City of Gilroy
STAFF REPORT
Agenda Item Title: Receive Preliminary Fiscal Year 2023-24 (FY24) YearEnd Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to
Appropriate Mid-cycle Budgetary Adjustments
Meeting Date: November 18, 2024
From: Jimmy Forbis, City Administrator
Department: Finance
Submitted By: Harjot Sangha, Finance Director
Prepared By: Carina Baksa, Finance Manager
STRATEGIC PLAN GOALS Develop a Financially Resilient Organization
RECOMMENDATION
1. Receive preliminary Fiscal Year 2023-24 (FY24) year-end financial report.
2. Adopt a resolution amending the FY25 budget to appropriate mid-cycle budget adjustments.
3. Approve the Pension and Other Post-Employment Benefits (OPEB) Section 115 Trust contributions pursuant to the Council adopted policies.
EXECUTIVE SUMMARY
This report serves to inform the City Council about the City’s Fiscal Year 2024 (FY24) preliminary year-end financial performance. The General Fund is the primary focus of this report, as it is the primary funding source for essential City services. All the nongeneral funds’ information is presented in aggregate in the latter part of the report.
BACKGROUND
The City of Gilroy adopts two, one-year operational budgets through a biennial budget process. The FY24 and FY25 budgets were adopted on June 5, 2023. Staff has provided Council with a quarterly financial report throughout FY24, with the Third
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Receive Preliminary Fiscal Year 2023-24 (FY24) Year-End Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to Appropriate Mid-cycle Budgetary Adjustments
City of Gilroy City Council Page 2 of 12 November 18, 2024 Quarter report to Council presented on May 20, 2024. This report provides the preliminary FY24 year-end financial report and the recommended mid-cycle adjustments.
ANALYSIS
General Fund
Revenues
For FY24, the General Fund revenues totaled $68.1 million, approximately $1.7 million better than the amended budget of $66.4 million. The table below provides a breakdown of General Fund revenues by category and a comparison to the amended budget, which are further discussed below.
Sales Tax – Sales Tax is one of the General Fund’s primary sources of revenue. The FY24 budget for sales tax revenue was $21.8 million. Based on the previous quarterly sales tax report, it was reported that the City’s sales tax revenue for FY24 was expected to come in under budget by approximately $0.9 million. Sales tax revenue performed slightly better than expected, coming in at $21.1 million, approximately $0.7 million under budget for FY24.
Property Tax – Property Tax is the second major source of revenue for the General Fund. The FY24 budget for property tax revenue was $20.4 million of which $20.4 million were received, which includes $2.0 million from the Excess Educational Revenue Augmentation Fund (ERAF).
Utility Users Tax (UUT) - Utility taxes are assessed against the value of energy and telecommunications, such as gas, electricity, steam, cable, and phone charges. The current tax rates are 4.5% for telecommunications and 5% for gas and electricity. The FY24 budget for utility user tax was $6.5 million of which $6.6 million were received.
General Fund Revenues by
Category
FY24 Amended
Budget
Actuals through
June 30, 2024
(Unaudited) % of Budget
Sales Tax $ 21.8 $ 21.1 97%
Property Tax 20.4 20.4 100%
Utility User Tax 6.5 6.6 100%
Franchise Tax 2.3 2.2 99%
Transient Occupancy Tax 2.0 1.6 80%
Business License Fee 0.7 0.9 122%
Other Revenues 12.7 15.3 120%
Total $ 66.4 $ 68.1 102%
(In Millions)
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City of Gilroy City Council Page 3 of 12 November 18, 2024 Franchise Tax - The City receives franchise tax revenue from three franchise types, including gas and electric, cable tv, and garbage/refuse. The FY24 budget for franchise tax was $2.3 million of which $2.2 million were received.
Transient Occupancy Tax (TOT) - The City’s TOT revenue comes from a 9% tax on hotel room rentals under 30 days, as well as from some of the RV parks in the City.
FY24 budget for TOT was $2.0 million of which $1.6 million was received, approximately $0.4 million under budget. This is primarily a result of lower-thanprojected occupancy throughout the year. The City’s current adopted work plan for FY24 and FY25 includes a review of the TOT return for all lodging operators to further ensure the assessments are correctly being assessed and collected from the transients.
Business License - The FY24 budget for Business License fees was $0.7 million of which $0.9 million was received. The additional $0.2 million is a result of the additional discovery and collections efforts undertaken during the year.
Other General Fund revenues - This category comprises departmental service charges, general administration charges, fines and forfeitures, and other intergovernmental revenues. The FY24 budget for this aggregate revenue category was $12.7 million of which $15.3 million was received. This is $2.6 million higher than budget, primarily due to catch-up payments received from Gilroy Gardens pursuant to their Lease Agreement, approximately $0.7 million (one-time) and higher than anticipated interest revenue of about $0.8 million. Interest revenue is largely dependent on the performance of the City’s cash investments.
Expenditures
For FY24, the General Fund expenditures, including outstanding encumbrances, were $73.0 million, approximately 2%, or about $1.8 million under budget. The table below provides a breakdown of General Fund expenditures by Department or Function and a comparison to the amended budget.
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Receive Preliminary Fiscal Year 2023-24 (FY24) Year-End Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to Appropriate Mid-cycle Budgetary Adjustments
City of Gilroy City Council Page 4 of 12 November 18, 2024 The preliminary FY24 ending General Fund balance is $33.4 million, or about 46%. The minimum required fund balance establish by the Council is 30%, or about $21.9 million.
The recommended mid-cycle budgetary adjustments for the General Fund and NonGeneral Funds is outlined further below in the “Mid-Cycle Budget Adjustments” section of the Analysis.
Non-General Funds
Revenues
The City has approximately 60 non-general funds. The information for these funds is presented in the table below in aggregate, by fund type, along with a brief description of what is included in these categories. Non-General Fund revenues for FY24 totaled $83.4 million or 87% of the amended budget of $96.1 million. The low receipts in Capital/Development Funds is primarily related to bond proceeds of $12.5 million that were budgeted for the Gilroy Ice Center in FY24, but is now expected to occur in FY25.
This is further discussed on the next page, with the Capital/Development Funds subsection.
