Half Moon Bay City Council
October 4, 2022

CITY COUNCIL AGENDA

REGULAR MEETING

CITY OF HALF MOON BAY
TUESDAY, OCTOBER 4, 2022
REMOTE PARTICIPATION (SEE NEXT PAGE) Debbie Ruddock, Mayor Deborah Penrose, Vice Mayor
Robert Brownstone, Councilmember
Joaquin Jimenez, Councilmember
Harvey Rarback, Councilmember
7:00 PM
This agenda contains a brief description of each item to be considered. Those wishing to address the City Council on any matter not listed on the Agenda, but within the jurisdiction of the City Council to resolve, may come forward to the podium during the Public Forum portion of the Agenda and will have a maximum of three minutes to discuss their item.

Those wishing to speak on a Public Hearing matter will be called forward at the appropriate time during the Public Hearing consideration.

Please Note: Anyone wishing to present materials to the City Council, please submit seven copies to the City Clerk.

Copies of written documentation relating to each item of business on the Agenda are on file in the Office of the City Clerk at City Hall and the Half Moon Bay Library where they are available for public inspection. If requested, the agenda shall be available in appropriate alternative formats to persons with a disability, as required by Section 202 of the Americans with Disabilities Act of 1990 (42 U.S.C. Sec. 12132.) Information may be obtained by calling 650-726- 8271.

In compliance with the Americans with Disabilities Act, special assistance for participation in this meeting can be obtained by contacting the City Clerk’s Office at 650-726-8271. A 48-hour notification will enable the City to make reasonable accommodations to ensure accessibility to this meeting (28 CFR 35.102-35.104 ADA Title II). http://hmbcity.com/
1 SPECIAL REMOTE PARTICIPATION PROTOCOLS
This meeting will be held entirely by teleconference. All Councilmembers and staff will only participate via the Zoom platform using the process described below. The meeting is being conducted pursuant to recent amendments to the teleconference rules required by the Ralph M. Brown Act allowing teleconferencing during a proclaimed state of emergency when local officials have recommended social distancing (AB 361). The purpose of AB 361 is to provide the safest environment for the public, elected officials, and staff while allowing for continued operation of the government and public participation during the COVID‐19 pandemic.

This meeting will be conducted via Zoom Webinar and live Spanish interpretation will be available within the Zoom platform. Members of the public are welcome to login into the webinar as Attendees. During any public comment portions, attendees may use the “raise your hand” feature and will be called upon and unmuted when it is their turn to speak. The meeting will also be streamed on Channel 27, on pacificcoast.tv, and on Facebook at www.facebook.com/cityofhalfmoonbay. Please click to join the webinar: https://us06web.zoom.us/j/99588947925 or join by phone at 669-900-9128, using Webinar ID 995-8894-7925. If joining by phone, use *9 to raise your hand, *6 to mute and unmute.

CALL TO ORDER / ROLL CALL

PUBLIC FORUM

PROCLAMATIONS AND PRESENTATIONS

LGBTQ HISTORY MONTH PROCLAMATION

PROPOSED CLOVERDALE UPLANDS PURCHASE INFORMATIONAL PRESENTATION (MIDPEN)

MAYOR'S ANNOUNCEMENTS OF COMMUNITY ACTIVITIES AND COMMUNITY SERVICE

REPORT OUT FROM RECENT CLOSED SESSION MEETINGS

CITY MANAGER UPDATES TO COUNCIL

ELECTION INFORMATION

1. CONSENT CALENDAR

1.A WAIVE READING OF RESOLUTIONS AND ORDINANCES

1.B AGREEMENT WITH MUNISERVICES FOR SALES & USE TAX COLLECTION AND AUDIT

SERVICES
Staff Recommendation: Adopt a resolution authorizing the City Manager to execute a Professional Services Agreement with MuniServices (Also known as Avenu Insights and Analytics) for the term of three years ending December 31, 2025, with a not-to-exceed annual amount of $40,000.

STAFF REPORT

RESOLUTION
ATTACHMENT 2
2 1.C AGREEMENT WITH HDL COMPANIES FOR BUSINESS LICENSE AND TRANSIENT

OCCUPANCY TAX ADMINISTRATION AND COLLECTION
Staff Recommendation: Adopt a resolution authorizing the City Manager to execute a Professional Services Agreement with Hinderliter De Llamas & Associates (HdL Companies) for the term of three years ending December 31, 2025, with a not-to-exceed annual amount of $70,000.

STAFF REPORT

RESOLUTION
ATTACHMENT 2

1.D ACCEPTANCE OF FUNDING FROM THE CHAN ZUCKERBERG INITIATIVE DONOR ADVISED

FUND, AN ADVISED FUND OF SILICON VALLEY COMMUNITY FOUNDATION, FOR

PROGRAM EVALUATION OF ECONOMIC ADVANCEMENT CENTERS IN THREE SAN MATEO

COUNTY COMMUNITIES INCLUDING THE COASTSIDE
Staff Recommendation: Adopt a resolution authorizing the City Manager to 1) accept grant funds by signing a grant agreement with Silicon Valley Community Foundation for program evaluation activities for three stakeholder groups currently engaged in the operation and implementation of economic advancement centers within San Mateo County in the amount of $100,000; 2) negotiate and execute a sub-grantee agreement with an evaluation firm in an amount not to exceed $100,000 and 3) make matching revenue and expenditure budget amendments in the amount of $100,000.

STAFF REPORT

RESOLUTION

2. ORDINANCES AND PUBLIC HEARINGS

3. RESOLUTIONS AND STAFF REPORTS

3.A 555 KELLY AVENUE AFFORDABLE HOUSING DEVELOPMENT - DECLARE CITY OWNED

PROPERTY AS EXEMPT SURPLUS LAND PURSUANT TO GOVERNMENT CODE SECTION 54221(F)(1)(A) AND AUTHORIZE THE CITY MANAGER TO EXECUTE AN EXCLUSIVE

NEGOTIATIONS AGREEMENT BETWEEN THE CITY AND MERCY HOUSING CALIFORNIA TO

ENABLE PREDEVELOPMENT ACTIVITIES
Staff Recommendation: Adopt two resolutions to:

1. Declare property owned by the City as "exempt surplus” land, pursuant to Government Code 54221(f)(1)(A), 54221(b), and 37364 located at 555 Kelly Avenue (APN 056-150-200) and a portion of the property located at 535 Kelly Avenue (APN 056-150-220) (the “Site”) and depicted in Exhibit A of the resolution, as the City 3 intends to lease the property for the development of affordable housing (Attachment 1), and;

2. Authorize the City Manager to execute an Exclusive Negotiations Agreement (ENA) between the City and Mercy Housing California (Mercy Housing) to enable predevelopment activities to be undertaken for an affordable housing development project on the Site and provide for a period of time in which to negotiate a development agreement between the parties (Attachment 2).

STAFF REPORT
RESOLUTION 1
RESOLUTION 2

3.B STUDY SESSION - FEEDING OF WILDLIFE
Staff Recommendation: Conduct a study session and consider whether to direct staff to begin preparation of an ordinance limiting the feeding of wildlife including possibly carnivorous birds and feral cats.

STAFF REPORT
ATTACHMENT 1

COMMISSION / COMMITTEE UPDATES

CITY COUNCIL REPORTS

FUTURE ITEMS

ADJOURNMENT
4 BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: October 4, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Lisa Lopez Rossi, Administrative Services Director Bryan Lopez, Senior Management Analyst
TITLE: RECOMMENDATION TO AUTHORIZE THE AGREEMENT WITH

MUNISERVICES FOR SALES & USE TAX COLLECTION AND AUDIT SERVICES RECOMMENDATION:

Adopt a resolution authorizing the City Manager to execute a Professional Services Agreement with MuniServices (Also known as Avenu Insights and Analytics) for the term of three years ending December 31, 2025, with a not-to-exceed annual amount of $40,000.

FISCAL IMPACT:

If approved, there is sufficient funding in the Administrative Services department FY 2022- 23 Budget to cover any charges through June 30, 2023.

STRATEGIC ELEMENT:

This recommendation supports the Infrastructure and Environment, Healthy Communities and Public Safety, Fiscal Sustainability, and Inclusive Governance Elements of the Strategic Plan.

BACKGROUND:

MuniServices/Avenu Insights has provided services to the City since February 1992 when the City made the decision to move Sales & Use Tax Collection and Audit services to a new thirdparty administrator.

Founded in California in 1978, MuniServices is a privately-owned consulting services company that specializes in helping public agencies across the nation to preserve, enhance, and manage their tax revenue base. In 2017, MuniServices joined forces with Avenu Insights & Analytics, LLC, and as one team, supports clients across the nation with revenue enhancement and consulting services, just like the City of Half Moon Bay. 5 In their 40-year history, they have grown to a national footprint of over 800 employees supporting clients in all 50 states. They have a dedicated team of revenue consulting and tax audit experts which provide concierge­ level services to over 350 public agencies in California and over 900 jurisdictions throughout the nation. MuniServices generates over $1.8 billion in new general fund revenue for clients each year. As a reflection of their dedication to state and local governments, MuniServices is listed on the GovTech100 for the last three (3) years in a row.

DISCUSSION:

In January 2022, the decision was made to do a Request for Proposal to provide Business License, Transient Occupancy Tax, and Sales Tax Services to combine services and find one vendor to handle all three areas. Currently the City enlists two companies, which includes MuniServices to handle these areas. Unfortunately, only two vendors replied, both currently serving the city. After in-depth interviews, and much consideration and discussion, we have decided to not move forward with awarding a contract to just one vendor for all three areas and keep our services with their current vendors. Muni Services has demonstrated that they are the highest quality candidate to continue providing Sales & Use Tax Collection and Audit Services. Under this contract, Muni Services will continue to provide Sales & Use Tax Collection and Audit Services.

