extended coverage insurance policy or policies. In no event shall the amounts of coverage be less than one hundred percent ( 100%) of tl1e insurable value or not less tl1an the unpaid balance of this Deed of Trust, whichever is more. (For purposes of this Deed of Trust insurable value shall mean the total replacement cost of the Project Property, including improvements.) Such policies shall be endorsed witl1 standard mortgage clause witl1 loss payable to City/Beneficirny and certificates tl1ereof together with copies of original policies shall be deposited witl1 City/Beneficiary;

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7. To pay, at least 10 days before delinquency, any taxes and assessments affecting said Project Property when due, all encumbrances, charges and liens, with interest, on said Project Property or any part thereof which appear to be prior or superior hereto, all costs, fees and expenses of this Trust;

8. To keep said Project Property in good condition and repair, not to remove or demolish any buildings thereon; to complete or restore promptly and in good and worlrmanlike manner any building which may be damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefore (unless contested in good faith if Contractor/Trustor provides security satisfactory to City/Beneficiary that any amounts found to be due will be paid and no sale of the Project Property or other impairment of the security hereunder will occur) ; to comply with all laws affecting said Project Property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said Project Property in violation of law and/or covenants, conditions and/or restrictions affecting said Project Property; not to permit or suffer any alteration of or addition to the buildings or in1provements in or upon said Project Property without the written consent of City/Beneficiary;

9. To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of City/Beneficiary or Trustee, and to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which City/Beneficiary or Trustee may appear; I 0. Should Contractor/Trustor fail to make any payment or do any act as herein provided, then City/Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Contractor/Trustor and without releasing Contractor/Trustor from any obligation hereof, may malce or do the san1e in such manner and to such extent as either may deem necessary to protect the security hereof. City/Beneficiary or Trustee being authorized to enter upon said Project Property for such purposes, may commence, appear in and/or defend any action or proceeding purporting to affect the security hereof or the rights or powers of City/Beneficiary or Trustee; may pay, purchase, contest or compromise any encumbrance, charge, or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, may pay necessary expenses, employ counsel, and pay his reasonable fees. Costs of such actions by City/Beneficiary or Trustee shall be added to the principal sun1 included hereby; II. City/Beneficiary shall have the right to pay fire and other property insurance premiun1s when due should Contractor/Trustor fail to make any required premium payments. All such payments made by City /Beneficiary shall be added to the principal sum secured hereby;

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12. To pay immediately and without demand all sums so expended by City/Beneficiary or Trustee, under permission given under this Deed of Trust, with interest from date of expenditure at the rate specified in the Note;

13. That the City Loan advanced hereunder is to be used in the acquisition and rehabilitation of Project Property in accordance with the CONTRACT; and upon the failure of Contractor/Trustor to keep and perform all the covenants, conditions and restrictions of said CONTRACT, the principal sum and all interest and other charges provided for in the Note shall at the option of City/Beneficiary become due and payable, anything contained herein to the contrary notwithstanding;

14. Contractor/Trustor further covenants that it will not voluntarily create, suffer or permit to be created against the Project Property, subject to this Deed of Trust, any lien or liens except as authorized by City/Beneficiary and further that it will keep and maintain the Project Property free from the claims of all persons supplying labor or materials which will enter into the rehabilitation and repair of any and all buildings on the Project Property;

15. That any and all improvements made or about to be made upon the Project Property, and all plans and specifications, comply with all applicable municipal ordinances and regulations and all other regulations made or promulgated, now or hereafter, by lawful authority, and that the san1e will upon completion comply with all such municipal ordinances and regulations and with the rules of the applicable fire rating or inspection organization, bureau, association or office;

16. Contractor/Trustor herein agrees to pay to City/Beneficiary or to the authorized loan servicing representative of City/Beneficiary a charge not to exceed $15.00 for providing a statement regarding the obligation secured by this Deed of Trust as provided by Section 2954, Al.iicle 2, Chapter 2, Title 14, Division 3 of the California Civil Code.

ITISMUTUALLY AGREED THAT:

17. If the construction of any improvements as herein referred to shall not be carried on with reasonable diligence, or shall be discontinued at any time for any reason other than strikes or lockouts, City /Beneficiary, after due notice to Contractor/Trustor or any subsequent owner, is hereby invested with full and complete authority to enter upon the Project Property, employ watclunen to protect such improvements from depreciation or injury and to preserve and protect the personal property therein, and to continue any and all outstanding contracts for the rehabilitation and repair of said building or buildings, to make and enter into any contracts and obligations wherever necessary, either in its own name or in the name of Contractor/Trustor, and to pay and discharge all debts, obligations and liabilities incurred thereby. All such sun1s so advanced by City/Beneficiary (exclusive

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of advances of the principal of the indebtedness secured hereby) shall be added to the principal of the indebtedness secured hereby and shall be secured by this Deed of Trust and shall be due and payable on demand with interest at the rate specified in the Note;

18. Should the Project Property or any part thereof be taken or damaged by reason of any public improvement or condenmation proceeding, or damaged by fire, or earthquake, or in any other manner, City/Beneficiary shall be entitled to all compensation, awards, and other payments or relief therefor, and shall be entitled at its option to commence, appear in and prosecute in its own name, any action or proceedings, or to mal'e any compromise or settlement, in. connection with such talcing or damage. All such compensation, awards, damages, rights of action and proceeds, including the proceeds of any policies of fire and otl1er insurance affecting said Project Property, are hereby assigned to City/Beneficiary.

After deducting therefrom all its expenses, including attorneys' fees, tl1e balance of ilie proceeds shall be applied to the amount due under the Note secured hereby. No amount applied to tl1e reduction of the principal shall relieve Contractor/Trustor from malcing additional payments as required by the Note;

19. Upon default by Contractor/Trustor in malcing any payments provided for herein or in tl1e CONTRACT or Note secured hereby, and if such default is not made good witl1in fifteen (15) days of the due date, or if Contractor/Trustor shall fail to perform any covenant or agreement in this Deed of Trust or the CONTRACT within thirty (30) days after written demand therefor by City/Beneficiary (or, in the event that more than 30 days is reasonably required to cure such default, should Contractor/Trustor fail to promptly commence such cure, and diligently prosecute same to completion) , City/Beneficiary may declare all sums secured hereby inm1ediately due and payable by delivery to Trustee of written declaration of default and demand for sale, and of written notice of default and of election to cause tl1e Project Property to be sold, which notice Trustee shall cause to be duly filed for record and City/Beneficiary may foreclose this Deed of Trust. City/Beneficiary shall also deposit with Trustee this Deed of Trust, the Note and all documents evidencing costs secured hereby;

20. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Contractor/Trustor, shall sell said Project Property at the tin1e and place fixed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may detennine at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee ma:y postpone sale of all or any portion of said Project Property by public annotmcement at the time and place of sale, and from time to time thereafter may postpone tl1e sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to the purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in the deed of any matters or facts shall be conclusive proof of

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the truthfulness thereof. Any person, including Contractor/Trustor, Trustee or City /Beneficiary, may purchase at the sale. Trustee shall apply the proceeds of sale to payment of.
a. The expenses of such sale, together with the reasonable expenses of this trust including therein reasonable Trustee's fees or attorneys' fees for conducting the sale and the actual cost of publishing, recording, mailing and posting notice of the sale;
b. T11e cost of any search and/or other evidence of title procured in connection with such sale and revenue stamps on Trustee's deed;
c. All sums expended under the terms hereof, not then repaid, with accrued interest at the rate specified in the Note;
d. All other sums then secured hereby; and
e. The remainder, if any, to the person or persons legally entitled thereto.

21. City/Beneficiary may from time to time substitute a successor or successors to any Trustee named herein or acting hereunder to execute this Deed of Trust. Upon such appointment, and without conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties conferred upon any Trustee herein named or acting hereunder. Each such appointment and substitution shall be made by written instrument executed by City/Beneficiary, containing reference to tllis Deed of Trust and its place of record, which, when duly recorded in the proper office of the county in which the property is situated, shall be conclusive proof of proper appointment of tl1e successor trustee;

22. The pleading of any statute of limitations as a defense to any and all obligations secured by this Deed of Trust is hereby waived to tl1e full extent pernlissible by law;

23. Upon written request of City/Beneficiary stating that all sums secured hereby have been paid, and upon surrender of tllis Deed of Trust and the Nate to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property t11en held heretmder. The recitals in such reconveyance of any matters of fact shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "tl1e person or persons legally entitled thereto;

24. The trust created hereby is irrecoverable by Contractor/Trustor;

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25. This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term "City" shall include not only the original City/Beneficiary hereunder but also any future owner and holder including pledgees, of the Note secured hereby. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. All obligations of each Contractor/Trustor hereunder are joint and several;

26. Trustee accepts tllis trust when this Deed of Trust, duly executed and acknowledged, is made public record as provided by law. Except as otl1erwise provided by law Tmstee is not obligated to notify any party hereto of pending sale tmder tllis Deed of Trust or of any action or proceeding in winch Contractor/Trustor, City/Beneficiary, or Tmstee shall be a party unless brought by Tmstee;

27. The tmdersigned Contractor/Tmstor requests that copies of any notice of default and of any notice of sale heretmder be mailed to it at 10185 North Stelling Road, Cupertino, California 95014.

28. Contractor/Tmstor agrees at any tin1e and from -time to time upon receipt of a written request from City/Beneficiary, to furnish to City/Beneficiary detailed statement in writing of income, rents, profits, and operating expenses of tl1e premises, and the names of the occupants and tenants in possession, together with tl1e expiration dates of their leases and full infommtion regarding all rental and occupancy agreements, and the rents provided for by such leases and rental and occupancy agreements, and such otl1er information regarding the Project Property and their use as may be requested by City/Beneficiary.

29. Transfer of Property by Contractor/Tmstor. In order to induce City/Beneficimy to make the loan secured hereby Contractor/Trustor agrees tlmt in tl1e event of any trm1sfer of the Property without tl1e prior written consent of City/Beneficiary, City/Beneficiary shall have the absolute right at its option, without prior demand or notice, to declare all sums secured hereby inunediately due and payable. Consent to one such transaction shall not be deemed to be a waiver of the right to require consent to future or successive transactions. City/Beneficiary may grant or deny such consent in its sole discretion and, if consent should be given, any such transfer shall be subject to tllis Deed of Trust, and any such transferee shall assume all obligations hereunder and agree to be bound by all provisions contained herein. Such assumption shall not, however, release Contractor/Trustor or any maker or guarantor of the Note from any liability tl1ereunder witl1out the prior written consent of City /Beneficiary. As used herein, "transfer" includes the sale, agreement to sell, transfer or conveym1ee of the Property, or any portion tl1ereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, the execution of any installment land sale contract or sinlllar instnunent affecting all or a portion of the Project Property, or tl1e lease of all or substantially all of the Project

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Property. "Transfer" shall also include the transfer, assignment, hypothecation or conveyance of legal or beneficiary ownership of any interest in Contractor/Trustor or any conversion of Contractor/Trustor to an entity form other than that of Contractor/Trustor at the time of execution of the CONTRACT. "Transfer" shall not include the leasing of individual residential units, or other rentable area on the Project Property, so long as Contractor/Trustor complies with the provisions of the Agreement relating to such leasing activity. In the event of any refinancing or partial refinancing (including any additional fmancing) , without the prior written consent of beneficimy (which consent City/Beneficimy may grant or deny in its sole discretion), then the entire outstanding balance of the Nate together with all accrued and unpaid interest, shall be repaid to the City/Beneficimy at the time of each refinancing or partial refinancing. In no event shall the total loan-to-value ratio for all financing exceed ninety percent (90%), nor shall the City/Beneficiary's proportion of the total encumbrances increase as a result of any refinancing or partial refinancing.

30. Contractor/Trustor shall permit City/Beneficimy and its agents or representatives, to inspect the Project Property at m1y and all-reasonable times, with 24 hours advance notice. Inspections shall be conducted so as not to interfere with the tenants' use and enjoyment of the property.

31. The Note provided for herein shall be subject to the restrictions set forth in the CONTRACT and Contractor/Trustor hereby consents to such restrictions and agrees to be bound thereby. Such restrictions shall be in addition to m1d not in limitation of the rights of City/Beneficimy expressly set forth in this Deed of Trust.

32. It is hereby expressly agreed and aclmowledged by Contractor/Trustor and City/Beneficimy that the City Loan and tltis Deed of Trust are subject and subordinate to and shall continue to be subject and subordinate to that certain first deed of trust on the Project Property in the amount of THREE HUNDRED TWENTY THOUSAND DOLLARS AND N0/100 ($320,000.00) executed by, dated in the Official Records of tl1e Recorder of the County of Santa Clara, California, as File No.

33. Notlting herein shall be construed to subordinate the covenants, conditions and restrictions of the CONTRACT or the conditions of the CONTRACT not pertaining to repayment of the City Loan. This Deed of Trust shall not be subordinated to m1y other interest in the Project Property without the prior written consent ofCity/Beneficimy.

34. For purposes of this Deed of Trust, "Hazardous Materials" mean m1d include any hazardous, toxic or dangerous waste, substance or material including, without lintitation, flm1m1able explosives, radioactive materials, asbestos, hazardous wastes, toxic substances m1d any materials or substances defined as hazardous materials, hazardous substances or toxic substances in (or for purposes of) tl1e Comprehensive Environmental Response,

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Compensation and Liability Act of 1980 (CERCLA), as amended (42 U.S.C. 9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.) and those substances defined as hazardous wastes in 25117 of the California Health and Safety Code or as hazardous substances in 25316 of the California Health and Safety Code or in any regulations promulgated under either such law, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance or material, as now or at any tin1e hereafter in effect.

35. In addition to the general and specific representations, covenants and warranties set forth in the Deed of Trust or otherwise, Contractor/Trustor represents, covenants and warrants, with respect to Hazardous Materials, as follows:
a. Neither Contractor/Trustor nor, to the best knowledge of Contractor/Trustor, any other person, has ever caused or permitted any Hazardous Materials to be manufactured, placed, held, located or disposed of on, under or at the Project Property or any part thereof, and neither the Project Property nor any part thereof, or any property adjacent thereto, has ever been used (whether by the Contractor/Trustor or, to the best knowledge of the Contractor/Trustor, by any other person) as a manufacturing site, dump site or storage site (whether permanent or temporary) for any Hazardous Materials;
b. Contractor/Trustor hereby agrees to indemnifY City/Beneficiary, its officers, employees, CONTRACTOR's and agents, and hold City/Beneficiary, its officers, employees, CONTRACTOR's and agents harmless from and against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and every kind whatsoever paid, incurred or suffered by, or asserted against City/Beneficiary, its officers, employees, CONTRACTOR's or agents for, with respect to, or as a direct or indirect result of, the presence or use, generation, storage, release, threatened release or disposal of Hazardous Materials on or under the Project Property or the escape, seepage, leakage, spillage, discharge, emission or release of any Hazardous Materials from the Project Property (including, without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under CERCLA, any so-called "Superfund" or "Superlien" law, or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or inlposing liability or standards of conduct concerning any Hazardous Materials) regardless or whether or not caused by, or within the control of Contractor/Trustor. c. Contractor/Trustor has not received any Notice of,

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1) The happening of any event involving the use, spillage, discharge or cleanup of any Hazardous Materials ("Hazardous Discharge") affecting Contractor/Trustor or the Project Property; or
2) Any complaint, order, citation or notice with regard to air emJssJons, water discharges, noise emissions or any other environmental, health or safety matter affecting Contractor/Trustor or the Project Property (''Environmental Complaint") from any person or entity, including, without limitation, the United States Enviromnental Protection Agency (EPA). if Contractor/Trustor receives any such notice after the date hereof, then Contractor/Trustor will give, within seven (7) business days thereafter, oral and written notice of same to City/Beneficiary. d. Without limitation of City/Beneficiary's rights under this Deed of Trust, City /Beneficiary shall have the right, but not the obligation, to enter onto the Project Property or to take such other actions as it deems necessary or advisable to clean up, remove, resolve or minimize the impact of, or otherwise deal with, any such Hazardous Materials or Enviromnental Complaint upon its receipt of any notice from any person or entity, including without limitation, the EPA, asserting the existence of any Hazardous Materials or any Environmental Complaint on or pertaining to the Project Property which, if true, could result in an order, suit or other action against Contractor/Trustor affecting any part of the Project Property by any governmental agency or otherwise, which, in the sole opinion of City/Beneficiary, could jeopardize its security under this Deed of Trust. All reasonable costs and expenses incurred by City/Beneficiary in the exercise of any snch rights shall be secured by this Deed of Trust and shall be payable by Contractor/Trustor upon demand together with interest thereon at a rate equal to the highest rate payable under the note secured hereby. e. The foregoing representation, covenants, indenmities and warranties shall be continuing and shall be true and correct for the period from the date hereof to the release of this Deed of Trust (whether by payment of the indebtedness secured hereby or foreclosure or action in lieu thereof), and these representations, covenants, indenmities and warranties shall survive such release.

36. A material violation of the terms, conditions or covenants of the CONTRACT, Note, or this Deed of Trust shall be an Event of Default (provided, however, that a material violation of the terms, conditions or covenants of the CONTRACT or Note shall only be an Event of Default under this Deed of Trust if such violation occurs before the issuance of a Certificate of Completion by City /Beneficiary).

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37. Upon the occurrence of an Event of Default as described in Section 35, Contractor/Trustor shall be obligated to repay the Note and City/Beneficiary may, by action, suit or proceeding at law or in equity, sue for, and enforce payment of any and all an10unts due by Contractor/Trustor pursuant to the terms of the Note and/or sue to enforce the performance ofthe obligations of Contractor/Trustor under the CONTRACT, subject to the terms and conditions of said agreement.

38. The Note secured by this Deed of Trust evidences a non-recourse only obligation of Contractor/Trustor.

39. All expenses (including reasonable attorneys' fees and costs and allowances) incurred in connection with an action to foreclose, or the exercise of any other remedy provided by tllis Deed of Trust, including the curing of any Event of Default, shall be the responsibility of Contractor/Trustor.

40. Each successor owner of an interest in the Project Property other than through foreclosure or deed in lieu of foreclosure, shall take its interest subject to tllis Deed of Trust.

