Hollister City Council
October 5, 2026

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

HOLLISTER AUTHORIZING MANDATORY CONTRIBUTIONS TO

THE IAFF MEDICAL EXPENSE REIMBURSEMENT PLAN
EFFECTIVE SEPTEMBER 1, 2026

{14066/A0481417.1}

Whereas firefighter employees of the City of Hollister (the “City”), who are in the bargaining unit represented by IAFF Local 3395, participate in the IAFF Medical Expense Reimbursement Plan (the “Plan”), which provides reimbursement for medical expenses for retired fire fighters who meet the eligibility rules of the Plan; and

Whereas IAFF Local 3395 employees participate in the Plan through employee and/or employer contributions under the Memorandum of Understanding Between the City of Hollister and the Hollister Firefighters Union (H.F.F.U) - Local 3395 (the “MOU”); and

Whereas certain fire fighter employees, who have promoted out of IAFF Local 3395, have requested to continue participation in the Plan through mandatory employee and/or employer contributions after their promotion; and

Whereas the governing body of the City of Hollister has the authority to require mandatory deductions from employee payroll as part of the employees’ compensation package, for contributions to such Plan to correspond to the MOU of the Local, as stated herein:

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF HOLLISTER, DOES HEREBY RESOLVE AS FOLLOWS:

SECTION 1. That all of the above recitals are true and correct;

SECTION 2. “Promoted Employee” is defined as an employee, who previously participated in the Plan through prior employment or promotes out of the IAFF Local 3395 bargaining unit on or after September 1, 2026.

SECTION 3. The City shall implement a Promoted Employee monthly or pay period mandatory payroll deduction to be deposited pre-tax with the Washington State Council of Fire Fighters Benefit Trust (the “Trust”). All contributions shall be in the same amount and adjusted whenever, and in the same amount, the contribution amount in the Memorandum of Understanding Between the City and Local 3395 is adjusted.

SECTION 4. That upon retirement or separation and/or annually the City shall transfer to the Trust pre-tax the same percentage of the sick and/or vacation leave payout that the Promoted Employee is entitled to based upon the Promoted Employee’s rate of pay immediately preceding transfer. This percentage shall match the percentage in the MOU of the Local and shall be adjusted whenever, and in the same amount, the leave transfer in the MOU is adjusted.

SECTION 5. Except as otherwise stated in Sections 3 and 4 hereof, all aspects of the Plan contributions for Promoted Employees, including the timing, manner, and reporting of the contributions will be determined according to the terms of the Memorandum of Understanding Between the City and Local 3395 as amended from time to time.

SECTION 6. That this Resolution shall take effect upon its adoption by this City Council.

City Council Resolution
Mandatory Contributions to Medical Expense Reimbursement Plan Firefighters Promoted out of Local 3395

{14066/A0481417.1} Dr. 10-02-26

PASSED, APPROVED, AND ADOPTED this ____ day of ________, 20__.

______________________________
Authorized City Representative

I hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Hollister at a regularly scheduled meeting thereof, held on the ______ day of __________, 20- ___, by the following vote of the Council:

AYES: NOES:

STAFF REPORT

HOLLISTER CITY COUNCIL
MEETING DATE: October 5, 2026
REPORT # Planning-2026-05

AGENDA ITEM: APPROVAL OF A ZONING ORDINANCE AMENDMENT TO REPEAL AND REPLACE CHAPTER 17.32, ACCESSORY DWELLING UNITS

DEPARTMENT: Planning
DEPARTMENT HEAD: Jeff Crechriou, Airport Director

COUNCIL NEXT STEPS: Waive the First Reading and Adopt an Ordinance amending the Zoning Ordinance to repeal and replace Chapter 17.32, Accessory Dwelling Units.

PROJECT DESCRIPTION: The existing ADU Ordinance (Chapter 17.32) is proposed to be repealed and replaced with a new Ordinance that is consistent with State Law.

Because a significant number of changes were required, Staff was unable to show the modifications in track change. Required amendments and changes to the way Cities can regulate ADUs can be found in the following Section.

The Planning Commission reviewed the draft Ordinance during a public hearing on August 27, 2026. The Planning Commission adopted a Resolution recommending City Council approval as proposed (3-0-1).

BACKGROUND: Several Bills were signed into law by the Governor since the City’s Ordinance was amended in 2023. These Bills are summarized as follows:

AB 1154 AB 1154 (Chapter 507, Statutes of 2025)

• Specifies that if a JADU has shared sanitation facilities with the primary structure, owner-occupancy will be required. If the JADU does not have shared sanitation facilities, owner-occupancy will not be required (Gov. Code, § 66333, subd. (b)).

• Requires that JADUs can no longer be used as short-term rentals and, if rented, must now be rented for longer than 30 days (Gov. Code, § 66333, subd. (g)).

SB 543 SB 543 (Chapter 520, Statutes of 2025)

• Revises the definition of a “junior accessory dwelling unit” to require the size of a JADU to be no more than 500 square feet of interior livable space (Gov. Code, § 66313, subd. (d)).

• Expands HCD’s authority over Chapter 13 of Division 1 of Title 7 of the Government Code, including but not limited to review, adopt, amend, or repeal guidelines to additionally grant that authority with respect to terms, references, and standards for JADUs (Gov. Code, § 66311).

• Revises the limitations on impact fees to, instead, prohibit impact fees upon the development of an ADU that has 750 square feet of interior livable space or less or JADU that has 500 square feet of interior livable space or less, and to require that any impact fee on an ADU that has more than 750 square feet of interior livable space be charged proportionately in relation to the square footage of the primary dwelling unit (Gov. Code, § 66311.5, subds. (a) – (d)).

• Requires a permitting agency to determine whether an application for an ADU or JADU is complete and provide written notice of the determination not later than 15 business days after the permitting agency received the application (Gov. Code, § 66317, subd. (a)(2)(A)).

• Requires the permitting agency to provide a process for an application to be deemed complete and for applicants to appeal an inco mpleteness determination or denial, as provided, and requires the permitting agency to provide a final written determination by not later than 60 business days after receipt of the written appeal if a permit application is determined to be incomplete or is denied (Gov. Code, § 66317, subd. (d)(1)).

• Specifies that an ADU or JADU that contains less than 500 square feet of interior livable space does not increase assessable space (Gov. Code, § 66311, subds. (d)). This is important to the calculation and imposition of school fees.

• Revises size limitations to be based on the square footage of interior living space of the ADU (Gov. Code, § 66321, subds. (b)(2)(A), (b)(2)(B), and (b)(3)).

• Specifies the number of allowable ADUs described under Government Code section 66323 (state mandated ADUs) per lot (Gov. Code, § 66323, subd. (a)).

• Clarifies that fire sprinklers are not required for a JADU if the primary residence does not have fire sprinklers and that the addition of a JADU cannot trigger the requirement for fire sprinklers (Gov. Code, § 66323, subd. (d)).

• Adds section 66333.5, which specifies that if a local agency fails to submit an adopted JADU ordinance to HCD within the 60-day timeline or fails to respond to HCD’s findings regarding their ordinance within the 30 -day timeline, that ordinance is null and void and the local agency must only apply State ADU Law when processing applications for JADUs.

AB 462 (Chapter 491, Statutes of 2025)

• Requires a local agency to issue a certificate of occupancy for an ADU constructed in a county that is subject to a proclamation of a state of emergency made by the Governor on or after February 1, 2025, even if the primary dwelling has not yet been issued a certificate of occupancy, if certain requirements are met, including that the primary dwelling was substantially damaged or destroyed by an event referenced in the state of emergency proclamation (Gov.

Code, § 66328).

AB 130 AB 130 (Chapter 22, Statutes of 2025)

• Specifies that reasonable restrictions in covenants, restrictions, and conditions, as described in the Civil Code, shall not include any fees or other financial requirements (Civil Code, § 714.3, subd. (b)).

• Removes Government Code section 66323, subdivision (g), which allowed the imposition of objective standards on ADUs in multifamily dwelling structures if the local agency had adopted an ADU ordinance by July 1, 2018.

AB 2533 AB 2533 (Chapter 834, Statutes of 2024)

• Prohibits a local agency from denying a permit for an unpermitted ADU or JADU that was constructed before January 1, 2020, for building code violations, unless the local agency makes a finding that correcting the violation is necessary to comply with conditions that would otherwise deem a building substandard.

• Authorizes an inspector from a local agency, upon receiving an application for a permit for a previously unpermitted ADU or JADU constructed before January 1, 2020, to inspect the unit for compliance with health and safety standards and provide recommendations to comply with health and safety standards.

• Requires this information to include a checklist of the conditions that deem a building substandard and to inform homeowners that, before submitting a permit application, the homeowner may obtain a confidential third -party code inspection from a licensed contractor.

• Prohibits a local agency from requiring a homeowner to pay impact fees or connection or capacity charges except under specified circumstances.

• Prohibits the local agency from penalizing an applicant for having the unpermitted ADU and would require the local agency to approve necessary permits to correct noncompliance with health and safety standards.

SB 1211 SB 1211 (Chapter 296, Statutes of 2 024)

• Defines “livable space” as a space in a dwelling intended for human habitation, as the term appears in Government Code sections 66313, subdivision (e), and 66323, subdivision (a)(3)(A).

• Specifies that uncovered, off-street parking spaces demolished in conjunction with the construction of an ADU do not need to be replaced.

• Authorizes up to eight (8) detached ADUs on a lot with an existing multifamily dwelling, provided that the number of ADUs does not exceed the number of existing units on the lot.

• Prohibits a local agency from imposing any objective development standards on 66323 Units that are not authorized by the provisions of Government Code section 66323, subdivision (a).

SB 477 SB 477 (Chapter 7, Statutes of 2024)

• Made changes to the numbering of the sections of Government Code for State ADU and JADU Laws.

ANALYSIS: Staff is proposing to repeal and replace the existing Chapter 17.32, Accessory Dwelling Units. The proposed revised Ordinance has been drafted to comply with all Bills passed since the current Ordinance was adopted in 2023. The current Ordinance is included as Attachment 2 for comparison. Because the current Ordinance is inconsistent with state law, Staff has been using state law to review ADUs instead of the Ordinance.