Staff is recommending a three-year contract, beginning January 1, 2023. The three-year term will provide stability and consistency in services, while also leveraging predictability in budgeting and future planning.

ATTACHMENTS:

1. Resolution

2. MuniServices Scope of Work – Sales Tax
6 RESOLUTION NO. C-2022-_

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY AUTHORIZING THE

CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH MUNISERVICES WHEREAS, in 1992, the City of Half Moon Bay entered into an agreement with MuniServices Companies to provide Sales & Use Tax Collection and Audit services for the City; and
WHEREAS, the city put out a Request for Proposal to provide Business License, Transient Occupancy Tax, and Sales Tax Services to combine services and find one vendor to handle all three areas; and
WHEREAS, the City decided to not move forward with awarding a contract to just one vendor for all three areas and keep our services with their current vendors; and WHEREAS, MuniServices has demonstrated that they are the highest quality candidate to continue providing Sales & Use Tax Collection and Audit Services; and WHEREAS, the scope of work will continue to include providing Sales & Use Tax Collection and Audit Services.

NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby authorizes the City Manager to execute a Professional Services Agreement for an annual amount of $40,000 through December 31, 2025, between MuniServices and the City of Half Moon Bay.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 4th day of October, 2022 by the City Council of Half Moon Bay by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:

ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
7 @)MUNISERVICES BUSINESS LICENSE, TRANSIENT OCCUPANCY

TAX,& SALES TAX SERVICES

3.3 SALES AND USE TAX SERVICES
MuniServices' approach is a result of over four decades of refined processes. Our personnel are experts in detecting and correcting Sales, Use and Transaction Tax misallocations. We capture the obvious sales tax errors, as well as the more complicated ones that involve different interpretations of tax liability.

MuniServices understands the Sales Tax is the City's General Fund's second largest revenue source. The objective of MuniServices' Sales, Use and Transaction and Use Tax Audit (SUT A) and Recovery service is to maximize the City's of Santa Clara's income - and minimize the cost of lost revenue.

MuniServices submits over 5,000 corrections to the CDTFA per year and we are successful at this through the timely detection and correction of sales, use and transaction taxes misallocated to 1) another jurisdiction, 2) another citywide pool or the statewide pool, and 3) misreported sales taxes that should be allocated to the City. We fully pursue correction of all misallocations allowable within the statute of limitations on recoverability.

CITY OF HALF MOON BAY, CA
" The objective of MuniServices'
Sales, Use and Transaction Tax
Audit (SUTA) and Recovery
service is to maximize the City's
income and minimize the cost of
lost revenue"
10 8
9 10
11 12

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: October 4, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Lisa Lopez Rossi, Administrative Services Director TITLE: RECOMMENDATION TO AUTHORIZE THE AGREEMENT WITH HDL COMPANIES

FOR BUSINESS LICENSE AND TRANSIENT OCCUPANCY TAX ADMINISTRATION

AND COLLECTION
RECOMMENDATION:

Adopt a resolution authorizing the City Manager to execute a Professional Services Agreement with Hinderliter De Llamas & Associates (HdL Companies) for the term of three years ending December 31, 2025, with a not-to-exceed annual amount of $70,000.

FISCAL IMPACT:

If approved, there is sufficient funding in the Administrative Services department FY 2022- 23 Budget to cover any charges through June 30, 2023.

STRATEGIC ELEMENT:

This recommendation supports the Infrastructure and Environment, Healthy Communities and Public Safety, Fiscal Sustainability, and Inclusive Governance Elements of the Strategic Plan.

BACKGROUND:

Hinderliter De Llamas & Associates (HdL) has provided services to the City since September 2015 when the City made the decision to move business licenses to a third-party administrator. Initially hired to maintain and process business licenses, HdL was then tapped to assist with the management of Transient Occupancy Tax and was key when the city implemented collection of TOT from short term rentals.

HdL maintains the largest privately held sales, property, and business tax databases in California. This proprietary database serves as the base for identifying emerging economic trends and developing budget projections that take those trends into account. HdL's systematic and coordinated approach to revenue management, tax administration and economic data analysis is currently being utilized by over 500 agencies nationwide. 13 The company is trusted by over 220 cities and counties in California for tax and fee administration services including business license tax/registration and ordinance review, transient occupancy tax, cannabis tax, short-term rentals and utility users' tax. HdL processes hundreds of millions in revenue annually on behalf of their clients. In addition, HdL is a Corporate Partner of the League of California Cities and California State Association of Counties and works extensively with the State Association of County Auditors, California Society of Municipal Finance Officers (CSMFO) and California Municipal Revenue and Tax Association (CMRTA) on anticipation and planning of programs to strengthen local government revenues and monitoring of legislative actions which impact local governments.

DISCUSSION:

In January 2022, the decision was made to do a Request for Proposal to provide Business License, Transient Occupancy Tax, and Sales Tax Services to combine services and find one vendor to handle all three areas. Currently the City enlists two companies, which includes HdL to handle these areas. Unfortunately, only two vendors replied, both currently serving the city. After in-depth interviews, and much consideration and discussion, we have decided to not move forward with awarding a contract to just one vendor for all three areas and keep our services with their current vendors. HdL has demonstrated that they are the highest quality candidate to continue providing Business License and Transient Occupancy Tax Services. Under this contract, HdL will continue to provide Business License and Transient Occupancy Tax Services
Staff is recommending a three-year contract, beginning January 1, 2023. The three-year term will provide stability and consistency in services, while also leveraging predictability in budgeting and future planning.

ATTACHMENTS:

1. Resolution

2. HdL Scope of Work – Business License and Transient Occupancy Tax Services 14 RESOLUTION NO. C-2022-_

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY AUTHORIZING THE

CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH HDL COMPANIES WHEREAS, in 2015, the City of Half Moon Bay entered into an agreement with HDL Companiesto provide business license and transient occupancy tax administration and collection for the City; and
WHEREAS, the city put out a Request for Proposal to provide Business License, Transient Occupancy Tax, and Sales Tax Services to combine services and find one vendor to handle all three areas; and
WHEREAS, the City decided to not move forward with awarding a contract to just one vendor for all three areas and keep our services with their current vendors; and WHEREAS, HdL Companies has demonstrated that they are the highest quality candidate to continue providing business license and transient occupancy tax administration and collection; and
WHEREAS, the scope of work will continue to include providing business license and transient occupancy tax administration and collection.

NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby authorizes the City Manager to execute a Professional Services Agreement for an annual amount of $70,000 through January 1, 2025 between HDL Companies and the City of Half Moon Bay.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 4th day of October 2022 by the City Council of Half Moon Bay by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:

ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
15 16
17 18
19 • Follow up with non-compliant accounts to obtain registration • Work with City to identify additional requirements and ensure collection of data necessary to enforcement procedures.
• Establish optional implementation items such as amnesty programs, back tax and penalty provisions, and other pre-registration programs.

Hdl9Companies I Proposal for Business License, Transient Occupancy Tax and Sales Tax Services 18 20

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: October 4, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Karen Decker, Economic and Community Vitality Manager TITLE: ACCEPTANCE OF FUNDING FROM THE CHAN ZUCKERBERG INITIATIVE DONOR

ADVISED FUND, AN ADVISED FUND OF SILICON VALLEY COMMUNITY

FOUNDATION, FOR PROGRAM EVALUATION OF ECONOMIC ADVANCEMENT

CENTERS IN THREE SAN MATEO COUNTY COMMUNITIES INCLUDING THE

COASTSIDE
______________________________________________________________________________ RECOMMENDATION:

Adopt a resolution authorizing the City Manager to 1) accept grant funds by signing a grant agreement with Silicon Valley Community Foundation for program evaluation activities for three stakeholder groups currently engaged in the operation and implementation of economic advancement centers within San Mateo County in the amount of $100,000; 2) negotiate and execute a sub-grantee agreement with an evaluation firm in an amount not to exceed $100,000 and 3) make matching revenue and expenditure budget amendments in the amount of $100,000.

FISCAL IMPACT:

The total grant amount is $100,000 and covers a grant term ending on March 31, 2024. There is no net fiscal impact to the City. City is lead agency and is determining appropriate amount of overhead and administrative fees.

STRATEGIC ELEMENT:

This recommendation supports the Fiscal Sustainability, Healthy Communities, and Inclusive Governance Elements of the Strategic Plan.

BACKGROUND:

The Coastside Recovery Initiative (CRI) is a comprehensive economic recovery effort sponsored by the City of Half Moon Bay in partnership and collaboration with the Half Moon Bay Coastside Chamber of Commerce and San Mateo County. It launched in 2021 with the purpose of providing immediate relief to individuals and businesses impacted by COVID and positioning the coastside economy for long-term resiliency.
21

Led by a diverse, multi-sector Recovery Task Force, CRI produced a set of strategic recommendations detailed in a public report, Building a More Equitable, Vibrant and Resilient Coastside Economy. Since the release of the report in March, the San Mateo County Board of Supervisors has approved, in concept, a $5 million funding allocation to support the development of economic advancement centers on the Coastside and the unincorporated area of North Fair Oaks. The centers would provide supportive services for job seekers, small businesses, and entrepreneurs.

Funding the centers on the Coastside and North Fair Oaks was partly informed by recent success at a neighboring economic advancement center in South San Francisco (EAC-SSF). EACSSF first opened its doors virtually in July 2021, and then officially in February 2022 in response to high unemployment rates at the peak of COVID and the growing divide between the city’s booming biotech sector and small family, immigrant-owned businesses. Strategically located in one of the city’s lowest income census tracts, the EAC-SSF addresses these issues by offering rapid job placement services and career pathway programs along with the city’s workforce development program as well as small business and entrepreneurship support services to residents and existing small business owners of South San Francisco and throughout North San Mateo County. Early results have exceeded initial goals in terms of clients served and there is high demand for services. Historically, South San Francisco and North San Mateo County have been described as resource deserts where people had to travel outside of the area for needed services and support. Most services provided by the EAC-SSF are offered in Spanish and some newer services in Cantonese.