CUPERTINO COMMUNITY SERVICES
BY "ffic~ 'G r:;u:,"' J'A"c()_Q_
TITLE: ead /~;-e_ [}~/uz_c£'6-..____ "CONTRACTOR/TRUSTOR"

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PROMISSORY NOTE SECURED BY DEED OF TRUST
$320,000.00 (THREE HUNDRED TWENTY THOUSAND DOLLARS AND N0/100) Date: ~&Av"'--" !1, 1996
Cupertino, California
FOR VALUE RECEIVED, CUPERTINO COMMUNITY SERVICES, a non-profit corporation organized and existing by virtue of the laws of the State of California (herein "CONTRACTOR") promises to pay to the order of the city of Cupertino, California, a chartered, municipal corporation (herein "CITY"), the sum of THREE HUNDRED TWENTY THOUSAND DOLLARS AND N0/100 ($320,000.00) at the Office of the Director of Finance of the city of Cupertino, 10300 Torre Avenue, Cupertino, CA 95014, or such other place as CITY may from time to time designate, with interest on the unpaid balance accruing at the rate of three percent (3.0% ).

Tllis Promissory Note is made in connection with a certain "AGREEMENT BY AND

BETWEEN THE CITY OF CUPERTINO, CALIFORNIA, AND CUPERTINO COMMUNITY SERVICES, dated (a(!L{ , 19 en. (herein "CONTRACT") to acquire a multifamily residential property at Hl311 Greenwood Court, Cupertino, California (herein "Project Property") , and to provide affordable, rental housing for very low and low income households under the Community Development Block Grant Program. The CONTRACT provides that CONTRACTOR is the recipient of certain COMMUNITY DEVELOPMENT BLOCK GRANT funds (herein "CDBG") for the acquisition of the Project Property, for the purpose of providing (30) years of affordable, rental housing. Repayment of this Promissory Note shall be subject to the terms and conditions set forth in the CONTRACT.

This Note shall, at the option of CITY any time prior to tllirty (30) years after transfer of title of Project Property to CONTRACTOR, become immediately due and payable upon: (a) a change in the use of tl1e Project Property without the prior written consent of CITY; or (b) the sale, transfer, lease or other disposition of the Project Property by CONTRACTOR without the prior written consent of CITY; or (c) failure of CONTRACTOR to file reports as required in EXHIBIT A of the CONTRACT; or (d) acceptance by CONTRACTOR of any tenants who do not meet the income linlits set forth in EXHIBIT B of the CONTRACT; or (e) failure of CONTRACTOR to set Project Property rents as described in EXHIBIT B of the CONTRACT; or (f) failure of CONTRACTOR to malce repayments oftl1e City Loan as set forth in EXHIBIT

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B of the CONTRACT; or (g) any other material contract noncompliance with the CONTRACT and its exhibits.

The entire principal balance shall be considered paid in full if any of the contingencies set forth in (a), (b), (c), (d), (e), (f), and (g) above have not occUlTed or have occUITed but been cured any time prior to thirty (30) years after transfer of title of Project Property to CONTRACTOR.

CONTRACTOR, any endorser of this Note, and all otl1ers who may become liable for all or any part of the obligations evidenced by this Note hereby severally waive demand, presentment for payment, demand and protest, notice of protest, demand and or dishonor and non-payment and consent to any nUlllber of renewals or extensions of time hereof. Any such renewals or extensions may be made without notice to any of said parties and without affecting tl1eir liability.

The pleading of any statute of limitations as a defense to any demand against the CONTRACTOR is expressly waived by CONTRACTOR.

This is a non-recourse note.

In the event of default Ullder this Note, CONTRACTOR further promises to pay reasonable attorneys fees and costs and expenses incUITed by tl1e CITY in connection witl1 any such default or any other action or otl1er proceeding brought to enforce any of the provisions of this Note.

The City/Beneficiary's right to such fees shall not be limited to or by its representation by staff coUllsel, and such representation shall be valued at customary and reasonable rates for private sector legal services.

It is the intent of tl1e Parties tl1at the relationship evidenced by tl1is Note shall be deemed to be one of debtor/creditor, and not of partnership or joint venture.

This Nate may not be modified or amended except by an instrument in writing expressing such intention executed by tl1e Parties sought to be bound thereby, which writing must be so firmly attached to this Note so as to become a pem1anent part thereof.

Any failure of tl1e CITY or other holder to exercise any rights hereUllder shall not constitute a waiver of such rights or of any other right Ullder this Note.

This Nate shall be governed by and construed in accordance with the laws of the State of California.

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To the extent assigmnent is permitted, the terms of this Note shall apply to, inure to the benefit of, and bind all Parties thereto, their heirs, successors and assigns.

Executed by CONTRACTOR on the date first hereinabove written.

CUPERTINO COMMUNITY SERVICES

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CITY OF CUPERTINO
Agenda Item
26-15090 Agenda Date: 5/19/2026
Agenda #: 17.

Subject: Approval of first amendment to the Countywide Household Hazardous Waste (HHW) Collection Program agreement with the County of Santa Clara (County) to augment funding up to an additional $36,433 to the Countywide HHW Program during Fiscal Year (FY) 2026-27 using earmarked funds within the Resource Recovery Fund 520, raising the not to exceed amount of the three-year 2024-2027 agreement to $435,676.

Authorize the City Manager to execute a first amendment to the Countywide HHW Collection Program agreement between the City of Cupertino and the County of Santa Clara to augment funding up to an additional $36,433 from fund 520 Resource Recovery with no impact to the General Fund to the Countywide HHW Program during FY 2026/27 for the purpose of attaining or increasing household participation, raising the not to exceed amount of the three-year 2024-2027 agreement to $435,676.

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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PUBLIC WORKS DEPARTMENT

CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-5732
TELEPHONE: (408) 777-3354
CUPERTINO.GOV

CITY COUNCIL STAFF REPORT
Date: May 19, 2026
Subject
Approval of first amendment to the Countywide Household Hazardous Waste (HHW) Collection Program agreement with the County of Santa Clara (County) to augment funding up to an additional $36,433 to the Countywide HHW Program during Fiscal Year (FY) 2026-27 using earmarked funds within the Resource Recovery Fund 520, raising the not to exceed amount of the three-year 2024-2027 agreement to $435,676.

Recommended Action
Authorize the City Manager to execute a first amendment to the Countywide HHW Collection Program agreement between the City of Cupertino and the County of Santa Clara to augment funding up to an additional $36,433 from fund 520 Resource Recovery with no impact to the General Fund to the Countywide HHW Program during FY 2026/27 for the purpose of attaining or increasing household participation, raising the not to exceed amount of the three-year 2024- 2027 agreement to $435,676.

Background
The City has recurring three-year agreements with Santa Clara County to participate in the countywide Household Hazardous Waste program. This agreement is partially funded by fees charged on tons of material going to landfill from jurisdictions in the county and partially funded by cities individually to fully cover participation of their residents dropping off hazardous materials. The current agreement with the County was approved by Cupertino City Council on June 4, 2024. Each year the County estimates what the individual funding per city will be, but as it is based on the uncertainties of landfill fees collected, actual participation, and hazardous materials handling vendor costs, from time to time the county presents the cities with amendments to their agreements to request additional funding. The County’s contract with their service provider is nearing expiration, so County staff recently conducted a competitive procurement process for a new service provider to receive and manage the collected hazardous materials. The proposed new agreement has an anticipated increase in costs that they must now be passed through to participating jurisdictions (Attachment C). 804
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Reasons for Recommendation and Available Options
Cupertino, along with the other cities in the County, have an agreement with the County of Santa Clara (the Agreement for Countywide Assembly Bill (AB) 939 Implementation Fee, Attachment A) to collect landfill tonnage disposal fees to pay for the costs of preparing, adopting, and implementing integrated waste management plans and programs, including HHW elements. The fee is $4.10 per ton of material disposed at any landfill in the County and is collected by the County from the landfills on behalf of the jurisdictions. The agreement specifies that the $4.10 per ton fee is divided into two parts: $1.50 per ton assists in funding an integrated Waste Management Plan, and $2.60 per ton provides funding to implement the Countywide HHW Program. The current agreement was signed in 2024 for FY’s 2024-2025, 2025-2026, and 2026-2027; this agreement runs through 6/30/2027.

The County and each city individually sign Agreements for Countywide Household Hazardous Waste Collection Program (Attachment B), which details the desire to use the collected $2.60 per ton fee to fund the Countywide HHW Program. This arrangement provides operational efficiency to jurisdictions as they do not each have to run their own HHW collection programs.

The County HHW Program includes two permanent drop-off facilities for HHW as well as temporary events at various locations in the county periodically throughout the year. There are no temporary events that occur in Cupertino, but locations in Saratoga, Sunnyvale, and Mountain View provide nearby access to Cupertino residents.

Cupertino residents (1,243 in FY 2024-2025) use this drop-off service for responsible disposal of unwanted HHW materials. Cupertino’s portion of the fee is based on tonnage of material being disposed that originated in Cupertino, including regular garbage accounts serviced by Recology, self-haul, and construction and demolition debris. County staff keep track of the tonnage originating in Cupertino and the fees collected on that tonnage and keep records on the jurisdiction of residence of each person who drops materials off at a HHW Program event. The County also tracks and reports on all the associated expenses for the Program. If the cost to serve Cupertino’s participating residents exceeds the funds collected via the per-ton disposal fee, Cupertino is invoiced for the difference. Each year the County provides each jurisdiction an estimate of the anticipated shortfall between collected fess and participation cost for the next fiscal year, which they call augmented funds. If collected tonnage fees are more than what is needed to pay for Cupertino residents’ participation, any excess would be remitted to the City.

However, Cupertino’s full participation in the County HHW Program makes such a refund unlikely. Recently, the County conducted a competitive procurement process to select a new vendor to provide the collection and disposition of the hazardous materials. The new vendor agreement will increase costs in fiscal year 2026-2027, requiring that the County pass through the increase to jurisdictions.

To ensure payment of the shortfall from each jurisdiction, the County creates an amendment to the agreement when necessary to identify the expected need for additional augmented funds.

After the end of each fiscal year, the County tallies actual attendance and issues an invoice (or refund) as appropriate. Actual usage of the HHW program by Cupertino residents in FY 24-25 was lower than projected, meaning that the City did not have to pay the full projected augmentation amount for that year, but that underuse is not enough to offset the projected 805
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increased costs. To ensure that all residents who need it have access to the HHW program for responsible management of their hazardous materials, staff recommends augmenting the agreement up to the amount recommended by the County.

The current agreement was approved with an expected per-year augmentation amount of $133,081, for a total agreement cost of $399,243 for the 3-year term. The increased augmentation recommendation for FY 26-27 is going up to $169,514, an increase of $36,433 for a total threeyear agreement amount of $435,676.

The deadline to return the signed Amendment to the County is June 1, 2026.

Sustainability Impact
Responsible management of solid waste, including HHW, is a requirement under Assembly Bill (AB) 939, the California Integrated Waste Management Act, and is part of section ten of the City’s Climate Action Plan 2.0. The AB 939 and HHW Agreements approve the countywide collection of fees to facilitate safe and appropriate disposal or re-purposing of all wastes.

Additionally, the countywide HHW Agreement is designed to reduce and eventually eliminate the residential hazardous waste that is still sent to landfill countywide and to capture some of the hazardous waste that might otherwise be illegally dumped.

Fiscal Impact
There is no impact to the General Fund for this item. For approximately seven years, the City received a refund from the County due to the At-Your-Door Pickup Program which limited residential participation in the County HHW Program. The money that was refunded arrived earmarked for HHW collection purposes but went into the larger Resource Recovery Fund 520 330-301. The At-Your-Door Program ended abruptly in early 2018 (the service was no longer available) and the City pivoted to using the County program to the full extent. In order to separate earmarked HHW funds from the Resource Recovery Fund, a new fund was created.

The AB 939 HHW Fund 520 303-312 now holds funds earmarked for use on HHW that can fund County HHW Program augmentation amounts. The County invoices the cities in two stages.

The initial invoice requests 50% of the total augmentation for the year. The second invoice is issued many months after the close of the fiscal year, and reflects actual participation for the year, invoicing only what is needed beyond the initial 50%. As such, this additional augmented amount for FY 2026-2027 will be part of the FY 2027-2028 Base Budget under 520-81-801 700-702 (formerly recurring special project 750-041).

City Work Program (CWP) Item/Description
None
Council Goal:

Environmental Sustainability
California Environmental Quality Act
No California Environmental Quality Act impact.
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Prepared by: Ursula Syrova, Environmental Programs Manager Reviewed by: Chad Mosley, Director of Public Works
Approved for Submission by: Tina Kapoor, City Manager
Attachments:

A – Agreement for Countywide AB939 Implementation Fee
B – Agreement for Countywide HHW Collection Program
C – Draft First Amendment for Countywide HHW Collection Program 807
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Agreement for Countywide AB939
Implementation Fee FYs 2025 - 2027

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AGREEMENT FOR COUNTYWIDE
AB939 IMPLEMENTATION FEE
This Agreement is made by and among the Cities and Towns of Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Milpitas, Morgan Hill, Monte Sereno, Mountain View, Palo Alto, San José, Santa Clara, Saratoga, and Sunnyvale (CITIES) and the County of Santa Clara (COUNTY) on the _________ day of ____________ 2024. The term CITIES may refer to CITIES collectively or individually.

RECITALS
WHEREAS, pursuant to Public Resources Code Section 41901, a city, county, or city and county may impose fees in amounts sufficient to pay the costs of preparing, adopting, and implementing a countywide integrated waste management plan; WHEREAS, State law, Public Resource Code Section 41750, requires that the countywide integrated waste management plans contain a household hazardous waste (“HHW”) element for each city within the county as well as for the unincorporated area of the county; WHEREAS, the Board of Supervisors of the County of Santa Clara (“Board”) has imposed a Countywide AB939 Implementation Fee (“Fee”) since July 1, 1992 to pay for the costs of preparing, adopting, and implementing integrated waste management plans and programs, including HHW program elements;
WHEREAS, the Board has approved reimposing the Fee for Fiscal Years 2025, 2026, and 2027 (July 1, 2024 through June 30, 2027) at $4.10 per ton of waste landfilled or incinerated in the County; received at any nondisposal or collection facility located within the County and subsequently transported for disposal or incineration outside of the County; collected from any location within the County by a solid waste hauler operating pursuant to a franchise, contract, license, or permit issued by any local jurisdiction and subsequently transported for disposal or incineration outside of the County; and removed from any location in the County by any person or business for disposal or incineration outside the County; WHEREAS, HHW programs provide household hazardous waste management services to residents of Santa Clara County and are necessary to meet HHW planning and management requirements under State law;
WHEREAS, jurisdictions in Santa Clara County desire to provide safe, convenient, and economical means for residents to properly dispose of household hazardous wastes in an environmentally safe manner in order to avoid unauthorized or improper disposal in the garbage, sanitary sewer, storm drain system, or on the ground or in any other manner which creates a health or environmental hazard. These wastes include, but are not limited to, common household products such as household cleaning products, spot remover, furniture polish, solvents, oven cleaner, pesticides, oil based paints, motor oil, antifreeze, fluorescent lamps, and batteries; and DocuSign Envelope ID: 2E69586E-5F1D-4D97-A148-27061C714399 28 June
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Agreement for Countywide AB939
Implementation Fee FYs 2025 - 2027

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WHEREAS, the County will collect the Fee on behalf of the fifteen cities and for the unincorporated area of the County and will apportion the Fee according to the terms of this Agreement.

NOW THEREFORE, CITIES and COUNTY AGREE AS FOLLOWS:

1. PURPOSE
The purpose of this Agreement is to state the terms and conditions under which the COUNTY will collect and distribute the Fee of $4.10 per ton of waste to be disposed in Fiscal Years 2025, 2026 and 2027. The Fee is divided into two parts: 1) a Program Fee of $1.50 per ton to assist in funding the costs of preparing, adopting, and implementing the integrated waste management plan in the fifteen cities and the unincorporated area of the County; and 2) a Household Hazardous Waste Fee of $2.60 per ton to provide funding to implement the Countywide HHW Program. The Program Fee will be allocated among the CITIES and COUNTY as described in Exhibit B, attached hereto and incorporated herein. The HHW Fee will be allocated to the COUNTY, CITIES, and Countywide HHW Program as described in Exhibit C, attached hereto and incorporated herein. The Fee shall be imposed on each ton of waste landfilled or incinerated within the County; received at any non-disposal or collection facility located within the County and subsequently transported for disposal or incineration outside of the County; collected from any location within the County by a solid waste hauler operating pursuant to a franchise, contract, license, or permit issued by any local jurisdiction and subsequently transported for disposal or incineration outside of the County; or removed from any location in the County by any person or business for disposal or incineration outside the County.

Non-Disposal Facilities are defined as those facilities included in the County of Santa Clara NonDisposal Facility Element (and subsequent amendments to that Element) and are listed in Exhibit A, attached hereto and incorporated herein.

2. SERVICES PROVIDED BY COUNTY
COUNTY will collect and distribute the Fee. COUNTY will collect the Fee from landfills and non-disposal facilities listed in Exhibit A, and any landfill or non-disposal facility subsequently permitted, on a quarterly basis using data from tonnage reports filed by landfill and non-disposal facility operators with the County Recycling and Waste Reduction Division.

COUNTY shall require each landfill and non-disposal facility to submit required payment, documentation of tonnages disposed, and state-mandated Disposal Reporting System Reports on a quarterly basis, within 45 days of the end of each calendar quarter. Late submissions and/or payments shall be subject to a late filing penalty and delinquent penalties. COUNTY will research Santa Clara County tonnage reported to COUNTY by landfills outside the COUNTY in significant amounts to determine the identity of the hauler. That hauler will subsequently be billed in the same fashion subject to the same penalties as mentioned above. Collected funds and any late filing payments and delinquency penalties shall be distributed to CITIES and Countywide HHW Program based on the formula set forth in Exhibits B and C. COUNTY shall not be obligated to distribute funds that COUNTY has been unable to collect from landfill or non-disposal facility operators.

DocuSign Envelope ID: 2E69586E-5F1D-4D97-A148-27061C714399 809
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/ /

3. ROLE OF CITIES
CITIES shall review the Disposal Reporting System Reports as prepared and submitted by the COUNTY and within 30 days of receipt shall report to COUNTY, with appropriate documentation, errors in waste allocations among jurisdictions.

4. COLLECTION AND USE OF FEE
Each ton of waste will be subject to the fee if it is landfilled or incinerated in the County; received at any non-disposal facility or collection facility in the County and subsequently transported for disposal or incineration outside the County; collected from any location within the County by a solid waste hauler operating under franchise, contract, license, or permit issued by a local jurisdiction and subsequently transported for disposal or incineration outside the County; or removed from any location in the County by any person or business for disposal or incineration outside the County. Best efforts will be made to prevent tonnage from being assessed a double fee (for instance, once at a non-disposal facility and again at a landfill within Santa Clara County). The Program Fee funding share paid to CITIES shall be used to assist in funding the CITIES’ costs of preparing, adopting, and implementing the integrated waste management plan of each of the CITIES and the unincorporated area of the COUNTY. The HHW Fee portion shall be applied to fund the costs of CITIES’ share of Countywide Household Hazardous Waste services; any HHW fees directly disbursed to CITIES as provided in this Agreement shall be used to fund the costs of preparing, adopting, and implementing the jurisdiction’s HHW element of the Countywide integrated waste management plan, including providing HHW services to residents.