The revised Chapter is laid out similarly to the existing Chapter. The following is a summary of the modifications included in the updated Chapter.

• Purpose (Section 17.32.010) was modified to comply with all of the amendments listed under the background section of this staff report.

• Definitions (Section 17.32.020) was amended to clarify the existing definitions, modify the definitions modified by the State (as listed above), add additional definitions to assist Staff and the Public, and modify definitions for clarity.

• Single-Family properties may now have up to three (3) ADUs pursuant to state law. Each property may have one conversion ADU, one new detached ADU and one JADU.

• Multi-Family properties may now have a minimum of two (2) detached ADUs and up to eight (8) attached ADUs. The number of detached ADUs may not exceed the total number of existing dwelling units on the site.

• Multi-Family properties may also have one (1) conversion ADU and up to a quantity that is equal to 25 percent of the total number of existing multi -family dwelling units.

• State law now allows for different types of ADUs, locally controlled ADUs and state exempt Section 66323 ADUs. The regulations for these ADUs can be found in Section 17.32.040 of the Ordinance.

• A new section, Section 17.32.050, Accessory Dwelling Unit General Standards, was created to include standards that apply to both the state exempt and locally controlled ADUs.

• Application requirements were modified to conform to state law (Section

17.32.080).

• Approval procedures (Section 17.32.090) were modified to reflect state law.

• The City must now review all applications for an ADU within 15 business days.

• Section 17.32.100, Building and Safety, has been added.

• Section 17.32.100, Impact Fees, was added to codify state law related to impact and connection fees.

• Section 17.32.120, Nonconforming Zoning Code Conditions, Building Code Violations, and Unpermitted Structures, was added to provide specific regulations related to nonconforming ADUs to meet state law.

FISCAL IMPACT: N/A

PREVIOUS COUNCIL OR COMMISSION ACTION: The Planning Commission adopted a Resolution recommending the City Council adopt an Ordinance repealing and replacing Chapter 17.32, Accessory Dwelling Units.

CEQA: The proposed Zoning Ordinance amendments are exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines because the proposed amendments will not result in any direct physical change to the City and therefore the proposed amendments are not a project under CEQA and are exempt from further review (CEQA Guidelines, Section 15378). Additionally, the construction of Accessory Dwelling Units and Junior Accessory Dwelling Units are Categorically Exempt from CEQA review (Class 3) pursuant to CEQA Guidelines Section 15303.

ATTACHMENTS:

1. City Council Ordinance repealing and replacing Chapter 17. 32, Accessory Dwelling Units.

2. Existing Chapter 17.32, Accessory Dwelling Units.

Ordinance No. XXXX

ORDINANCE NO. XXXX

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

HOLLISTER AMENDING THE ZONING ORDINANCE TO REPEAL
AND REPLACE CHAPTER 17.32, ACCESSORY DWELLING UNITS
(ZOA 2026-3)

WHEREAS, the City occasionally initiates an amendment to the Zoning Ordinance in order to codify requirements pursuant to State Law; and

WHEREAS, the Governor has signed several Bills into law which limits how cities can regulate and review Accessory Dwelling Units and which require an amendment to the Municipal Code to ensure compliance with state law; and

WHEREAS, these regulations are included in Government Code Sections 66310-66342; and

WHEREAS, State Law allows a local agency to adopt an Ordinance to implement the provisions of Government Code Sections 66310-66342; and

WHEREAS, the City desires to repeal the existing Chapter 17.32, Accessory Dwelling Units, which is inconsistent with State Law and replace with a new, revised Chapter 17.32, Accessory Dwelling Units; and

WHEREAS, the purpose of the proposed amendments is to comply with the Housing Accountability Act, remove subjective design standards, comply with state housing law, comply with the upzoning requirements of the City’s 6th Cycle Housing Element and 2040 General Plan; and

WHEREAS, the Planning Commission held a duly noticed public hearing on August 27, 2026, and adopted Resolution No. 2026-24 recommending the adoption of Zoning Ordinance Amendment 2026-3 to the City Council; and

WHEREAS, on October 5, 2026, the City Council held a duly noticed public hearing to consider the adoption of Zoning Ordinance Amendment 2026-3; and

WHEREAS, the proposed Zoning Ordinance amendments are exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines because the proposed amendments will not result in any direct physical change to the City, and any future development projects will be subject to the requirements of CEQA and therefore the propo sed amendments are not a project under CEQA and are exempt from further review (CEQA Guidelines, Section 15378).

NOW THEREFORE THE CITY COUNCIL OF THE CITY OF HOLLISTER DOES ORDAIN AS FOLLOWS:

SECTION 1. Chapter 17.34, Accessory Dwelling Units, is hereby repealed in its entirety and replaced with Chapter 17.34, Accessory Dwelling Units (Exhibit A), attached to this

Ordinance No. XXXX

ordinance and incorporated herein by this reference.

SECTION 2. SEVERABILITY. If any part of this Ordinance is held invalid for any reason by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portion of this Ordinance, and the City Council hereby declares that it would have passed the remainder of the Ordinance if such invalid portion thereof had b een deleted.

SECTION 3. EFFECTIVE DATE. This ordinance shall take effect and be in force thirty (30) days from and after its final passage.

SECTION 7. PUBLICATION. Within fifteen (15) days after passage, the City Clerk shall cause this ordinance to be published in a newspaper of general circulation.

INTRODUCED at a regular City Council meeting on the 5th day of October 2026 and ADOPTED as an ordinance of the City of Hollister at a regular City Council meeting on __Adoption Date__ by the following vote:

AYES:

NOES:

ABSTAINED:

ABSENT:

________________________________
Roxanne Stephens, Mayor

ATTEST: APPROVED AS TO FORM:

Hanson Bridgett LLP

______________________________ _______________________________ Merab Talamantes, City Clerk Dayna D. Louie, City Attorney

I, MERAB TALAMANTES, City Clerk of the City of Hollister, do hereby certify that the attached Ordinance No. __Ordinance Number__ is an original ordinance, or true and correct copy of a City ordinance, duly adopted by the Council of the City of Hollister at a regular meeting of said Council held on __Adoption Date__, at which meeting a quorum was present.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of

Ordinance No. XXXX

the City of Hollister on __Adoption Date__.

Merab Talamantes
City Clerk of the City of Hollister

Ordinance No. XXXX

EXHIBIT A
Chapter 17.32, Accessory Dwelling Units

17.32.010 Purpose.

A. Purpose. The purpose of this Chapter is to allow and regulate Accessory Dwelling units (ADUs) and Junior Accessory Dwelling Units (JADUs) in compliance with Chapter 13 of Division 1 of Title 7 of the California Government Code (Sections 66310-66342).

B. Effect of Conforming. An ADU or JADU that conforms to the standards in this Chapter will not be:

1. Deemed to be inconsistent with the city’s general plan and zoning designation for the lot on which the ADU or JADU is located.

2. Deemed to exceed the allowable density for the lot on which the ADU or JADU is located.

3. Considered in the application of any local ordinance, policy, or program to limit residential growth.

4. Required to correct a nonconforming zoning condition. This does not prevent the city from enforcing compliance with applicable building standards in accordance with Health and Safety Code section 17980.12.

17.32.020 Definitions
A. Accessory Dwelling Unit (ADU). ADU shall have the same meaning as defined under Section 65852.2(j) of the Government Code and shall mean an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single -family dwelling. An ADU also includes an efficiency unit and a manufactured home, provided it is built on a permanent foundation. An ADU may be located within an existing attached or detached garage, shed, barn or any other accessory structure. An ADU may add up to 150 square feet beyond the physical dimensions of the existing accessory structure to provide for ingress and egress (including, but not limited to entryways, stairwells, and hallways). An accessory dwelling unit also includes the following:

1. An efficiency unit, as defined by section 17958.1 of the California Health and Safety Code; and

Ordinance No. XXXX

2. A manufactured home, as defined by section 18007 of the California Health and Safety Code.

B. Complete Independent Living Facilities. A complete independent living facility shall mean the permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling is or will be situated.

C. Conversion Accessory Dwelling Unit (Single-Family). A conversion ADU on a single-family property means an ADU which is created within either the existing space of the primary dwelling unit or the existing space of an attached or detached garage, shed, barn, or any other accessory structure. A Conversion ADU may add up to 150 square feet beyond the physical dimensions of the existing space to provide for ingress and egress (including, but not limited to, entryways, stairwells, and hallways).

D. Conversion Accessory Dwelling Unit (Multi-Family). A conversion ADU on a multi-family property means an ADU which is created from non-livable space and includes but is not limited to boiler rooms, offices, laundry rooms, storage, passageways, attics, garages or community buildings, if each converted ADU complies with state building standards for dwellings.

E. Efficiency Kitchen. Efficiency Kitchen shall mean an area with cooking appliances, food preparation counter(s) and storage cabinets that are of a reasonable size in relation to the size of the junior accessory dwelling unit.

F. Efficiency Unit. An efficiency unit shall mean a dwelling unit construction in accordance with Health and Safety Code Section 17958.1 or the California Building Code Section 1208.4.

G. Junior Accessory Dwelling Unit (JADU). A JADU shall mean a unit that is no more than 500 square feet in size and is contained entirely within a single-family residence, including within an attached garage, and does not result in an addition to the structure for ingress or egress which is more than 150 square feet in size. A JADU may include separate sanitation facilities or may share sanitation facilities with the single-family dwelling. If the unit does not include its own separate bathroom, then it contains an interior entrance to the main living area of the existing or proposed single-family structure in addition to an exterior entrance that is separate from the main entrance to the primary dwelling.

H. Livable Space. Living space shall mean a space in a dwelling intended for human habitation, including living, sleeping, eating, cooking, or sanitation.

Ordinance No. XXXX

I. Living Area. Living area means the interior habitable area of a dwelling unit, including basements and attics, but does not include a garage or any accessory structure.

J. Major Transit Stop. A Major Transit Stop shall have the same meaning as defined in subdivision (b) of Section 21155 of the Public Resources Code.