General Fund Expenditures
by Department/Function
FY24 Amended
Budget
Actuals through
June 30, 2024
(Unaudited) % of Budget
Administration $ 3.8 $ 3.7 98%
Recreation Transfer 1.5 1.5 100%
Other Transfers 1.0 1.0 100%
Human Resources 1.7 1.5 84%
Community Development 6.1 5.3 87%
Finance 1.2 1.2 97%
Fire 15.8 15.9 101%
Other General Government 3.2 3.7 115%
Police 30.8 30.4 99%
Public Works 9.7 8.8 91%
Total $ 74.8 $ 73.0 98%
(In Millions)
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City of Gilroy City Council Page 5 of 12 November 18, 2024 Special Revenues – The primary source of this fund type is intergovernmental funds in the manner of tax sharing or grants from Federal, State, County, and other regional governments. For the City of Gilroy, these Special Revenues provide funding for transportation (Gas Taxes, Vehicle Registration, and Measure B), public safety (Proposition 172 sales tax, Gang Prevention, and regional task forces), and community development (CDBG and housing) among others. The FY24 budget for Special Revenues Funds is $9.6 million of which $9.0 million was received.
Recreation – The Recreation Fund receives an annual allocation of $1.5 million from the General Fund and, in addition, acquires revenues from charges for services or grants related to recreation programs. The FY24 budget for Recreation revenue was $2.3 million of which $2.3 million was received.
Capital/Development Impact Funds – Revenues in the Capital and Development Impact Funds are primarily generated by new development approvals and the required contributions to offset infrastructure impacts. Revenue depends on the size and impact of the development and the timing of the project; therefore, revenue is not evenly distributed throughout the fiscal year. The FY24 budget for Capital/Development Funds revenue was $32.1 million of which $15.2 million was received. This revenue category came under budget primarily because it included $12.5 million expected revenue from bond proceeds for the Gilroy Ice Center Project, which is now expected to occur in FY25.Large capital projects, such as the Gilroy Ice Center, are typically financed by the issuance of Bonds to fund different phases of the project and the project is delivered over multiple fiscal years. Bond financing can be a single issuance or multiple issuances for different phases of the project. The Gilroy Ice Center project is expected to be a design-build project and was originally budgeted to commence design-build in FY24, with completion in FY25 with approximately $12.5 million bond proceed in each fiscal year. The project is currently undergoing environmental clearance and is now expected to enter design-build phase in FY25, with completion in FY26. The final bond financing plan will be determined and brought before the Council for formal approval.
Non-General Fund Revenues
by Fund Type
FY24 Amended
Budget
Actuals through
June 30, 2024
(Unaudited) % of Budget
Special Revenue $ 9.6 $ 9.0 94%
Recreation 2.3 2.3 100%
Capital/Development 32.1 15.2 47%
Debt Service 5.0 5.0 100%
Internal Service 16.2 16.3 101%
Sewer 16.4 18.9 115%
Water 14.5 16.8 115%
Total $ 96.1 $ 83.4 87%
(In Millions)
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City of Gilroy City Council Page 6 of 12 November 18, 2024 Debt Service - Debt Service funds receive their revenue from annual property tax levies and/or via interfund transfers from other funds and are typically aligned with the timing of the debt service payment. The FY24 budget for Debt Service revenue was $5.0 million of which $5.0 million was received.
Internal Service – Internal Service Funds (Information Technology (IT), Fleet, Facilities, Worker’s Compensation, and Liability Funds) primarily receive their revenue from charges to other departments and funds in the City. These charges are typically assessed in equal monthly amounts based on the budget. The FY24 budget for Internal Service Funds revenue was $16.2 million of which $16.3 million was received, the increase was primarily due to higher interest revenue received.
Sewer Enterprise– The FY24 budget for Sewer revenue is $16.4 million of which $18.9 million was received. The Sewer Enterprise Fund generates its revenue from utility user charges. The increase in revenues in this Fund are primarily due to higher interest revenue received.
Water Enterprise – The FY24 budget for Water revenue is $14.5 million of which $16.8 million was received. Like the Sewer Fund, the Water Fund generates its revenues from utility user charges. The increased revenues in this Fund are primarily due to higher interest revenue received as well as increased revenue from new connection and installation charges, more than projected.
Expenditures
For FY24, in aggregate, the Non-General Fund expenditures, including outstanding encumbrances, totaled $100.9 million, approximately $38.4 million, or 28%, less than the appropriated budget. The table below provides a breakdown of Non-General Fund expenditures by Fund and a comparison to the amended budget.
Non-General Fund
Expenditures by Fund Type
FY24 Amended
Budget
Actuals through
June 30, 2024
(Unaudited) % of Budget
Special Revenue $ 15.3 $ 13.1 85%
Recreation 2.1 1.8 88%
Capital/Development 37.9 15.2 40%
Debt Service 4.9 5.0 101%
Internal Service 22.0 16.0 73%
Sewer 36.5 31.1 85%
Water 20.6 18.7 91%
Total $ 139.3 $ 100.9 72%
(In Millions)
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City of Gilroy City Council Page 7 of 12 November 18, 2024 Special Revenues – For FY24, the City expended $13.1 million, or 85%, of the $15.3 million in special revenue appropriations. The primary category of expenditures for special revenue funds is capital outlay (Gas Taxes, Measure B, Vehicle Registration, and SB1) and special revenue grants for the Police Department. The underspending was primarily in capital outlay within the Sidewalk Repairs fund, and the Vehicle Registration Fund, followed by materials and services category within the Police Grant Funds for grant such as Title II, which are expected to now occur in FY25.
Recreation – For FY24, the Recreation Fund expended $1.8 million, approximately $0.3 million, or 12%, less than the appropriated budget. The under spending was primarily related to salary savings and materials and services.
Capital/Development Impact Funds – For FY24, the City expended $15.2 million, or 40%, of the $37.9 million appropriations in the Capital/Development Impact Funds. The underspending was primarily in the capital outlay expenditures notably within the Public Facilities Impact Fund related to the Gilroy Ice Center project, which is now expected to occur in FY25, and the Downtown Beautification Fund ($3.9 million grant for Gourmet/Railroad alley) contract which was awarded, and majority of the expenditures will occur in FY25 as the project is will be completed in fall of 2024.
Internal Service Funds (ISFs) – For FY24, the City expended $16.0 million, or 73%, of the $22.0 million appropriations in the Internal Service Funds. The underspending was primarily in the capital outlay expenditures in the Equipment Outlay Fund from the Citywide Energy Conservation Measures and the Fire Stations upgrade and remodel projects. Both projects are expected to commence in the current fiscal year, FY25.
Debt Service – For FY24, this fund type expended the full budgeted amount of approximately $5.0 million to make the annual debt payments for the outstanding loan, and the general obligation and lease revenue bonds.
Sewer Enterprise – For FY24, the Sewer Fund expended $31.1million, or 85%, of the $36.5 million appropriations. The underspending was primarily in the capital outlay expenditures related to the Sewer Treatment Plant Expansion Project and the Joint Morgan Hill Trunk Line Repair project. The Sewer Treatment Plant Expansion project is expected to substantially be complete within the FY25, and the Trunk Line Repair project is expected to commence design phase in fall of 2024.