5. INSURANCE
Each party shall maintain its own insurance coverage, through third party insurance, selfinsurance or a combination thereof, against any claim, expense, cost, damage or liability arising out of the performance of its responsibilities pursuant to this Agreement. CITIES agree to provide evidence of such insurance to COUNTY via Certificate of Insurance or other documentation acceptable to the COUNTY upon request.

6. INDEMNIFICATION
In lieu of and not withstanding the pro rata risk allocation which might otherwise be imposed between CITIES and COUNTY pursuant to Government Code Section 895.6, the parties agree that all losses or liabilities incurred by a party shall not be shared pro rata but instead the parties agree that each of the parties hereto shall fully indemnify and hold each of the other parties harmless from any claim, expense or cost, damage or liability arising out of, or in connection with, performance of its responsibilities pursuant to this Agreement and as described in Exhibit D.

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Additionally, CITIES shall indemnify, hold harmless, and defend COUNTY, its officers, agents, and employees with respect to any loss, damage, liability, cost or expenses, including attorney fees and court costs, arising from any misuse of the Fee distributed to CITIES.

COUNTY shall indemnify, hold harmless, and defend CITIES, its officers, agents, and employees with respect to any loss, damage, liability, cost or expenses, including attorney fees and court costs, brought by third parties based on COUNTY’s sole negligence in the collection or distribution of said Fees.

7. DISTRIBUTION OF FEE
COUNTY shall distribute the AB939 Program Fee to CITIES and the HHW Program Fee to the Countywide HHW Program pursuant to the formulas described in Exhibits B and C within 45 days of receipt of landfill and non-disposal facility payments and disposal documentation required for calculation of Fee distribution amounts. Distributions shall begin December 15, 2024, and continue quarterly through October 15, 2027.

8. PARTICIPATION IN THE COUNTYWIDE HHW PROGRAM
CITIES, at their option, may individually participate in the Countywide HHW Program by entering into the AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM.

9. LATE PAYMENTS
If Fee payments and disposal documentation are not received from landfill or nondisposal facility operators prior to scheduled distribution of payments to CITIES and the Countywide HHW Program, payment distribution shall be calculated on a pro rata share of monies received. Upon collection, late payments and accrued delinquent penalties, if any, shall be distributed among CITIES and the Countywide HHW Program according to the formula in Exhibits B and C.

10. ACCOUNTING
COUNTY shall maintain records of all transactions related to collection, use and distribution of the Fee for at least five (5) years after the termination date of this Agreement, unless otherwise required by law to retain such records for a longer period. Such records will be available for inspection upon written request by CITIES, and will include but not be limited to tonnage reports submitted by landfills and non-disposal facilities, waste stream documentation provided by cities, payments made by the landfills and non-disposal facilities to the COUNTY and by the COUNTY to CITIES, and expenditures for programmatic and overhead costs.

11. REQUEST FOR REVIEW
In the event CITIES have a dispute regarding the calculation of its share of the Fee or the distribution or use of the Fee, CITIES may request in writing a review by COUNTY within 10 DocuSign Envelope ID: 2E69586E-5F1D-4D97-A148-27061C714399 811
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days of receipt of their Fee allocation. The review shall be performed within 30 days of request and results shall be reported to CITIES in writing.
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12. EFFECTIVE DATE OF AGREEMENT
This agreement is effective upon approval by all fifteen CITIES and the COUNTY.

13. AMENDMENT
This Agreement may be amended only by an instrument signed by all fifteen CITIES and the COUNTY.

14. INDEPENDENT CONTRACTOR
Each party shall perform responsibilities and activities described herein as an independent contractor and not as an officer, agent, servant or employee of any of the parties hereto. Each party shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors and subcontractors, if any. Nothing herein shall be considered as creating a partnership or joint venture between the parties.

15. TERM OF AGREEMENT
The term of this Agreement shall be from July 1, 2024 to June 30, 2027, or until all funds from the last quarter’s Fee payments have been distributed, whichever is later. COUNTY shall bill the operators of the landfills and non-disposal facilities listed in Exhibit A for the Fee commencing with the Quarter ending September 30, 2024. Said landfills and non-disposal facilities will be billed for the Fee through June 30, 2027.

16. NOTICES
All notices required by this Agreement will be deemed given when in writing and delivered personally or deposited in the United States mail, postage prepaid, return receipt requested, addressed to the other party at the address set forth below or at such address as the party may designate in writing in accordance with this section.

City of
Contact:

Title:

Address:

County of Santa Clara
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Contact: Recycling and Waste Reduction Program Manager
Program: Integrated Waste Management Services
Address: 1553 Berger Drive, Building 1
San José, CA 95112
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17. CONTROLLING LAW
This Agreement shall be governed and construed in accordance with the laws of the State of California.

18. ENTIRE AGREEMENT
This document embodies the entire Agreement between the parties with respect to the subject matter hereof. No modification of this Agreement shall be effective unless and until modification is evidenced by writing signed by all parties or their assigned designees.

19. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

20. CONTRACT EXECUTION
Unless otherwise prohibited by law or County policy, the parties agree that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term “electronic copy of a signed contract” refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term “electronically signed contract” means a contract that is executed by applying an electronic signature using technology approved by the County.
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IN WITNESS WHEREOF, the parties have executed this AGENCY AGREEMENT FOR COUNTYWIDE AB939 IMPLEMENTATION FEE on the dates as stated below:

Date: COUNTY OF SANTA CLARA

JAMES R. WILLIAMS
County Executive
Date: CITY”

CITY/TOWN OF
Title
A municipal corporation
APPROVED AS TO FORM AND LEGALITY:

Willie Nguyen
Deputy County Counsel
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IN WITNESS WHEREOF, the parties have executed this AGENCY AGREEMENT FOR COUNTYWIDE AB939 IMPLEMENTATION FEE on the dates as stated below:

Date: COUNTY OF SANTA CLARA
JAMES R. WILLIAMS
County Executive
Date: CITY”

CITY/TOWN OF
Title
A municipal corporation
APPROVED AS TO FORM AND LEGALITY:

Willie Nguyen
Deputy County Counsel
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Monte Sereno

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IN WITNESS WHEREOF, COUNTY and CITY, through their duly authorized representatives, have entered into this First Amendment to the AGREEMENT on the last date shown below:

COUNTY OF SANTA CLARA
Signature:

James R. Williams
County Executive
Date:

APPROVED AS TO FORM AND

LEGALITY

Willie Nguyen
Deputy County Counsel
Date:

CITY OF MOUNTAIN VIEW,
a California charter city and municipal
corporation
By:

City Manager
Attest:

Asst. City Clerk
APPROVED AS TO CONTENT:

Acting Public Works Director
FINANCIAL APPROVAL:

Finance and Administrative
Services Director
APPROVED AS TO FORM:

Sr. Assistant City Attorney

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EXHIBIT A

LANDFILLS LOCATED IN SANTA CLARA COUNTY
Guadalupe Rubbish Disposal Site
Kirby Canyon Sanitary Landfill
Newby Island Sanitary Landfill
Pacheco Pass Sanitary Landfill
Palo Alto Refuse Disposal Area
Zanker Materials Processing Facility
Zanker Road Landfill

NON-DISPOSAL FACILTIES AND TRANSFER STATIONS LOCATED IN

SANTA CLARA COUNTY
Butterick Enterprises Recyclery
California Waste Solutions Recycling & Transfer Station City of Palo Alto Green Composting Facility
ComCare Farms Composting Facility
Environmental Management Systems Facility
Green Waste Recovery Facility
Mission Trail Waste Systems, Inc.

Newby Island Compost Facility
Pacheco Pass Landfill Composting Facility
Pacific Coast Recycling, Inc.

Premier Recycling Facility
The Recyclery at Newby Island
San Martin Transfer Station
Sunnyvale Materials Recovery and Transfer Station (SMaRT Station) Z-Best Composting Facility
Zanker Materials Processing Facility
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EXHIBIT B
FORMULA FOR DISTRIBUTION OF AB939 PROGRAM FEE
Each of the CITIES, and the COUNTY for its unincorporated area, will receive $1.50 per ton of solid waste disposed of in landfills or taken to non-disposal facilities located in Santa Clara County that originates from that jurisdiction, as documented in quarterly reports submitted by the County to the State Disposal Reporting System.

Fees collected from undocumented disposed tonnage, or tonnage originating outside of Santa Clara County, will be distributed according to each jurisdiction’s percent of countywide population, according to the latest available population report issued by the California Department of Finance.

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EXHIBIT C

COUNTYWIDE HOUSEHOLD HAZARDOUS
WASTE PROGRAM FEE (HHW Fee)

1. PROGRAM FUNDING SOURCE
HHW Program services are mandated by State law, Public Resources Code Section 41500 et seq. Public Resources Code Section 41901 authorizes imposition of a fee to support planning and implementation of integrated waste management programs, including their HHW elements. The HHW Fee, of $2.60 per ton, collected as part of the AB939 Implementation Fee, will be the primary source of funding for Countywide Household Hazardous Waste Collection Program (CoHHW Program) services.

Funds derived from the HHW Fee will be allocated among five types of CoHHW Program service costs as follows:

C. Variable Cost Per Car is the cost associated with labor, waste disposal, transportation, and other services provided to residents at the County HHW Collection Facilities and at temporary HHW collection events. The Variable Cost Per Car is based on the estimated cost of providing a base level service to 4% of households in all participating jurisdictions. The number of households will be determined at the beginning of each Fiscal Year by statistics compiled by the California Department of Finance, Demographic Research Unit from their most recent Report, “Population Estimates for California Cities and Counties.”
D. Available Discretionary Funding is allocated based on tonnage generated per participating jurisdiction, and after allocation of Fixed Program Costs, San José Facility Use Surcharge, and Variable Cost Per Car allocation.

E. Abandoned Waste Disposal Costs will fund disposal of HHW illegally abandoned at Nonprofit Charitable Reuser organizations as defined in Public Resources Code Section 41904.
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2. FIXED PROGRAM COST
Funds shall be allocated on a per household basis for Fixed Program Costs at the conclusion of each Fiscal Year. This portion of the funds shall be distributed directly to the Countywide HHW Program to pay for HHW Program costs. Fixed Program Costs funding shall be calculated shall not exceed $5.07 per household in Fiscal Years 2025, 2026, and 2027. Fixed Program Costs may include, but are not limited to, eleven (11) CoHHW Program staff members, facility leasing costs, vehicle lease costs, office rent, office supplies, county administrative overhead, county legal counsel, training costs, equipment and facility maintenance, and union negotiated salary and benefit changes.

3. ABANDONED WASTE DISPOSAL COST
The Abandoned Waste Disposal Cost will fund disposal of HHW illegally abandoned at Nonprofit Charitable Reuser organizations. The Abandoned Waste Disposal Cost is based on the cost to the County to dispose of abandoned waste allocated among participating jurisdictions based on their proportional share of the County population and shall not exceed $0.05 per household. Projected Abandoned Waste Disposal Costs to the CITY based on a charge of $.05 per household are set forth in Attachment A, attached hereto and incorporated herein.

Any existing unexpended non-profit abandoned waste fund balance may be allocated toward funding of disposal of HHW illegally abandoned at nonprofit charitable reuser organizations as defined in Public Resources Code Section 41904.

For the purposes of this agreement, a nonprofit charitable reuse organization has the definition provided in Public Resources Code Section 41904 as follows: “Nonprofit charitable reuser” means a charitable organization, as defined in Section 501(c)(3) of the federal Internal Revenue Code, or a distinct operating unit or division of the charitable organization, that reuses and recycles donated goods or materials and receives more than 50 percent of its revenues from the handling and sale of those donated goods or materials.

4. SAN JOSÉ FACILITY USE SURCHARGE
The total San José Facility Use Surcharge for CITY will be based on CITY residents’ proportional participation at the County Household Hazardous Waste Collection Facility located at 1608 Las Plumas Avenue, San José. The San José Facility Use Surcharge will vary depending on facility usage but will not exceed $8.09 per car for Fiscal Years 2025, 2026, and 2027. The total San José Facility Use Surcharge for CITY will be based on CITY’s participation at the County Household Hazardous Waste Collection Facility located at 1608 Las Plumas Avenue, San José.

5. VARIABLE COST PER CAR
The Variable Cost Per Car is the cost associated with actual labor, waste disposal, transportation and other services provided to the residents at the County HHW Collection DocuSign Envelope ID: 2E69586E-5F1D-4D97-A148-27061C714399 833
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Facilities and Temporary Events. This portion of the funds shall be distributed directly to the Countywide HHW Program. The Variable Cost Per Car is estimated to be $66.02 per car for Fiscal Years 2025, 2026, and 2027. The estimated cost per car will be adjusted annually to reflect actual service costs. After fixed costs and San José Facility Use Surcharge are allocated on a per household basis, the variable cost per car will be used to calculate the costs to service 4% of households across all participating jurisdictions. If the level of 4% of households is not reached, the Countywide HHW Program will use the remaining balance of funds, in cooperation with the CITIES, to increase public outreach and/or provide additional services in that jurisdiction where the level of 4% is not reached the following year.

6. AVAILABLE DISCRETIONARY FUNDING
The Available Discretionary Funding portion will be allocated based on the tons of waste generated within each jurisdiction and after allocation of Fixed Program Cost, San José Facility Use Surcharge, and Variable Per Car Cost. Available Discretionary Funds must be used for HHW purposes. Options for how to spend these funds include, but are not limited to, increasing the number of residents served in the jurisdiction by the Countywide HHW Program, universal waste collection, emergency HHW services, funding HHW public education, the support of capital infrastructure projects to accommodate HHW drop-off and collection events, or providing special programs such as retail collection of certain waste and/or door-to-door collection of HHW for the elderly and/or persons with disabilities and neighborhood clean-up events. CITIES authorize the COUNTY to determine appropriate uses of available discretionary funding and to use CITIES’ Available Discretionary Funding portion of the AB939 HHW Fee to provide for additional HHW services requested by the CITIES.

7. PROGRAM FUNDING PASS-THROUGH
Annual funding calculations include HHW Fees collected on behalf of all jurisdictions in the County. CITIES, at their option, may participate in the Countywide HHW Program by entering into the AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM. If CITIES elect to participate in the Countywide HHW Program, their pro-rata share of the HHW Fee shall be retained by the County to utilize for HHW Program costs, as provided in this Agreement and the Agreement for Countywide Household Hazardous Waste Collection Program. The COUNTY will distribute to CITIES not participating in the Countywide Household Hazardous Waste Collection Program their pro-rata share of funding received by the COUNTY from the HHW Fee, except that the COUNTY may retain and expend that portion of the non-participating CITIES’ fee attributable to Abandoned Waste Disposal Costs.

If CITIES not participating in the AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM desire to allow residents to participate in HHW Program services on an emergency basis, then services to these residents will be provided on a cost recovery basis. A charge equal to the established rates charged by the Countywide HHW Program to Conditionally Exempt Small Quantity Generators will be billed to the CITIES.

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an appointment for the resident. Liability shall be apportioned as provided in Exhibit D to this Agreement.

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EXHIBIT D
SECTION 28 OF AGENCY AGREEMENT

FOR COUNTYWIDE HOUSEHOLD HAZARDOUS

WASTE COLLECTION PROGRAM

HOLD HARMLESS AND INDEMNIFICATION
In lieu of and not withstanding the pro rata risk allocation which might otherwise be imposed between CITY and COUNTY pursuant to Government Code Section 895.6, the parties agree that all losses or liabilities incurred by a party shall not be shared pro rata but instead COUNTY and CITY agree that pursuant to Government Code Section 895.4, each of the parties hereto shall fully indemnify and hold each of the other parties, their officers, board members, employees and agents, harmless from any claim, expense or cost, damage or liability imposed for injury (as defined by Government Code Section 810.8) occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying party, its officers, employees or agents, under or in connection with or arising out of any work, authority or jurisdiction delegated to such party under this Agreement. No party, nor any officer, board member, employee or agent thereof shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other parties hereto, their officers, board members, employees or agents, under or in connection with or arising out of any work authority or jurisdiction delegated to such other parties under this Agreement.

Additionally, CITY shall indemnify COUNTY for CITY’s apportioned share of any liability incurred and attributed to the Countywide HHW Program for the transportation, treatment, or disposal of the household hazardous waste, once the waste has been accepted by a licensed hazardous waste hauler. Apportionment for disposal liability shall be determined by each participating jurisdiction’s pro rata proportion of household participation in the Program.

Apportionment for transportation and treatment liability shall be determined by each participating jurisdiction’s pro rata household participation at the event where the waste was generated. COUNTY will use reasonable efforts to obtain recovery from all available resources, including insurance, of any liable hauler or liable disposal facility operator. No liability shall be apportioned to CITY for transportation, treatment or disposal in any case where COUNTY has contracted for such services and has failed to require the contractor to maintain the insurance requirements set forth in Section 23 of the AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM.

CITY shall further indemnify COUNTY for CITY’s apportioned share of liability incurred and attributed to the Countywide HHW Program for the transportation, treatment or disposal of household hazardous waste at corporate sponsored events where non-county resident employees of the corporate sponsor are authorized to participate in the event. Liability for the nonresident portion of the disposal of waste shall be shared by the cities and the county as described above. The nonresident portion shall be determined by calculating the percentage of nonresidents participating in the event. This percentage will then be subtracted from the total DocuSign Envelope ID: 2E69586E-5F1D-4D97-A148-27061C714399 836
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liability for the household hazardous waste prior to assessing CITY’s apportioned share of any liability for the household hazardous waste.

COUNTY shall require Very Small Quantity Generators (“VSQG”) and Nonprofit Charitable Reusers to indemnify COUNTY for, at minimum, their apportioned share of any liability incurred and attributed to the Countywide HHW Program for the transportation, treatment, or disposal of their hazardous waste, once the waste has been accepted by a licensed hazardous waste hauler. The VSQG and Nonprofit Charitable Reuser portion of the waste shall be determined by calculating the percentage, by weight, of the total household hazardous waste accepted by the CoHHW Program. This percentage will be used to calculate the portion of liability attributed to VSQGs and Nonprofit Charitable Reusers and will be subtracted from the total liability prior to assessing CITY’s apportioned share of any liability for household hazardous waste.