K. Multi-Family. For the purposes of this Chapter, multi-family shall mean a property with two (2) or more attached dwelling units on a single lot. Regardless of the zoning district in which the property is located, multiple detached dwelling units are not considered a multi-family property.

L. New Construction Accessory Dwelling Unit. A new construction ADU means an ADU which does not otherwise meet the definition of a Conversion ADU. This shall also include attached or detached ADUs which expand upon existing space of the primary dwelling. This definition also includes the conversion of an existing accessory structure which includes an addition of greater than 150 square feet.

M. Nonconforming Zoning Condition. A nonconforming zoning condition means a physical improvement on a property that does not conform with current zoning standards.

N. Passageway. A passageway is a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the ADU or JADU.

O. Primary Dwelling Unit. A primary dwelling unit is a residential dwelling, other than an ADU or JADU, with provisions for living, sleeping, eating, a kitchen for cooking, and sanitation facilities.

P. Proposed Dwelling. A proposed dwelling is a dwelling that is the subject of a permit application and that meets the requirements for permitting.

Q. Public Transit. Public transit means a location, including, but not limited to, a bus stop or train station, where the public may access buses, trains, subways, and other forms of transportation that charge set fares, run on fixed routes, and are available to the public.

R. Single-Family Property. A single-family property for the purposes of this Chapter shall mean a property with one (1) detached residential dwelling unit.

S. Tandem Parking. Tandem parking shall mean two or more automobiles parked on a driveway or on any other location on a lot, lined up behind one another.

17.32.030 Maximum Number of ADUs
A. Single-Family Properties. Properties with an existing or proposed single-family

Ordinance No. XXXX

dwelling may have the following types of ADUs (for a total of three ADUs):

1. Junior Accessory Dwelling Unit. A single-family property may have one (1) JADU.

2. Conversion ADU. A single-family property may have one (1) JADU.

3. Detached ADU. One (1) detached new construction ADU.

B. SB 9 Lots. For lots with a two-unit residential development, approved under Chapter 17.26, Two-unit Residential Developments and Urban Lot Splits, an ADU or JADU may not be constructed if two (2) primary dwelling units exist on the site.

C. Multi-Family Properties. Multi-family properties are allowed to have the following ADUs:

1. Conversion ADU. At least one conversion ADU and up to a quantity that is equal to 25 percent of the total number of existing multi-family dwelling units.

2. Detached ADU. A minimum of two (2) detached ADUs and up to eight (8) attached ADUs are permitted. In no case shall the number of ADUs exceed the total number of existing dwelling units on the site. The ADUs may be attached to each other and may be created from existing detached accessory structure(s).

17.32.040 Accessory Dwelling Unit Classes (Types)

A. 66323 Single-Family Units (Statutorily Regulated). Section 66323 ADUs and JADUs are approved under Government Code Section 66323 and include the following.

1. Conversion. Conversion ADU or JADU is allowed on a parcel with a proposed or existing single-family dwelling on it, is permitted anywhere on the parcel and not subject to development standards or size limitations if all of the following apply:

a. The ADU and/or JADU is located within the space of an existing or proposed single-family dwelling; or (in the case of an ADU only) within the existing space of an existing accessory structure.

b. Has exterior access that is independent of that for the single-family dwelling; and

c. May include an expansion of up to 150 square feet to accommodate ingress and egress; and

Ordinance No. XXXX

d. Has side and rear setbacks sufficient for fire and safety, as dictated by applicable building and fire codes; and

e. The JADU complies with the requirements of Government Code Sections 66333 through 66339.

f. No parking shall be required for the JADU.

2. Detached. Detached, new-construction ADU on a lot with a proposed or existing single-family dwelling, is allowed to be located on the parcel if all of the following are met:

a. The side- and rear-yard setbacks are at least four feet.

b. The total floor area is 800 square feet of livable space or smaller.

c. The peak height above grade does not exceed the applicable height limit in Section 17.32.050(D).

B. 66323 Multi-Family Units (Statutorily Regulated). Section 66323 multi-family ADUs are approved under Government Code Section 66323 if they conform to the following:

1. Conversion ADU. A multi-family site is permitted to have at least one (1) conversion ADU and up to a quantity that is equal to 25 percent of the total number of existing multi-family dwelling units.

2. Detached ADU. No more than two (2) detached ADUs on a lot with a proposed multifamily dwelling, or a minimum of two (2) and a maximum of eight (8) detached ADUs on a lot with an existing multifamily dwelling, if each detached ADU satisfies all of the following:

a. The side- and rear-yard setbacks are at least four feet. If the existing multifamily dwelling has a rear or side yard setback of less than four feet, the city will not require any modification to the multifamily dwelling as a condition of approving the ADU.

b. The peak height above grade does not exceed the applicable height limit established by this Chapter.

c. If the lot has an existing multifamily dwelling, the number of detached ADUs does not exceed the number of primary dwelling units on the lot.

Ordinance No. XXXX

C. Single-Family Locally Regulated ADUs. Single-family, locally regulated ADUs are approved under Government Code Sections 66314 –66322 and allow for an ADU which is larger than the 66323 single-family units discussed above. Except for Section 66323 ADUs approved under Section 17.32.040(A) above, all other ADUs are subject to the standards set forth in Section 17.32.060 below.

17.32.050 Accessory Dwelling Units (ADU) General Standards The following requirements apply to locally regulated ADUs and Section 66323 ADUs.

A. Zoning.

1. 66323 ADU. A Section 66323 ADU may be created on a lot in a residential or mixed-use zone.

2. Locally regulated ADU. A locally regulated ADU above may be created on a lot that is zoned to allow single-family dwelling residential use or multifamily dwelling residential use.

3. JADU. In accordance with Government Code section 66333(a), a JADU may only be created on a lot zoned for single-family residences.

B. Density. Accessory Dwelling Units that conform to this chapter shall be exempted from the calculation of the maximum allowable density for the lot on which it is located.

C. Minimum Unit Size. An ADU shall be a minimum of 150 square feet or the size necessary to accommodate an efficiency unit as defined by Health and Safety Code Sections 17958.1 whichever is greater.

D. Height.

1. Detached ADU. Except as otherwise provided below, a detached ADU created on a lot with an existing or proposed single family or multifamily dwelling unit may not exceed 18 feet in height. A detached ADU may be up to 18 feet in height if it is created on a lot with an existing or proposed single family or multifamily dwelling unit that is located within one-half mile walking distance of a major transit stop or high quality transit corridor, and the ADU may be up to two additional feet in height (for a maximum of 20 feet) if necessary to accommodate a roof pitch on the ADU that is aligned with the roof pitch of the primary dwelling unit.

2. Attached ADU. The height of ADUs which are attached to a single-family dwelling unit is limited to the maximum height allowed for the Zoning District in which the property is located.

Ordinance No. XXXX

E. Existing Structure Setbacks. The setback for an existing, legal nonconforming structure which is to be converted into an ADU shall be allowed to continue on the site. Any addition to the existing structure shall be allowed to use the same setbacks that were previously approved.

F. Entrance. An ADU shall require a separate entrance from the main entrance to the proposed or existing principal residence. An exterior stairway proposed to serve an ADU on a second story or higher shall not be visible from the front public right-of-way.

G. Owner Occupancy. ADUs are not subject to an owner-occupancy requirement.

H. Parking. When the ADU is created through the conversion of a garage, carport, or covered parking structure no replacement parking is required.

I. Fire Sprinklers. Fire Sprinklers in an ADU shall not be required if they were not required for the primary dwelling, in accordance with Government Code Section 65852.2. For an ADU in a multi-family structure, the entire residential structure shall serve as the “primary residence” for the purposes of this requirement. If the multi-family structure is served by fire sprinklers, the ADU shall be required to install fire sprinklers. The construction of an ADU or JADU does not trigger a requirement for fire sprinklers to be installed in the existing primary dwelling.

J. Ownership. An ADU shall not be sold or otherwise conveyed separately from the residential dwelling(s) unless all of the following conditions are met:

1. The ADU or primary dwelling was built or developed by a qualified nonprofit.

2. A deed restriction is placed on the property between the low-income buyer and the nonprofit that satisfies the requirements of Section 402.1. of the Revenue and Taxation Code.

3. The ADU and primary dwelling unit must be restricted to o wner-occupied, low income housing for a period of 45 years and is only sold or resold to a qualified buyer.

4. The property is held pursuant to a recorded tenancy in common agreement as required by Government Code Section 65852.26(a)(3).

K. No Short-Term Rental. Accessory Dwelling Units shall not be rented for terms of 30 days or less.

Ordinance No. XXXX

17.32.060 Locally Regulated ADUs
A locally regulated Accessory Dwelling Unit shall comply with the following regulations:

A. Unit Size. The total floor area of a newly constructed attached or detached ADU shall not exceed 1,000 square feet for an ADU with more than one bedroom or 850 square feet for a single bedroom. However, in no case shall an attached ADU exceed 50% of the total square footage of the existing principal residence. An exception to the 50% maximum shall be waived in order to allow a minimum 800 square foot and a maximum 1,000 square foot ADU. For the conversion of an existing accessory structure, the ADU may be the same size as the existing structure.

B. Setbacks.

1. Front Yard. The minimum front yard setback shall conform to the requirements of the Zoning District which governs the property, except where necessary to allow a minimum 800 square foot ADU with side and rear yard setbacks as defined below.

2. Side Yard. The minimum side yard setback shall be four feet.

3. Rear Yard. The minimum rear yard setback shall be four feet.

4. Existing Structure. The setback for an existing, legal nonconforming shall be allowed to continue on the site. Any addi tion to the existing structure shall be allowed to use the same setbacks that were previously approved.

5. Planned Unit Development. Where a Planned Unit Development allows a smaller setback for side or rear yards than the setbacks under this Chapter, the new ADU shall comply with those Planned Unit Development setbacks.

6. Second Story ADU. For an ADU located on a second story, the second story shall be set back five (5) feet from the main wall of the existing primary dwelling unit.