Water Enterprise – For FY24, the Water Fund expended $18.7 million, or 91%, of the $20.6 million appropriations. The underspending was in the capital outlay expenditures for various water utility capital improvement projects.
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City of Gilroy City Council Page 8 of 12 November 18, 2024 Mid-Cycle Budget Adjustments
Included with this report are adjustments to the revenues and expenditures in various funds as part of this mid-cycle report. Majority of the budget adjustments are carryforward of projects or initiatives the City Council approved as part of the adopted FY24 and FY25 budget but were not commenced or otherwise encumbered during the fiscal year. These adjustments are itemized and included as Exhibit A to the attached budget amendment resolution and major adjustments are discussed below by Fund Type.
General Fund:
• Revenues: $0.2 million - A net increase in General Fund revenue of $0.2 million is included in the mid-cycle adjustments. Key adjustments to the General Fund revenues include a decrease to the FY25 Sales Tax revenue of $0.6 million, which is offset by the projected increase in investment income of $0.4 million.
The remaining adjustments are primarily related to Grant revenues for the Emergency Operations Center and a Federal Grant for the Public Works Department for the development of Local Roads Safety Plan. • Expenditures: $3.9 million – Of this total, approximately $2.0 million is for the Public Works Department for Capital Projects, which includes: an increase to citywide park restroom rehabilitation project ($0.2 million), Miller Park electrical undergrounding project ($0.1 million) general citywide park improvements for equipment and structures ($0.3 million), an increase to the FY25 pavement rehabilitation project by reprogramming the savings realized from FY23 pavement rehabilitation project ($0.7 million),development of a grant funded Local Roads and Safety Plan ($0.2 million), traffic calming improvements ($0.2 million), and an investment to procure special events street barriers ($0.3 million). $0.5 million for the Community Development Department primarily includes the Climate Action Plan development. In addition, there is total of $0.9 million included as Section 115 Trust contributions for the Pension and OPEB Trusts based on City Council’s adopted policies.
Summary by Fund Type Revenues Expenditures
General Fund $ 199,946 $ 3,941,172
Special RevenueFunds 658,781 1,716,791
Capital/Development Funds 700,000 4,997,733
Internal Services Funds (1,403,540) 3,513,167
EnterpriseFunds - 1,771,535
AgencyFunds - 15,000
All FUNDS TOTAL $ 155,187 $ 15,955,398
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City of Gilroy City Council Page 9 of 12 November 18, 2024 Non-General Funds
• Special Revenue Funds
o Revenues: $0.7 million – The revenue adjustments are primarily related to Police grant funds which were not received/expended in FY24 and are being carryforward as allowed by the Grantors.
o Expenditures: $1.7 million – The expenditures adjustments are primarily related to Police grants for the amount of $0.5 million; a carry forward of capital outlays totaling $0.6 million for the Public Works Department for sidewalk repair and maintenance, annual traffic signal upgrades and safe routes to school, and additional landscape upgrades within the Landscape Community Facilities Districts. The remaining amount is related to CDBG final allocations for FY25, and increase in operation costs for the street lights.
• Capital/Development Funds
o Revenues: $0.7 million – The revenue adjustment is for the recently awarded state and federal grants for the Gateway Apartments Pedestrian Crossing Safety improvements.
o Expenditures: $5.0 million – The expenditure adjustments are primarily for capital outlay related to the Pedestrian Cross Safety improvements (0.7 million, Water well CIP ($2.8 million), Gilroy Ice Center related infrastructure improvements ($0.5 million), Civic Center Masterplan development ($0.8 million), and State mandated stormwater compliance projects ($0.2 million).
• Internal Service Funds
o Revenues: A net decrease of $1.4 million revenue adjustments is primarily related to a decrease of $2.0 million related to the Citywide Energy Savings Measure project, offset by increases to Fleet and General Liability insurance charges of $0.6 million to the Departments for increases in ongoing operations and insurance costs. The Energy Saving Measures project was anticipating reimbursements from PG&E at the completion of the project, which now are not expected to materialize at the same level due to PG&E enacted changes to their qualification’s metric for the related program. Therefore, both the revenue and the related expenditure are being adjusted down for the project.
o Expenditures: $3.5 million – The expenditure adjustments are primarily related to the Citywide Energy Savings Measures project of $1.7 million which is now expected to be completed in FY25, $0.7 million for Information Technology related expenditures for Cybersecurity assessment implementation, and $0.7 million for Facilities carryforward of capital outlay for the Old City Hall HVAC and the Shooting Range Lead Abatement projects.
• Enterprise Funds
o Expenditures: $1.8 million – The expenditures adjustments include $0.2 million in the Sewer Fund for increases to the Fleet and insurance
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Receive Preliminary Fiscal Year 2023-24 (FY24) Year-End Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to Appropriate Mid-cycle Budgetary Adjustments
City of Gilroy City Council Page 10 of 12 November 18, 2024 charges, and additional one-time expenditures for repairs at the Annex building which will house the newly established Utilities Department. $1.6 million expenditure adjustment is in the Water Fund for Water Reservoir projects ($1.0 million), and the remaining is for the increase in operational costs, notably the fleet and insurance charges, electricity, and one-time repairs at the Annex building for the newly established Utilities Department.
• Agency Funds
o Expenditures: The increase of $15,000 is to the Highway 152 Agency Fund, which is expected to have increases in contractual services related to the administration and the annual disclosure filings required by the outstanding Bonds. The expenditures are recouped via the annual levies of assessments within the district.
Other Financial Updates
• Pensions – The City has an unfunded accrued liability (UAL) associated with its CalPERS pension plans. As of June 30, 2022, the City’s UAL was $110.7 million; however; CalPERS reported investment returns of 6.1% for FY23, which were lower than CalPERS target investment return of 6.8%, increased the City’s UAL to $117.4 million as of June 30, 2023, based on the recently released actuarial valuation reports. In July 2024, CalPERS announced preliminary investment returns of 9.3% for the fiscal year ending June 30, 2024, which is expected to lower the City’s UAL to $111.0 million. The impact of the lower UAL and related lower UAL payment is expected to take effect in FY27 onwards. The City has taken prudent efforts to mitigate the impacts of rising pension costs by establishing the Section 115 Pension Trust and making annual contributions. As of September 30, 2024, the Pension Trust had a balance of $4.0 million – earning a very strong return of 21.2% over the past year. Given the year-overyear projected increases of the annual UAL payments, continuing to grow the Pension Trust through additional deposits and investment earnings is recommended and will serve to help lessen the impact on the General Fund in future years when UAL payments are highest. Staff expect in the next couple years, beginning in FY27, the City will be able to leverage the Pension Trust (withdraw funds) in a strategic manner, ranging from $0.5 million up to $1.8 million annually, to help pay for a portion of the annual UAL payments and lessen the burden to the City’s General Fund, resulting in a net savings of up to $2.0 million.