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AGREEMENT FOR COUNTYWIDE

HOUSEHOLD HAZARDOUS WASTE

COLLECTION PROGRAM
This Agreement for Countywide Household Hazardous Waste Collection Program (“AGREEMENT”) is made by and between the (“CITY”) and the County of Santa Clara (“COUNTY”) on the day of 2024.

RECITALS
WHEREAS, the Board of Supervisors of the County of Santa Clara (“Board of Supervisors”) has approved a Countywide Household Hazardous Waste Collection Program whereby residents of the unincorporated areas of the Santa Clara County and cities and towns within Santa Clara County participating in the Countywide program will have an opportunity to safely dispose of household hazardous wastes (HHW), regardless of the specific location at which the collection has been scheduled; and
WHEREAS, CITY desires to provide residents with convenient opportunities to safely dispose of their HHW in order to encourage the proper disposal of toxic products, and avoid unauthorized or improper disposal in the garbage, sanitary sewer, storm drain system, or on the ground, in a manner which creates a health and/or environmental hazard; and WHEREAS, CITY desires to provide a safe, convenient, and economical means for residents to dispose of HHW. These wastes include, but are not limited to, common household products such as household cleaning products, furniture polish, solvents, oven cleaner, pesticides, oil-based paints, motor oil, antifreeze, car batteries, mercury thermostats, fluorescent lamps, household batteries, and electronic waste; and
WHEREAS, CITY desires to schedule Household Hazardous Waste Collection Events (Events) for residents for FY 2025 through FY 2027 (July 1, 2024 – June 30, 2027); and WHEREAS, CITY desires to provide household hazardous waste collection services to a minimum of 4% of the households per fiscal year in its jurisdiction; and WHEREAS, CITY desires to participate in the Countywide Household Hazardous Waste Collection Program to meet these objectives; and
WHEREAS, pursuant to Public Resources Code Section 41901, the Board of Supervisors has approved the collection of a $4.10 per ton Countywide AB939 Implementation fee, including a $2.60 per ton Household Hazardous Waste Fee (AB939 HHW Fee), for FY 2025 through FY 2027 (July 1, 2024 – June 30, 2027) on all wastes landfilled or incinerated within Santa Clara County, received at any non-disposal or collection facility located within Santa Clara County and subsequently transported for disposal or incineration outside of Santa Clara County, collected from any location within the County by a solid waste hauler operating pursuant to a franchise, contract, license, or permit issued by any local jurisdiction and subsequently City of Cupertino
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transported for disposal or incineration outside of Santa Clara County, or removed from any location in Santa Clara County by any person or business for disposal or incineration outside the county; and
WHEREAS, the AB939 HHW Fee is allocated to the Countywide Household Hazardous Waste Program and participating jurisdictions to fund HHW program costs in accordance with the terms of the Countywide AB939 Implementation Fee Agreement; and WHEREAS, CITY desires for COUNTY to utilize CITY’s share of the AB939 HHW Fee to provide HHW services for CITY residents.

NOW THEREFORE, CITY and COUNTY AGREE AS FOLLOWS:

1. PURPOSE
The purpose of this AGREEMENT is to state the terms and conditions under which CITY will participate in the Countywide Household Hazardous Waste Collection Program (CoHHW Program) available to its residents. Participating jurisdictions are those jurisdictions that enter into this AGREEMENT with the County.

2. PROGRAM FUNDING SOURCE
HHW Program services are mandated by State law, Public Resources Code Section 41500 et seq. State law authorizes cities and counties to impose fees in amounts sufficient to support planning and implementation of integrated waste management programs, including HHW elements. The AB939 HHW Fee, of $2.60 per ton, imposed by COUNTY as part of the AB939 Implementation Fee and collected and distributed in accordance with the Agreement for Countywide AB939 Implementation Fee will be the primary source of funding for CoHHW Program services. CITY agrees that COUNTY may utilize CITY’s share of the AB939 HHW fee to provide HHW Program services in accordance with the terms and conditions of this AGREEMENT.

Funds derived from the AB939 HHW Fee will be allocated among five types of CoHHW Program service costs as follows:

A. Fixed Program Costs will be apportioned based on the number of households in each participating jurisdiction. The number of households will be determined at the beginning of each Fiscal Year by statistics compiled by the California Department of Finance, Demographic Research Unit from their most recent Report, “Population Estimates for California Cities and Counties.” B. San José Facility Use Surcharge will be apportioned based on CITY residents’ participation at the County Household Hazardous Waste Collection Facility located at 1608 Las Plumas Avenue, San José, CA 95133.
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C. Variable Cost Per Car is the cost associated with labor, waste disposal, transportation, and other services provided to residents at the County HHW Collection Facilities and at temporary HHW collection events. The Variable Cost Per Car is based on the estimated cost of providing a base level service to 4% of households in all participating jurisdictions. The number of households will be determined at the beginning of each Fiscal Year by statistics compiled by the California Department of Finance, Demographic Research Unit from their most recent Report, “Population Estimates for California Cities and Counties.” D. Available Discretionary Funding is allocated based on tonnage generated per participating jurisdiction, and after allocation of Fixed Program Costs, San José Facility Use Surcharge, and Variable Cost Per Car allocation.

E. Abandoned Waste Disposal Costs will fund disposal of HHW illegally abandoned at Nonprofit Charitable Reuser organizations as defined in Section 41904 of California Public Resources Code.

The projected AB939 HHW Fee Allocation by jurisdiction is set out in Attachment A, attached hereto and incorporated herein.

3. FIXED PROGRAM COST
Estimated HHW Fixed Program Costs are projected in Attachment B, attached hereto and incorporated herein. Fixed Program Costs are allocated to CITY at the conclusion of each fiscal year based on CITY’s proportional share of the County population and will not exceed $5.07 per household for Fiscal Years 2025, 2026, and 2027. Fixed Program Costs may include, but are not limited to, up to eleven (11) County HHW Program staff members, facility lease costs, vehicle lease costs, office rent, office supplies, county administrative overhead, county legal counsel, training costs, equipment and facility maintenance and union negotiated salary and benefit changes.

4. ABANDONED WASTE DISPOSAL COST
The Abandoned Waste Disposal Cost will fund disposal of HHW illegally abandoned at Nonprofit Charitable Reuser organizations. The Abandoned Waste Disposal Cost is based on the cost to the County to dispose of abandoned waste allocated among participating jurisdictions based on their proportional share of the County population and shall not exceed $0.05 per household. Projected Abandoned Waste Disposal Costs to the CITY based on a charge of $0.05 per household are set forth in Attachment A, attached hereto and incorporated herein.

For the purposes of this Agreement, “Nonprofit Charitable Reuser Organization” is defined in accordance with Section 41904 of California Public Resources Code as follows: a charitable organization, as defined in Section 501(c)(3) of the federal Internal Revenue Code, or a distinct operating unit or division of the charitable organization, that reuses and recycles donated goods or materials and receives more than 50 percent of its revenues from the handling and sale of those donated goods or materials.
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5. SAN JOSÉ FACILITY USE SURCHARGE
The total San José Facility Use Surcharge for CITY will be based on CITY residents’ proportional participation at the County Household Hazardous Waste Collection Facility located at 1608 Las Plumas Avenue, San José. Estimated San José Facility Use Surcharges are projected in Attachment A, attached hereto and incorporated herein. The San José Facility Use Surcharge will vary depending on facility usage but will not exceed $8.09 per car for Fiscal Years 2025, 2026, and 2027.

6. VARIABLE COST PER CAR
The Variable Cost Per Car is the cost associated with actual labor, waste disposal, transportation and other services provided to the residents at the County Household Hazardous Waste Collection Facilities (CoHHWCF) and at Temporary Events. The Variable Cost Per Car is estimated to be approximately $66.02 per participating resident car for Fiscal Years 2025, 2026 and 2027. The estimated cost per car will be adjusted to reflect actual service costs. After Fixed Program Costs and San José Facility Use Surcharge are allocated on a per household basis, the Variable Cost Per Car will be used to calculate the costs to service 4% of households across all participating jurisdictions. If the level of 4% of households is not reached in the CITY, the CoHHW Program may use the remaining balance of funds, in cooperation with the CITY, to increase public outreach and/or provide additional services in that jurisdiction the following year.

7. AVAILABLE DISCRETIONARY FUNDING
The Available Discretionary Funding portion of the AB939 HHW Fee will be allocated based on the tons of waste generated within each jurisdiction, and after allocation of Fixed Program Costs, San José Facility Use Surcharge, and Variable Cost Per Car allocation.

Available Discretionary Funds must be used for HHW purposes. Options for how to spend these funds include, but are not limited to, increasing the number of residents served in that jurisdiction by the CoHHW Program, subsidizing curbside used motor oil collection, electronic waste (e-waste) collection, universal waste collection, emergency HHW services, funding HHW public education, the support of capital infrastructure projects to accommodate HHW drop-off and collection events, or providing special programs such as retail collection of certain waste and/or door-to-door collection of HHW for the elderly and/or persons with disabilities and neighborhood clean-up events. COUNTY has discretion to determine appropriate uses of Available Discretionary Funding in accordance with the terms and conditions in this Agreement, and to apply the funding toward those uses.

8. ADMINISTRATION AND PAYMENT OF THE AB939 HHW FEE
The County of Santa Clara Recycling and Waste Reduction Division will administer the AB939 HHW Fee, as part of the existing online disposal reporting and payment system.

Administration and payment will be made in accordance with the Agreement for Countywide AB939 Implementation Agreement. Notwithstanding the foregoing, the COUNTY shall maintain records of the amount, use, and distribution of Fixed Program Cost expenditures for at least five (5) years after the termination date of this Agreement, unless otherwise required by law 842
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to retain such records for a longer period. CITY may request in writing a review by COUNTY of the Fixed Program Cost records. The review shall be performed within 30 days of request and results shall be reported to participating cities in writing.

9. PROGRAM PUBLICITY
The CoHHW Program shall produce and make available to the public an HHW brochure for distribution. The brochure will be made available at various events, including but not limited to, environmental events and community fairs. The brochure may also be distributed, upon request, to cities within Santa Clara County and to Santa Clara County residents and businesses.

The CITY shall be responsible for developing and coordinating citywide awareness of the HHW Program. The CoHHW Program shall be responsible for Countywide public education for used oil recycling. CoHHW Program public awareness responsibilities shall include, but not be limited to, the following activities:
• Serving as the formal contact to the local media such as local newspapers and television news stations;
• Providing participating jurisdictions with educational materials developed for the CoHHW Program;
• Promoting oil and oil filter recycling by developing, purchasing, and distributing educational materials, media relations materials, basic art work and camera ready advertising materials for distribution countywide and for use by jurisdictions; • Representing the program through educational presentations at schools and businesses and attendance at community events such as local fairs and festivals; and • Providing participating jurisdictions opportunities to review and comment on the development of countywide outreach materials.

CITY’s public awareness responsibilities, at the sole discretion of the CITY, shall include, but not be limited to, the following activities:
• Providing a copy of HHW promotional materials to the CoHHW Program for review for accuracy and completeness, prior to publication; • Developing and distributing HHW promotion communications to residents for local and CITY newsletters, newspapers and to the electronic media; • Providing the CoHHW Program with a copy of HHW promotion materials produced by the CITY;
• Conducting and supporting outreach and publicity to attain the goal of 4% of households in the CITY participating in the CoHHW Program; and • Providing the CoHHW Program a report summarizing all outreach activities conducted by the CITY during the fiscal year. The report is due 30 days after the end of the reporting period.

10. TEMPORARY HHW EVENTS
COUNTY shall conduct Temporary HHW Events at various sites located in Santa Clara County. COUNTY shall obtain all necessary permits and licenses required for the Temporary 843
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HHW Events and shall provide or contract for the services of properly trained, qualified personnel and hazardous waste haulers, and shall provide or secure suitable equipment and supplies to properly receive, package, label, haul, recycle and dispose of the household hazardous wastes collected at the Temporary HHW Events.

When COUNTY conducts a Temporary HHW Event in CITY’s jurisdiction, CITY agrees to provide solid waste and recycling services at such event at no cost to the CoHHW Program to ensure the proper management of non-hazardous waste generated at the event. Any additional expenses for such event incurred beyond the agreed-upon budget shall be subject to negotiation and mutual agreement between the COUNTY and the CITY.

To increase the Community’s awareness of and participation in any Temporary HHW Event in CITY’s jurisdiction, the CITY agrees to promote, at the CITY’s sole expense, each such event to the residents at least thirty (30) days in advance before the scheduled date. The promotion may include, but is not limited to, bill inserts, door hangers, flyers, in-person outreach events, newsletters, press releases, public service announcements, social media, television public access stations, websites, etc.

11. HOUSEHOLD HAZARDOUS WASTE COLLECTION FACILITIES
COUNTY shall conduct collection operations at two County Household Hazardous Waste Collection Facilities (CoHHWCF).

The CoHHWCF are located at:
♦ San Martin, 13055 Murphy Avenue, San Martin, CA 95046 ♦ San José, 1608 Las Plumas, San José, CA 95133
The COUNTY shall obtain all necessary permits and licenses required for the CoHHWCF and shall provide or contract for services, equipment, and supplies to properly receive, package, label, haul, recycle and dispose of wastes collected.

12. RECYCLING AND DISPOSAL PROGRAM FOR VERY SMALL QUANTITY

GENERATORS
COUNTY will provide services to accept hazardous waste from Very Small Quantity Generators (VSQG) in accordance with Section 25218.3 of California Health and Safety Code, as amended from time to time. VSQG is defined in Section 25218.1(q) of California Health and Safety Code.

Eligible VSQGs include, but not limited to, small businesses, governmental entities, non-profit organizations, schools, special districts, etc. within the County so long as they meet the criteria as defined in Section 25218.1(q) of California Health and Safety Code. Eligible VSQGs will be allowed to bring their hazardous waste to CoHHWCF. These services to VSQGs located within the CITY will be provided on a cost recovery basis, which will include program administration, 844
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on-site collection, transportation, and disposal costs. COUNTY will assume responsibility for fee collection from participating VSQG.

The CITY may choose to pay for services for VSQG’s within the CITY and will notify the COUNTY in writing with 30-day advance notice in order to exercise this option. If the CITY exercises this option, the COUNTY will invoice the CITY for all costs associated with VSQG’s within the CITY. If CITY has available Discretionary Funding, COUNTY may use this funding to pay for VSQG costs.

13. ABANDONED HOUSEHOLD HAZARDOUS WASTE
The CoHHW Program will allow for the disposal of abandoned HHW by government agencies and qualified nonprofit charitable reusers. Abandoned HHW means HHW left at a property by an unknown party. Abandoned household hazardous waste does not include waste generated by a known organization or agency in the course of normal business operations such as, but not limited to, the assembly or manufacture of products from new or used materials or the provision of charitable services such as classroom education, meal preparation, and shelter, or the provision of services for a fee.

A) GOVERNMENT AGENCIES
Government agencies shall be charged for disposal of abandoned HHW according to the CoHHW Program’s rates for VSQGs.

B) NONPROFIT CHARITABLE REUSER
In order to qualify as a Nonprofit Charitable Reuser, the business must submit to the County Executive a request to be so designated. The County Executive shall review the request and supporting documentation and shall make a final decision on the designation. COUNTY will accept abandoned HHW from Nonprofit Charitable Reusers and will waive disposal fees on the cost of disposal of the abandoned HHW in an annual amount not to exceed funds available from the existing unexpended abandoned waste fund. Funding for disposal available to Nonprofit Charitable Reuser shall be on a first come first serve basis. Once the available fund to pay for the disposal of the abandoned HHW from Nonprofit Charitable Reusers is exhausted, disposal fees shall no longer be waived, and Nonprofit Charitable Reusers shall be charged for disposal of abandoned HHW according to the CoHHW Program’s rates for VSQGs. No additional costs shall be applied to the budget of the CITY or any other participating jurisdiction.

14. HOUSEHOLD HAZARDOUS WASTES ACCEPTED
HHW accepted by the CoHHW Program shall be limited to those materials that qualify as “Household Hazardous Waste” pursuant to Section 25218.1(d) of California Health and Safety Code, as amended from time to time. These materials include, but are not limited to, automotive fluids, automotive and other types of batteries, latex and oil paint, oil filters, garden chemicals, 845
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household cleaners, pool chemicals, mercury thermostats, fluorescent lamps containing mercury, household batteries, electronic waste (e-waste), and other common hazardous consumer products.

15. WASTES NOT ACCEPTED
Certain hazardous wastes shall not be accepted for collection and disposal. These include, but are not limited to, compressed gas cylinders larger than 5 gallons, radioactive materials, biohazardous waste, and explosives. Other wastes not accepted by the CoHHW Program are wastes generated as part of operating a business, including a home operated business, except that waste from VSQGs as provided for in Section 12 of this Agreement shall be accepted.

16. ADDITIONAL SERVICES UNDER THIS AGREEMENT
CITY must augment funding provided under this Agreement to cover the cost of a minimum participation level of 4% of CITY households; CITY may also elect to augment funding to provide additional services to increase CITY participation beyond the 4% minimum participation level. Additional services shall be made available upon written agreement between the CITY’s authorized representative and the County Executive Officer or designee. Additional services may include, but are not limited to, additional appointments (charged at the Variable Cost Per Car rate), door-to-door HHW collection, used oil filter collection, universal waste collection, electronic waste collection, and abandoned waste collection.

CITY agrees to augment up to an additional $_133,081__ annually to the Countywide HHW Program in Fiscal Years 2025, 2026, and 2027, up to a total of $_399,243__ for the duration of this Agreement for the purpose of attaining or increasing CITY household participation above the 4% minimum participation level at the scheduled collection dates listed in Attachment C, attached hereto and incorporated herein. Augmentation will be calculated, where applicable, at the Variable Cost Per Car rate. Other services will be charged based on a cost recovery basis. CITY authorizes the COUNTY to use CITY’S Available Discretionary Funding portion of the AB939 HHW Fee, if available, to offset the above agreed additional augmentation amount.

CITY agrees to make interim payments to COUNTY amounting to 50 percent of the annual augmentation amount of $_133,081___ for each fiscal year. These interim payments shall be made no later than September 30th of each fiscal year. The remaining balance of any outstanding cost shall be reconciled and paid or refunded in accordance with the terms outlined in the annual cost statement.