C. Lot Coverage. The principal residence and ADU combined shall meet the requirements for lot coverage or floor area ratio of the Zoning District in which the property is located. The maximum lot coverage or floor area ratio required by the Zoning Ordinance shall be waived in the amou nts necessary to accommodate an ADU with a gross floor area of up to 800 square feet with the minimum required side and rear yard setbacks.

D. Historic District or Property. If the proposed ADU is located on a lot that is located within a historic district or property included on the State Historic Resources Inventory, as defined in Section 5020.1 of the Public Resources Code,

Ordinance No. XXXX

or within a site that is designated or listed as a city or county landmark or historic property or district pursuant to an Ordinance by the City of Hollister or San Benito County, the proposed ADU shall comply with the following:

1. A newly constructed ADU (attached or detached) shall not be visible from the public right-of-way; or

2. The ADU shall be entirely contained within the existing dwelling unit (excluding any porch or other architectural detail or feature on the property) or within a detached structure on the property.

E. Height. A detached ADU shall not exceed 16 feet in height on a single-family property or 18 feet in height for an ADU on a multi-family property or located within a half-mile walking distance of a major transit stop or high -quality transit corridor.

The maximum height for an attached ADU shall conform to the height requirements of the zoning district where the lot is located.

F. Minimum Open Space. No ADU subject to this subsection may reduce the total open space area of the site so that it is below the minimum open space requirement for the Zoning District in which the property is located.

G. Required Parking. The following parking requirements apply to ADUs and JADUs.

1. An ADU shall be provided with one (1) off -street parking space per unit (if the ADU is a studio, then no space is required) in addition to parking required for the principal residence in accordance with Table 17.18 -1, Off- Street Parking and Bicycle Spaces Required by Land Use Type.

2. If a space is required, the space may be compact, may be uncovered, and may be in a tandem space with the required parking of the principal dwelling unit (either covered or uncovered).

3. Off-street parking for a locally regulated ADU is not required in any of the following instances:

a. The ADU is located within an architecturally and historically significant historic district.

b. When on-street parking permits are required but not offered to the occupant of the ADU.

c. The ADU is located within one-half mile walking distance of a public transit stop.

d. The ADU is located within one-half mile walking distance of public transit.

Ordinance No. XXXX

e. When there is a car share vehicle located within one block of the ADU.

H. Maximum Front Setback Coverage. No more than 50% of the front setback area may contain hardscape, excluding the allowed driveway for garages pursuant to Chapter 17.18, Pedestrian, Bicycle, Parking and Loading Standards. Driveway width shall be a maximum of 20 feet in width for a double car garage and 30 feet for a three car garage.

I. Public Utilities and Services. Accessory Dwelling Units shall be served by public water and sewer and shall have access to an improved public street. A separate utility connection Is required for all detached Accessory Dwelling Units that are the result of new construction (the conversion of an existing accessory structure or space within the primary dwelling unit to an Accessory Dwelling Unit does not require a separate utility connection,

J. Design. All attached and detached ADUs which are visible from the street shall comply with the following:

1. The materials and colors of the exterior walls, roof, and windows and doors shall be the same as those of the primary dwelling.

2. The exterior lighting shall be limited to down-lights or as otherwise required by the building or fire code.

3. All mechanical and utility equipment shall be screened from view from the street through a combination of wall or fencing and landscape plant materials sufficient to screen the height and width of the equipment.

17.32.070 Junior Accessory Dwelling Units (JADU)
A Junior Accessory Dwelling Unit (JADU) shall comply with the following regulations:

A. Unit Size. The total floor area of a JADU shall not be more than 500 square feet, excluding any shared sanitation facility within the principal single-family residence.

B. Parking. No off-street parking is required for a JADU.

C. Entrance. A JADU shall require a separate exterior entrance from the main entrance of the proposed or existing single-family residence. An exterior stairway proposed to serve a JADU on a second story or higher shall not be visible from the front public right-of-way. If the JADU shares a bathroom with the existing dwelling, access from the inside of the unit to the main living area of the dwelling shall be provided.

Ordinance No. XXXX

D. Efficiency Kitchen. A JADU shall include an efficiency kitchen.

E. Occupancy and Ownership. JADUs are subject to an owner-occupancy requirement. A natural person with legal or equitable title to the property must reside on the property, in either the primary dwelling or JADU, as the person’s legal domicile and permanent residence.

1. Exceptions. The owner-occupancy requirement in this subsection do not apply in either of the following situations:

a. The JADU has separate sanitation facilities (i.e., does not share sanitation facilities with the existing primary dwelling unit structure).

b. The property is entirely owned by another governmental agency, land trust, or housing organization.

2. Sale. A JADU shall not be sold or otherwise conveyed separately from the principal single-family residence.

3. Deed Restriction. A deed restriction, which shall run with the land, shall be filed with the building permit application and include the following:
a. Prohibition on the sale of the JADU separate from the sale of the single-family residence, including a statement that the deed restriction may be enforced against future purchasers.
b. A restriction on the size and attributes of the JADU that conforms with Government Code Section 66313.
c. JADUs shall not be rented for terms of 30 days or less. The deed restriction may be removed if the owner eliminates the JADU, as evidenced by, for example, removal of the kitchen facilities.

d. To remove the deed restriction, an owner may make a written request of the Planning Division, providing evidence that the JADU has in fact been eliminated. The Director may then determine whether the evidence supports the claim that the JADU has been eliminated. Appeal may be taken from the Director’s determination consistent with other provisions of this Code. If the JADU is not entirely physically removed, but is only eliminated by virtue of having a necessary component of an JADU removed, the
remaining structure and improvements must otherwise comply with applicable provisions of this Code.

e. The deed restriction is enforceable by the Director or his or her designee for the benefit of the city. Failure of the property owner to

Ordinance No. XXXX

comply with the deed restriction may result in legal action against the property owner, and the city is authorized to obtain any remedy available to it at law or equity, including, but not limited to, obtaining an injunction enjoining the use of the JADU in violation of the recorded restrictions or abatement of the illegal unit.

17.32.080 Permit Application
An application for an Administrative Permit Review for an Accessory Dwelling Unit and/or Junior Accessory Dwelling Unit shall be submitted to the Development Services Department. The application package shall include the following:

A. Application. An applicant for an ADU or JADU shall submit an application on a form provided by the City, along with all information and materials prescribed by such form. No application shall be accepted unless it is completed as prescribed, all required materials are submitted, and the application fee is paid.

B. Preliminary Title Report. A preliminary title report dated within 6 months of the application submittal date, including a digital copy of all referenced documents.

C. Utility and Service Information. Provide information on available utility easements, services and connections.

D. Deed Restriction. Prior to issuance of a Building Permit, the Applicant shall record a restrictive covenant in accordance with Section 17.32.070, above.

17.32.090 Approval Procedures
The following approvals apply to ADUs and JADUs created under this section:

A. Ministerial ADU and Building Permits Required. Every ADU and JADU requires an ADU Permit (from the Planning Department) and a building permit. The city will review and approve permit applications in accordance with subsection (C) below.

B. Processing Fee. The application for an ADU Permit shall be accompanied by the fee listed in the City’s Fee Schedule.

C. Process and Timing.

1. Completeness.

a. Completeness Review. The city will review an application for an ADU and/or JADU for completeness and will provide written notice of all items necessary to deem the application complete to the applicant within 15 business days after the city receives the application.

Ordinance No. XXXX

b. Incomplete items. If the city’s determination is that the application is incomplete, the city’s notice must list the incomplete items and describe how the application can be made complete.

c. Cure. After receiving a notice that the application is incomplete, the applicant may cure and address the items that were deemed by the city to be incomplete.

d. Subsequent Submittals. Within 15 business days of each subsequent submittal the city will determine in writing whether the additional information remedies all the incomplete items that the city identified in its original notice.

e. Deemed Complete. If the city does not make a timely
determination as required by this subsection, the application or resubmitted application is deemed complete.

f. Appeal of Incompleteness. An applicant may appeal the city’s determination that the application is incomplete by submitting a written appeal to the city clerk. The planning commission will review the written appeal and affirm or reverse the completeness determination and provide a final written determination to the applicant within 60 business days after receipt of the appeal.

2. Ministerial Review. Ministerial permits for an ADU or JADU are considered and approved without discretionary review or a hearing.

3. Determination. The city must approve or deny an application to create an ADU or JADU within 60 days from the date that the city receives a complete application. If the city has not approved or denied the complete application within 60 days, the application is deemed approved unless either:

a. The applicant requests a delay, in which case the 60-day time period is tolled for the period of the requested delay, or

b. When an application to create an ADU or JADU is submitted with a permit application to create a new single-family or multifamily dwelling on the lot, the city may delay acting on the permit application for the ADU or JADU until the city acts on the permit application to create the new single-family or multifamily dwelling, but the application to create the ADU or JADU will still be considered ministerially without discretionary review or a hearing.

Ordinance No. XXXX

4. Denial. If the city denies an application to create an ADU or JADU, the city must provide the applicant with comments that include, among other things, a list of all the defective or deficient items and a description of how the application may be remedied by the applicant. Notice of the denial and corresponding comments must be provided to the applicant within the 60 - day time period.

5. Appeal of Denial. An applicant may appeal the city’s denial of the application by submitting a written appeal to the city clerk. The planning commission will review the written appeal and affirm or reverse the denial and provide a final written determination to the applicant within 60 business days after receipt of the appeal.

6. Concurrent Review of Demolition. A demolition permit for a detached garage that is to be replaced with an ADU shall be reviewed with the application for the ADU and issued at the same time.

17.32.100 Building & Safety

A. Codes. All ADUs and JADUs must comply with all local building and fire code requirements.

B. No Change of Occupancy. Construction of an ADU does not constitute a Group R occupancy change under the local building code, as described in Section 310 of the California Building Code, unless the building official or code enforcement officer makes a written finding based on substantial evidence in the record that the construction of the ADU could have a specific, adverse impact on public health and safety. Nothing in this subsection prevents the city from changing the occupancy code of a space that was uninhabitable space or that was only permitted for nonresidential use and was subsequently converted for residential use in accordance with this section.