Like South San Francisco, the City of Half Moon Bay is poised to create a similar center that will serve the Coastside region. Even before the pandemic, the Coastside region was uniquely vulnerable due its geographic isolation, lack of economic diversity and job growth, income inequality, high cost of housing and lack of services and infrastructure. The City and its partners including the Half Moon Bay Coastside Chamber of Commerce which recently launched a business development center, are currently evaluating potential commercial sites for a center and have agreed that workforce development and small business support will be essential. In addition, a business incubator, another recommendation from the Coastside Recovery Initiative, will be housed at the center. The incubator will harness the Coastside’s unique industries and assets, build entrepreneurship capacity and support business and job growth.

Planning is also underway for a North Fair Oaks center.

In August, the County of San Mateo, City of South San Francisco, and City of Half Moon Bay presented the Economic Advancement Center concept to staff from the Chan Zuckerberg Initiative (CZI) and emphasized the benefit of forming a cohort for peer reflection and joint learning. On August 31, the City of Half Moon Bay submitted a proposal to CZI seeking funds to support an 18-month process evaluation of the creation and early implementation of these centers in three distinct communities.

DISCUSSION:
22

A funding agreement between the City and Chan Zuckerberg Initiative (through Silicon Valley Community Foundation) would allow the City to receive and administer funds from a significant philanthropic partner. This funding will build learning and evaluation capacity among the partners and stakeholders with a focus on developing knowledge, skills, and tools to enhance the EAC model, setting strategic priorities, improving decision-making, measuring performance and impact, and using evidence to advance strategic priorities while also increasing public and private support for this work.

If approved, staff will finalize the agreement with Silicon Valley Community Foundation to receive the grant and negotiate and execute a sub-grantee agreement with an evaluation firm with expertise in economic and community development, participatory approaches, and qualitative methods. The ideal firm would also have a commitment to values of diversity, equity and inclusion and a successful track record of projects focused on underserved communities.

ATTACHMENT:

Resolution
23 RESOLUTION NO. C-2022-_

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY

AUTHORIZING THE CITY MANAGER TO ACCEPT GRANT FUNDS BY SIGNING A GRANT

AGREEMENT WITH SILICON VALLEY COMMUNITY FOUNDATION FOR PROGRAM EVALUATION

OF ECONOMIC ADVANCEMENT CENTERS IN THREE SAN MATEO COUNTY COMMUNITIES

INCLUDING THE COASTSIDE
WHEREAS, the Coastside Recovery Initiative has gained momentum following the release of its public report in March 2022; and
WHEREAS, the report identified fifteen recommendations across four critical areas of need and opportunity with respect to COVID recovery and long-term economic resiliency; and WHEREAS, the San Mateo County Board of Supervisors has approved, in concept, a $5 million funding allocation to support the development of economic advancement centers (EACs) on the Coastside and the unincorporated area of North Fair Oaks in unincorporated San Mateo County modeled after an EAC in South San Francisco; and
WHEREAS, San Mateo County, City of South San Francisco and City of Half Moon Bay met with staff from Chan Zuckerberg Initiative to present the concept of the EACs and City of Half Moon Bay submitted a proposal on August 31, 2022, requesting funds for program evaluation for the creation and early implementation of these EACs in three distinct communities; and
WHEREAS, on September 28, 2022, Silicon Valley Community Foundation notified the City of a grant award through the CZI Donor Advised Fund in the amount of $100,000 over an 18-month period ending on March 31, 2024, to support evaluation of the EACs in South San Francisco, Half Moon Bay, and North Fair Oaks; and
WHEREAS, Silicon Valley Community Foundation and the City desire to enter into an agreement to establish the process, terms and conditions governing the allocation and expenditure of CZI Donor Advised funds for program evaluation of the EACs; and WHEREAS, the City desires to enter into a sub-grantee agreement with an evaluation firm with expertise in economic and community development, approaches and qualitative measures relative to the creation of the three EACs, in an amount not to exceed a total of $100,000.

NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay hereby authorizes the City Manager to:

1. Accept grant funds by signing a grant agreement with Silicon Valley Community Foundation for program evaluation activities for three stakeholder groups currently 24 engaged in the operation and implementation of economic advancement centers within San Mateo County in the amount of $100,000; and

2. Negotiate and execute a sub-grantee agreement with an evaluation firm in an amount not to exceed $100,000; and

3. Make matching revenue and expenditure budget amendments in the amount of $100,000.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 4th day of October 2022 by the City Council of Half Moon Bay by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:

ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
25

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: October 4, 2022
TO: Honorable Mayor and City Council
VIA: Matthew Chidester, City Manager
FROM: Jill Ekas, Community Development Director
Mike Noce, Housing Coordinator
TITLE: 555 KELLY AVENUE AFFORDABLE HOUSING DEVELOPMENT – DECLARE CITY

OWNED PROPERTY AS EXEMPT SURPLUS LAND PURSUANT TO GOVERNMENT CODE SECTION 54221(f)(1)(A) AND AUTHORIZE THE CITY MANAGER TO

EXECUTE AN EXCLUSIVE NEGOTIATIONS AGREEMENT BETWEEN THE CITY AND

MERCY HOUSING CALIFORNIA TO ENABLE PREDEVELOPMENT ACTIVITIES ______________________________________________________________________________ RECOMMENDATION:

Adopt two resolutions to:

1. Declare property owned by the City as "exempt surplus” land, pursuant to Government Code § 54221(f)(1)(A), 54221(b), and 37364 located at 555 Kelly Avenue (APN 056-150-200) and a portion of the property located at 535 Kelly Avenue (APN 056-150-220) (the “Site”) and depicted in Exhibit A of the resolution, as the City intends to lease the property for the development of affordable housing (Attachment 1), and;

2. Authorize the City Manager to execute an Exclusive Negotiations Agreement (ENA) between the City and Mercy Housing California (Mercy Housing) to enable predevelopment activities to be undertaken for an affordable housing development project on the Site and provide for a period of time in which to negotiate a development agreement between the parties (Attachment 2).

FISCAL IMPACT:

The fiscal impact of this action is limited to staff and consultant time to prepare necessary agreements, loan documents, and related materials. This action may lead to City Council authorization to provide funding to Mercy Housing from the City’s Affordable Housing Fund (AHF), not to exceed one million dollars ($1,000,000) for predevelopment activities, to support development of an affordable housing project on the Site, and to convey the City-owned site to Mercy Housing, or an affiliate of Mercy Housing, through a long-term ground lease. The Mercy Housing financing proforma requests a funding commitment total of $2 million from Half Moon Bay – in addition to donation of the land – and outlines their intent to seek funding from multiple sources, including a request of up to $3.32 million from San Mateo County. This 26

combination of funding sources is required to reach feasibility for the project. Currently, the City’s Affordable Housing Fund has a balance of $2.16 million. Any funding issued for predevelopment activities will be considered part of the City’s overall $2 million contribution to the project, which is subject to City Council approval.

STRATEGIC ELEMENT:

This action supports the Healthy Communities and Public Safety, and Inclusive Governance Elements of the Strategic Plan.

BACKGROUND:
555 Kelly Avenue was purchased by the City in 2017. It is a rectangular parcel located south of the City’s Ted Adcock Community Center adjacent to Shoreline Station. The property’s lot area is approximately 6,200 square feet and abuts the City’s parking lot located on the south side of the Ted Adcock Community Center at 535 Kelly Avenue. In preparing to move this effort forward, staff determined that the Community Center parking lot area would likely need to be incorporated to make a larger site of approximately 17,000 square feet to facilitate the economic feasibility of an affordable housing development. At a housing work session on November 9, 2021, City Council directed staff to initiate a process seeking development proposals for the 555 Kelly Avenue Site.

Staff worked with the City’s housing consultant to prepare a Request for Qualifications (RFQ) to solicit development interest for developing 555 Kelly Avenue, and/or the expanded site including the parking lot area, with affordable housing. The RFQ was released on February 15, 2022, and closed on May 23, 2022. The RFQ was originally scheduled to close on May 9; however, a prospective applicant team requested a two-week extension and staff adjusted the schedule and provided notice of the extended deadline. The RFQ was posted on the City website at this link.
1 The site is relatively small for multi-family housing development. Thus, despite extensive outreach to publicize the RFQ to local affordable housing developers, the City received only one submittal from a two-agency team comprised of Mercy Housing and Ayudando Latinos A Soñar (ALAS). As proposed, the development includes 40 units of affordable farmworker housing as well as 2,050 square feet of space for a resource center, which would be staffed and managed by ALAS. The proposed building would be four stories in height, with parking and the Farmworker Resource Center on the ground floor. Community space, open space, and management offices would be provided on the second floor. Mercy Housing proposes to develop the property and provide ongoing property management and resident services. ALAS will be a vital partner throughout the development process, including community outreach and marketing in addition to operating the Farmworker Resource Center.

On July 19, 2022, City Council approved a resolution directing staff to prepare an ENA between the City and Mercy Housing that outlines predevelopment activities and a period to negotiate 1 555 Kelly Avenue - Affordable Housing RFQ | Half Moon Bay, CA (half-moon-bay.ca.us) 27

related development agreement(s) between the parties. The action also allowed staff to begin preparing a predevelopment loan agreement to provide potential funding support to Mercy Housing for predevelopment activities. A hyperlink to the July 19, 2022 staff report is provided in Attachment 3, which includes a copy of the Mercy Housing and ALAS development proposal.