At the end of each fiscal year, a final annual cost statement shall be prepared by COUNTY and issued to CITY by November 30th. The annual cost statement will take into consideration costs incurred on behalf of CITY for additional services and all payments made by CITY to COUNTY. If any balance is owed to COUNTY, it will be due within 30 days following receipt of the annual cost statement. If any credit is owed to CITY, COUNTY will refund that amount to CITY within 30 days following delivery of the annual cost statement. 846
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17. INFORMATION AND APPOINTMENT LINE
COUNTY will operate a telephone information and appointment desk Monday through Friday, from the hours of 9:00 a.m. to 5:00 p.m, except for COUNTY-recognized holidays The information service will register residents for the Temporary HHW Events and the collections at CoHHWCF. The information service will provide information about hazardous household materials. CITY will be notified immediately if resident participation approaches a level of service that may not be supported by available funding.

18. SCHEDULING AND SITE SELECTION
COUNTY shall work with CITY to determine the date(s) of Temporary Events and collections at the CoHHWCF. CITY shall coordinate with COUNTY in locating and securing sites for Temporary HHW Events. It is recognized that some participating jurisdictions in the CoHHW Program may not have appropriate sites available. A proposed HHW schedule for Fiscal Year 2025 of Temporary Events and collections at CoHHWCF is included as Attachment C. COUNTY will schedule an adequate number of collection days to serve the 4% level of service. The COUNTY determines the adequate number of collection days by tracking attendance at each event.

19. OUTSIDE FUNDING
During the term of this Agreement, COUNTY may seek outside funding sources for services that would supplement existing HHW services such as permanent collection sites, equipment, retail take-back collection and operational funding. If outside funding is obtained, the CoHHW Program will, at COUNTY’s discretion, proceed with development of additional programs using that outside funding without drawing on CITY’s funding provided under this Agreement.

20. REGIONAL GRANT AND OIL PAYMENT PROGRAM PARTICIPATION The CITY authorizes the CoHHW Program to apply for lead agency grants, including but not limited to Used Oil Payment Program grants, from the California Department of Resources Recycling and Recovery (CalRecycle), on behalf of participating jurisdictions. The CoHHW Program will act on behalf of all participating jurisdictions, as the lead applicant and administrator. The CoHHW Program will oversee how the moneys are used and work in cooperation with CITY as to how the funds will be spent. Nothing in this section shall preclude the COUNTY or a participating jurisdiction from applying for grant funds in any case where the CoHHW Program does not apply for the grant opportunity.

21. EMERGENCY SERVICES
Participating jurisdictions, at their option, may desire to provide residents with convenient emergency opportunities to safely dispose of their HHW in the event of a disaster.

The purpose of this emergency planning for HHW is to minimize potential public health and 847
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safety impacts, as well as to minimize costs and confusion. Attachment D sets out CITY and COUNTY responsibilities for the collection of household hazardous wastes in response to an emergency. CITY shall make good faith efforts to provide the public with information related to the problems associated with HHW. Upon the decision to hold an emergency collection event, it is CITY’s responsibility to make a good faith effort to prepare and disseminate the necessary outreach to notify the public of an emergency collection event. An emergency collection event shall be initiated by a written request from CITY to COUNTY. Emergency collection events can be scheduled in as little as ten (10) working days of CITY’s written request or at an agreed upon date thereafter. The emergency collection plan is set out in Attachment D, Household Hazardous Waste Emergency Collection Plan.

COUNTY agrees to conduct the Emergency Collection Event at a mutually agreeable site and time. The COUNTY will obtain the necessary permit from California Department of Toxic Substances Control and will handle wastes in accordance with applicable state laws and regulations. COUNTY will bill CITY for all Emergency Collection Events on a cost recovery basis, and all payments shall be due COUNTY within 30 days following the receipt of the invoice.

22. PRIVATE SPONSORED EVENTS
COUNTY may also secure funding from corporations or agencies to conduct HHW Collection Events for corporate employees and residents of participating jurisdictions and to pay for special programs such as Universal Waste collection at retail locations. The transportation, treatment, and disposal liability for nonresident employee participation in these events shall be shared by all participating jurisdictions, including the CITY, and the COUNTY, as described in Section 26 of this Agreement. Summary information concerning these corporate sponsored events, if any, will be included in the CoHHW Program’s annual report to the participating jurisdictions.

23. INSURANCE REQUIREMENTS
Contractors who provide hazardous waste transportation, treatment, or disposal services shall have the required insurance as outlined in Attachment E, Exhibit E Insurance Requirements for Environmental Services Contract. Other contractors shall have insurance in amounts to be determined by COUNTY Insurance Manager, after consultation with CITY. COUNTY shall obtain insurance certificates from each of the contractors prior to the contractor providing service to the program naming the COUNTY as an additional insured.

24. WASTE TRACKING AND REPORTING
COUNTY will provide a mid-year report to CITY regarding participation rates from each participating jurisdiction by March 15 of each year. Mid-year and year end reports will outline the types and quantities of waste collected, the amount of waste diverted for reuse or recycling and the waste management method for each waste stream and associated costs for services.

COUNTY will prepare a report summarizing program activities which will be delivered to the participating jurisdictions no later than six months after the end of COUNTY’s fiscal year. 848
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It will be assumed for cost and reporting purposes that each participating jurisdiction is contributing to the waste stream in proportion to the number of its residents who directly participate.

COUNTY shall take steps to assure that the bi-annual statements to jurisdictions reflect the funds necessary to cover costs for CITY participation in services scheduled during the next quarter.

25. PARTICIPATION REPORTING
COUNTY shall employ means necessary to verify the place of residence of all participants in the CoHHW Program.

26. HOLD HARMLESS AND INDEMNIFICATION
In lieu of and not withstanding the pro rata risk allocation which might otherwise be imposed between CITY and COUNTY pursuant to Government Code Section 895.6, the parties agree that all losses or liabilities incurred by a party shall not be shared pro rata but instead COUNTY and CITY agree that pursuant to Government Code Section 895.4, each of the parties hereto shall fully indemnify and hold each of the other parties, their officers, board members, employees and agents, harmless from any claim, expense or cost, damage or liability imposed for injury (as defined by Government Code Section 810.8) occurring by reason of the negligent acts or omissions or willful misconduct of the indemnifying party, its officers, employees or agents, under or in connection with or arising out of any work, authority or jurisdiction delegated to such party under this Agreement. No party, nor any officer, board member, employee or agent thereof shall be responsible for any damage or liability occurring by reason of the negligent acts or omissions or willful misconduct of the other parties hereto, their officers, board members, employees or agents, under or in connection with or arising out of any work authority or jurisdiction delegated to such other parties under this Agreement.

Additionally, CITY shall indemnify COUNTY for CITY’s apportioned share of any liability incurred and attributed to the Countywide HHW Program for the transportation, treatment or disposal of the household hazardous waste, once the waste has been accepted by a licensed hazardous waste hauler. Apportionment for disposal liability shall be determined by each participating jurisdiction’s pro rata proportion of household participation in the Program.

CITY shall further indemnify COUNTY for CITY’s apportioned share of liability incurred and attributed to the Countywide HHW Program for the transportation, treatment or 849
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disposal of household hazardous waste at corporate sponsored events where non-county resident employees of the corporate sponsor are authorized to participate in the event. Liability for the nonresident portion of the disposal of waste shall be shared by the participating jurisdictions and the COUNTY as described above. The nonresident portion shall be determined by calculating the percentage of nonresidents participating in the event. This percentage will then be subtracted from the total liability for the household hazardous waste prior to assessing CITY’s apportioned share of any liability for the household hazardous waste.

COUNTY shall require VSQGs and Nonprofit Charitable Reusers to indemnify COUNTY, at minimum, for their apportioned share of any liability incurred and attributed to the Countywide HHW Program for the transportation, treatment, or disposal of their hazardous waste, once the waste has been accepted by a licensed hazardous waste hauler. The VSQG and Nonprofit Charitable Reuser portion of the waste shall be determined by calculating the percentage, by weight, of the total household hazardous waste accepted by the CoHHW Program. This percentage will be used to calculate the portion of liability attributed to VSQGs and Nonprofit Charitable Reusers and will be subtracted from the total liability prior to assessing CITY’s apportioned share of any liability for household hazardous waste.

27. TERMINATION
This Agreement may be terminated by either the COUNTY or CITY upon thirty (30) days written notice given by the terminating party.

28. TERM OF AGREEMENT
The term of this Agreement shall be from July 1, 2024 to June 30, 2027, or until all revenue from the last quarter’s AB939 fee payments have expended and/or distributed, whichever is later.

29. INDEPENDENT CONTRACTOR
Each party shall perform responsibilities and activities described herein as an independent contractor and not as an officer, agent, servant or employee of any of the parties hereto. Each party shall be solely responsible for the acts and omissions of its officers, agents, employees, contractors and subcontractors, if any. Nothing herein shall be considered as creating a partnership or joint venture between the parties.

30. EXECUTION BY COUNTERPART
This Agreement may be executed in any number of counterparts, each of which shall for all purposes be deemed an original and all of which shall together constitute one and the same instrument.

31. CONTROLLING LAW
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This Agreement shall be governed and construed in accordance with the laws of the State of California.

32. ENTIRE AGREEMENT
This document embodies the entire Agreement between the parties with respect to the subject matter hereof. No modification of this Agreement shall be effective unless and until modification is evidenced by writing signed by all parties or their assigned designates.

33. NOTICES
All notices and communications herein required shall be in writing to the other party as follows, unless expressly changed in writing:

CITY of City Representative
Representative’s Title
City Address
County of Santa Clara Director
Consumer and Environmental Protection Agency
1553 Berger Drive
San José, California 95112

34. CONTRACT EXECUTION
Unless otherwise prohibited by law or COUNTY policy, the parties agree that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term “electronic copy of a signed contract” refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term “electronically signed contract” means a contract that is executed by applying an electronic signature using technology approved by the COUNTY.
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Cupertino Pamela Wu
City Manager
10300 Torre Ave.

Cupertino, CA 95014
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IN WITNESS WHEREOF, the parties have executed this AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM on the dates as stated below:

Date: COUNTY OF SANTA CLARA
JAMES R. WILLIAMS
County Executive
Date: “CITY”

CITY/TOWN OF
Title
A municipal corporation
APPROVED AS TO FORM AND LEGALITY:

WILLIE NGUYEN
Deputy County Counsel
Attachments:

A Projected Fiscal Years 2025, 2026, and 2027 AB939 HHW Fee Funding Allocation by Jurisdiction
B Estimated HHW Program Fixed Costs for Fiscal Years 2025, 2026, and 2027 C HHW Schedule of Collection Events for Fiscal Year 2025 D Household Hazardous Waste Emergency Collection Plan
E Exhibit-E Insurance Requirements for Environmental Services Contracts Cupertino
City Manager
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ATTACHMENT A: PROJECTED FISCAL YEARS 2025-2027 ANNUAL HHW FEE

FUNDING ALLOCATION BY JURISDICTION
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ATTACHMENT B: ESTIMATED ANNUAL HHW PROGRAM FIXED COSTS FOR FISCAL YEARS 2025, 2026, AND 2027
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ATTACHMENT C: HHW SCHEDULE OF PERMANENT & TEMPORARY
COLLECTION EVENTS FOR FISCAL YEAR 2025-2027*
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ATTACHMENT C: HHW SCHEDULE OF PERMANENT & TEMPORARY
COLLECTION EVENTS FOR FISCAL YEAR 2025-2027* (Continued) *SUBJECT TO CHANGE
2025/Month Day Date Location Type of Event County Holidays/ Notes January Wed 1 No Event No Event NEW YEAR'S
Thurs,Fri, Sat 2,3,4 San Martin Permanent
Thurs,Fri,Sat 2,3,4 San Jose Permanent
Thurs,Fri 9,10 San Jose Permanent
Saturday 11 Sunnyvale Temporary TBD
Thurs,Fri,Sat 16,17,18 San Jose Permanent
Thurs,Fri 23,24 San Jose Permanent
Saturday 25 Santa Clara Temporary TBD
Thurs,Fri 30,31 San Jose Permanent
February Sat 1 San Jose Permanent
Thurs,Fri, Sat 6,7,8 San Martin Permanent
Thurs,Fri,Sat 6,7,8 San Jose Permanent
Thurs,Fri,Sat 13,14,15 San Jose Permanent
Thurs,Fri,Sat 20,21,22 San Jose Permanent
Thurs,Fri 27,28 San Jose Permanent
March Sat 1 San Jose Permanent
Thurs,Fri, Sat 6,7,8 San Martin Permanent
Thurs,Fri,Sat 6,7,8 San Jose Permanent
Thurs,Fri,Sat 13,14,15 San Jose Permanent
Thurs,Fri,Sat 20,21,22 San Jose Permanent
Thurs,Fri,Sat 27,28,29 San Jose Permanent
April Thurs,Fri,Sat 3,4,5 San Jose Permanent
Thurs,Fri, Sat 3,4,5 San Martin Permanent
Thurs,Fri 10,11 San Jose Permanent
Saturday 12 Los Altos Temporary TBD
Thurs,Fri 17,18 San Jose Permanent
Saturday 19 Sunnyvale Temporary TBD
Thurs,Fri 24,25 San Jose Permanent
Saturday 26 Santa Clara Temporary TBD
May Thurs,Fri,Sat 1,2,3 San Jose Permanent
Thurs,Fri, Sat 1,2,3 San Martin Permanent
Thurs,Fri,Sat 8,9,10 San Jose Permanent
Thurs,Fri,Sat 15,16,17 San Jose Permanent
Thurs,Fri 22,23 San Jose Permanent
Saturday 24 No Event No Event MEMORIAL DAY WEEKEND
Thurs,Fri,Sat 29,30,31 San Jose Permanent
June Thurs,Fri, Sat 5,6,7 San Martin Permanent
Thurs,Fri,Sat 5,6,7 San Jose Permanent
Thurs,Fri 12,13 San Jose Permanent
Saturday 14 Milpitas Temporary TBD
Thurs, Fri,Sat 19,20,21 San Jose Permanent
Thurs,Fri,Sat 26,27,28 San Jose Permanent
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ATTACHMENT D:

COUNTY HOUSEHOLD HAZARDOUS WASTE

EMERGENCY COLLECTION PLAN

1. PURPOSE
The purpose of the Household Hazardous Waste Emergency Collection Plan is to minimize potential public health and safety impacts, as well as to minimize costs and confusion during an emergency or disaster. This Attachment describes the services the County can provide and the responsibilities of each party for the collection of household hazardous wastes (HHW) in response to an emergency as defined by the local jurisdiction.

Jurisdictions should contact local emergency agencies, the Governor's Office of Emergency Services (OES), and California Department of Toxic Substances Control (DTSC) for more specific information on hazardous materials emergency response.

2. Timing of HHW
While it is important to have special collection opportunities for disaster-related HHW as soon as possible to avoid illegal disposal or harm to people and/or the environment, having an event or service too soon after a disaster may result in low participation. Sufficient public notification, assessment and monitoring of the disaster and cleanup process by the designated City HHW Coordinator(s) is essential.

3. Public Information/Notification:

Cities should be prepared to provide the public with information related to the problems associated with HHW along with information about special collection events and services. Upon the decision to hold an emergency collection event, it is the City’s responsibility to prepare and deliver the necessary public outreach to notify the public of an upcoming event. A City’s public outreach program should evaluate all forms of media including: newspaper ads, posters, flyers, press releases, banners, door-to-door notices, roadside signs, signs on dumpsters, radio public service announcements, social media outlets and television public access stations. Be aware of communities where multiple language outreach efforts will be necessary.

4. State HHW Collection Permits
DTSC is responsible for issuing the necessary state permits for HHW collection facilities. During an emergency, the County will obtain the necessary emergency permit for special collection of household hazardous waste from DTSC through their expedited approval process.

5. Collection Events
Temporary collection events can be set-up at various sites including parking lots, city maintenance yards, within neighborhoods needing service, and at landfills or a centralized 857
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Agreement for Countywide Household
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location to service larger segments of the population. Waste collected will be transported with a transportation vehicle provided by the HHW Program. In addition, events can be scheduled at the two existing Countywide Household Hazardous Waste Collection Facilities (CoHHWCF).

The following options are available to each participating City.

• Neighborhood Drop-off Events: The County is able to provide localized service to specific areas in need of household hazardous waste collection services. The County will work with City Solid Waste Coordinators to conduct coordinated efforts to residents in the affected area. After a specific event, waste will be transported by County staff or a hazardous waste contractor to an appropriate facility.

• Mobile HHW Event: The County conducts Household Hazardous Waste Collection Event (Events) at various sites located in Santa Clara County throughout the year. Events will be expanded to give priority to disaster victims when requested by the City. The County shall obtain all necessary permits and licenses required for the events and shall provide and/or contract for the services of properly trained personnel and hazardous waste haulers. The County shall also provide or secure suitable equipment and supplies to properly receive, package, label, haul, recycle and dispose of the household hazardous wastes collected at events.

• CoHHWCF: The County operates two permitted HHW collection facilities for the collection and storage of HHW. The County shall provide or contract for services, equipment, and supplies to properly receive, package, label, haul, recycle and dispose of wastes collected at the CoHHWCF.

The CoHHWCF are located at:

San Martin, 13055 Murphy Ave, San Martin, CA 95046
San Jose, 1608 Las Plumas, San Jose, CA 95133

6. Costs, Documentation, and Reimbursements

Cities will be billed on a cost recovery basis. Costs of emergency events will be tracked and billed separately. Emergency funding applications pending from the State or Federal government for reimbursements in no way relieves the City of responsibility to make timely payment to the County in accordance with the terms of the AGENCY AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM.

The County agrees to provide the City with a detailed accounting of services provided for an emergency collection. Documentation will track the time and materials of staff, outside contractor expenses, and quantities and types of waste collected to demonstrate that the wastes were generated above and beyond existing collection programs.

Services to businesses will be provided on a cost recovery basis and according to Section 12 of the

AGENCY AGREEMENT FOR COUNTYWIDE HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM, which includes program administration, on-site collection, transportation, and disposal costs. The County will assume responsibility for collecting fees from participating businesses.

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7. State and Federal Assistance and Funds

It is the City’s responsibility to pursue reimbursement from State or Federal agencies.

California Governor’s Office of Emergency Services (Cal OES)

Cal OES is responsible for requesting assistan is declared a state disaster area, and the local jurisdiction deems that the needs of the disaster response are beyond ce on behalf of local jurisdictions for resources beyond the capability of the jurisdiction. State assistance may include assistance available from State, Federal, or private sources. If a local jurisdiction its capabilities, then the local jurisdiction can request assistance and reimbursement of costs from Cal OES.

Follow Standardized Emergency Management System (SEMS)
All requests and emergency responses must be in accordance with the SEMS. DTSC may have funding available for hazardous waste response and collection.