C. Certificate of Occupancy Timing.

1. Generally. No certificate of occupancy for an ADU or JADU may be issued before the certificate of occupancy is issued for the primary dwelling unit.

2. Limited Exception for State-declared Emergencies. Notwithstanding subsection (1) above, a certificate of occupancy for an ADU may be issued before a certificate of occupancy for the primary dwelling if each of the following requirements are met:

a. The county is subject to a proclamation of a state of emergency made by the California Governor on or after February 1, 2025.

Ordinance No. XXXX

b. The primary dwelling was substantially damaged or destroyed by an event referenced in the Governor’s state of emergency proclamation.

c. The ADU has been issued construction permits and has passed all required inspections.

d. The ADU is not attached to the primary dwelling.

17.32.110 Impact Fees

The following requirements apply to all ADUs and JADU.

A. 749 Square Feet or Less. No impact fee is required for a JADU or for an ADU that has less than 750 square feet of interior livable space. For purposes of this subsection, “impact fee” means a “fee” under the Mitigation Fee Act (Gov. Code § 66000(b)) and a fee under the Quimby Act (Gov. Code § 66477). “Impact fee” here does not include any connection fee or capacity charge for water or sewer service.

B. School Fees. A JADU or ADU with less than 500 square feet of interior livable space does not increase assessable space by 500 square feet for purposes of Education Code section 17620(a)(1)(C), and is therefore not subject to school fees under Education Code section 17620.

C. 750 Square Feet or More. Any impact fee that is required for an ADU that has 750 square feet or more of interior livable space must be charged proportionately in relation to the square footage of the primary dwelling unit. (E.g., the floor area of the ADU, divided by the floor area of the primary dwelling, times the typical fee amount charged for a new dwelling.)

D. Utility Fees.

1. If an ADU or JADU is constructed with a new single-family home, a separate utility connection directly between the ADU or JADU and the utility and payment of the normal connection fee and capacity charge for a new dwelling are required.

2. Except as described above, JADUs and converted ADUs on a single - family lot that are not required to have a new or separate utility connection directly between the JADU or ADU and the utility. Nor is a connection fee or capacity charge required. Notwithstanding the rest of this paragraph, a direct utility connection is required for separate conveyance of an ADU when separate conveyance is allowed under this code.

Ordinance No. XXXX

3. Except as described by subsection (2) above, all ADUs that are not covered) above require a new, separate utility connection directly between the ADU and the utility for any utility that is provided by the city. All utilities that are not provided by the city are subject to the connection and fee requirements of the utility provider.

a. The connection is subject to a connection fee or capacity charge that is proportionate to the burden created by the ADU based on either the floor area or the number of drainage -fixture units (DFU) values, as defined by the Uniform Plumbing Code, upon the water or sewer system.

b. The portion of the fee or charge that is charged by the city may not exceed the reasonable cost of providing this service.

17.32.120 Nonconforming Zoning Code Conditions, Building Code Violations, and Unpermitted Structures

A. Generally. The city will not deny an ADU or JADU application due to a nonconforming zoning condition, building code violation, or unpermitted structure on the lot that does not present a threat to the public health and safety and that is not affected by the construction of the ADU or JADU.

B. Unpermitted ADUs and JADUs constructed before 2020.

1. Permit to Legalize. As required by state law, the city may not deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 2020, if denial is based on either of the following grounds:

a. The ADU or JADU violates applicable building standards; or

b. The ADU or JADU does not comply with state ADU or JADU law or this ADU ordinance.

2. Exceptions.

a. Notwithstanding the subsection above, the city may deny a permit to legalize an existing but unpermitted ADU or JADU that was constructed before January 1, 2020, if the city makes a finding that correcting a violation is necessary to comply with the standards specified in California Health and Safety Code section 17920.3.

b. Subsection (B) above does not apply to a building that is deemed to be substandard in accordance with California Health and Safety Code section 17920.3.

CHAPTER 17.32 - ACCESSORY DWELLING UNITS

17.32.010 - Purpose.

The purpose of this chapter is to establish development standards for the construction of accessory dwelling units and junior accessory dwelling units in residential or mixed-use (single-family and multi-family) zoning Districts consistent with Government Code Sections 65852.2 and 65852.22. (Ord. 1229, § 1, 2023)

17.32.020 - Definitions.

Accessory dwelling unit (ADU) shall have the same meaning as defined under Section 65852.2(j) of the Government Code and shall mean an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling. An ADU also includes an efficiency unit and a manufactured home, provided it is built on a permanent foundation. An ADU may be located within an existing attached or detached garage, shed, barn or any other accessory structure. An ADU may add up to 150 square feet beyond the physical dimensions of the existing accessory structure to provide for ingress and egress (including, but not limited to entryways, stairwells, and hallways).

Efficiency kitchen shall mean an area with cooking appliances, food preparation counter(s) and storage cabinets that are of a reasonable size in relation to the size of the junior accessory dwelling unit.

Efficiency unit shall mean a dwelling unit construction in accordance with Health and Safety Code Section 17958.1 or the California Building Code Section 1208.4.

Junior accessory dwelling unit (JADU) shall mean a unit that is no more than 500 square feet in size and is contained entirely within a single-family residence, including within an attached garage, and does not result in an addition to the structure for ingress or egress which is more than 150 square feet in size. A JADU may include separate sanitation facilities or may share sanitation facilities with the single-family dwelling.

Multi-family for the purposes of this chapter shall mean a property with two or more attached dwelling units on a single lot. Multiple detached dwelling units are not considered a multi-family property.

Primary dwelling unit shall mean a residential dwelling, other than an ADU or JADU, with provisions for living, sleeping, eating, a kitchen for cooking, and sanitation facilities.

Single-family unit for the purposes of this chapter shall mean a property with one detached residential dwelling unit.
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Tandem parking shall mean two or more automobiles parked on a driveway or on any other location on a lot, lined up behind one another.
(Ord. 1229, § 1, 2023)

17.32.030 - Accessory dwelling units (ADU).

An accessory dwelling unit (attached or detached) shall comply with the following regulations:

Location. An ADU may be located on any property where a residential dwelling is permitted by right or conditionally permitted and where the proposed accessory dwelling unit will be an accessory to the primary dwelling unit.

Maximum Number of Units and Density.

For lots with a single-family residence, there shall be a maximum of one attached ADU or one detached ADU unit which may be combined with a junior accessory dwelling unit that is consistent with Section 17.32.040. An ADU may be located within a detached garage.

For lots with a two-unit residential development, approved under Chapter 17.26, Two-unit Residential Developments and Urban Lot Splits, an ADU or JADU may not be constructed if two primary dwelling units exist on the site.

Accessory dwelling units that conform to this chapter shall be exempted from the calculation of the maximum allowable density for the lot on which it is located.

Accessory dwelling units on a multi-family property are subject to the following:

A minimum of one ADU will be allowed within the non-livable portions of the existing multi-family structure, including, but not limited to, storage rooms, boiler rooms, passageways, attics, basements, and garages. The maximum number of ADUs shall not exceed 25 percent of the number of existing legally established dwelling units within the existing multifamily structure; and/or
A maximum of two ADUs that are detached from the multi-family structure.

Unit Size. The total floor area of an attached or detached ADU shall not exceed 1,000 square feet for an ADU with more than one bedroom or 850 square feet for a single bedroom. However, in no case shall an attached ADU exceed 50 percent of the total square footage of the existing principal residence. An exception to the 50 percent maximum shall be waived in order to allow a minimum 800 square foot and a maximum 1,000 square foot ADU.

Minimum Unit Size. An ADU shall be a minimum of 150 square feet or the size necessary to accommodate an efficiency unit as defined by Health and Safety Code Sections 17958.1 whichever is greater.

Setbacks.
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Front Yard. The minimum front yard setback shall conform to the requirements of the zoning District which governs the property, except where necessary to allow a minimum 800 square foot ADU with side and rear yard setbacks as defined below.

Side Yard. The minimum side yard setback shall be four feet.

Rear Yard. The minimum rear yard setback shall be four feet.

Existing Structure. The setback for an existing, legal nonconforming shall be allowed to continue on the site. Any addition to the existing structure shall be allowed to use the same setbacks that were previously approved.

Setbacks Between Structures. A detached accessory structure shall be setback six feet from the primary dwelling unit and all new structures shall be set back a minimum of five feet from the eaves of an inhabited structure (measured from eave to eave) and a minimum of three feet to an uninhabitable structure.

Planned Unit Development. Where a planned unit development allows a smaller setback for side or rear yards than the setbacks under this chapter, the new ADU shall comply with those planned unit development setbacks.

Second Story ADU. For an ADU located on a second story, the second story shall be set back five feet from the main wall of the existing primary dwelling unit.

Lot Coverage. The principal residence and ADU combined shall meet the requirements for lot coverage or Floor Area Ratio of the zoning District in which the property is located. The maximum lot coverage or Floor Area Ratio required by the Zoning Ordinance shall be waived in the amounts necessary to accommodate an ADU with a gross floor area of up to 800 square feet with the minimum required side and rear yard setbacks.

Historic District or Property. If the proposed ADU is located on a lot that is located within a historic District or property included on the State Historic Resources Inventory, as defined in Section 5020.1 of the Public Resources Code, or within a site that is designated or listed as a city or county landmark or historic property or District pursuant to an ordinance by the city of Hollister or San Benito County, the proposed ADU shall comply with the following:

A newly constructed ADU (attached or detached) shall not be visible from the public right-of- way; or
The ADU shall be entirely contained within the existing dwelling unit (excluding any porch or other architectural detail or feature on the property) or within a detached structure on the property.

Height. A detached ADU shall not exceed 16 feet in height on a single-family property or 18 feet in height for an ADU on a multi-family property. The maximum height for an attached ADU shall conform to the height requirements of the zoning District where the lot is located. 8/10/26, 1:58 PM Hollister, CA Code of Ordinances
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Required Parking. The following parking requirements apply to ADUs and JADUs.

An ADU shall be provided with one off-street parking space per unit (if the ADU is a studio, then no space is required) in addition to parking required for the principal residence in accordance with Table 17.18-1, Off-Street Parking and Bicycle Spaces Required by Land Use Type.