Below is an illustrative example, which assumes 6.8% discount rate for CalPERS, 9.3% FY24 CalPERS investment return, and 6.8% investment returns from FY25 onwards, as well as the City’s continuing its contributions to the Pension Trust based on Council adopted policy.
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Receive Preliminary Fiscal Year 2023-24 (FY24) Year-End Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to Appropriate Mid-cycle Budgetary Adjustments
City of Gilroy City Council Page 11 of 12 November 18, 2024 • Property Tax – Excess Educational Revenue Augmentation Fund (ERAF) – Staff have previously provided updates to the City Council regarding Excess ERAF, which has faced challenges both by the California School Boards Association and more recently from the State Controller’s Office (SCO). While the California School Boards Association matter was put to rest by the Third District Court of Appeals, the SCO’s review of the County’s Excess ERAF calculation is still not resolved. Based on the recent update provided by the County, the matter will extend into calendar year 2025, with potential resolution by summer of 2025. The annual negative impact on local jurisdictions Excess ERAF for FY25 is approximately 20%. The City of Gilroy’s Excess ERAF allocation is estimated to be $2.1 million, so the potential impact is about $420,000 reduction in Excess ERAF amount. Staff have made the adjustments to accommodate this potential reduction and will continue to monitor and provide updates. The SCO’s claim includes a retroactive provision for the adjustments going back to FY21; however, staff continue to forecast the best-case scenario that any adjustments will be made on a going forward basis.
ALTERNATIVES
There are no recommended alternatives to receiving the preliminary FY24 year-end report.
The City Council could elect to not approve any single, multiple, or all the mid-cycle adjustments to the expenditures. Staff does not recommend this option.
FISCAL IMPACT/FUNDING SOURCE
There is no direct fiscal impact from the preliminary FY24 year-end report. As noted, the General Fund ended the year with better-than-expected revenues and under budget in expenditures.
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Receive Preliminary Fiscal Year 2023-24 (FY24) Year-End Financial Report and Adopt a Resolution Amending Fiscal Year 2024-25 (FY25) Budget to Appropriate Mid-cycle Budgetary Adjustments
City of Gilroy City Council Page 12 of 12 November 18, 2024 The fiscal impact from the recommended mid-cycle adjustments would result in adjustments to the FY25 budget of a net increase in revenues of $0.2 million, and a net increase in expenditures of $15.9 million for all funds. This is further outlined in Exhibit A of the resolution.
Attachments:
1. Resolution and Exhibit A – Recommended FY25 Mid-Cycle Adjustments
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RESOLUTION NO. 2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY
AMENDING THE BUDGET FOR THE CITY OF GILROY FOR
FISCAL YEAR 2024-2025 AND APPROPRIATING PROPOSED
EXPENDITURE AMENDMENTS
WHEREAS, the City Administrator prepared and submitted to the City Council a budget for the City of Gilroy for Fiscal Years 2023-2024 and 2024-2025, and the City Council carefully examined, considered and adopted the same on June 5, 2023; and WHEREAS, City Staff has prepared and submitted to the City Council proposed amendments to said budget for Fiscal Year 2024-2025 for the City of Gilroy in the staff report dated November 18, 2024 for Preliminary Fiscal Year 2023-2024 year-end report and mid-cycle adjustments for Fiscal Year 2024-2025.
NOW, THEREFORE, BE IT RESOLVED that the appropriations for Fiscal Year 2024-2025 shall be adjusted (increased or decreased) in respective funds as outlined on Exhibit A to this resolution.
PASSED AND ADOPTED this 18th day of November 2024 by the following roll call vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
APPROVED:
______________________________
Marie Blankley, Mayor
ATTEST:
Beth Minor, Interim City Clerk
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Resolution No. 2024-XX
Mid-Cycle Adjustments to FY25 Budget
City Council Regular Meeting | November 18, 2024
CERTIFICATE OF THE CLERK
I, BETH MINOR, Interim City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2024-XX is an original resolution, or true and correct copy of a City Resolution, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said held on Council held Monday, Date, with a quorum present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Date.
____________________________________
Beth Minor
Interim City Clerk of the City of Gilroy
(Seal)
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Summary by Fund Type Revenues Expenditures
General Fund $ 199,946 $ 3,941,172
Special Revenue Funds 658,781 1,716,791
Capital/Development Funds 700,000 4,997,733
Internal Services Funds (1,403,540) 3,513,167
Enterprise Funds - 1,771,535
Agency Funds - 15,000
ALL FUNDS TOTAL $ 155,187 $ 15,955,398
Itemized Detail
Line Fund>Department>Description
Revenue
Adjustment
Expenditure
Adjustment
1 100-GENERAL FUND TOTAL $ 199,946 $ 3,941,172
2 Administration 46,200 46,200
3 Federal Grant: Emergency Management Performance Grant 21,200 21,200 4 State Grant: Listos California Community Emergency Response Team (CERT) Support Grant 25,000 25,000 5 Administrative Services 31,500
6 Fire Department Annual Life Scan Exams 31,500
7 Community Development (11,254) 512,229
8 ADU Pre-Reviewed Plans Program 50,000
9 CDBG FY2024-2025 Allocation Adjustment (11,254)
10 Climate Action Plan/VMT/TDM Policy 400,000
11 Commercial Linkage Fee Nexus and Feasibility Study 30,000 12 Community Development Focused Fee Study 30,000
13 Increase in Fleet User Fees 2,229
14 Finance (25,000) 912,000
15 Admin Fee-Garbage 70,000
16 Business Licenses 100,000
17 Documentary Transfer Tax (80,000)
18 Franchise Garbage 85,000
19 FY24 General Fund Pension Contribution from Budget Savings 450,000 20 FY24 General Fund OPEB Contribution from Budget Savings 450,000 21 FY25 Sales Tax Reduction (600,000)
22 Investment Income 400,000
23 Transient Occupancy Tax Compliance Audit Review 12,000 24 Fire 219,821
25 Increase in Fleet User Fees 112,821
26 Lexis Nexis SOP Manual 35,000
27 Six portable radios 72,000
28 General Government 131,529
29 Increase in Fleet User Fees 2,529
30 Liability Insurance Premium Increase 129,000
31 Police 127,524
32 Increase in Fleet User Fees 127,524
33 Public Works 190,000 1,960,369
34 Citywide Park Restroom Reroofing/Rehabilitation 200,000 35 Federal Grant: Local Roads Safety Plan 190,000 190,000 36 General Park Improvements (Shades/Equipment) 300,000 37 Special Events: Street Barriers 300,000