DISCUSSION:

Surplus Land Act (SLA)
As required by Government Code § 54220, the California Surplus Land Act (SLA) requires local agencies to make publicly owned land available for affordable housing before selling or leasing the property for other purposes. All jurisdictions are mandated to prioritize affordable housing development, follow all noticing obligations of SLA, and adhere to compliance review standards set by the California Department of Housing and Community Development (HCD) on land that is no longer necessary for an agency’s primary use. The first step SLA requires is that the agency make a finding that the land is either “surplus” or “exempt surplus.” Local agencies, such as Half Moon Bay, who plan to streamline the process and produce affordable housing may declare property as “exempt surplus.” To be eligible for exemption, a jurisdiction must provide a competitive bidding process that invites housing developers to participate. As mentioned previously, the Site is intended for affordable housing and Half Moon Bay issued an RFQ in February 2022, which meets this provision for exemption. A local agency is permitted to declare multiple parcels surplus or exempt surplus in a single action once per calendar year. This means that similar declarations made in relation to affordable housing on other City-owned land could come before City Council as soon as January 2023.

In addition to providing a competitive bidding process, for property to be declared “exempt surplus”, a proposed project must fall into one of four categories: grandfathering; land for affordable housing; land dedicated to other public uses; or land not suitable for housing. The category, land for affordable housing, outlines several specific standards for projects to qualify as exempt from SLA. For this Project, staff finds that § 54221(f)(1)(A) best fits the development characteristics and size presented by Mercy Housing and ALAS. Section 54221(f)(1)(A) includes the following project requirements:
1) at least 80% of the property’s area will be used for housing, and; 2) at least 40% of the units are to be affordable to households at or below 60% of area median income (AMI), and;
3) at least half of the affordable units are affordable to very low income households, and; 4) affordable units are subject to at least a 30-year affordability covenant.

The Mercy Housing and ALAS proposal will meet and/or exceed the provisions of § 54221(f)(1)(A). Additionally, all of the proposed 40 units will be affordable and are expected to be reserved for households far below 60% of AMI. Most households will fall into the acutely low, extremely low, and/or very low income categories, which will also exceed SLA requirements by assisting households at the lowest incomes. The proposal includes a mix of 28

studio and one-bedroom units serving households with 1-3 persons, depending on unit size.

The below table illustrates the maximum income, depending on household size, for each category according to income limits released annually by HCD for San Mateo County, see Table

1. As in most affordable housing developments, households generally pay 30% or less of their annual income toward housing costs, including rent and utilities. Farmworkers are considered a special housing needs group due to their limited income and vulnerability to market rate housing costs. HCD defines special housing needs groups as people who are elderly or disabled (including developmental disabilities), female-headed households, large families, farmworkers, and people experiencing homelessness. Furthermore, HCD finds these special-needs groups often spend a disproportionate amount of their income to secure safe and decent housing and are sometimes subject to discrimination based on their specific needs or circumstances. Mercy Housing and ALAS intend to seek additional rental subsidies to assist tenants and provide additional stability, therefore preventing potential homelessness and overcrowded living conditions for this population.

Table 1: San Mateo County 2022 Income Limits (1 to 3 Person Households) Household Size and Income Limits
Income Category Limits 1 2 3
Acutely Low Income (15% AMI) 17,450 19,900 22,400
Extremely Low Income (30% AMI) 39,150 44,750 50,350
Very Low Income (50% AMI) 65,250 74,600 83,900
Median Income 116,200 132,800 149,400
Source: https://www.hcd.ca.gov/docs/grants-and-funding/inc2k22.pdf Following City Council declaring the Site as exempt surplus land, a copy of the resolution must be sent to HCD 30 days prior to any land disposition. The term disposition refers to the conveyance of land owned by a local agency through sale or lease. Staff expects to have HCD certify the City’s declaration long before the City Council’s consideration of a ground lease agreement with Mercy Housing is required to move forward. Such actions and details will be included in a Disposition and Development Lease Agreement (DDLA) to be negotiated between Mercy Housing and the City, which will return for City Council consideration.

Exclusive Negotiations Agreement (ENA)
A copy of the proposed ENA between the City and Mercy Housing is included as Exhibit B in the Resolution provided in Attachment 2. Given the ongoing negotiations between the City and Mercy Housing regarding the ENA, it is anticipated that the final ENA executed by the City Manager will be substantially similar to the attached draft ENA. The purpose of the ENA is to establish terms including predevelopment milestones and a timeline for the execution of the DDLA, with terms to be negotiated during the ENA period. Predevelopment activities include tasks such as preparing a detailed predevelopment budget and preliminary financial analysis for the construction of the development; developing site and conceptual plans; preparing soils and environmental reports; developing plans for the programming, unit mix, occupancy and 29

affordability restrictions; and developing and implementing community outreach and engagement plans.

In support of the financial costs of the aforementioned predevelopment activities, including the coastal development permit entitlement process, City Council may authorize a predevelopment loan to Mercy Housing as a portion of the City’s full contribution to the project. As mentioned in the Fiscal Impact section, the Mercy Housing financing proforma, included in the project proposal (see Attachment 3), outlines a funding commitment of $2 million from the City of Half Moon Bay. The ENA states that after a predevelopment budget has been established, satisfactory to the City, a predevelopment loan agreement in an amount not to exceed one million dollars ($1,000,000) can support those necessary activities. The predevelopment loan amount would be included as part of the total funding contribution of up to $2 million, all subject to additional City Council approval.

In addition to the City and County, Mercy Housing will seek additional funding sources such as 9% tax credits and HCD’s Joe Serna Farmworker Housing Grant program. Staff wishes to highlight that funding from the County’s Affordable Housing Fund is extremely competitive, and the County will expect to see a significant commitment of resources from the City of Half Moon Bay in order to commit County funds to the project. Currently, the City’s Affordable Housing Fund has a balance of $2.16 million. The ability to utilize City-owned land and multiple funding sources greatly contributes to the potential success of developing affordable housing in a region with high land and construction cost, in addition to limited available sites.

Following the execution of the ENA (as shown in the Developer’s Schedule of Performance on the last page of Attachment 2), key milestones include:
• Submission of a proposed Operating Plan and Budget
• Execution of a City Predevelopment Loan
• Preliminary plan for Community Outreach and Engagement • Conceptual Design Plans
• Community Resources Center features and programming
• Completion of development studies
• Execution of the DDLA
SUMMARY:

Throughout the Bay Area, it is common for affordable housing developers to seek a variety of avenues for funding in order to increase financial feasibility. Securing sufficient financing for an affordable housing development as proposed at 555 Kelly Avenue that serves acutely low and extremely low income farmworkers is particularly challenging due to the low rental income expected to be generated by the property. Specific funding amounts related to predevelopment activities will be discussed during the ENA period and included in a predevelopment loan agreement that will return to the City Council for approval. Execution of the ENA is a significant 30

milestone that will allow Mercy Housing and staff to engage in specific predevelopment activities to advance the Project toward successful completion, as outlined in the ENA.

The project will also require the City to amend aspects of current zoning on the site to be consistent with the new Workforce Housing Overlay land use designation and its associated build out allowances prior to development permit approvals being issued. Staff will continue to evaluate the project in relation to zoning provisions outlined in the Local Coastal Land Use Plan, including the Workforce Housing Overlay that supports farmworker housing as a Coastal Act priority use. Declaring the Site as exempt surplus in accordance with SLA and § 54221(f)(1)(A) is an initial, procedural step the City is required to take in the pursuit of developing affordable housing on the Site.

Staff recommends Council’s approval of the resolutions in support of moving the overall concept of affordable farmworker housing development of this Site forward, with the acknowledgement that staff will continue to return to City Council with project updates and to seek further approvals.

ATTACHMENTS:

1. Resolution – Declaration of Exempt Surplus per the Surplus Lands Act

2. Resolution – ENA City of Half Moon Bay and Mercy Housing

3. Hyperlink – July 19, 2022, City Council staff report, item 3.A:
https://granicus_production_attachments.s3.amazonaws.com/halfmoonbay/159ce6d41 cbe55f4625b8f18a0ce16a40.pdf
31 Resolution No. C-2022-____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY DECLARING PROPERTY OWNED BY THE CITY OF HALF MOON BAY AT 555 KELLY AVENUE AND A PORTION OF PROPERTY AT 535 KELLY AVENUE (APN 056-150-200 AND 056-150-220) AS EXEMPT SURPLUS LAND PURSUANT TO GOVERNMENT CODE SECTION 54221(f)(1)(A) WHEREAS, the City of Half Moon Bay (“City”) owns two parcels located at 555 Kelly Avenue and 535 Kelly Avenue. (Assessor Parcel Numbers 056-150-200 and 056-150-220); and WHEREAS, the City wishes to create an affordable housing site of approximately 17,000 square feet, using the entire property located at 555 Kelly Avenue and a portion of the property located at 535 Kelly Avenue, as depicted on Exhibit A attached hereto and incorporated herein by reference (the “Site”); and
WHEREAS, on February 15, 2022 the City issued a Request for Qualifications (“RFQ”) for the development of affordable housing on the Site that may target a range of affordable housing types and underserved populations; and
WHEREAS, the City of Half Moon Bay Local Coastal Land Use Plan identifies this property as appropriate for application of the Workforce Housing Overlay land use designation to provide sites suitable for affordable housing; and
WHEREAS, Mercy Housing California (“Developer”) submitted a response to the RFQ prior to the May 23, 2022 deadline and proposed the construction of a 40-unit affordable farmworker housing development project (the “Project”); and WHEREAS, pursuant to Government Code Section 54220 et seq. (the “Surplus Land Act”), the City Council must declare the Site to be “Surplus Land” or “Exempt Surplus Land” before the City Council may take action to dispose of the Site; and WHEREAS, Government Code Section 54221( f)(1)(A) defines “Exempt Surplus Land” to include surplus land that is transferred pursuant to Government Code Section 37364; and WHEREAS, Government Code Section 37364 authorizes a City to sell, lease, exchange, quitclaim, convey, or otherwise dispose of real property to provide affordable housing to persons and families of low or moderate income provided the following conditions are met:
a) Not less than 80 percent of the area of the parcel will be used for the development of housing; and
32 b) Not less than 40 percent of the total number of those housing units developed on the parcel shall be affordable to households whose incomes are equal to, or less than, 75 percent of the maximum income of lower income households, and at least half of which shall be affordable to very low income households; and
c) Dwelling units produced for persons or families of low and moderate income under Government Code Section 37364 shall be restricted by regulatory agreement to remain continually affordable to those persons and families for the longest feasible time, but not less than 30 years, with such regulatory agreement recorded in the office of the county recorder in which the housing development is located; and
WHEREAS, the Developer’s Project is expected to meet and exceed the requirements of Government Code Section 37364; including but not limited to:
a) all housing units (100 percent) developed on the Site be restricted to households at the lowest affordable income categories, including acutely low, extremely low, and/or very low income households as established and defined by the California Department of Housing and Community Development ("HCD") for San Mateo County; and WHEREAS, pursuant to the Surplus Land Act, the City Council must take formal action in a regular public meeting to declare that the Site is exempt surplus land, as supported by written findings; and
WHEREAS, pursuant to the Surplus Land Act Guidelines issued by HCD, any determination by a local agency that its surplus lands are exempt from the Surplus Land Act must be provided to HCD for its review at least 30 days prior to Site disposition; and WHEREAS, following the declaration that the Site is exempt surplus land, the City intends to execute an Exclusive Negotiation Agreement (“ENA”) with the Developer for the Project that allows City staff to coordinate necessary development milestones and documents with the Developer; and
WHEREAS, during the term of the ENA, the City and Developer will negotiate the terms of a Disposition and Development Lease Agreement and long-term ground lease (“DDLA”) for the development and operation of 40 units of affordable farmworker housing; and WHEREAS, the Site will not be transferred to Developer until a DDLA and long-term ground lease is executed between City and Developer and the City has confirmed approval from HCD’s review of the declaration of the Site as except surplus land; and 33 NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay find the above recitals to be true and correct and are a substantive part of this Resolution; and be it further
RESOLVED, that the City Council of the City of Half Moon Bay hereby declares that the Site is exempt surplus land, pursuant to Government Code Sections 54221(b) and 54221( f)(1)(A), because the City intends to lease the Site pursuant to a DDLA for development of an affordable housing project pursuant to Government Code Section 37364; all housing units at the Site be reserved for acutely low, extremely low and/or very low income households, which will be subject to a regulatory agreement with a term of at least 55 years and recorded in the official records of San Mateo County; and be it further
RESOLVED, that the City Council of the City of Half Moon Bay hereby authorizes the City Manager to submit a copy of this Resolution to HCD in accordance with the Surplus Land Act Guidelines; and be it further
RESOLVED, that the City Council of the City of Half Moon Bay hereby finds that these actions are not subject to the California Environmental Quality Act ("CEQA") because they are activities that are excluded from the definition of a Project by Section 21065 of the Public Resources Code and section 15378( b) of the State CEQA Guidelines. This action only declares the Site as exempt surplus land and directs staff to effectuate the purpose of this Resolution. This is administrative activity of government which will not result in direct or indirect physical changes to the environment. No commitment to any project is being made at this time. CEQA review requirements must be completed before any commitment to a project occurs, and appropriate environmental review pursuant to CEQA will be completed at that time.
***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 4
th day of October, 2022 by the City Council of Half Moon Bay by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:

ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
34 EXHIBIT A

PROPERTY DESCRIPTION
Site
Kelly Avenue
Cabrillo Highway -
1 35
Resolution No. C-2022-____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HALF MOON BAY

TO AUTHORIZE THE CITY MANAGER TO EXECUTE AN EXCLUSIVE NEGOTIATIONS AGREEMENT (ENA) BETWEEN THE CITY AND MERCY HOUSING CALIFORNIA TO ENABLE PRE-DEVELOPMENT

ACTIVITIES TO BE UNDERTAKEN FOR AN AFFORDABLE HOUSING DEVELOPMENT PROJECT ON CITY-OWNED PROPERTY LOCATED AT 555 KELLY AVENUE AND 535 KELLY AVENUE WHEREAS, the City of Half Moon Bay (“City”) owns two parcels located at 555 Kelly Avenue and 535 Kelly Avenue. (Assessor Parcel Numbers 056-150-200 and 056-150-220); and WHEREAS, the City wishes to create an affordable housing site of approximately 17,000 square feet, using the entire property located at 555 Kelly Avenue and a portion of the property located at 535 Kelly Avenue, incorporated herein by reference (the “Site”); and WHEREAS, on February 15, 2022 the City issued a Request for Qualifications (“RFQ”) for the development of affordable housing on the Site that may target a range of affordable housing types and underserved populations; and
WHEREAS, the City of Half Moon Bay Local Coastal Land Use Plan identifies this property as appropriate for application of the Workforce Housing Overlay land use designation to provide sites suitable for affordable housing; and
WHEREAS, Mercy Housing California (“Developer”) submitted a response to the RFQ prior to the May 23, 2022 deadline and proposed the construction of a 40-unit affordable farmworker housing development project (the “Project”); and WHEREAS, despite extensive outreach to publicize the RFQ to local affordable housing developers, the Developer’s proposal was the only one submitted in response to the RFQ; and WHEREAS, the Project submitted by the Developer proposes a partnership with Ayudando Latinos A Soñar (ALAS), a nonprofit organization with deep ties to the farmworker community and experience in serving the social, educational, and cultural needs of Latino communities in coastal areas of Northern California, to include a Farmworker Resource Center on the ground floor that ALAS will operate; and
WHEREAS, the Developer is an experienced local nonprofit affordable housing developer with prior experience developing affordable housing in the City; and WHEREAS, the Developer’s proposal addresses the critical need for housing for local farmworkers and also meets the City’s priorities for housing that is affordable to Acutely Low-, Very Low- and Extremely-Low Income households; and
36 WEREAS, the City wishes to execute an Exclusive Negotiation Agreement (“ENA”) with the Developer (see Exhibit “A”, attached), for the Project that allows City staff to coordinate necessary development milestones and documents with the Developer; and WHEREAS, during the term of the ENA, the City and Developer will negotiate the terms of a Disposition and Development Lease Agreement and long-term ground lease (“DDLA”) for the development and operation of 40 units of affordable farmworker housing; and WHEREAS, the City contemplates executing an agreement with Developer for a predevelopment loan (“Predevelopment Loan”), in an amount not to exceed One Million Dollars ($1,000,000), to assist Developer with predevelopment costs incurred prior to the start of construction; and
WHEREAS, the Site will not be transferred to Developer (the “Site Disposition”) until a DDLA and long-term ground lease is executed between City and Developer, which Site Disposition is expected to occur shortly before the start of construction of the Project; and WHEREAS, pursuant to Government Code Sections 54220, 54221( f)(1)(A) and 37364 the City Council has taken all necessary action to ensure compliance with the Surplus Land Act and the approved the required declaration of Exempt Surplus Land for the Site; and NOW, THEREFORE, BE IT RESOLVED THAT the City Council of the City of Half Moon Bay finds the above recitals to be true and correct and are a substantive part of this Resolution; and be it further
RESOLVED, that the City Council of the City of Half Moon Bay hereby authorizes the City Manager to execute the ENA, in substantially similar form to Exhibit B, with the Developer. ***************************************************************** I, the undersigned, hereby certify that the foregoing Resolution was duly passed and adopted on the 4
th day of October, 2022 by the City Council of Half Moon Bay by the following vote:

AYES, Councilmembers:

NOES, Councilmembers:

ABSENT, Councilmembers:

ABSTAIN, Councilmembers:

ATTEST: APPROVED:
___________________________ _____________________________ Jessica Blair, City Clerk Debbie Ruddock, Mayor
37 1
EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT (555 KELLY AVENUE PROJECT) This Exclusive Negotiating Rights Agreement (this "Agreement") is entered into as of this __________ (the "Effective Date"), by and between the City of Half Moon Bay, a public body, corporate and politic, organized and existing under the laws of the State of California (the "City"), and Mercy Housing California, a nonprofit public benefit corporation (the "Developer"). The City and the Developer are collectively referred to herein as the “Parties” and sometimes individually as a “Party”.

RECITALS
A. The City owns or controls certain real property located in the City of Half Moon Bay at 535 Kelly Avenue and 555 Kelly Avenue and depicted in Exhibit A attached hereto (the “Site” or, the “Property”), and consisting of APNs 05610200 and 056150220 (partial), covering an area of approximately 17,000 sf.

B. On February 15, 2022, the City issued a Request for Qualifications ("RFQ") to select a developer to develop on the Site an affordable housing development consistent with the general goals and requirements contained in the RFQ (the “Development”).