Federal Assistance
If a state disaster area is declared a federal disaster, then federal funding assistance may be available through the Cal OES. Funding and assistance may be available from Federal agencies such as FEMA and the USEPA.

Damage estimates: The city should provide to the Cal OES estimates of damages and a "scope of work requested." It is recommended that the local HHW coordinator meet ahead of time with local emergency agencies or Cal OES contacts regarding the proper procedures and wording of requests for assistance.

Funding Process: The funding process may vary depending on the unique circumstances of the disaster. The process can either be the traditional FEMA reimbursement process, or by direct assistance from USEPA.

REFERENCES

California Integrated Waste Management Board, Integrated Waste Management Disaster Plan:

Guidance for local government on disaster debris management, January 1997.

Emergency Planning Contacts and Personnel
Primary County Contact: County of Santa Clara
Consumer and Environmental Protection Agency
Household Hazardous Waste Program
ATTN: Hazardous Materials Program Manager
(408)-918-1967

For Non-Emergency after-hours, contact County Communications at: (408) 977-3220

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Responsibility: Coordinate and establish proper collection and disposal methods for household hazardous waste. Assess the need for HHW and VSQG services in consultation with the City and other operations.

Cal OES Public Safety Communications Main Office
601 Sequoia Pacific Boulevard
Sacramento, CA 95811
(916) 894-5209

Cal OES
3650 Schriever Avenue
Mather, CA 95655-4203
(916) 845-8510

CHEMTREC Emergency number, (800) 424-9300
Non‑emergency (800) 262-8200

Chemtrec is a public service established by the Chemical Manufacturers Association. The Center was developed as a resource for obtaining immediate emergency response information to mitigate accidental chemical releases, and as a means for emergency responders to obtain technical assistance from chemical industry product safety specialists, emergency response coordinators, toxicologists, physicians, and other industry experts to safely mitigate incidents involving chemicals.
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ATTACHMENT E
Agreement for Countywide Household
Hazardous Waste Collection Program Page 23 of 27

EXHIBIT E

INSURANCE REQUIREMENTS FOR

ENVIRONMENTAL SERVICES

CONTRACTS
(Hazardous Waste Disposal, Remediation Services, Environmental Consulting, etc.) Indemnity
The Contractor shall indemnify, defend, and hold harmless the County of Santa Clara (hereinafter "County"), its officers, agents and employees from any third party claim, liability, loss, injury or damage to the extent arising out of, or in connection with, performance of this AGREEMENT by Contractor and/or its agents or employees, excepting only loss, injury or damage caused by the sole negligence or willful misconduct of personnel employed by the County. It is the intent of the parties to this AGREEMENT to provide the broadest possible coverage for the County. The Contractor shall reimburse the County for all costs, attorneys' fees, expenses and liabilities incurred with respect to any litigation in which the Contractor contests its obligation to indemnify, defend and/or hold harmless the County under this AGREEMENT and does not prevail in that contest.

Insurance
Without limiting the Contractor's indemnification of the County, the Contractor shall provide and maintain at its own expense, during the term of this AGREEMENT, or as may be further required herein, the following insurance coverages and provisions:

A. Evidence of Coverage
Prior to commencement of this AGREEMENT, the Contractor shall provide a Certificate of Insurance certifying that coverage as required herein has been obtained. Individual endorsements executed by the insurance carrier shall accompany the certificate.

This verification of coverage shall be sent to the requesting County department, unless otherwise directed. The Contractor shall not receive a Notice to Proceed with the work under the AGREEMENT until it has obtained all insurance required and such insurance has been approved by the County. This approval of insurance shall neither relieve nor decrease the liability of the Contractor.

B. Qualifying Insurers
All coverages, except surety, shall be issued by companies which hold a current policy holder's alphabetic and financial size category rating of not less than A- V, according to the current Best's Key Rating Guide or a company of equal financial stability that is approved by the County's Insurance Manager. 861
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ATTACHMENT E
Agreement for Countywide Household
Hazardous Waste Collection Program Page 24 of 27
Exhibit E (Continued)
C. Notice of Cancellation
Should any of the requested policies be cancelled before the expiration date, notice will be provided in accordance with policy provisions.

D. Insurance Required

1. Commercial General Liability Insurance - for bodily injury (including death) and property damage which provides limits as follows:
a. Each occurrence - $1,000,000
b. General aggregate - $2,000,000
c. Products/Completed Operations aggregate - $2,000,000 d. Personal Injury - $1,000,000

2. General liability coverage shall include:
a. Premises and Operations
b. Products/Completed
c. Personal Injury liability
d. Severability of interest

3. General liability coverage shall include the following endorsement, a copy of which shall be provided to the County:

Additional Insured Endorsement, (Commercial General Liability Additional Insured provided pursuant to Additional Insured Endorsement #1), which shall read:
“County of Santa Clara, and members of the Board of
Supervisors of the County of Santa Clara, and the officers, agents, and employees of the County of Santa Clara,
individually and collectively, as additional insureds provided pursuant to Additional Insured Endorsement Form #1.”
Insurance afforded by the additional insured endorsement shall apply as primary insurance, and other insurance maintained by the County of Santa Clara, its officers, agents, and employees shall be excess only and not contributing with insurance provided 862
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Exhibit E (Continued)
under this policy. Public Entities may also be added to the Additional Insured Endorsement Form #1 as applicable by way of insurance addendum, and the contractor shall be notified by the contracting department of these requirements.

4. Automobile Liability Insurance
For bodily injury (including death) and property damage which provides total limits of not less than one million dollars ($1,000,000) combined single limit per occurrence applicable to all owned, non-owned and hired vehicles. Coverage shall include Environmental Impairment Liability Endorsement MCS90 for contracts requiring the transportation of hazardous materials/wastes.

5. Workers' Compensation and Employer's Liability Insurance a. Statutory California Workers' Compensation coverage including broad form all-states coverage.
b. Employer's Liability coverage for not less than one million dollars ($1,000,000) per occurrence.

6. Contractors Pollution Liability Insurance
Coverage shall provide a minimum of not less than five million dollars ($5,000,000) per occurrence and aggregate for bodily injury, personal injury, property damage and cleanup costs both on and offsite.

7. Professional Errors and Omissions Liability Insurance (required for contractors providing professional services, such as through a professional engineer, registered geologist, etc.)
a. Coverage shall be in an amount of not less than one million dollars ($1,000,000) per claim/aggregate.
b. If coverage contains a deductible or self-retention, it shall be reviewed and approved by the County’s Insurance Manager prior to contract execution.
c. Coverage as required herein shall be maintained for a minimum of two years following termination or completion of this AGREEMENT. 863
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ATTACHMENT E
Agreement for Countywide Household
Hazardous Waste Collection Program Page 26 of 27
Exhibit E (Continued)

8. Claims Made Coverage
If coverage is written on a claims made basis, the Certificate of Insurance shall clearly state so. In addition to coverage requirements above, such policy shall provide that:
a. Policy retroactive date coincides with or precedes the Consultant's start of work (including subsequent policies purchased as renewals or replacements).
b. Policy allows for reporting of circumstances or incidents that might give rise to future claims. If coverage terminated Run-Off (Tail) coverage will be purchased for three (3) years following termination.

E. Special Provisions
The following provisions shall apply to this AGREEMENT:

1. The foregoing requirements as to the types and limits of insurance coverage to be maintained by the Contractor and any approval of said insurance by the County or its insurance consultant(s) are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by the Contractor pursuant to this AGREEMENT, including but not limited to the provisions concerning indemnification.

2. The County acknowledges that some insurance requirements contained in this AGREEMENT may be fulfilled by self-insurance on the part of the Contractor. However, this shall not in any way limit liabilities assumed by the Contractor under this AGREEMENT. Any self-insurance shall be approved in writing by the County upon satisfactory evidence of financial capacity. Contractors obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance programs or self-insurance retentions.

3. Should any of the work under this AGREEMENT be sublet, the Contractor shall require each of its subcontractors of any tier to carry the aforementioned coverages.

4. The County reserves the right to withhold payments to the Contractor in the event of material noncompliance with the insurance requirements outlined above.
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ATTACHMENT E
Agreement for Countywide Household
Hazardous Waste Collection Program Page 27 of 27
Exhibit E (Continued)
F. Fidelity Bonds (Required only if contractor will be receiving advanced funds or payments)
Before receiving compensation under this AGREEMENT, Contractor will furnish County with evidence that all officials, employees, and agents handling or having access to funds received or disbursed under this AGREEMENT, or authorized to sign or countersign checks, are covered by a BLANKET FIDELITY BOND in an amount of AT LEAST fifteen percent (15%) of the maximum financial obligation of the County cited herein. If such bond is canceled or reduced, Contractor will notify County immediately, and County may withhold further payment to Contractor until proper coverage has been obtained. Failure to give such notice may be cause for termination of this AGREEMENT, at the option of County.
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Attachment C
First Amendment to Countywide Household Page 1 of 6
Hazardous Waste Collection Program Agreement

FIRST AMENDMENT TO THE AGREEMENT FOR COUNTYWIDE HOUSEHOLD

HAZARDOUS WASTE COLLECTION PROGRAM
The Agreement for Countywide Household Hazardous Waste Collection Program (AGREEMENT) by and between the City of Cupertino (CITY) and the County of Santa Clara (COUNTY) previously entered into on June 28, 2024, is hereby amended as set forth below.

The COUNTY and the CITY agree that:

1. Section 3. FIXED PROGRAM COST is amended in full to read:

3. FIXED PROGRAM COST
Estimated HHW Fixed Program Costs are projected in Attachment B-1, attached hereto and incorporated herein. Fixed Program Costs are allocated to CITY at the conclusion of each fiscal year based on CITY’s proportional share of the County population and will not exceed $5.07 per household for Fiscal Years 2025 and 2026. Fixed Program Cost will not exceed $5.19 per household for Fiscal Year 2027. Fixed Program Costs may include, but are not limited to, up to eleven (11) County HHW Program staff members, facility lease costs, vehicle lease costs, office rent, office supplies, county administrative overhead, county legal counsel, training costs, equipment and facility maintenance and union negotiated salary and benefit changes.

2. Section 6. VARIABLE COST PER CAR is amended in full to read:

6. VARIABLE COST PER CAR
The Variable Cost Per Car is the cost associated with actual labor, waste disposal, transportation and other services provided to the residents at the County Household Hazardous Waste Collection Facilities (CoHHWCF) and at Temporary Events. The Variable Cost Per Car is estimated to be approximately $66.02 per participating resident car for Fiscal Years 2025 and 2026. The Variable Cost Per Car is estimated to be approximately $86.73 per participating resident car for Fiscal Year 2027. The estimated cost per car will be adjusted to reflect actual service costs. After Fixed Program Costs and San José Facility Use Surcharge are allocated on a per household basis, the Variable Cost Per Car will be used to calculate the costs to service 4% of households across all participating jurisdictions.

If the level of 4% of households is not reached in the CITY, the CoHHW Program may use the remaining balance of funds, in cooperation with the CITY, to increase public outreach and/or provide additional services in that jurisdiction the following year.
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Attachment C
First Amendment to Countywide Household Page 2 of 6
Hazardous Waste Collection Program Agreement

3. Section 16. ADDITIONAL SERVICES UNDER THIS AGREEMENT is amended in full to read:

16. ADDITIONAL SERVICES UNDER THIS AGREEMENT
CITY must augment funding provided under this AGREEMENT to cover the cost of a minimum participation level of 4% of CITY households; CITY may also elect to augment funding to provide additional services to increase CITY participation beyond the 4% minimum participation level.

Additional services shall be made available upon written agreement between the CITY’s authorized representative and the County Executive Officer or designee. Additional services may include, but are not limited to, additional appointments (charged at the Variable Cost Per Car rate), doorto-door HHW collection, used oil filter collection, universal waste collection, electronic waste collection, and abandoned waste collection.

CITY agrees to augment up to an additional $ 133,081 to the Countywide HHW Program during Fiscal Years 2025 and 2026 for the purpose of attaining or increasing CITY household participation above the 4% minimum participation level at the scheduled collection dates listed in Attachment C, attached hereto and incorporated herein. Augmentation will be calculated, where applicable, at the Variable Cost Per Car rate.

Other services will be charged based on a cost recovery basis. CITY authorizes the COUNTY to use CITY’S Available Discretionary Funding portion of the AB939 HHW Fee, if available, to offset the above agreed additional augmentation amount.

CITY agrees to augment up to an additional $169,513.83 to the Countywide HHW Program during Fiscal Year 2027 for the purpose of attaining or increasing CITY household participation above the 4% minimum participation level at the scheduled collection dates listed in Attachment C-2, attached hereto and incorporated herein. Augmentation will be calculated, where applicable, at the Variable Cost Per Car rate.

CITY agrees to make an interim payment to COUNTY amounting to 50 percent of the augmentation amount stated above for each fiscal year.

This interim payment shall be made no later than September 30th of each fiscal year. The remaining balance of any outstanding cost shall be reconciled and paid or refunded in accordance with the terms outlined in the annual cost statement.

At the end of each fiscal year, a final annual cost statement shall be prepared by COUNTY and issued to CITY by November 30th. The annual cost statement will take into consideration costs incurred on behalf of 867
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Attachment C
First Amendment to Countywide Household Page 3 of 6
Hazardous Waste Collection Program Agreement
CITY for additional services and all payments made by CITY to COUNTY.

If any balance is owed to COUNTY, it will be due within 30 days following receipt of the annual cost statement. If any credit is owed to CITY, COUNTY will refund that amount to CITY within 30 days following delivery of the annual cost statement.

4. Section 17. INFORMATION AND APPOINTMENT LINE is amended in full to read:

17. INFORMATION AND APPOINTMENT LINE
COUNTY will operate a telephone information and appointment desk Monday through Friday, from the hours of 8:30 a.m. to 4:30 p.m, except for COUNTY-recognized holidays The information service will register residents for the Temporary HHW Events and the collections at CoHHWCF. The information service will provide information about hazardous household materials. CITY will be notified immediately if resident participation approaches a level of service that may not be supported by available funding.

5. Attachment C-2 “HHW Schedule Of Collection Events for Fiscal Year 2026/2027” attached hereto and incorporated herein by this reference is hereby added to the AGREEMENT.

Except as provided herein, all terms and conditions of the AGREEMENT shall remain in full force and effect.

IN WITNESS WHEREOF, COUNTY and CITY, through their duly authorized representatives, have entered into this First Amendment to the AGREEMENT on the last date shown below:

COUNTY OF SANTA CLARA CITY OF CUPERTINO

Signature: Signature:

James R. Williams Name:_____________________
County Executive Title:

Date: Date:

APPROVED AS TO FORM AND LEGALITY

Willie Nguyen
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Attachment C
First Amendment to Countywide Household Page 4 of 6
Hazardous Waste Collection Program Agreement
Deputy County Counsel
Date:
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Hazardous Waste Collection Program Agreement
ATTACHMENT C-2: HHW SCHEDULE OF COLLECTION EVENTS FOR
FISCAL YEAR 2026/2027*
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First Amendment to Countywide Household Page 6 of 6
Hazardous Waste Collection Program Agreement

S M T W T F S S M T W T F S S M T W T F S
1 2 3 4 1 1 2 3 4 5
5 6 7 8 9 10 11 2 3 4 5 6 7 8 6 7 8 9 10 11 12
12 13 14 15 16 17 18 9 10 11 12 13 14 15 13 14 15 16 17 18 19 19 20 21 22 23 24 25 16 17 18 19 20 21 22 20 21 22 23 24 25 26 26 27 28 29 30 31 23 24 25 26 27 28 29 27 28 29 30
30 31

S M T W T F S S M T W T F S S M T W T F S
1 2 3 1 2 3 4 5 6 7 1 2 3 4 5
4 5 6 7 8 9 10 8 9 10 11 12 13 14 6 7 8 9 10 11 12
11 12 13 14 15 16 17 15 16 17 18 19 20 21 13 14 15 16 17 18 19 18 19 20 21 22 23 24 22 23 24 25 26 27 28 20 21 22 23 24 25 26 25 26 27 28 29 30 31 29 30 27 28 29 30 31

S M T W T F S S M T W T F S S M T W T F S
1 2 1 2 3 4 5 6 1 2 3 4 5 6
3 4 5 6 7 8 9 7 8 9 10 11 12 13 7 8 9 10 11 12 13
10 11 12 13 14 15 16 14 15 16 17 18 19 20 14 15 16 17 18 19 20 17 18 19 20 21 22 23 21 22 23 24 25 26 27 21 22 23 24 25 26 27 24 25 26 27 28 29 30 28 28 29 30 31
31 S M T W T F S S M T W T F S S M T W T F S
1 2 3 1 1 2 3 4 5
4 5 6 7 8 9 10 2 3 4 5 6 7 8 6 7 8 9 10 11 12
11 12 13 14 15 16 17 9 10 11 12 13 14 15 13 14 15 16 17 18 19 18 19 20 21 22 23 24 16 17 18 19 20 21 22 20 21 22 23 24 25 26 25 26 27 28 29 30 23 24 25 26 27 28 29 27 28 29 30
30 31
*Schedule subject to change*
KEY:

Las Plumas Permanent 102
LP & SM Permanent 34 136 Total Permanent Events
Temporary Event 10 146 Total Events
Holiday 11
April '27 May '27 June '27
July '26 August '26 September '26
October '26 November '26 December '26
HHW Schedule of Collection Events for Fiscal Year 2026/2027 January '27 February '27 March '27
2026-2027
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CITY OF CUPERTINO
Agenda Item
26-15017 Agenda Date: 5/19/2026
Agenda #: 18.

Subject: Public Hearing Pursuant to Government Code Section 3502.3 to Receive a Report on City of Cupertino Vacancies, Recruitment and Retention Efforts.

Receive the informational report on City of Cupertino Vacancies, and Recruitment and Retention Efforts Pursuant to Government Code Section 3502.3.

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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CITY MANAGER’S OFFICE

CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014-3255
TELEPHONE: (408) 777-3212
CUPERTINO.GOV

CITY COUNCIL STAFF REPORT
Date: May 19, 2026
Subject
Public Hearing Pursuant to Government Code Section 3502.3 to Receive a Report on City of Cupertino Vacancies, Recruitment and Retention Efforts.

Recommended Action
Receive the informational report on City of Cupertino Vacancies, and Recruitment and Retention Efforts Pursuant to Government Code Section 3502.3.