38 Increase funding for FY25 Pavement Rehabilitation (Savings from FY23 Project) 700,000 39 Increase in Fleet User Fees 22,569
40 Miller Park Restrooms Electrical Undergounding 97,800 41 Traffic Calming 150,000
42 200-SIDEWALK REPAIR RESERVE FUND TOTAL TOTAL 329,322 43 Public Works 329,322
EXHIBIT A: RECOMMENDED MID-CYCLE ADJUSTMENTS TO FY25 BUDGET 3 10.1
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Line Fund>Department>Description
Revenue
Adjustment
Expenditure
Adjustment
44 Sidewalk Maintenance Program 329,322
45 205-GAS TAX FUNDS TOTAL (175,570) 290,339
46 Administrative Services 85,000
47 Electricity for street lights (PG&E) 85,000
48 Finance (175,570)
49 State Gas Taxes (175,570)
50 Public Works 205,339
51 Annual Citywide Traffic Signal Upgrades 117,474
52 Annual Safe Routes to Schools 62,600
53 On-Call Geotechnical Eng & Material Testing 10,000
54 Traffic Data Collection 15,265
55 215-TRANSPORT/MOBILITY GRANT FUND TOTAL 182,600 182,600 56 Public Works 182,600 182,600
57 Lions Creek Trail West of Santa Teresa and Day 182,600 182,600 58 223-OTS PD GRANT TOTAL 28,500 28,500
59 Police 28,500 28,500
60 Office of Traffic Safety PT24079 28,500 28,500
61 225-POLICE GRANTS FUND TOTAL 19,822 19,994
62 Police 19,822 19,994
63 Board of State and Community Corrections Wellness 172 64 Justice Assistance Grant Community Room 19,822 19,822 65 227-SOUTH COUNTY YOUTH TASK FORCE TOTAL 6,000 35,124 66 Police 6,000 35,124
67 South County Youth Task Force - FY25 County District Attorney's Office Grant 6,000 6,000 68 South County Youth Task Force FY24 Unspent Grant budget 29,124 69 228-BRD STATE&COMM CORR TITLE II TOTAL 469,183 469,183 70 Police 469,183 469,183
71 Board of State and Community Corrections Title II 469,183 469,183 72 245-COMMUNITY DEV BLOCK GRANT FUND TOTAL 128,246 127,795 73 Community Development 128,246 127,795
74 CDBG FY2024-2025 Allocation 128,246 127,795
75 250-HOUSING TRUST FUND TOTAL 10,000
76 Community Development 10,000
77 Arbitrator for Mobile Home Rent Stabilization Ordinance 10,000 78 260-COMMUNITY FACILITIES FUND TOTAL 223,004
79 Public Works 223,004
80 CFD Irrigation and Landscape Upgrades 153,504
81 Vehicle 65,000
82 Contractual Services - Tree Removal 4,500
83 290-RECREATION FUND TOTAL 930
84 Administration 930
85 Increase in Fleet User Fees 930
86 400-CAPITAL PROJECT FUND TOTAL 700,000 700,000
87 Public Works 700,000 700,000
88 Gateway Senior Apartments Pedestrian Crossing Safety Improvements 700,000 700,000 89 410-STORM DRAIN DEVELOPMENT FUND TOTAL 205,228
90 Public Works 205,228
91 State Trash Amendments Stormwater Compliance Project 118,800 92 Stormwater NPDES Compliance 86,428
93 425-TRAFFIC IMPACT FUND TOTAL 511,207
94 Public Works 511,207
95 Gilroy Ice Center 511,207
96 435-WATER DEVELOPMENT FUND TOTAL 2,831,298
97 Utilities 2,831,298
98 McCarthy Site Well #9 CIP Project # 800050 2,831,298 99 440-PUBLIC FACILITIES IMPACT FUND TOTAL 750,000
100 Public Works 750,000
4 10.1
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Line Fund>Department>Description
Revenue
Adjustment
Expenditure
Adjustment
101 Civic Center Master Plan 750,000
102 600-FLEET SERVICES FUND TOTAL 300,000 215,000
103 Administrative Services 300,000 215,000
104 Fleet - Emergency/Unplanned repairs 100,000
105 Fleet - Parts 85,000
106 Increase in Fleet User Fees 300,000
107 Liability Insurance Premium Increase 30,000
108 610-LIABILITY INSURANCE FUND TOTAL 300,000 300,000
109 Administrative Services 300,000 300,000
110 Municipal Pooling Authority 300,000 300,000
111 615-FACILITY SERVICES FUND TOTAL 655,811
112 Administrative Services 655,811
113 Increase in Fleet User Fees 3,111
114 Liability Insurance Premium Increase 15,000
115 Old City Hall HVAC Project 360,700
116 Shooting Range lead abatement measures 277,000
117 620-INFORMATION TECHNOLOGY FUND TOTAL 19,822 686,000 118 Finance 435,000
119 Cyber Security Assessment Implementation 200,000
120 Firewall for Redundant Internet Connection 25,000
121 Network Security Software 30,000
122 Next Generation Wi-Fi 70,000
123 SeeClickFix 50,000
124 Verizon VOIP DID Trunk Circuit 60,000
125 Police 19,822 186,000
126 AT&T Data Circuit for CLETS 46,000
127 Network Equipment Purchases 10,000
128 PD Community Room A/V Upgrade 19,822 130,000
129 Public Works 35,000
130 Public Works Workstation Class Computers 35,000
131 Utilities 30,000
132 Firewall and Switch for SCADA Systems 30,000
133 625-EQUIPMENT OUTLAY TOTAL (2,023,362) 1,656,356
134 Other General Government (2,023,362) 1,656,356
135 Citywide Energy Savings Measures (2,023,362) 1,656,356 136 700-SEWER FUND TOTAL 211,755
137 Utilities 211,755
138 Annex Repairs for Utilities Department Equipment, Furniture 70,000 139 Increase in Fleet User Fees 11,664
140 Liability Insurance Premium Increase 60,000
141 Office, Computer Supplies 35,000
142 Old Gilroy Chesnut to Forest Sewer Upgrade CIP#800550 35,091 143 705-WATER FUND TOTAL 1,559,780
144 Finance 60,000
145 Customer Engagement Portal 60,000
146 Utilities 1,499,780
147 Annex Repairs for Utilities Department Equipment, Furniture 70,000 148 Electricity for Water's wells and boosters (PG&E) 200,000 149 Forest and Eighth CIP #800620 66,419
150 Increase in Fleet User Fees 14,961
151 Liability Insurance Premium Increase 60,000
152 Office, Computer Supplies 15,000
153 PFAS Outreach 45,000
154 St Louise Hospital Large Meter Install CIP Project # 800670 63,200 155 Water Reservoir A and B Painting CIP Project # 800690 483,200 156 Water Reservoir A and B Retrofit Overflow Piping CIP Project # 800700 482,000 157 810-HWY 152 BOND SERIES 2018 FUND TOTAL 15,000
5 10.1
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Line Fund>Department>Description
Revenue
Adjustment
Expenditure
Adjustment
158 Finance 15,000
159 CFD Administration 10,000
160 Annual Disclosure Filings 5,000
GRAND TOTAL $ 155,187 $ 15,955,398
6 10.1
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City of Gilroy
STAFF REPORT
Agenda Item Title: Adoption of a Resolution Approving and Authorizing the City Administrator to Enter into an Agreement
with Applicant Gilroy Logistics LLC for 951-981 Renz
Lane Agricultural Mitigation
Meeting Date: November 18, 2024
From: Jimmy Forbis, City Administrator
Department: Community Development
Submitted By: Sharon Goei, Community Development Director Prepared By: Cindy McCormick, Planning Manager
STRATEGIC PLAN GOALS Not Applicable
RECOMMENDATION
Adopt a Resolution to approve an Agreement with Gilroy Logistics LLC to utilize 12.8 acres of the conservation easement that the City caused to be purchased on the Van Dyke property to satisfy compliance with the City of Gilroy’s Agricultural Mitigation Policy and authorize the City Administrator to execute the Agreement.