C. Through the RFQ process, the Developer was selected as the developer of the Site.

D. The purpose of this Agreement isto establish: (1) the general tasks to be undertaken by the Developer and the City during the term of this Agreement as more particularly described in Article 2 of this Agreement and the Schedule of Performance (“Schedule of Performance”) attached hereto as Exhibit B; (2) the procedures and standards for the negotiation by the Parties of a Disposition and Development Lease Agreement (the "DDLA"); (3) the terms, if any, under which the City may provide financial assistance to the Developer for predevelopment expenses to be incurred in connection with the Development (the "City Assistance"); and (4) the relationship between the Developer and the City, including whether the Parties should serve as co-developers of the Development. As more fully set forth in Section 3.1, the Parties acknowledge and agree that this Agreement in and of itself does not obligate either Party to acquire or convey any property, does not grant the Developer the right to develop the Development, and does not obligate either Party to engage in any activities or incur any costs to develop the Development other than those activities set forth in Article 2 of this Agreement and the Schedule of Performance.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties mutually agree as follows:
38 2
ARTICLE 1.

EXCLUSIVE NEGOTIATIONS
Section 1.1 Good Faith Negotiations. During the Negotiating Period as defined in Section 1.2 below, and subject to the terms and conditions of this Agreement, both the City and the Developer shall proceed diligently and in good faith regarding negotiation and documentation of the potential terms, conditions, covenants, restrictions and agreements of a DDLA between them and the terms of any City Assistance pursuant to such a DDLA. The issues to be addressed in the negotiations include at a minimum: (i) the terms of a ground lease of the Site to the Developer; (ii) the physical and land title conditions of the Site and remediation of any adverse conditions on the Site; (iii) the type of entitlements necessary for the Development; (iv) the design, density, programming, unit mix and phasing of the Development;(v) the general scope of community and resident outreach and engagement; (vi) the specific roles, rights and responsibilities of each Party (vii) the development schedule for the Development; and (viii) financing of the Development (including, without limitation, the terms of the City Assistance). The Parties may include additional issues in the negotiations at their mutual agreement.

The Parties shall generally cooperate with each other and supply such documents and information as may be reasonably requested by the other to facilitate the conduct of the negotiations. During the Negotiating Period, the Parties shall use good faith efforts to accomplish the respective tasks outlined in Article 2 of this Agreement to facilitate the negotiation of a mutually satisfactory DDLA and the terms of any City Assistance and shall exercise reasonable efforts to complete discussions relating to the terms, conditions, covenants or restrictions of a DDLA and any City Assistance, all as may be mutually acceptable to both the City and the Developer. The exact terms and conditions of a DDLA and the City Assistance, if any, shall be determined during the course of these negotiations. During the Negotiation Period, the Developer shall also undertake and use all commercially reasonable efforts to complete the actions described in the Schedule of Performance within the time period specified for each such action in the Schedule of Performance. During the Negotiation Period, the Schedule of Performance may be amended with the mutual consent of the Parties.

Section 1.2 Negotiating Period. The negotiating period under this Agreement is a period of 365 days, commencing on the Effective Date (the "Negotiating Period"). The Negotiating Period may be extended twice, each time for an additional 90-day period by the written agreement by the Parties, as provided below. The City Manager of the City, or his or her designee, has the authority to agree to such an extension on behalf of the City if, in the City Manager’s or designee’s judgment, sufficient progress has been made toward the execution of a mutually acceptable DDLA and the terms of the City Assistance, if any, during the Negotiating Period to merit such an extension. The City Manager or his or her designee also has the authority to agree to such an extension if additional tasks triggered by the environmental review process and required to be completed prior to approval of the DDLA necessitate such an extension.

If a DDLA has not been executed by the Parties prior to the expiration of the Negotiating Period or mutually agreed upon extension of the Negotiating Period, then this Agreement shall terminate and neither Party shall have any further rights or obligations under this Agreement. If a DDLA is executed by the Parties prior to the expiration of the Negotiating Period or mutually agreed upon extension of the Negotiating Period, upon the execution of the DDLA, this Agreement shall 39 3
terminate, and all rights and obligations of Parties shall be as set forth in the executed DDLA and any documentation evidencing the City Assistance, if applicable.

The Negotiating Period may also be extended for the period of time that Developer’s compliance is delayed, through no action or omission of Developer, by a Force Majeure Event. For purposes hereof, “Force Majeure Event” means (1) acts, failures to act and/or delays of the City in accordance with the Schedule of Performance; (ii) acts of God; (iii) flood, fire, earthquake, explosion, pandemic; (iv) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot, or other civil unrest; (iv) national or regional emergency, or other event out of Developer’s reasonable control that impacts the ability of Developer or City to meet milestone deadlines as set forth in this Agreement. The foregoing notwithstanding, any extension due to a Force Majeure Event shall run from the time of commencement of the Force Majeure Event, but only if written notice is delivered by Developer to City within thirty (30) days following such commencement of the cause of such Force Majeure Event, and shall continue for the period of time that such Force Majeure Event materially impacts Developer’s or City’s ability to comply with the Schedule of Performance and for a period no longer than 240 days.

Section 1.3 Exclusive Negotiations. During the Negotiating Period, the City shall not negotiate with any entity, other than the Developer, regarding development of the Site, or solicit or entertain bids or proposals to do so.

ARTICLE 2.

NEGOTIATION TASKS
Section 2.1 Overview. To facilitate negotiation of the DDLA, the Parties shall use reasonable good faith efforts to accomplish the tasks set forth in this Article 2 of this Agreement in a timeframe that will support negotiation and execution of a mutually acceptable DDLA prior to the expiration of the Negotiating Period.

Section 2.2 Financing and Costs of Development. Within forty-five (45) days of the execution of this Agreement and as set forth in the Schedule of Performance, the Developer will provide the City with a preliminary financial analysis for the construction of the Development.

The financial analysis submitted by the Developer shall be refined by the Parties during the Negotiating Period and as otherwise provided in the DDLA.

Section 2.3 Predevelopment City Assistance. As soon as reasonably possible, the Developer will provide the City with a predevelopment budget, to include sources by uses for all predevelopment costs, for work to be undertaken beginning at the execution of this Agreement and ending at the commencement of construction of the Development (the “Predevelopment Budget”). The City shall then work diligently with the Developer to make any mutually acceptable changes or adjustments to the Predevelopment Budget. Within forty-five (45) days of the Developer’s provision of a Predevelopment Budget that is satisfactory to the City and subject to City Council approval, the City shall provide to the Developer a predevelopment loan agreement in an amount not to exceed One Million Dollars ($1,000,000.00) (the “City Predevelopment Loan”). It is understood that the City’s predevelopment loan may or may not cover all of the costs enumerated in the Predevelopment Budget, and that the Developer may need to secure additional predevelopment sources from the County of San Mateo, the City, and/or other sources. The City Predevelopment 40 4
Loan will be used by Developer to conduct certain predevelopment activities related to the Development as detailed in the Predevelopment Budget. The City Predevelopment Loan will be unsecured and will be evidenced by a promissory note, a loan agreement, and an assignment of work product. The City Predevelopment Loan will bear no interest and will be due at the earlier of construction closing for the Development or 36 months following execution of the construction phase loan documents; provided however that the City shall forgive the disbursed portion of the City Predevelopment Loan if: (i) this Agreement is terminated pursuant to its terms; (ii) the Parties fail to enter into a DDLA despite the Parties’ good faith efforts; and (iii) the Developer is not in default under the Agreement. Should the City forgive the disbursed portion of the City Predevelopment Loan under the conditions stated above, all finished or unfinished work products assigned under the City Predevelopment Loan shall become property of the City and shall be promptly delivered to the City. The City shall have no obligation to disburse any City Predevelopment Loan funds upon expiration, cancellation or termination of this Agreement, unless the Agreement is superseded by a duly executed DDLA.

Section 2.4 Site and Conceptual Plans. Within the timeline set forth in the Schedule of Performance, the Developer shall submit to the City conceptual plans for the development of the Site, including any plans for commercial or other non-residential space (“Conceptual Plans”). The City shall review and comment on the Conceptual Plans in a timely manner.

Section 2.5 Programming, Unit Mix and Occupancy of the Development. Within the time set forth in the Schedule of Performance, the Developer shall submit to City preliminary plans for the programming, unit mix, occupancy, and affordability restrictions for the Development (“Preliminary Programming Plans”). The City shall review and comment on the Preliminary Programming Plans in a timely manner.

Section 2.6 Plans for Community Engagement. Within the time set forth in the Schedule of Performance, the Developer shall submit to the City preliminary plans for community outreach and engagement (“Preliminary Outreach and Engagement Plans”). The City shall review and comment on the Preliminary Outreach and Engagement Plans in a timely manner. The Parties agree that Preliminary Outreach and Engagement Plans may be modified during the Negotiating Period in response to reasonable requests of community members or because of other new information that comes to light.

Section 2.7 Schedule of Performance. The Developer and the City agree to negotiate an amended Schedule of Performance to be incorporated into the DDLA, which shall include but not be limited to: the dates for obtaining Planning Approvals and financing commitments for the Development, and the dates for the commencement and completion of construction of the Development.

Section 2.8 Due Diligence. During the Negotiating Period the Developer shall conduct due diligence activities, including but not limited to planning, soils report, hazardous materials report, financial feasibility and title adequacy. (a) Physical Adequacy Determination. The Developer shall conduct physical due diligence activities to determine whether the Site is suitable for the Development, taking into account the geotechnical and soils conditions, the presence or absence of toxic or other 41 5
hazardous materials, the massing of the proposed Development improvements and the parking requirements imposed on developments of this type and the other environmental and regulatory factors that the Developer deems relevant. Developer and City shall cooperate to timely secure any permission and noticing agreements needed for the Developer to conduct such physical due diligence activities at the Site. If, in the Developer's judgment based on such investigations and analyses, the Site is not suitable for development, the Developer may notify the City in writing prior to the expiration of the Negotiating Period of its determination (an "Unsuitability Notice").