Background
Assembly Bill ("AB") 2561 (Attachment A), codified in Government Code section 3502.3, passed in 2024, requires public agencies to hold a public hearing to address the status of job vacancies prior to the adoption of the upcoming final budget. During this public hearing, the City must present information on the status of vacancies and the City's recruitment and retention efforts. If necessary, the City will identify necessary changes to policies, procedures, or recruitment activities that may lead to obstacles in the hiring process. This public hearing will ensure compliance with the new law as outlined in Attachment A. During this public hearing, the City must present information on the status of vacancies and the City's recruitment and retention efforts. If necessary, the City will identify necessary changes to policies, procedures, or recruitment activities that may lead to obstacles in the hiring process. This public hearing will ensure compliance with the new law.

Reasons for Recommendation
Staff will present the following required information at the public hearing prior to the adoption of the final budget:

1. The status of vacancies at the City of Cupertino.

2. Information on the City of Cupertino’s recruitment and retention efforts.

3. Obstacles in the City of Cupertino's policies, procedures, and recruitment activities that may create challenges in the hiring process.
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Based on the findings, staff recommends that Council receive the informational report on City of Cupertino Vacancies, and Recruitment and Retention Efforts Pursuant to Government Code Section 3502.3. No changes to policies, procedures, or recruitment practices are being recommended at this time.

As of April 15, 2026, there are no bargaining units with a vacancy rate exceeding 20%. If the number of job vacancies within a single bargaining unit meets or exceeds 20% of the total number of authorized full-time positions, the staff presentation will also include the following information:

1. The total number of job vacancies within the bargaining unit.

2. The total number of applicants for vacant positions within the bargaining unit.

3. The average number of days to complete the hiring process from when a position is posted.

4. Opportunities to improve compensation and other working conditions.

As shown in the table above, as of April 15, 2026, the Vacancy Rate is 5.7%. As a reference, the rate as of April 14, 2025, was 10.4%.

Sustainability Impact
No sustainability impact.

Fiscal Impact
No fiscal impact.

City Work Program (CWP) Item/Description
None
Council Goal:

Public Engagement and Transparency
Bargaining Unit Total
Positions
Vacant
Positions
Vacancy
Rate As of
4/15/2026
Cupertino Employees’ Association (CEA)/IFPTE
Local 21
71 3 4.2%
Operating Engineers Local No. 3 Union, AFL-CIO
(OE3)
54 1 1.9%
Unrepresented Management/Appointed Employees 85 8 9.4%
TOTAL (Does not include 5 Council positions) 210 12 5.7% 874
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California Environmental Quality Act
No California Environmental Quality Act impact.
_____________________________________
Prepared by: Vanessa Guerra, Human Resources Manager
Reviewed by: Kirsten Squarcia, Deputy City Manager
Floy Andrews, Interim City Attorney
Approved for Submission by: Tina Kapor, City Manager
Attachments:

A – Assembly Bill 2561
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Assembly Bill No. 2561
CHAPTER 409
An act to add Section 3502.3 to the Government Code, relating to public employment. [ Approved by Governor September 22, 2024. Filed with Secretary of State September 22, 2024. ]

LEGISLATIVE COUNSEL'S DIGEST
AB 2561, McKinnor. Local public employees: vacant positions.

Existing law, the Meyers-Milias-Brown Act (act), authorizes local public employees, as defined, to form, join, and participate in the activities of employee organizations of their own choosing for the purpose of representation on matters of labor relations. The act requires the governing body of a public agency to meet and confer in good faith regarding wages, hours, and other terms and conditions of employment with representatives of recognized employee organizations and to consider fully presentations that are made by the employee organization on behalf of its members before arriving at a determination of policy or course of action.

This bill would, as specified, require a public agency to present the status of vacancies and recruitment and retention efforts at a public hearing at least once per fiscal year, and would entitle the recognized employee organization to present at the hearing. If the number of job vacancies within a single bargaining unit meets or exceeds 20% of the total number of authorized full-time positions, the bill would require the public agency, upon request of the recognized employee organization, to include specified information during the public hearing. By imposing new duties on local public agencies, the bill would impose a state-mandated local program. The bill would also include related legislative findings.

The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

This bill would make legislative findings to that effect.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement shall be made pursuant to these statutory provisions for costs mandated by the state pursuant to this act, but would recognize that a local agency or school district may pursue any available remedies to seek reimbursement for these costs.

Digest Key
Vote: majority Appropriation: no Fiscal Committee: yes Local Program: yes Bill Text
4/30/25, 9:49 AM California-2023-AB2561-Chaptered
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THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS
FOLLOWS:

SECTION 1. The Legislature finds and declares as follows:
(a) Job vacancies in local government are a widespread and significant problem for the public sector affecting occupations across wage levels and educational requirements. (b) High job vacancies impact public service delivery and the workers who are forced to handle heavier workloads, with understaffing leading to burnout and increased turnover that further exacerbate staffing challenges.
(c) There is a statewide interest in ensuring that public agency operations are appropriately staffed and that high vacancy rates do not undermine public employee labor relations.

SEC. 2. Section 3502.3 is added to the Government Code, to read:
3502.3. (a) (1) A public agency shall present the status of vacancies and recruitment and retention efforts during a public hearing before the governing board at least once per fiscal year. (2) If the governing board will be adopting an annual or multiyear budget during the fiscal year, the presentation shall be made prior to the adoption of the final budget. (3) During the hearing, the public agency shall identify any necessary changes to policies, procedures, and recruitment activities that may lead to obstacles in the hiring process. (b) The recognized employee organization for a bargaining unit shall be entitled to make a presentation at the public hearing at which the public agency presents the status of vacancies and recruitment and retention efforts for positions within that bargaining unit.
(c) If the number of job vacancies within a single bargaining unit meets or exceeds 20 percent of the total number of authorized full-time positions, the public agency shall, upon request of the recognized employee organization, include all of the following information during the public hearing:
(1) The total number of job vacancies within the bargaining unit. (2) The total number of applicants for vacant positions within the bargaining unit. (3) The average number of days to complete the hiring process from when a position is posted. (4) Opportunities to improve compensation and other working conditions. (d) This section shall not prevent the governing board from holding additional public hearings about vacancies. (e) The provisions of this section are severable. If any provision of this section or its application is held invalid, the invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(f) For purposes of this section, “recognized employee organization” has the same meaning as defined in subdivision (a) of Section 3501.
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SEC. 3. The Legislature finds and declares that Section 2 of this act, which adds Section 3502.3 to the Government Code, furthers, within the meaning of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the Legislature makes the following findings:

It is in the public interest, and it furthers the purposes of paragraph (7) of subdivision (b) of Section (3) of Article I of the California Constitution, to ensure that information concerning public agency employment is available to the public.

SEC. 4. No reimbursement shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code for costs mandated by the state pursuant to this act. It is recognized, however, that a local agency or school district may pursue any remedies to obtain reimbursement available to it under Part 7 (commencing with Section 17500) and any other law.
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CITY OF CUPERTINO
Agenda Item
25-14460 Agenda Date: 5/19/2026
Agenda #: 19.

Subject: Acceptance of the City Manager’s Third Quarter Financial Report for Fiscal Year 2025-26; Budget Modification increasing appropriations by $526,184 and increasing estimated revenues by $372,500.

1. Accept the City Manager’s Third Quarter Financial Report for Fiscal Year 2025-26,

2. Adopt Resolution No. 26-060 approving Budget Modification No. 2526-443, increasing appropriations by $526,184 and increasing estimated revenues by $372,500; and

3. Adopt Resolution No. 26-061 amending the Unrepresented Employees’ Compensation Program to incorporate revised salary schedule.

CITY OF CUPERTINO Page 1 of 1 Printed on 5/13/2026
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CITY COUNCIL STAFF REPORT
Meeting: May 19, 2026
Subject
Acceptance of the City Manager’s Third Quarter Financial Report for Fiscal Year 2025-26; Budget Modification increasing appropriations by $526,184 and increasing estimated revenues by $372,500.

Recommended Action

1. Accept the City Manager’s Third Quarter Financial Report for Fiscal Year 2025-26

2. Adopt Resolution No. 26-XXX approving Budget Modification No. 2526-443, increasing appropriations by $526,184 and increasing estimated revenues by $372,500; and

3. Adopt Resolution No. 26-XXX amending the Unrepresented Employees’ Compensation Program to incorporate revised salary schedule.

Executive Summary
The Third-Quarter Financial Report for Fiscal Year (FY) 2025-26 outlines the City’s financial status as of March 31, 2026.

The FY 2025-26 Amended Budget as of March 31, 2026, is $229.7 million across all funds, increasing from an adopted budget of $136.1 million due to carryovers and encumbrances from the last fiscal year, in addition to Council-approved budget adjustments in the first three quarters of the fiscal year.

As of Third Quarter FY 2025-26, revenue was $2.5 million, or 3%, lowerthan Third Quarter 2024-25, primarily due to a combination of the lingering effects of the CDTFA settlement agreement and the timing of payments related to the City’s tax sharing agreements and associated rebates paid during the comparable period. Third Quarter expenditures were $0.5 million, or 1% lower than last year, primarily due to a City Council approved onetime Additional Discretionary Payment to CalPERS to address the City’s Unfunded Accrued Liability retirement costs.
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2 Key recommendations from this Third Quarter report include the following proposed budget adjustments:
• Funding for City Attorney Contract Services
• Funding for bank charges and credit card fees (with offsetting revenue) • Funding for on-call contracts and environmental review contracts (with offsetting revenue)
Reasons for Recommendation
Background
On June 3, 2025, the City Council adopted the FY 2025-26 Adopted Budget, a $136.1 million spending plan funded by $133.7 million in revenue, and $2.4 million in use of fund balance. The adopted budget reflected a $68,966 increase from the proposed budget as illustrated below.

Budget Actions Amount
Proposed Budget & Capital Improvement Program (Including Transfers) $ 135,997,435
Final Budget Hearing & Adoption
Operating Changes 68,966
FY 2025-26 Adopted Budget $ 136,066,401
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3 Third-Quarter Summary of Budget Adjustments by Fund
Discussion
The Third Quarter Financial Report, reported as of March 31, 2026, is a critical tool for the City to evaluate its current revenue outlook and make necessary adjustments to the budget in response to changing spending priorities. It provides an overview of the City's budget status, including its revenue outlook, expenditure patterns, and other key financial metrics. Additionally, the report helps the City ensure that it stays on track toward achieving its goals and objectives by providing valuable insights into the City's financial performance. By using this information to make informed decisions and take appropriate actions, the City can maintain its fiscal sustainability.

Fund
FY 2025-26
Adopted
Budget Carryovers Encumbrances
Adjustments
Approved in 1st,
2nd and 3rd
Quarters
FY 2025-26 Amended
Budget as of March
31, 2026
General 99,189,741 28,105,391 7,162,543 3,983,189 138,440,864 Special Revenue 10,810,122 17,269,837 1,604,982 135,181 29,820,122 Debt Service 2,676,600 - - - 2,676,600
Capital Projects 4,225,000 22,691,140 8,198,536 2,538,284 37,652,960 Enterprise 9,153,170 181,612 535,558 123,005 9,993,345
Internal Service 10,011,768 96,963 712,952 264,688 11,086,371 Total All Funds $ 136,066,401 $ 68,344,943 $ 18,214,571 $ 7,044,347 $ 229,670,262 882
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4 The City will continue to closely monitor revenue and expenditure trends in the coming months. This ongoing analysis is critical to ensuring that the City's budget remains responsive to the needs of its constituents and is aligned with the City's goals and objectives. By proactively managing its budget, the City can remain fiscally responsible and provide essential services and programs to its community.

General Fund Forecast
The General Fund Forecast has been updated as part of the FY 2026-27 Proposed Budget.

Please refer to pages 51-78 of the FY 2026-27 Proposed Budget document to review the forecast.

General Fund at Third Quarter
4-Year Comparison of Revenues, Expenditures, and Changes to Fund Balance ($ in millions)
The General Fund's year-end actuals show that the City’s revenues have historically exceeded expenditures, leading to the increase in fund balance. In addition, the City's 883
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5 encumbrance and budget carryover process typically led to increases in year-end fund balance. Historically, when this was not the case, it was not due to a structural deficit but the transfer of excess fund balance from the General Fund to the Capital Reserve per the City's Fund Balance policy. By continuing to monitor and manage its financial resources effectively, the City can ensure that it maintains a healthy fund balance in the General Fund.

General Fund Revenue
The following table shows the differences between General Fund revenues as of the third quarter in the current fiscal year and the prior fiscal year.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenues General Fund
Revenues in the General Fund decreased by $2.5 million, or 3%, when compared to the same time last year. The major drivers for the $2.5 million variance in General Fund revenues are attributed to decreases in Sales Tax and Use of Money and Property, offset by increases in Intergovernmental Revenue and Other Financing Sources. These major variance categories will be discussed in further detail below.

Sales Tax revenue as of third quarter is $12.5 million, which is a 22% decrease from the previous year. This decline is due to a combination of the lingering effects of the CDTFA Revenue Category
Third Quarter
2025
Third Quarter
2026 Variance ($) Variance (%)
05 - Sales tax 16,054,865 12,493,796 (3,561,069) -22%
10 - Property tax 20,752,532 21,300,606 548,074 3%
15 - Transient occupancy 4,226,041 4,425,328 199,287 5% 20 - Utility tax 2,859,665 2,921,800 62,135 2%
25 - Franchise fees 1,883,406 2,071,281 187,876 10%
30 - Other taxes 1,343,057 1,240,600 (102,458) -8%
35 - Licenses and permits 4,244,586 4,679,031 434,445 10% 40 - Use of money and property 7,410,031 6,406,916 (1,003,115) -14% 45 - Intergovernmental revenue 2,252,813 4,611,121 2,358,308 105% 50 - Charges for services 11,026,826 10,842,374 (184,452) -2% 55 - Fines and forfeitures 219,957 210,444 (9,513) -4%
60 - Miscellaneous 1,690,550 1,519,590 (170,960) -10%
65 - Transfers in 15,000 15,000 - 0%
70 - Other financing sources 1,338,475 99,118 1,331,275 99% Total 75,317,805 72,837,005 $ (2,480,800) -3%
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6 settlement agreement and the timing of payments related to the City’s tax sharing agreements and associated rebates paid during the comparable period.

Property Tax revenue is higher than last year by approximately $548,100, or 3%. According to the HdL, the City’s property tax consultant, the citywide growth in value in the 2025- 26 assessment roll is $1.21 billion, an increase of 3.6%. This is in comparison to the positive increase in 2024-25 tax year of $1.4 billion for an increase of 4.4%. The bulk of the increase was due to increases in residential properties by $1.4 billion, or 6.4%. This category makes up 64.8% of the net taxable value. Unsecured property tax decreased by $229.3 million, or

21.2%. This category makes up 2.4% of the net taxable value. Lastly, commercial property values increased by $49.8 million, or 0.5%. This category makes up 26.9% of the net taxable value.

Use of Money and Property decreased by approximately $1.0 million, or 14%, largely due to the reversal of the $2.8 million mark-to-market adjustment recorded as a year-end entry in FY 2023-24, resulting in a temporary positive revenue impact in the prior third-quarter period FY 2024-25.

Intergovernmental Revenue increased by $2.4 million, or 105%, over the same period last year primarily due to the receipt of a $3.7 million transportation grant from Apple.

Other Financing Sources decreased by $1.3 million, or 99%, due to revenues received from the sale of the Byrne property in the prior third quarter period.

The remaining revenue categories of transient occupancy tax, utility tax, franchise fees, other taxes, licenses and permits, charges for services, fines and forfeitures, miscellaneous, and transfers in have nominal change or remain relatively consistent with the prior thirdquarter period.

General Fund Expenditures
The following table shows the differences between General Fund expenditures as of the third quarter in the current fiscal year and the prior fiscal year. 885
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7 Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures General Fund
Expenditures in the General Fund decreased by $0.5 million, or 1%, when compared to the same time last year. The major drivers for the $0.5 million variance in General Fund expenditures are attributed to a decrease in Employee Benefits, offset by increases in Special Projects, Contract Services, Transfers Out, and Employee Compensation. These major variance categories will be discussed in further detail below.

Salary increased by approximately $0.8 million, or 5%, from the previous third quarter period due to vacancy savings in the prior year and negotiated cost of living adjustments Benefits decreased by approximately $10.6 million, or 60%, primarily due to a City Council approved one-time $10.0 million Additional Discretionary Payment to CalPERS to address the City’s Unfunded Accrued Liability retirement costs in the prior third-quarter period.

Contract Services increased by approximately $1.8 million, or 9%, primarily driven by outsourcing legal services, law enforcement contract costs, and community shuttle rate increases and increased ridership.

Special Projects increased by approximately $5.0 million, or 691%, primarily due to the I280/Wolfe Rd Interchange Improvement project and fluctuations in one-time expenditures. It’s important to note that staff has not adjusted projects in this category to align with the Special Project policy thus expenses in this category include all special projects, including development and City Work Program items.

Expenditure Category
Third Quarter
2025
Third Quarter
2026 Variance ($) Variance (%)
05 - Employee compensation 15,188,016 16,014,569 826,553 5% 10 - Employee benefits 17,717,676 7,122,462 (10,595,214) -60% 15 - Materials 4,133,926 4,070,628 (63,298) -2%
20 - Contract services 20,760,826 22,589,036 1,828,210 9% 25 - Cost allocation 7,978,935 8,323,844 344,909 4%
30 - Capital outlays 32,349 80,484 48,135 149%
31 - Special projects 728,275 5,760,913 5,032,639 691%
35 - Contingencies 13,617 9,850 (3,767) N/A
45 - Transfer out 11,504,732 13,225,753 1,721,021 15%
50 - Other financing uses 537,572 886,722 349,150 65%
Total $ 78,595,924 $ 78,084,261 $ (511,663) -1%
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8 Transfers Out increased by approximately $1.7 million, or 15%, primarily due to an increase in transfers to restart annual Capital Reserve funding transfer. Interfund transfers are the movement of cash between one or more funds. As part of the Adopted Budget process, transfers from the General Fund to other City funds serve as operating subsidies to ensure each fund has a positive fund balance at the end of the fiscal year.

Other Financing Uses increased by $0.3 million, or 65%, due to a higher volume of on-call contracts in the Community Development Department for plan reviews and inspections, and an increase in special contracts for current planning. Special contracts are for larger special projects or specialized tasks outside the scope of on-call agreements.

The remaining expenditure categories of materials, cost allocation, and contingencies have nominal change or remain relatively consistent with the prior third-quarter period.

Special Revenue Funds
Revenue
Special Revenue Funds revenue is $1.4 million, or 13%, lower than the same time last year, primarily due to a decrease in Other Taxes, Use of Money and Property, and Transfers In.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenues Special Revenue Funds
Other Taxes decreased by approximately $545,000, or 67%, primarily due to less Housing Mitigation and Park Ded Tax Zone 1.