EXECUTIVE SUMMARY
Gilroy Logistics LLC (applicant) is seeking to develop a 12.8-acre industrial site located at 951 and 981 Renz Lane and must comply with the City of Gilroy’s Agricultural Mitigation Policy (“Policy”). The Policy applies when land that is currently (or previously) used for agricultural uses is later converted to urban uses. It requires conservation of another agricultural property in a 1:1 ratio of the land to be developed.
The applicant has not found it possible to purchase land or development rights over land of roughly that size that would satisfy their obligation under the Policy. In 2020, the City of Gilroy provided funding to the Land Trust of Santa Clara Valley to allow the Land Trust to purchase an Agricultural Conservation Easement over approximately 108.4 acres of land to satisfy compliance of the Policy for development of the Gilroy Sports Park. The amount of land covered by the Conservation Easement exceeds
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951-981 Renz Lane Agricultural Mitigation
City of Gilroy City Council Page 2 of 4 November 18, 2024 1 7 what is needed for the development of the Sports Park and is therefore available to utilize as mitigation for public or private property within the City of Gilroy. The applicant has asked the City for permission to use 12.8 acres of the conserved property to satisfy its mitigation requirement.
BACKGROUND
On March 9, 2023, the City of Gilroy approved an Architectural and Site Review application (AS 22-03) for construction of two industrial warehouse buildings located at 951 and 981 Renz Lane (Assessor Parcel Numbers 841-18-080 and 841-18-081) in the C-3 (Shopping Center Commercial) zoning district, with a General Services Commercial General Plan land use designation. The subject property is part of the Pacheco Pass Planned Unit Development (PUD), which anticipated a mix of commercial and industrial uses. The project includes two buildings. Building 1 totals 95,639 square feet and building 2 totals 110,675 square feet. The project is required to comply with the City of Gilroy’s Agricultural Mitigation Policy (“Policy”) because it was considered prime farmland when the Policy was adopted in 2004, following adoption of the 2020 General Plan in 2002.
The Policy applies to such land when it is converted to urban uses, including but not limited to industrial and commercial uses. Similarly, development of the Gilroy Sports Park requires compliance with the Agricultural Mitigation Policy.
Mitigation may be accomplished through one of two options. The first option is to purchase an equal amount of agricultural land (1:1 ratio) within the “Preferred Preservation Areas” illustrated in the Policy. The second option is to purchase development rights to a 1:1 ratio of agricultural land within the “Preferred Preservation Areas”. In both cases, ownership of the land or rights to the easement must be transferred to the Silicon Valley Land Conservancy (now called The Land Trust of Santa Clara Valley) or other City-approved agency. Both options also include payment of all costs to cover program administration, monitoring and management of established easements.
ANALYSIS
As noted above, the development of the Gilroy Sports Park required compliance with the Agricultural Mitigation Policy. On or about Jan. 6, 2020, the City Council approved an agreement with the Land Trust of Santa Clara Valley to purchase an Agricultural Conservation Easement over approximately 108.4 acres of property, owned by the Van Dyke family, located at 7665 Crews Road (“Conserved Property”). The City provided funding for the purchase and also the perpetual stewardship of the Conserved Property in the amount of $1,298,850. The 108.4 acres of land exceeds what is needed for the development of the Sports Park and is therefore available to utilize as mitigation for another City of Gilroy owned property, or for a privately owned property within the City of Gilroy.
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951-981 Renz Lane Agricultural Mitigation
City of Gilroy City Council Page 3 of 4 November 18, 2024 1 7 Finding a “right sized” property that exactly fits the Policy’s 1:1 ratio requirement is highly infeasible, leading applicants (private and public) to either not finding a property that is large enough to meet the 1:1 ratio or finding a property that far exceeds the 1:1 ratio. This issue can be a major hurdle (financial and/or logistical) to developers who need to comply with the Policy.
Gilroy Logistics LLC (applicant) is seeking to develop a 12.8-acre industrial site located at 951 and 981 Renz Lane and must comply with the Policy. The applicant has not found it possible to purchase land or development rights over land of roughly that size that would satisfy their obligation under the Policy, and accordingly has asked the City for permission to, in effect, use 12.8 acres of the Conservation Easement for its mitigation. The remaining 95.6 acres of the Conserved Property is sufficient acreage for build-out of the Sports Park.
If approved by the City Council, the owner has offered to pay the City’s appraised land value for the use of the 12.8 acres of the Conservation Easement as well as the pro rata share of the stewardship fee that was paid to the Land Trust to manage the Conservation Easement, which is calculated to be $207,265. The $207,265 payment must be received on or prior to June 21, 2025. Otherwise, the fee will be increased by three percent if received between June 21, 2025 and June 21, 2026, or by six percent if received after June 21, 2026. The term of the Agreement shall expire on June 30, 2026, unless extended in writing by the City of Gilroy and Gilroy Logistics LLC. Furthermore, neither this Agreement nor permission to use the Conserved Property for agricultural mitigation may be assigned or transferred to another party without the express written consent of the City. The payment amount must be received by the City in full before the City is obligated to issue the first building permit for the construction of the Renz Lane Project, and the City may withhold issuing any building permit until the payment amount is received in full.
ALTERNATIVES
Council may choose to not allow Gilroy Logistics LLC to utilize 12.8 acres of the Conservation Easement to satisfy compliance with the City of Gilroy’s Agricultural Mitigation Policy. This is not recommended as it is unlikely for the Applicant to secure an appropriately sized property, which will further delay development of this project.