If a space is required, the space may be compact, may be uncovered, and may be in a tandem space with the required parking of the principal dwelling unit (either covered or uncovered).

Off-street parking for an ADU or JADU is not required in any of the following instances:

When the ADU is created through the conversion of a garage, carport, or covered parking structure.

The ADU is located within an architecturally and historically significant historic District.

The ADU is within a new or existing primary dwelling unit or accessory structure.

When on-street parking permits are required but not offered to the occupant of the ADU.

The ADU is located within one-half mile walking distance of a public transit stop.

When there is a car share vehicle located within one block of the ADU.

Entrance. An ADU shall require a separate entrance from the main entrance to the proposed or existing principal residence. An exterior stairway proposed to serve an ADU on a second story or higher shall not be visible from the front public right-of-way.

Maximum Front Setback Coverage. No more than 50 percent of the front setback area may contain hardscape, excluding the allowed driveway for garages pursuant to Chapter 17.18, Pedestrian, Bicycle, Parking and Loading Standards. Driveway width shall be a maximum of 20 feet in width for a double-car garage and 30 feet for a three-car garage.

Public Utilities and Services. Accessory dwelling units shall be served by public water and sewer and shall have access to an improved public street. A separate utility connection shall not be required for any ADUs which are the result of a conversion of existing space (plus an addition of up to 150 square feet as allowed by this section) or within the proposed space of a single-family dwelling (new construction). All other ADUs will require a separate utility connection.

Design. All attached and detached ADUs which are visible from the street shall have the same architectural style, detail, color, and building materials as the existing or proposed primary dwelling unit. For detached ADUs which are not visible from the street, the detached ADU shall have the same color and materials as the existing or proposed primary dwelling unit. 8/10/26, 1:58 PM Hollister, CA Code of Ordinances
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Mechanical Equipment. All mechanical and utility equipment shall be screened from view from the street through a combination of wall or fencing and landscape plant materials sufficient to screen the height and width of the equipment.

Fire Sprinklers. Fire sprinklers in an ADU shall not be required if they were not required for the primary dwelling, in accordance with Government Code § 65852.2. For an ADU in a multi-family structure, the entire residential structure shall serve as the "primary residence" for the purposes of this requirement. If the multi-family structure is served by fire sprinklers, the ADU shall be required to install fire sprinklers.

Occupancy. Owner-occupancy shall not be required as a condition of permit approval for ADUs permitted between January 1, 2020 and January 1, 2025.

Ownership. An ADU shall not be sold or otherwise conveyed separately from the residential dwelling(s).

No Short-Term Rental. Accessory dwelling units shall not be rented for terms of 30 days or less. (Ord. 1229, § 1, 2023)

17.32.040 - Junior accessory dwelling unit (JADU).

A junior accessory dwelling unit(JADU) shall comply with the following regulations:

Location Permitted. A JADU may be located on a property within a single-family residential zone with one primary dwelling unit located, or proposed to be built, on the property. For historic lots with a two-unit residential development, approved under Chapter 17.26, Two-unit Residential Developments and Urban Lot Splits, a JADU may not be constructed if two primary dwelling units exist on the site.

Relationship to Principal Use. The JADU shall be located entirely within the walls of a proposed or existing single-family residence, including an attached garage, except that up to 150 square feet may be constructed outside of the walls of the existing structure in order to provide ingress and egress into the unit.

Maximum Number of Units and Density. There shall be a maximum of one JADU per lot. A JADU may be in addition to a detached accessory dwelling unit that is consistent with Section

17.32.030.

Unit Size. The total floor area of a JADU shall not be more than 500 square feet, excluding any shared sanitation facility within the principal single-family residence.

Parking. No off-street parking is required for a JADU.

Entrance. A JADU shall require a separate exterior entrance from the main entrance of the proposed or existing single-family residence. An exterior stairway proposed to serve a JADU on a second story or higher shall not be visible from the front public right-of-way. If the JADU 8/10/26, 1:58 PM Hollister, CA Code of Ordinances
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shares a bathroom with the existing dwelling, access from the inside of the unit to the main living area of the dwelling shall be provided.

Efficiency Kitchen. A JADU shall include an efficiency kitchen.

Occupancy and Ownership.

Owner-occupancy of the primary dwelling unit is required. The owner may reside in the remaining portion of the structure or the JADU.

A JADU shall not be sold or otherwise conveyed separately from the principal single-family residence.

A deed restriction, which shall run with the land, shall be filed with the building permit application and include the following:

Prohibition on the sale of the JADU separate from the sale of the single-family residence, including a statement that the deed restriction may be enforced against future purchasers.

A restriction on the size and attributes of the JADU that conforms with Government Code § 65862.22.

No short-term rental. JADUs shall not be rented for terms of 30 days or less. Ord. 17- 20 (November 2020).
(Ord. 1229, § 1, 2023)

17.32.050 - Permit applications.

An application for an administrative permit review for an accessory dwelling unit and/or junior accessory dwelling unit shall be submitted to the development services Department. The application package shall include the following:

Application. An applicant for an ADU or JADU shall submit an application on a form provided by the city, along with all information and materials prescribed by such form. No application shall be accepted unless it is completed as prescribed, all required materials are submitted, and the application fee is paid.

Preliminary Title Report. A preliminary title report dated within six months of the application submittal date, including a digital copy of all referenced documents.

Utility and Service Information. Provide information on available utility easements, services and connections.

Deed Restriction. Prior to issuance of a building permit, the applicant shall record a restrictive covenant in the form prescribed by the city, which shall run with the land and provide for the following, as applicable:
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A prohibition on non-residential use of any units, with the exception of home occupations approved by the city;
A prohibition against renting or leasing the units for a period of less than 30 days; A prohibition on the sale of an ADU separate from the sale of the single-family residence; and
A restriction on the size and attributes of the JADU that conforms with Government Code § 65862.22.

Nonconforming Conditions. The construction of an ADU or JADU shall not create any unpermitted construction or illegal nonconforming zoning conditions; however, an application shall not be denied due to the correction of preexisting nonconforming zoning conditions. (Ord. 1229, § 1, 2023)

17.32.060 - Review procedures.

For an ADU or JADU located on a lot with an existing residential dwelling(s), consistent with state law, the Director of development services will administratively consider and approve or disapprove a complete application for an administrative permit review under this chapter ministerially, without discretionary review or public hearing. The city shall process the application request pursuant to the timelines in Government Code § 65862.22.

If an application for an ADU or JADU is submitted with a permit application to create a new residence on a lot, the application for the ADU or JADU may not be acted upon until the permit application to create the new residence is approved.
(Ord. 1229, § 1, 2023)
8/10/26, 1:58 PM Hollister, CA Code of Ordinances
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STAFF REPORT

HOLLISTER CITY COUNCIL
MEETING DATE: October 5, 2026
REPORT # City Manager-2026-43

AGENDA ITEM: AUTHORIZE THE INITIATION OF THE PROCUREMENT

PROCESS FOR PUBLIC UTILITY CONCESSIONAIRE

DEPARTMENT: City Manager
DEPARTMENT HEAD: Ana Cortez, City Manager

COUNCIL NEXT STEPS: : Provide direction to staff to execute procurement selecting a Concessionaire to operate water, wastewater and sewer utilities.

DISCUSSION: The City of Hollister is undertaking a comprehensive review of its financial condition, operations, assets, revenues, liabilities, and delivery of municipal services. As part of the City's financial stabilization efforts, staff recommends evaluating whether certain municipal utilities could be operated more efficiently through a long-term public-private partnership or concession arrangement. A utility concession differs significantly from the outright sale or privatization of a public utility.

Under the model contemplated by staff, the City would retain ownership of the public utility infrastructure while competitively selecting a private entity to assume specified responsibilities for operations, maintenance, capital improvements, financing, customer service, or other utility functions pursuant to a long-term agreement.

The purpose of the procurement would not be to predetermine that Hollister should enter into a concession. Rather, it would allow the City to determine through competition whether the private market can offer Hollister a financial and operational arrangement superior to continued traditional City operation.

Of particular relevance is the City of Rialto. In 2012, Rialto and the Rialto Utility Authority entered into a 30-year concession agreement for its water and wastewater systems. Under that arrangement, Rialto retained ownership of the utility assets, water rights and rate-setting authority while its concession structure provided for private participation in financing, operations and capital improvements. Rialto's current adopted budget confirms that the arrangement continues today. Rialto Water Services is responsible for system operations and capital-project delivery, while the public agency retains ownership and rate-setting responsibility. Rialto also maintains governmental oversight of the concessionaire, including performance monitoring and audits.

FISCAL IMPACT: None at this point.

PREVIOUS COUNCIL OR COMMISSION ACTION: N/A

CEQA: N/A

ATTACHMENTS:

1.

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

PUBLIC UTILITY

CONCESSION
A public-private partnership framework for Hollister water and wastewater utilities
Council Discussion • 2026
1Page 214 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

ACTION REQUESTED
Begin a competitive process —not a sale of the utilities.

Provide direction to staff to execute
procurement selecting a concessionaire to
operate water, wastewater and sewer
utilities.

PUBLIC OWNERSHIP
City retains utility assets.

PUBLIC CONTROL
City retains policy and rate authority.

COMPETITION
Concessionaire selected through transparent
procurement.

Any final transaction returns to Council for consideration and approval. 2Page 215 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

THE RIALTO MODEL
Public ownership + private financing, operations and long-term performance obligations.

CITY / UTILITY

AUTHORITY
Owns assets
Retains water rights
Sets rates
Prioritizes projects →

CONCESSIONAIR
E
Financial backing
Capital investment
Concession oversight →

PRIVATE

OPERATOR
Operations
Maintenance
Billing / service →

RATEPAYERS
Receive utility service
Protected by public rate-
setting
Rialto’s arrangement is a concession —not a sale of the utility systems. 3Page 216 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION
WHAT RIALTO’S EXPERIENCE SHOWS
Opportunity and caution must be evaluated together.
$41M+
utility capital improvements
$35M
back-due rent to General
Fund
$168.7M
original concession-related
borrowing
$138.6M
principal outstanding at
June 30, 2025

LESSON FOR

HOLLISTER
Evaluate total lifecycle economics —not simply the
amount of upfront money.
4Page 217 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

HOLLISTER POLICY PRINCIPLES
Guardrails before the City tests the market.
1 Public ownership 2 Rate authority 3 Water rights 4 Public policy control
5 Performance
accountability
6 Infrastructure first 7 Ratepayer
protection
8 Competitive
procurement
The City retains the public responsibilities; the concessionaire receives defined contractual responsibilities. 5Page 218 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

THREE ILLUSTRATIVE SCENARIOS
Planning assumptions for market testing —not valuations or borrowing recommendations.