Use of Money and Property decreased by approximately $529,000, or 36%, primarily due to the mark-to-market adjustment, mirroring the impact seen in the General Fund. 887
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9 Intergovernmental Revenue increased by approximately $271,000, or 6%, due primarily to Measure B Transportation fund street pavement maintenance.

Charges for services decreased by approximately $23,000, or 2%, primarily due to less engineering fees revenues received for traffic impact.

Fines and forfeitures and Miscellaneous revenues were relatively unchanged from the prior third quarter period.

Transfers In decreased by approximately $528,000, or 20%, due to decreased transfers in from general fund for roadway safety improvements, Bollinger Road corridors and nondepartmental for Bridge rehab minor.

Expenditures
Special Revenue Funds expenditures are $3.1 million, or 35%, lower than the same time last year due primarily to decrease in special projects and employee benefits.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures Special Revenue Funds
Salaries increased by approximately $32,500, or 3%, due to an increase in salaries and overtime.

Benefits decreased by approximately $94,900 or 15%, from last year due to decreases in health care premiums and retirement costs.
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10 Materials decreased by approximately $13,700, or 4%, due to decreases in grants expenditures.

Contract Services increased by approximately $37,800, or 13%, primarily due to annual sidewalk curb and gutter maintenance.

Cost Allocation decreased by approximately $14,600, or 1%, primarily due to increased Innovation & Technology reimbursements and Human Resources CAP Charges.

Capital Outlays increase by approximately $184,300, or 14%, due to increases in SB1 Road projects.

Special Projects decreased by approximately $2,766,100, or 95%, primarily due to the annual asphalt project.

Transfers Out increased by $487,000, or 69%, due to increased transfers to the General Fund.

Debt Service Funds
Revenue
Debt Service Funds revenue is similar to last year.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenue Debt Service Funds
Expenditures
Debt Service Funds expenditures are similar to last year. 889
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11 Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures Debt Service Funds
Capital Projects Funds
Revenue
Capital Projects Funds revenue is lower than last year primarily due to less transfers in.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenues Capital Projects Funds
Capital Projects funds differ from year to year based on projects that have been approved or worked on in a given fiscal year.

Expenditures
Capital Projects Funds expenditures are $7.1 million, or 62%, lower than last year due to an increase in transfers out to fund capital projects as the City increased the Capital Reserve to meet the minimum reserve levels per policy and restart the annual Capital Reserve funding transfers.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures Capital Projects Funds
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12 Capital Projects funds differ from year to year based on projects that have been approved or worked on in a given fiscal year.

Enterprise Funds
Revenue
Enterprise Funds revenue is $670,000 or 14%, higher than the same time last year due primarily to an increase in service fee charges.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenues Enterprise Funds
Use of Money and Property decreased by approximately $174,000, or 28%, primarily due to decreased in the Mark-to-Market adjustment.

Charges for services increased by approximately $110,000, or 3%, primarily due to an increase in engineering fees.

Transfers In increased by approximately $721,000, or 140%, due to transfers from the General Fund.

Expenditures
Enterprise Funds expenditure is $0.3 million, or 5%, lower than the same time last year due primarily to a decrease in contract services, capital outlay and special projects. 891
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13 Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures Enterprise Funds
Salaries is relatively unchanged from last year.

Benefits decreased by approximately $79,000, or 13%, primarily due to health insurance premiums and retirement costs.

Materials increased by approximately $77,000, or 24%, primarily due to electrical; service and Cal Recycle payment program administration expenses.

Contract Services decreased by approximately $161,000, or 9%, primarily due to the restructuring of the Lifetime Tennis contract at the Sports Center.

Cost Allocation increased by approximately $52,000, or 4%, primarily due to increased City Manager, Innovation & Technology and Finance CAP.

Special Projects decreased by approximately $174,000, or 86%, due to projects that differ in scope and timing from year to year.

Internal Service Funds
Revenue
Internal Service Funds revenue is $773,500, or 12%, higher than the same time last year due to increased charges for services and transfers in. 892
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14 Comparison of FY 2024-25 and FY 2025-26 Third Quarter Revenues Internal Service Funds
Use of Money and Property decreased by approximately $57,000, or 23%, due to decrease interest earnings from the City’s mark-to-market adjustments.

Charges for Services increased by approximately $457,000, or 13%, primarily due to Innovation Technology and Public Works related Cost Allocation charges.

Transfers In increased by approximately $335,000, or 14%, due to increased transfers from the General Fund to the Innovation & Technology and Compensated Absences Fund.

Other Financing Sources increased by about $35,000, or 8% due to workers compensation charges being billed to departments and received as revenue in this fund.

Expenditures
Internal Service Funds expenditures are approximately $980,000, or 17%, higher than the same time last year due primarily to an increase in cost allocation, materials, special project, and employee benefits offset by decreases in contract services.

Comparison of FY 2024-25 and FY 2025-26 Third Quarter Expenditures Internal Service Funds
Salary increased by approximately $151,000, or 13%, due to an increase in full-time salaries.
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15 Benefits increased by approximately $225,000, or 13%, primarily due to health insurance premiums and retirement costs.

Materials increased by $229,000, or 28%, mainly due to a decrease in small tools and equipment costs.

Contract Services decreased by approximately $300,000, or 19%, largely due to less contracted services and insurance.

Cost Allocation increased by approximately $426,000, or 186%, primarily due to City Manager, City Attorney and Finance related CAP charges.

Special Projects increased by approximately $247,000, or 95%, due to projects that differ in scope and timing from year to year.

Budget Adjustment Requests
The City's departments regularly evaluate their budget expenditures throughout the fiscal year to ensure they stay within their budget appropriations. In case of any variance, they can request budget adjustments as necessary as part of the quarterly reports.

The budget adjustment requests are summarized in the table below and are also provided in this report as Attachment E.
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16 Administration – City Attorney’s Office (CAO) – Contract Services Staff is requesting $175,000 for Legal Services as costs have increased due to unique circumstances, including various personnel matters, a City-sponsored affordable housing project which has led to litigation, a development project involving novel CEQA exemption issues, builder’s remedy cases and anticipated responses to a recently released Grand Jury Report.

Administration – City Attorney’s Office (CAO) – Senior Assistant City Attorney Salary Alignment to Department Director – effective January 1, 2026.

Staff is requesting an increase to salaries and benefits beginning January 1, 2026, through the remainder of Fiscal Year 2026 in the amount of $15,696 to align the salary of the Senior Assistant City Attorney. This alignment reflects the elevation of that classification as a member of the City’s Executive Management Team and increased responsibilities including review and revision of department staff reports, review of an increasing volume of Public Records Act requests, increased work on special complicated projects such as interagency agreements and appointment as the Board member to PLAN and its concomitant responsibilities in risk and insurance management. This alignment will result in an ongoing expense of approximately $31,391 for future fiscal years. 895
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17 Innovation and Technology – GIS - Wordly
Staff is requesting an approval of an annual cost of $7,488 for this proposal to ensure compliance with Senate Bill (SB) 707 language accessibility requirements by providing real‑time translation for Chinese‑speaking residents at City Council meetings. It improves transparency and civic participation, reduces staff workload and meeting‑related risks, and clearly demonstrates the City’s commitment to equity, inclusion, and accessible public engagement.

CDD & P&R – Bank Charges and Credit Card Fees
Staff is requesting $150,000 in additional appropriations for bank charges, offset by $200,000 in revenues from credit card transaction fees. This is needed to correct budget line items omitted from the base budget. If this request is not approved, the revenues and expenditures will not be correctly reflected in the department budget.

CDD – Human Services Grant Program
Staff is requesting $25,000 in additional appropriations for the GF Human Services Grant Program (HSG). This is needed to meet the funding recommendations awarded to the applicants of the HSG program. If this request is not approved the grant recipients won’t receive the funding needed for their public service activities.

CDD – Refundable Deposit Contract - Environmental Review Staff is requesting $150,000 in additional appropriations for On-Call Contracts and Special Contracts related to CEQA environmental review. This is needed due to an increase in contracts for large residential development projects utilizing Assembly Bill (AB) 130, a new State law created to accelerate housing development by streamlining approvals, creating exemptions from CEQA for infill projects, and making housing law reforms permanent. AB 130 streamlines development by reducing CEQA burdens and requires that the City act within a shorter timeframe than most other projects. As these tasks are time sensitive, not conducting them would put the City at risk of violating the mandated State timelines.

Commissions – Planning Commission – Advertising & Legal Notices Staff is requesting $3,000 in additional appropriations for Advertising and Legal Notices.

This is needed because more hearings were required, which necessitated more advertising and legal noticing than was anticipated at the beginning of the year.

Fund Balance
The General Fund’s audited ending fund balance for FY 2024-25 is $181.8 million, a 15.7 million increase from FY 2023-24 actuals primarily due to the prior year ending with expenditure savings that outpaced revenue decreases. Expenditure savings were primarily because of salary and contract savings along with increased revenues across almost all revenue categories, primarily due to increased investment earnings. 896
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18 As of third quarter, staff anticipate the General Fund will end FY 2025-26 with $178.0 million in fund balance, an increase of $22.0 million from the FY 2025-26 Adopted Budget fund balance projection. The increase from the Adopted Budget is a result of both yearend revenues exceeding expenditures and budget savings achieved in the prior fiscal year.

It’s important to note that the only portion available for use, according to City policy, is unassigned funds. Committed funds are set aside for specific purposes determined by City Council resolution. Restricted funds, such as the Section 115 Pension Trust, are allocated for specific purposes stipulated by external resource providers. Assigned funds are reserved for encumbrances. Of the total fund balance, $63.5 million is unassigned and available to be used.

Approximately $10.7 million of unassigned fund balance is attributed to Vallco Town Center plan check and building inspection revenues that were carried over. These revenues will continue to be carried over each year until the services are rendered, and the revenues are recognized.

General Fund Classification of Fund Balance ($ in millions) Per the City’s Fund Balance Policy, unassigned fund balance over $500,000 is to be used in the following order to replenish committed/restricted fund balances with any remaining balances to be placed in the Capital Reserve:

1. Economic Uncertainty Reserve

2. For Future Use

3. CalPERS Reserve (Section 115 Pension Trust)

4. Sustainability Reserve

5. Unassigned
As of third quarter, all priority areas in the General fund are fully funded.

Staffing
As of March 31, 2026, the FY 2025-26 Amended Budget includes a total of 211 full-time equivalent (FTE) positions. No changes are recommended in the third quarter.

Classification
Actual
2023-24
Actual
2024-25
Adopted Budget
2025-26
1st Quarter Year End
Projection
2025-26
Mid-Year Year End
Projection
2025-26
Third Quarter Year
End Projection
2025-26
Non Spendable $ 3.4 $ 4.0 $ 3.5 $ 4.0 $ 4.0 $ 4.0
Restricted 23.3 25.8 22.1 24.8 25.8 24.3
Committed 108.6 88.6 87.2 88.6 86.1 86.1
Assigned 4.7 7.3 - - - -
Unassigned 26.0 56.1 43.3 65.5 62.7 63.5
TOTAL FUND BALANCE $ 166.1 $ 181.8 $ 156.0 $ 183.0 $ 178.7 $ 178.0 897
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19 City Manager Discretionary Fund
In the FY 2025-26 Adopted Budget, City Council approved $50,000 in funding for the City Manager Discretionary Fund. The quarterly financial reports will detail the City Manager’s use of the discretionary fund and may include recommendations to replenish depending on the extent and nature of use. As of March 31, 2026, the City Manager’s Discretionary Fund has been used for Property Appraisal Services for 10480 Finch Avenue at a cost of $9,850.

Special Projects
The quarterly financial reports provide a status update on special projects, including the budget, amount spent, and estimated completion date. See Attachment F for FY 2025-26 special projects as of March 31, 2026. This quarterly report only reflects changes made to special projects as defined in the City Council Special Project Policy.

Grants
Staff provides updates on the status of grants as part of the quarterly financial reports. As mentioned in the First Quarter financial staff report, staff will begin to provide updates only on active grants and any completed projects for which funding is yet to be received.

Active grants have not yet been fully closed out with the granting agency. Previously, staff reported on grants that have also been closed out. Staff now provides information on the granting agency, grant amount spent, and grant amount remaining.

Below is a high-level summary of the grant tracking document and a count of pending potential awards including a combined state budget request, a single federal budget request and 3 standard competitive proposal processes. Please refer to Attachment G for complete grant tracking updates.

Competitive Grants Non-Competitive Grants
Active Grants 15 17
Applications Submitted
Awaiting Possible Award
5 0
Total Grant Dollars Awarded $29,176,392 $3,394,360
Staff will continue to provide additional updates on the status of grants as part of the quarterly financial reports.

Capital Improvement Program
The quarterly financial reports provide a revised estimate and update on Capital Improvement Program (CIP) projects. As of third-quarter, the Public Works Department is not requesting any revisions to the capital budget. See Attachment H for the status of projects.
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20 Capital Improvement Plan
Public Works staff has brought forward potential Capital Improvement Projects to City Council in March 2026. Projects will again be reviewed at the FY 2026-27 Proposed Budget Study Session in May 2026, for inclusion in the FY 2026-27 Final Budget Hearing and Adoption in June 2026.

Sustainability Impact
No sustainability impact.

Fiscal Impact
The Third Quarter Financial Report shows the City is positioned as anticipated. City staff recommends adjustments of $526,184 in new appropriations, funded by $372,500 in revenues and $153,684 in one-time fund balance. The City will continue to monitor its revenue and expenditure trends closely to ensure it remains on track toward achieving its budgetary goals and objectives.

City Work Program (CWP) Item/ Description:

Not applicable.

Council Goal:

Public Engagement and Transparency, Fiscal Strategy
California Environmental Quality Act
Not applicable.
_____________________________________
Prepared by: Toni Oasay-Anderson, Acting Budget Manager Reviewed by: Jonathan Orozco, Acting Director of Administrative Services Approved for Submission by: Tina Kapoor, City Manager
Attachments:

A – FY 2025-26 Third Quarter Financial Report
B – Draft Resolution
C – Description of Budget Transfers as of March 31, 2026 D – Description of Carryovers and Adjustments as of March 31, 2026 E – FY 2025-26 Third Quarter Recommended Adjustments
F – FY 2025-26 Third Quarter Special Projects Update as of March 31, 2026 G – Competitive and Non-Competitive Citywide Grants Tracking H – Capital Improvement Program Project Status
I – Draft Resolution – Unrepresented Employees’ Compensation Program J - Amendments to the Unrep Employees’ Compensation Program (clean) K - Amendments to the Unrep Employees’ Compensation Program (redline) 899
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This Financial Report is interactive. Click on a chart to learn more.

Background
On June 3, 2025, the City Council adopted the FY 2025-26 Adopted Budget, a $136.1 million spending plan funded by $133.7 million in revenue and $2.4 million in fund balance. The adopted budget reflected a $68,966 increase from the proposed budget as illustrated below.

As of Third Quarter FY 2025-26, revenue was $2.5 million, or 3%, lower than Third Quarter 2024-25, primarily due to a decrease in reported sales tax this period compared to the prior third-quarter period, and also due to the reversal of the $2.8 million mark-to-market adjustment recorded as a year-end entry in FY 2023-24, resulting in a temporary positive revenue impact in the prior third-quarter period FY 2024-25.

Third Quarter expenditures were $0.5 million, or 1% lower than last year, primarily due to a City Council approved one-time Additional Discretionary Payment to CalPERS to address the City’s Unfunded Accrued Liability retirement costs.

CITY OF CUPERTINO
FY 2025-26 Third Quarter Report
The Administrative Services Department is pleased to present the Third Quarter Financial Report for Fiscal Year 2025-26, covering the period from January 1, 2026 to March 31, 2026. This report serves as an update on the City's financial standing, providing the City Council, City leadership, and the public with important insights on the City's fiscal status.

The City is committed to providing accurate and timely financial information, and this report reflects its ongoing efforts to maintain transparency and accountability. 900
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Amended Budget
Cupertino's budgets: cupertino.org/budget
Updated On 13 May, 2026
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General Fund Classification of Fund Balance
As of third quarter, staff anticipate the General Fund will end FY 2025-26 with $178.0 million in fund balance, an increase of $22.0 million from the FY 2025-26 Adopted Budget fund balance projection. The increase from the Adopted Budget is a result of both year-end revenues exceeding expenditures and budget savings achieved in the prior fiscal year. It’s important to note that the only portion available for use, according to City policy, is unassigned funds. Committed funds are set aside for specific purposes determined by City Council resolution. Restricted funds, such as the Section 115 Pension Trust, are allocated for specific purposes stipulated by external resource providers. Assigned funds are reserved for encumbrances. Of the total fund balance, $63.5 million is unassigned and available to be used.

Recommended Adjustments
The City's departments regularly evaluate their budget expenditures throughout the fiscal year to ensure they stay within their budget appropriations. In case of any variance, they can request budget adjustments as necessary as part of the quarterly reports.

The budget adjustment requests are summarized in the table below. 902
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Summary
The Third Quarter Financial Report shows the City is positioned as anticipated. City staff recommends adjustments of $526,184 in new appropriations, funded by $372,500 in revenues and $153,684 in one-time fund balance. The City will continue to monitor its revenue and expenditure trends closely to ensure it remains on track toward achieving its budgetary goals and objectives.

City of Cupertino, California
Cupertino City Hall
10300 Torre Avenue
Cupertino, CA 95014-3202
View the City Council Meeting Agendas
View the City's Budgets
View the City's Financial Transparency Portal
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RESOLUTION NO. 26-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING THE OPERATING BUDGET FOR FISCAL YEAR 2025-26 BY

APPROPRIATING, TRANSFERRING, AND UNAPPROPRIATING MONIES

FOR SPECIFIED FUNDS
WHEREAS, the orderly administration of municipal government depends on a sound fiscal policy of maintaining a proper ratio of expenditures within anticipated revenues and available monies; and
WHEREAS, accomplishing City Council directives, projects and programs, and performing staff duties and responsibilities likewise depends on the monies available for that purpose; and
WHEREAS, the City Manager has determined that the balances from the funds specified in this resolution are adequate to cover the proposed amended appropriations, and therefore recommends the fund reallocations described herein.

NOW, THEREFORE, BE IT RESOLVED that the City Council does hereby approve the recommended fund reallocations and ratifies the attached amended appropriations as set forth in Exhibit A.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 19th day of May 2026, by the following vote:

Members of the City Council
AYES:

NOES:

ABSENT:

ABSTAIN:
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Resolution No. 26-__

Page 2 ends

Cupertino City CouncilMay 19, 2026

Cupertino City Council
May 19, 2026