FISCAL IMPACT/FUNDING SOURCE
Pursuant to the agreement, prior to the owner’s receipt of a building permit for the project, the Applicant will be required to remit between $207,265 - $219,701, depending on when the payment is made during the term of the agreement, which expires on June 30, 2026. The 2020 Conservation Easement was primarily paid for by the City’s Public Facilities Impact Fund, thus it is recommended the payment pursuant to this agreement be deposited back to the Public Facilities Impact Fund.
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951-981 Renz Lane Agricultural Mitigation
City of Gilroy City Council Page 4 of 4 November 18, 2024 1 7 In addition, the Applicant has paid the Community Development Department’s processing fees for the application.
Attachments:
1. Draft Resolution
2. Draft Agreement
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RESOLUTION NO. 2024-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GILROY ALLOCATING A PORTION OF THE ACREAGE OF THE
CONSERVATION EASEMENT PURCHASED BY THE CITY OVER
THE VAN DYKE PROPERTY TO BE USED FOR AGRICULTURAL
MITIGATION FOR A PROJECT PROPOSED BY GILROY
LOGISTICS LLC ON RENZ LANE
WHEREAS, The City of Gilroy (“City”) has an Agricultural Mitigation Policy (the “Policy”) that was adopted on May 3, 2004 and revised on January 4, 2016; and WHEREAS, Pursuant to the Policy, projects on land proposed in certain specified areas in the City must partially mitigate the environmental impact of a development project upon the preservation of certain agricultural land (the “Affected Land”) in the City by the purchase of certain other agricultural lands or by the purchase of development rights over such agricultural land (“Mitigation Land”) and transfer of such development rights to a Cityapproved agency; and WHEREAS, On or about Jan. 6, 2020, the City Council approved an agreement (the “Conservation Agreement”) with the Land Trust of Santa Clara Valley (“Land Trust”) by which the Land Trust agreed to purchase an Agricultural Conservation Easement (the “Easement”) over approximately 108.4 acres of property located at 7665 Crews Road owned by the Van Dyke family (the “Conserved Property”). The City provided funding for the purchase and also the perpetual stewardship of the Conserved Property in the amount of $1,298,850; and
WHEREAS, The Easement over the Conserved Property complies with the provision of the Policy to purchase development rights over the Conserved Property, and thus provides to the City agricultural mitigation pursuant to the Policy to allow the potential mitigation for the agricultural impact on 108.4 acres of Affected Land. Such a project could be any combination of City and private projects. The City intends to partially use the Conservation Easement as mitigation for future development of the City’s own Sports Park, but does not need the full acreage of the Conservation Easement for such purposes; and WHEREAS, A company called Gilroy Logistics LLC (“Owner”) is seeking to develop an industrial site of 12.8 acres located at 951 and 981 Renz Lane in the City and needs to comply with the City’s Policy. Owner has not found it to be possible to purchase land or development rights over land of roughly that size that would satisfy their obligation under the Policy, and accordingly has asked the City for permission to, in effect, use 12.8 acres of the Conserved Property for its mitigation, thus reducing the amount of Conserved Property remaining to 95.6 acres; and
WHEREAS, Owner has offered to pay the City’s appraised land value for the use of the
12.8 acres of Conserved Property; and
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Resolution No. 2024-XX
Renz Lane Project Agricultural Mitigation
City Council Regular Meeting | November 18, 2024
WHEREAS, the Council determines that it is in the public interest to accept Owner’s offer and to allow Owner to use 12.8 acres of the Conserved Property for agricultural mitigation pursuant to the Policy.
NOW, THEREFORE, BE IT RESOLVED THAT:
1) The City Council of the City of Gilroy finds that the remaining 95.6 acres of the Conserved Property is sufficient acreage of Conserved Property available for its needs, including any possible build out of the Sports Park. 2) It is in the public interest to approve the attached agreement with Owner by which Owner will be granted the right to use 12.8 acres of the Conserved Property for its own agricultural mitigation.
3) The compensation from Owner in the Agreement is based on an appraisal of the property rights at issue as well as Owner’s pro rata share of the stewardship fee that was paid to the Land Trust to manage the Agricultural Conservation Easement. 4) The Agreement with Owner attached hereto as Exhibit A is hereby approved and the City Administrator is authorized to execute said agreement.
PASSED AND ADOPTED this 18th day of November 2024 by the following roll call vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
APPROVED:
______________________________
Marie Blankley, Mayor
ATTEST:
________________________
Beth Minor, Interim City Clerk
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Resolution No. 2024-XX
Renz Lane Project Agricultural Mitigation
City Council Regular Meeting | November 18, 2024
CERTIFICATE OF THE CLERK
I, BETH MINOR, Interim City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2024-XX is an original resolution, or true and correct copy of a City Resolution, duly adopted by the Council of the City of Gilroy at a Regular Meeting of said held on Council held Monday, Date, with a quorum present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this Date.
____________________________________
Beth Minor
Interim City Clerk of the City of Gilroy
(Seal)
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EXHIBIT A
AGREEMENT BETWEEN CITY OF GILROY AND GILROY LOGISTICS LLC FOR
AGRICULTURAL MITIGATION FOR RENZ LANE PROJECT
THIS AGREEMENT (the “Agreement”) is made and entered into this ___ day of ____________, 2024, by and between the City of Gilroy, a California municipal corporation (“City”), and Gilroy Logistics LLC, a Delaware limited liability company (“Owner”).