Upon delivery by any of the methods described in Section 3.3 of an Unsuitability Notice by the Developer to the City, this Agreement shall be terminated without further action of any party, and thereafter no party shall have any further duties, obligations, rights, or liabilities under this Agreement. The Parties acknowledge that any executed DDLA shall provide a similar opportunity for the Developer to determine the physical suitability of the Site. (b) Title Adequacy Determination. Within thirty (30) days following the Effective Date, the Developer shall cause a reputable title company to issue a Preliminary Title Report (the "Report") on the Site, and the Developer shall make a copy of the Report available to the City. If the Developer objects to any exception appearing on the Report or should any title exception arise after the date of the Report, the Developer may object to such exception, provided such objection is made to City in writing within forty-five (45) days of receiving the Report . If the Developer objects to any exception to title, the City, within thirty (30) days of receipt of the Developer's objection shall notify the Developer in writing whether the City elects to (1) cause the exception to be removed of record, (2) obtain a commitment from the title company for an appropriate endorsement to the policy of title insurance to be issued to the Developer, insuring against the objectionable exception, or (3) terminate this Agreement unless the Developer elects to take title subject to such exception. If any Party elects to terminate this Agreement pursuant to this Section 2.8(b), no Party shall thereafter have any obligations to or rights against the others hereunder. The Parties acknowledge that any executed DDLA shall provide a similar opportunity for the Developer to determine the title adequacy of the Site.

Section 2.9 Reports.
(a) The Developer, within ten (10) days of receipt of any of the following documents, shall provide the City with copies of all reports, studies, analyses, correspondence and similar documents, but excluding confidential or proprietary information, prepared or commissioned by the Developer with respect to this Agreement and the Development. (b) The City shall provide the Developer with copies of all reports, studies, analyses, correspondence and similar documents prepared or commissioned by the City with respect to this Agreement and the Development, promptly following execution of this Agreement with respect to documents then in its possession or under its reasonable control, and promptly upon their completion with respect to any subsequently prepared documents.

Section 2.10 Environmental Review. During the Negotiating Period the City and the Developer shall review existing environmental documentation to ascertain whether it adequately addresses the Development. Based on that analysis the Developer shall prepare or cause to be prepared the appropriate environmental documentation required by the California Environmental Quality Act ("CEQA") and the National Environmental Policy Act (“NEPA”), if applicable, for 42 6
consideration of approval of the DDLA and any City planning approvals; provided, that nothing in this Agreement shall be construed to compel the City to approve or make any particular findings with respect to such CEQA and/or NEPA documentation. The City shall provide such information about the Development as may be required to enable the Developer to prepare or cause preparation and consideration of any CEQA- and/or NEPA-required document, and shall otherwise generally cooperate with the Developer to complete this task.

Section 2.11 Progress Reports. From time to time as reasonably agreed upon by the Parties, each Party shall make oral or written progress reports advising the other Party on studies being made and matters being evaluated by the reporting Party with respect to this Agreement and the Development within ten (10) days of a request from the other Party.

Section 2.12 Relocation. City acknowledges there are no existing tenants residing on the Property as of the date of this Agreement. However, the City currently is using the Site for storage of some public works supplies and is accessing these materials on a regular basis. During the Negotiating Period, City and Developer will negotiate a mutually agreeable plan to relocate the City’s supplies as needed and to provide the Developer with all necessary access to the Site, in order to accommodate the Developer’s predevelopment activities and schedule.

Section 2.13 Property Management and Supportive Services. During the Negotiating Period, the Parties will negotiate the terms of property management and any supportive service provision, if any, which may be provided separately from the general resident services provided on site.

Section 2.14 Sub-Lease of Space to Ayudando Latinos a Sonar (“ALAS”). During the Negotiating Period, the Parties will negotiate the terms of any sub-lease of space within the Development to ALAS for the purpose of providing specific resident and community services and activities.

Section 2.15 Parties’ Relationship. During the Negotiating Period, the Parties will define the relationship between each other regarding the rights, responsibilities and roles of each Party ARTICLE 3.

GENERAL PROVISIONS
Section 3.1 Limitation on Effect of Agreement. This Agreement shall not obligate either the City or the Developer to enter into a DDLA. By executing this Agreement, the City is not committing itself to or agreeing to undertake conveyance, acquisition, or disposition of any parcels in the Site. By executing this Agreement, the City is merely agreeing to negotiate exclusively with the Developer for a particular period of time in accordance with the terms hereof, reserving for the City’s subsequent action the final discretion and approval regarding the execution of a DDLA and all proceedings and decisions in connection therewith. Any DDLA resulting from negotiations pursuant to this Agreement shall become effective if and only if and after such DDLA has been considered and approved by City and executed by duly authorized representatives of City and Developer. Unless and until a DDLA is signed by the Developer, approved by the City and executed by the City, no agreement drafts, actions, deliverables or communications arising from 43 7
the performance of this Agreement shall impose any legally binding obligation on either Party to enter into or support entering into a DDLA or be used as evidence of any oral or implied agreement by either Party to enter into any other legally binding document.

Section 3.2 City Approvals. Developer shall be responsible for obtaining all approvals required by City for the Project in accordance with City’s standard application process for discretionary land use entitlements, including payment for all of City’s costs of processing such approvals. Nothing set forth herein shall be construed as a grant of any such approvals, nor as an obligation on the part of City to grant such approvals.

Section 3.3 Notices. Formal notices, demands and communications (other than day to day routine communications) between the City and the Developer shall be sufficiently given if, and shall not be deemed given unless: (i) dispatched by certified mail, postage prepaid, return receipt requested, (ii) sent by express delivery or overnight courier service with a delivery receipt, (iii) personally delivered with a delivery receipt, or (iv) sent by facsimile with a copy delivered by one of the previous three methods, to the office of the parties shown as follows, or such other address as the parties may designate in writing from time to time:

City: City of Half Moon Bay
Community Development Department
501 Main Street
Half Moon Bay, CA 94109
Attn: Director
Reference: 555 Kelly Avenue Project
With a copy to:

Catherine Engberg
City Attorney
Shute, Mihaly & Weinberger LLP
396 Hayes Street
San Francisco, CA 94102
Developer: Mercy Housing California
1256 Market Street
San Francisco, CA 94102
Attn: Ramie Dare
Such written notices, demands and communications shall be effective on the date shown on the delivery receipt as the date delivered or the date on which delivery was refused.

Section 3.4 Right of Entry.

The Developer and its consultants shall have the right to enter upon the Site during normal business hours to carry out normal business activities such as carrying out visual observations, meeting with City staff regarding the Development, etc. No formal notice is required for such activities on the Site. The Developer and its consultants will work with the City staff to give reasonable advance notice for any such planned activities on the Site. 44 8
The Developer and its consultants shall obtain the City’s written approval, which may be requested and provided via email, prior to entering upon the Site to conduct physical investigations in accordance with this Agreement. Any such requests shall include, at a minimum, a description of the work to be performed and any expected disruption to the physical state of the Site or the normal activity of City staff on the Site, the names and company affiliations of any personnel that will perform such work, a projected schedule for the work, and a copy of liability insurance certificates covering the right of entry and naming the City, its employees and affiliates as an additional insured. Such work, once approved, shall be conducted during normal business hours, unless otherwise approved by the City. In connection with such entry and investigation, the Developer shall: (i) give the City or its designee reasonable advance notice; (ii) repair and restore any damage it may cause; (iii) carry liability insurance covering the right of entry naming the City as an additional insured; and (iv) deliver to the City, within ten (10) days of receipt thereof, a complete copy of any investigation, test, report or study which the Developer conducts, or causes to be conducted, with respect to the Site.

Section 3.5 Costs and Expenses. Except as explicitly set forth in this Agreement, each Party shall be responsible for its own costs and expenses in connection with any activities and negotiations undertaken in connection with this Agreement, and the performance of each Party's obligations under this Agreement.

Section 3.6 No Commissions. Each Party represents to the other that is has not retained the services of any broker, agent or finder with respect to the Site or in connection with any matters relating to this transaction of the subject discussions, and agrees to hold the other Party harmless from and against any claim for commission, fee, or other remuneration by any broker, agent, or finder under any claimed retainer for services with respect thereto. The City shall not be liable for any real estate commissions or brokerage fees that may arise from this Agreement or any DDLA that may result from this Agreement, unless the City retains a broker, agent or finder.

Section 3.7 Defaults and Remedies.
(a) Default. Failure by either Party to negotiate in good faith as provided in this Agreement shall constitute an event of default under this Agreement. The non-defaulting Party shall give written notice of a default to the defaulting Party, specifying the nature of the default and the required action to cure the default. If a default remains uncured fifteen (15) days after receipt by the defaulting Party of such notice, or, if the default cannot be cured within 15 days, if the defaulting party fails to commence to cure within 15 days and thereafter diligently pursue such cure and complete such cure within a reasonable period thereafter, the non-defaulting Party may exercise the remedies set forth in subsection (b).
(b) Remedies.
(1) In the event of an uncured default by the City, the Developer may either: (a) seek specific performance; or (b) terminate this Agreement, in which case following such termination, neither Party shall have any further right, remedy or obligation under this Agreement.
(2) In the event of an uncured default by the Developer, the City's sole 45 9
remedy shall be to terminate this Agreement. Following such termination, neither Party shall have any right, remedy or obligation under this Agreement.

Except as expressly provided above, neither Party shall have any liability to the other Party for damages or otherwise for any default, nor shall any Party have any other claims with respect to performance under this Agreement. Each Party specifically waives and releases any such rights or claims it may otherwise have at law or in equity.

Section 3.8 Termination.
(a) This Agreement may be terminated at any time by mutual consent of the Parties. (b) Developer shall have the right to terminate this Agreement, effective upon 30 days’ written notice to the City that Developer has determined the Project to be financially or physically infeasible, provided that the City has reviewed and agreed with Developer’s determination.