STABILIZATION
$105M
Capital $45M
Debt / Interfund $20M
Reserves / Working Capital $20M
Financing / Costs $10M
Potential City Consideration $10M

COMPREHENSIVE
$145M
Capital $65M
Debt / Interfund $20M
Reserves / Working Capital $28M
Financing / Costs $12M
Potential City Consideration $20M

TRANSFORMATION
$190M
Capital $90M
Debt / Interfund $20M
Reserves / Working Capital $35M
Financing / Costs $15M
Potential City Consideration $30M
6Page 219 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION
WHAT HOLLISTER RETAINS vs. WHAT MAY TRANSFER
Responsibilities move by contract —ownership does not.

HOLLISTER RETAINS
Ownership of water & wastewater assets
Water rights and supply control
Rate-setting and Proposition 218 responsibility
Policy and regulatory authority
Major capital project approval
Contract monitoring, audit, default & termination
rights

COULD TRANSFER
Utility and treatment operations
Certified operational staffing
Preventive / corrective maintenance
Equipment replacement
Regulatory compliance
Capital design, construction & financing
Asset management, emergency response
Billing / customer service, if desired
Defined operational and financial risks
7Page 220 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

RATEPAYER PROTECTION IS THE TEST
Every proposal should show the full cost and customer impact for every year of the concession.

Operating
expenses →Capital
expenditures →Debt &
financing →Concession
payments →Required
rates →Customer
bills
Compare customer bills in Years 1, 5, 10, 20 and 30 —with and without the concession.

Private capital is not free capital. The complete lifecycle calculation determines economic value. 8Page 221 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

PROPOSED PROCUREMENT PROCESS
A phased process keeps Council control at every major decision point. 1 RFQ
Identify experienced teams
2 RFP
Price the same 3 scenarios
3 ANALYSIS
Compare lifecycle cost &
rates
4 NEGOTIATE
Refine structure and
protections
5 COUNCIL
Consider any final
agreement
No concession agreement becomes effective without appropriate City Council consideration and approval.
9Page 222 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION
BEFORE THE RFP: COMPLETE FEASIBILITY ANALYSIS
Know the baseline before asking the market to improve it.

FINANCIAL BASELINE
Water & wastewater revenues
Operating expenditures
Debt & interfund obligations
Current / required reserves

SYSTEM NEEDS
Existing operating contracts
Capital projects
20–30 year capital requirements
Regulatory requirements

CUSTOMER / MARKET
Customer accounts & rates
Projected revenues
Affordability
Municipal & concession financing
capacity

LEGAL / VALUE
Risk-transfer potential
Limits on upfront consideration
Proposition 218 / 26
Total lifecycle cost
The memo recommends this analysis before issuance of the final RFP. 10Page 223 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

QUESTIONS COUNCIL SHOULD REQUIRE ANSWERED
The initial payment is only one part of the decision.
✓How much capital is invested in infrastructure?✓What risks move to the concessionaire? ✓What responsibilities remain with Hollister?✓What happens to City employees? ✓What are annual payments and escalators?✓What are customer bills in Years 1, 5, 10, 20 & 30? ✓What happens if the operator fails?✓How can the City terminate —and at what cost? ✓What condition must assets be in when returned?✓What is the total 30-year cost? 11Page 224 of 257

CITY OF HOLLISTER PUBLIC UTILITY CONCESSION

STAFF DIRECTION
Test whether a concession creates greater value than the existing model.

RECOMMENDED NEXT STEP
Authorize staff to complete feasibility
analysis and execute a transparent
competitive procurement for a water and
wastewater concessionaire.

THE STANDARD
Greater infrastructure
investment
Stronger operations
Financial stability
Meaningful risk transfer
Better total value for
ratepayers
Public ownership remains central.
12Page 225 of 257

1 PURPOSE
The purpose of this memorandum is to provide the City Council with information regarding the City of Rialto's long-term public-private partnership for its water and wastewater utilities and to present three conceptual scenarios for consideration by the City of Hollister. This report is intended to begin a policy, financial, and operational discussion. It does not recommend the sale or privatization of Hollister's water or wastewater utilities.

Under each scenario presented in this report, the City retains ownership and ultimate public control of its utility assets. The concept being evaluated is whether Hollister could benefit from combining public ownership with private financing, operations, capital investment, and contractually defined performance obligations. Before proceeding with any transaction, the City would need to complete detailed financial, legal, operational, labor, rate, and Proposition 218 analyses.

The three illustrative scenarios range from $105 million to $190 million and include potential upfront City consideration ranging from $10 million to $30 million.

I. EXECUTIVE SUMMARY
In 2012, the City of Rialto and Rialto Utility Authority entered into a 30-year concession agreement with Rialto Water Services, LP ("RWS") involving the City's water and wastewater systems.

Rialto describes the agreement as covering the design, construction, and financing of capital improvements as well as operation and maintenance of the Rialto Utility Authority facilities.

The arrangement did not constitute a sale of Rialto's utilities.

Under Rialto's current model:
 The City/Rialto Utility Authority retains ownership of the water and wastewater systems.
 The public entity retains water rights and water supply.  The public entity retains rate-setting authority.
 RWS provides financial backing, oversight, and concession services.  Veolia North America performs water and wastewater operations, including billing and customer service.
 City staff oversees the concession and identifies and prioritizes utility projec ts.  Major projects continue to be presented to the City Council.

2 The partnership originally provided more than $41 million for water and wastewater capital improvements and $35 million in back-due rent to Rialto's General Fund, while also restructuring existing utility obligations.

The complete financing was substantially larger than those two amounts. Rialto's FY 2025 audited financial statements report original concession-related borrowing of approximately $38.25 million for the Water Enterprise and $130.47 million for the Wastewater Enterprise.

Rialto's experience demonstrates that a concession can generate substantial immediate capital and transfer significant operating responsibilities while maintaining public ownership. It also demonstrates that the financing creates substantial long-term obligations supported by utility revenues.

Hollister should therefore evaluate a concession based on its total lifecycle economics, rather than simply the amount of upfront money offered by a private partner.

II. BACKGROUND – THE RIALTO PUBLIC-PRIVATE PARTNERSHIP
The City of Rialto formed the Rialto Utility Authority to facilitate management of its water and wastewater systems. In 2012, Rialto and the Rialto Utility Authority entered into a 30-year concession agreement with Rialto Water Services.

According to Rialto's adopted budgets, the partnership was intended to:
 Accelerate delivery of needed capital improvements;
 Transfer management of water and wastewater operations;  Implement operational efficiencies;
 Provide financial backing for infrastructure improvements; and  Address aging utility infrastructure.

Rialto reports that the partnership delivered more than $41 million in capital improvements within approximately the first five years of the agreement.

The concession therefore combined several activities that traditionally might have been addressed through separate contracts:

Financing + Capital Improvements + Operations + Maintenance + Long-Term Performance Obligations
This distinguishes the Rialto arrangement from a conventional operating contract.

III. PUBLIC OWNERSHIP WAS RETAINED
One of the most significant aspects of the Rialto model is what the City did not transfer.

3 Rialto's official budget documents state that the City/Rialto Utility Authority retains:
 Ownership of the water system
 Ownership of the wastewater system
 Water rights and supply
 Rate-setting authority
 Project prioritization
 Public oversight
The private concessionaire therefore does not own Rialto's utility infrastructure. Instead, it receives contractual rights and responsibilities for a defined period. This distinction would be fundamental to any Hollister model. Hollister could maintain public ownership while transferring defined responsibilities and risks to a private partner through a competitively procured long-term agreement.

IV. CURRENT RIALTO BUSINESS MODEL
The current Rialto structure can generally be illustrated as follows:

CITY OF RIALTO / RIALTO UTILITY AUTHORITY
Owns utility assets
Retains water rights
Controls utility policy
Establishes rates
Prioritizes projects
Oversees concession
↓

RIALTO WATER SERVICES
Concessionaire
Financial backing
Financing structure
Capital investment
Concession oversight
↓

VEOLIA NORTH AMERICA
Water operations
Wastewater operations
Maintenance
Billing

4 Customer service
Capital-program implementation
The City's current FY 2025-26 budget continues to identify RWS and Veolia as the City's concession partners. City staff remains responsible for monitoring the concession, coordinating financing and project scheduling, identifying and prioritizing utility projects, and presenting appropriate projects to the City Council. This creates a division between public governance and contracted utility delivery.

V. FINANCIAL STRUCTURE OF THE RIALTO TRANSACTION
The financial structure is particularly relevant to Hollister.

Rialto's audited FY 2025 financial statements state that the concessionaire provided:
 $41.037 million for funds restricted to water and wastewater capital projects;  $35 million of back-due rent to the City's General Fund; and funding to previous Rialto Utility Authority debt.
 The transaction resulted in original concession-related borrowing of approximately:
 Water Enterprise: $38.249 million
 Wastewater Enterprise: $130.473 million
 Combined: approximately $168.7 million
This distinction is important. Rialto did not simply receive $35 million from a private company in exchange for allowing the company to operate its utility. Instead, the transaction financed a package of utility and financial requirements through a long-term concession supported by future utility revenues.

VI. LONG-TERM FINANCIAL OBLIGATION
Private capital is not free capital. Rialto's audited financial statements report that water and wastewater enterprise revenues are pledged to repay the collateralized concession- related debt. As of June 30, 2025, Rialto reported approximately $138.6 million in concession-related principal still outstanding. The outstanding balance alone should not be interpreted as evidence that the transaction has performed favorably or unfavorably; evaluation of the financing should consider debt -service schedules, refinancing activity, concession payments, capital delivered, operating costs, rates, and remaining contractual obligations.