RECITALS
WHEREAS, the City adopted an Agricultural Mitigation Policy on May 3, 2004, (the “Policy”) in order to, among other things, enable the continued viability of agriculture and agritourism in the Gilroy Area, and the Policy allows for partial mitigation for the environmental impact of a project upon agricultural resources by purchasing either agricultural lands in a designated area of the City or development rights to such land; and WHEREAS, the City has provided funding to allow the Land Trust of Santa Clara Valley (“Land Trust”) to purchase a conservation easement encumbering that certain real property located at 7665 Crews Road, Gilroy, California (“Conserved Property”), which will preserve the Conserved Property as agricultural lands, and prevent the development thereof (“Conservation Easement”); and
WHEREAS, the City intends that the Conservation Easement shall serve as an agricultural mitigation measure for its development of the Gilroy Sports Park, and other developments that might support or promote the City’s Agricultural Mitigation Policy; and WHEREAS, the Land Trust is a private, non-profit corporation that conducts a land conservation program which includes the acceptance, holding, and monitoring of lands subject to conservation easements, as well as the management of lands acquired in fee simple for conservation and related purposes; and
WHEREAS, Owner has obtained planning entitlements (specifically Architectural and Site Review Application No. AS 22-03, approved on March 9, 2023), to construct two industrial buildings for wholesale establishments or warehouse (the “Renz Lane Project”), subject to conditions of approval and mitigation measures adopted pursuant to CEQA) to develop its property located at 951 and 981 Renz Lane in the City (the “Gilroy Logistics Property”). The Gilroy Logistics Property is approximately 12.84 acres in size, so under the Policy Owner must either purchase suitable fee land or purchase development rights to that amount of suitable property; and
WHEREAS, the Conserved Property comprises 108.4 acres of land and thus under the Policy could serve as agricultural mitigation for the development of 108.4 acres. The City is willing to allow Owner to use 12.84 acres of the Conserved Property (the “Gilroy Logistics Mitigation Allocation”) as mitigation for its Renz Lane Project. This would leave the City with
95.6 acres remaining of mitigation for the Sports Park or other uses chosen by the City; and
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WHEREAS, the portion of the Conserved Property comprising the Gilroy Logistics Mitigation Allocation has been appraised and Owner is willing to pay the appraised value of the
12.84 acres of land, plus its pro rata share of the fee paid by the City to the Land Trust for stewardship of the Conservation Easement (the appraised value plus such pro rata share of the fee, as more particularly described in Section 1 below, shall be collectively referred to as the “Payment Amount”), and City is willing to accept such Payment Amount as representing the fair market value (plus applicable fees) of the rights being allocated to Owner.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual covenants and conditions contained herein, the parties hereby agree as follows:
AGREEMENT
1. Payment by Owner. As a condition to Owner’s receipt of a building permit for the Renz Lane Project, Owner shall pay to City, and City shall accept as payment in full for the Gilroy Logistics Mitigation Allocation the sum of money defined in this Paragraph as the Payment Amount, without offset or deduction. The Payment Amount shall consist of the amount set forth in clause (a), (b) or (c), as applicable depending upon when the Payment Amount is made: (a) if paid on or prior to June 21, 2025, the sum of $207,265; or (b) if the amount specified in clause (a) is not paid by June 21, 2025 but is paid on or prior to June 21, 2026, then such amount specified in clause (a) shall be increased by three percent; or (c) if the amount specified in clause (a) is not paid on or prior to June 21, 2026, then such amount specified in clause (a) shall be increased by six percent. The Payment Amount must be received by the City in full before the City is obligated to issue the first building permit for the construction of the Renz Lane Project, and the City may withhold issuing any building permit until the Payment Amount is received in full.
2. Agricultural Mitigation. Upon receiving the full Payment Amount, City shall allow Owner the full benefit of the Gilroy Logistics Mitigation Allocation and shall accept the Payment Amount as full and complete mitigation for agricultural impacts for the Renz Lane Project and full satisfaction of the requirements of the Policy on the Gilroy Logistics Property, and for no other purpose. Nothing in this agreement gives Owner any right, title, or interest in the Conserved Property itself.
3. Term: Amendment; Termination. The term of this Agreement shall expire on June 30, 2026, unless extended in writing by the Parties. This Agreement may be terminated or amended during its original or any extended term only by mutual written agreement of Owner and the City.
4. Notices. Notices given pursuant to this Agreement, including notices for enforcement purposes, shall be deemed delivered when deposited in the United States Mail, postage prepaid, or when delivered by facsimile or overnight delivery courier and addressed as follows:
To City: City of Gilroy
7351 Rosanna Street
Gilroy, CA 95020
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Attn: City Administrator
To Owner: Gilroy Logistics LLC
19700 S. Vermont, Suite 101
Torrance, CA 90502
Attn: CEO
5. Applicable Law. This Agreement has been made and delivered within the State of California, and the rights and obligations of the parties hereto shall be construed and enforced in accordance with California law. Venue for any legal dispute between the parties shall be exclusively in Santa Clara County.
6. Successors and Assigns. Neither this Agreement nor permission to use the Conserved Property for agricultural mitigation may be assigned or transferred by Owner without the express written consent of the City, which consent may not be unreasonably withheld, conditioned or delayed. Any such assignment or transfer may only be made in conjunction of a transfer of fee ownership in the Gilroy Logistics Property, and the Gilroy Logistics Mitigation Allocation may be used by any party only in connection with agricultural mitigation for the Renz Lane Project on the Gilroy Logistics Property. Any purported transfer in violation of this section shall be null and void. This Agreement is binding upon and shall inure to the benefit of the parties hereto and their respective representatives, heirs, predecessors, affiliated entities, transferees, assigns and successors in interest.
7. Severability. Should any paragraph, clause or provision of this Agreement be construed to be against public policy or determined by a court of competent jurisdiction to be void, invalid or unenforceable, such construction and decisions shall affect only those paragraphs, clauses or provisions so construed or interpreted, and shall in no event affect the remaining paragraphs, clauses or provisions of this Agreement, which shall remain in force.
8. No Third Party Beneficiaries. This Agreement is not intended to, and will not be construed to, create any right on the part of any third party to bring an action to enforce any of its terms.
9. Authority to Execute; Counterparts. Each party represents that it has legal authority to enter into this Agreement and to perform its obligations hereunder. This Agreement may be signed in counterparts, and all counterparts when taken together shall constitute one document.
10. Cooperation. Each party agrees to cooperate with the other to ensure that the terms, provisions, and purpose of this Agreement are effectively carried out at all times. To that end, each party agrees to execute any and all documents that may be reasonably necessary, helpful, or appropriate to carry out the terms, provisions, and purpose of this Agreement.
Without limiting the generality of the forgoing, upon Owner’s request at any time following Owner’s payment of the Payment Amount, City shall upon request execute suitable and appropriate documentation to confirm that the Owner has fully and forever satisfied the requirements of City’s Agricultural Mitigation Policy for the Renz Lane Project.
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11. Indemnity. If any legal claim or challenge is made to this Agreement or to the ability of the City to make the allocation to Owner provided for herein, Owner shall defend, through counsel approved by City (which approval shall not be unreasonably withheld), indemnify and hold harmless City, its officers, representatives, agents and employees against any and all suits, damages, costs, fees, claims, demands, causes of action, losses, liabilities and expenses, including without limitation attorneys’ fees, arising or resulting directly or indirectly from such claim or challenge.
12. Entire Agreement. This Agreement is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. Each party has cooperated in the drafting and preparation of this Agreement, and this Agreement shall not be construed against any party on the basis of drafting.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first set forth above.
CITY OF GILROY OWNER
Gilroy Logistics LLC, a Delaware limited liability
company
By: ______________________ By: _________________________ City Administrator Manager
Date: _____________________ Date: _________________________ By: ___________________
President
By: ______________________
City Clerk
Date: _____________________
Approved as to Form
By: ______________________
City Attorney
Date: _____________________
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