Notwithstanding the foregoing, if the City approves revisions to the proposed Development to address Developer’s determination of infeasibility during the 30-day period following Developer’s notice, this Agreement shall remain in effect.

Section 3.9 Effect of Termination. If the Parties have not entered into a DDLA prior to the termination of this Agreement as provided herein, or prior to the expiration of the Negotiating Period (as it may be modified by the Parties pursuant to Section 1.2 of this Agreement), this Agreement shall terminate, and there shall be no further liability or obligation on the part of any of the Parties or their respective officers, employees, agents or other representatives; provided however, the provisions of Section 3.4 (Right of Entry) to the extent necessary to repair or restore any damage caused by Developer, Section 3.19 (Confidentiality), and Section 3.20 (Indemnification) shall survive such termination.

Section 3.10 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 3.11 Entire Agreement. This Agreement constitutes the entire agreement of the Parties regarding the subject matters of this Agreement.

Section 3.12 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

Section 3.13 Assignment. The Developer may not transfer or assign any or all of its rights or obligations hereunder except with the prior written consent of the City, which consent shall be granted or withheld in the City's reasonable discretion, and any such attempted transfer or assignment without the prior written consent of City shall be void. Notwithstanding the foregoing and subject to the City’s consent, which consent shall not be unreasonably withheld, Developer may assign its rights and obligations hereunder to a limited partnership in which Developer or its wholly owned affiliate is the managing member of the general partner.

Section 3.14 Non-Recourse to Agents. No member, official, employee, agent, or consultant of any Party to this Agreement shall be personally liable to any other Party, or any successor in interest or person claiming by, through or under any Party, in the event of any default or 46 10
breach, or for or on account of any amount which may be or become due, or in any claim, cause or obligation whatsoever under the terms of this Agreement.

Section 3.15 No Third Party Beneficiaries. This Agreement is made and entered into solely for the benefit of the City and the Developer and no other person shall have any right of action under or by reason of this Agreement.

Section 3.16 Actions by the City. Whenever this Agreement calls for or permits the approval, consent, authorization or waiver of the City, the approval, consent, authorization, or waiver of the City Manager of the City or his or her designee shall constitute the approval, consent, authorization or waiver of the City without further action of the City.

Section 3.17 Relationship of the Parties. The subject of this Agreement is a co-development undertaking between the Parties for coordinated development of the Site. Aside from the relationship between the Parties described herein and to be further negotiated under this Agreement for inclusion in the executed DDLA, neither Party is acting as the agent of the other Party in any respect, and none of the provisions in this Agreement shall be deemed to render the City a partner in any additional business, venture, or enterprise of Developer.

Section 3.18 Cooperation. In connection with this Agreement, the Developer and the City shall reasonably cooperate with one another to achieve the objectives and purposes of this Agreement. In so doing, the Parties shall each refrain from doing anything that would render its performance under this Agreement impossible, and each shall do everything that this Agreement contemplates that the Party shall do to accomplish the purchase of this Agreement.

Section 3.19 Confidentiality. The Parties enter into this Agreement with the understanding that during the negotiations, the City may request that Developer provide certain information that is proprietary in order for the City to verify financial, operational or trade secret information that is relevant to the negotiations of the DDLA and that will serve the public interest in assisting the City to negotiate effectively. Any such information requested by the City, and if Developer reasonably designates and clearly marks any such information as confidential or proprietary, then the City shall not disclose such information publicly without Developer’s consent, except to the extent that the City is compelled to make such a disclosure under applicable law. The City agrees to notify Developer of any public records request that involves information that Developer has designated as confidential or proprietary under this Agreement. Developer agrees to bear all the costs of any litigation that is filed to determine the applicability of the public records law to documents submitted by Developer and designated as confidential or proprietary under this Section. Developer acknowledges that the final draft of the DDLA proposed for endorsement and/or approval by the City Council will be made available to the public.

Section 3.20 Indemnification. Developer hereby covenants to indemnify, hold harmless and defend the City and its respective elected and appointed officials, officers, agents, representatives and employees (all of the foregoing, collectively the “Indemnitees”) from and against all liability, loss, cost, claim, demand, action, suit, legal or administrative proceeding, penalty, deficiency, fine, damage and expense (including, without limitation, reasonable attorney’s fees and costs of litigation) (all of the foregoing, collectively the “Claims”) arising out of any act of negligence, misfeasance or willful misconduct of Developer in connection with this Agreement or the activities contemplated hereby.

Developer shall have no indemnification obligation with respect to claims arising solely out of the 47 11
negligence, misfeasance or willful misconduct of the City. Developer’s indemnification obligations set forth in this Section 3.22 shall survive the expiration or earlier termination of this Agreement.

Section 3.21 Waiver of Claims. Developer expressly and absolutely waives any and all claims against the City or the City property, directly or indirectly, arising out of, or in any way connected with, any or all of the following matters:
(a) Any aspect of the Request for Qualifications for 555 Kelly Avenue (the “RFQ”), including any information or material set forth therein or referred to therein; (b) Any modification, or suspension of the RFQ, or informalities or defects therein; and (c) Any defects in the selection procedure identifying Developer as the preferred developer conducted by the City or any act or omission of the City with respect thereto, or any release or dissemination of any information submitted by Developer to the City prior to the Effective Date of this Agreement.

IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written.

THE DEVELOPER:

MERCY HOUSING CALIFORNIA
By:
[NAME, TITLE]
CITY:

CITY OF HALF MOON BAY
By:

Matthew Chidester, City Manager
48 EXHIBIT A

PROPERTY DESCRIPTION
Site
Kelly Avenue
Cabrillo Highway - 1
49 EXHIBIT B
DEVELOPER’S SCHEDULE OF

PERFORMANCE
No. Task No. of Days After
Effective Date
1 Submit Predevelopment Budget (including Sources by Uses). Within 10 days 2 Submit timeline for predevelopment activities. Within 15 days 3 Submit proposed City and Developer roles & responsibilities. Within 30 days 4 Submit proposed Operating Plan and Budget (15- and 30-year). Within 45days 5 Submit preliminary Financing Plan for Predevelopment, Construction and Permanent Phases of the Development.

Within 45 days
6 Execute City Predevelopment loan agreement. [both Parties] Within 60 days 7 Submit preliminary Community Outreach and Engagement Approach. Within 60 days 8 Submit Conceptual Design Plans and Programming for tenant and unit mix. Within 120 days 9 Submit preliminary Services Plan and budget. Within 120 days 10 Submit preliminary plans for the use of Community Resources Center by ALAS and include an outline of details such as size, features, and programming.

Within 200 days
11 Completion of Due Diligence, Physical Adequacy and Title Adequacy studies. Within 210 days 12 Execute a Disposition and Development Agreement. [both Parties] Within 365 days 50

BUSINESS OF THE COUNCIL OF THE CITY OF HALF MOON BAY

AGENDA REPORT
For meeting of: October 4, 2022
TO: Honorable City Council
VIA: Matthew Chidester, City Manager
FROM: John Doughty, Interim Assistant City Manager
TITLE: STUDY SESSION--FEEDING OF WILDLIFE
______________________________________________________________________________ RECOMMENDATION:

Conduct a study session and consider whether to direct staff to begin preparation of a City Ordinance limiting the feeding of wildlife including possibly carnivorous birds and feral cats.

FISCAL IMPACT:

The operating budget of the City Manager’s Office and City Attorney’s Office is sufficient to cover the cost of research and ordinance preparation in Fiscal Year 2022-23.

STRATEGIC ELEMENT:

This recommendation supports the Healthy Communities and Public Safety Element of the Strategic Plan.

BACKGROUND/DISCUSSION:

On August 16, 2022, the City Council agreed to the placement of an item on a future agenda regarding the feeding of wildlife by visitors and community members, notably carnivorous birds such as ravens and crows. The request was at the behest of a group of residents that believe the practice is deleterious to the local environment. They have advocated for a local ordinance to restrict the feeding of such birds in Half Moon Bay.

On September 21, 2022, the City Manager and Interim Assistant City Manager met with a group of residents to discuss their concerns and to receive an update on their research regarding protection of wildlife. Attachment 1 includes research material submitted by the group. During the visit, staff was witness to the feeding of ravens from a deck adjacent to the former railroad right-of-way.

Research confirms that raven and crows are members of the Corvidae family and more specifically the Corvus genus. These birds are indigenous to California and most of the United 51

States. These birds are carnivorous and often compete with raptors and other birds of prey for food wherever they coexist.

City staff has communicated with two local bird experts. These experts indicate that feeding of Corvus is problematic for the following reasons:
1) Regular feeding can and often leads to concentration of Corvus where naturally they would not concentrate;
2) Concentration of Corvus leads to unnatural increases in population; 3) Increased population means greater competition for food and habitat with raptors and other birds of prey;
4) Ultimately, this could result in loss of raptors and birds of prey in the coastal bluff area which could be detrimental to the health of the habitat of this and other areas on the coastside.

Note 1: The experts also indicate that feral cats represent a threat to many local and migratory birds in Half Moon Bay and on the coastside.

Note 2: The experts indicated that small backyard bird feeders are important and that any proposed regulations should not preclude them.

Conclusion
California Department of Fish and Wildlife (CDFW) have regulations in place that prohibit the feeding of wildlife in the State. CDFW has limited resources and capacity to respond to and engage in enforcement in the City. The City of Half Moon Bay has the authority to regulate the feeding of wildlife by local ordinance and there are examples from other California communities to base such regulations upon. The primary issue for the City relates to logistics and successful enforcement of a local ordinance.

ATTACHMENT:
1) Community generated materials
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