The financial obligations extend through 2042. This provides an important lesson for Hollister. The amount of money available at closing should not be the primary measurement of whether a concession is financially beneficial.

Instead, the City must evaluate:

5 (Immediate capital received + Capital improvements delivered + Operating efficiencies + Risk transferred) – ( Financing costs - Long-term concession payments - Ratepayer impacts)
This complete calculation determines the economic value of the transaction.

VII. RIALTO CONTINUES TO CONTROL UTILITY RATES
Another significant feature of the Rialto arrangement is that the concessionaire does not independently establish utility rates. Rialto retains rate-setting authority. That authority continues to be exercised today.

Rialto completed a formal Proposition 218 process in 2025-26 and adopted a new five- year schedule of water and wastewater rates on January 27, 2026, with the first adjustments becoming effective March 1, 2026.

Therefore: Private operations do not mean private rate-setting. That principle should also apply to Hollister.

VIII. HOLLISTER'S EXISTING UTILITY OPERATIONS
Hollister already operates a substantial utility enterprise  Industrial Wastewater Treatment Plant;
 Domestic Water Reclamation Facility;
 Water distribution infrastructure; minor ground treatment  Sewer collection infrastructure; and
 Related utility functions.

IX. WHY HOLLISTER SHOULD EVALUATE THE MODEL
A long-term concession could potentially address several issues simultaneously.

Instead of separately procuring operations, financing individual capital projects, issuing debt, addressing deferred maintenance, recruiting specialized personnel, and managing major infrastructure projects, a concession could potentially combine these functions under one long-term performance agreement.

The potential advantages to Hollister warranting evaluation include:

Capital Investment
A concessionaire could provide significant capital at the beginning of the agreement for priority infrastructure.

6 Accelerated Capital Improvements
Projects that otherwise might occur over many years could potentially be delivered earlier.

Operational Expertise
A private operator could provide specialized utility expertise, certified operators, engineering resources, and technical capabilities.

Risk Transfer
Defined operating, construction, maintenance, cost, and performance risks could potentially be assigned contractually to the concessionaire. The feasibility analysis should distinguish between assigning contractual responsibility and actually transferring financial or operational risk, including existing asset-condition risk, regulatory-change risk, construction cost and schedule risk, equipment failure, staffing and certification, permit compliance, emergency capital needs, financing risk, and asset handback condition.

Predictability
A long-term agreement could establish defined formulas for operating costs and capital responsibilities.

Financial Restructuring
The transaction could potentially restructure appropriate existing utility and interfund obligations.

Rate Stabilization
A portion of financing could potentially establish reserves designed to mitigate abrupt rate impacts, subject to legal and financial analysis.

X. POLICY PRINCIPLES FOR HOLLISTER
If Council wishes to investigate a public-private utility partnership, Council can confirm necessary principles at this time.

1. PUBLIC OWNERSHIP
Hollister should retain ownership of its water and wastewater infrastructure.

2. RATE AUTHORITY
Hollister should retain rate-setting authority and responsibility for Proposition 218 compliance.

7 3. WATER RIGHTS
The City should retain all applicable City water rights and control over water supply.

4. PUBLIC POLICY CONTROL
Council should retain policy authority over the utility enterprises.

5. PERFORMANCE ACCOUNTABILITY
The concessionaire should operate under measurable contractual performance standards.

6. INFRASTRUCTURE FIRST
The principal financial purpose of the transaction should be recapitalizing and strengthening the utility systems.

7. RATEPAYER PROTECTION
The financial model should demonstrate the long-term impact on customers before Council commits to a transaction.

8. COMPETITIVE PROCUREMENT
Any concession should result from a transparent competitive procurement process.

XI. THREE POTENTIAL HOLLISTER SCENARIOS
Staff has developed three illustrative scenarios for purposes of financial analysis.

These amounts are illustrative financial modeling assumptions only. They are not valuations of Hollister's utility systems, determinations of borrowing capacity, market indications, or recommendations for a specific transaction size. No analysis has yet established that Hollister's utility revenues can support these transaction amounts, that all identified uses are legally permissible utility expen ditures, or that the market would offer financing on these terms. The scenarios should also be compared against a municipal baseline reflecting continued public ownership and conventional public financing, separately procured operations, anticipated capita l improvements, staffing, reserves, regulatory costs, and projected rate requirements.

Use of Funds Scenario 1 –
Stabilization
Scenario 2 –
Comprehensive
Scenario 3 –
Transformation
Utility Capital Improvements $45 million $65 million $90 million Debt/Interfund Restructuring $20 million $20 million $20 million

8 Reserves/Rate
Stabilization/Working Capital $20 million $28 million $35 million Financing/Transaction Costs $10 million $12 million $15 million Potential Upfront City
Consideration* $10 million $20 million $30 million

TOTAL ILLUSTRATIVE
TRANSACTION $105 MILLION $145 MILLION $190 MILLION
Any upfront unrestricted City consideration would require specific legal and financial analysis. Hollister should not assume that the General Fund component of Rialto's 2012 transaction can be duplicated under current California law.

XII. SCENARIO 1 – STABILIZATION
The objective would be to strengthen the utility enterprises while limiting the size and complexity of the concession.

XIII. SCENARIO 2 – COMPREHENSIVE PARTNERSHIP
Scenario 2 would establish a broader public-private partnership. Under this scenario, a concessionaire could potentially assume broader responsibility for operations, maintenance, certified staffing, regulatory compliance, major capital delivery, and financing. This scenario is intended to test a structure more comparable in scope to the comprehensive nature of Rialto's concession.

XIV. SCENARIO 3 – TRANSFORMATION
Scenario 3 would evaluate a substantial recapitalization and modern ization of Hollister's utility systems. This scenario would provide the upper-end test of what the utility enterprises could potentially support.

It should not be interpreted as a recommendation to borrow or finance $190 million.

Rather, the purpose would be to determine whether a larger transaction could substantially accelerate infrastructure investment while maintaining financially sustainable utility rates.

XV. WHAT HOLLISTER WOULD RETAIN
Under all three scenarios, Hollister should evaluate retaining:
 Ownership of water assets;
 Ownership of wastewater assets;

9  Applicable water rights;
 Control over water supply;
 Rate-setting authority;
 Proposition 218 responsibilities;
 Regulatory and policy authority;
 Approval of major capital projects;
 Long-term capital-planning authority;
 Contract monitoring;
 Performance enforcement;
 Audit rights; and
 Default and termination rights.

Public ownership and accountability should remain central to the structure.

XVI. WHAT COULD BE TRANSFERRED TO THE PRIVATE PARTNER
The concession agreement could potentially assign responsibility for:
 Water utility operations;
 Wastewater utility operations;
 Treatment operations;
 Certified operational staffing;
 Preventive maintenance;
 Corrective maintenance;
 Equipment replacement;
 Regulatory compliance;
 Capital-project design;
 Capital construction;
 Capital financing;
 Energy efficiency;
 Asset management;
 Emergency response;
 Billing and customer service, if desired; and
 Defined operational and financial risks.

These responsibilities would be established contractually rather than transferred through ownership.

10 XVII. PERFORMANCE STANDARDS
A concession should contain measurable performance requirements.

Potential performance indicators could include:
 Drinking-water quality;
 Wastewater discharge compliance;
 Regulatory violations;
 Permit compliance;
 Water loss;
 Sewer overflows;
 Emergency response times;
 Preventive maintenance completion;
 Equipment availability;
 Capital-project schedules;
 Capital-project budgets;
 Energy consumption;
 Customer response times;
 Billing accuracy; and
 Customer-service performance.

XVIII. RATEPAYER PROTECTION
Ratepayer impact should be one of the principal measurements of any proposal.

A bidder should therefore be required to provide a complete financial model covering every year of the proposed concession, together with sufficient assumptions and sensitivity analysis to permit comparison with the City's municipal baseline:
 Operating expenses;
 Capital expenditures;
 Debt service;
 Concession payments;
 Inflation assumptions;
 Financing costs;
 Reserve requirements;
 Revenue requirements;
 Projected water revenues;
 Projected wastewater revenues;
 Required rate adjustments; and
 Estimated customer bill impacts.

11 XIX. UPFRONT CITY CONSIDERATION
The potential upfront City consideration is intentionally presented separately from utility infrastructure investment.

The three scenarios assume:

Scenario 1: $10 million
Scenario 2: $20 million
Scenario 3: $30 million
The purpose is to determine whether a transaction can provide immediate City consideration while simultaneously improving the financial and physical condition of the utility systems.

However, Rialto's experience requires careful interpretation. Rialto's audited financial statements characterize its $35 million General Fund payment as bac k-due rent.

Hollister should identify and document any historical General Fund advances, subsidies, loans, property interests, or other legally cognizable obligations involving the utility enterprises. Special counsel and the City's financial advisers shou ld then determine whether any reimbursement or other consideration is legally permissible and financially appropriate. Documentation alone should not be assumed to establish entitlement to a lump-sum payment.

Before including an upfront City payment in any procurement, special counsel should determine:
i. The legal basis for the payment;
ii. Whether it constitutes an appropriate utility expense; iii. Proposition 218 implications;
iv. Restrictions on use of proceeds;
v. Accounting treatment;
vi. Financing implications; and
vii. Potential effects on utility rates.

XX. EXISTING HOLLISTER PRIVATE OPERATION
Hollister's existing relationship with Veolia deserves particular attention. The City's official sewer information identifies Veolia as the operator of the Hollister Water Reclamation Facility. Any long-term concession should be competitively procured and structured to maximize value to the City and its ratepayers.

12 If the City elects to proceed following feasibility, legal, financial, labor, and rate analyses, a competitive procurement could evaluate proposals for integrated water and wastewater operations, financing, maintenance, and capital delivery. The procurement should remain open to qualified firms, including the City's existing wastewater operator.

XXI. EMPLOYEE AND LABOR CONSIDERATIONS
A concession analysis must also identify the effect on existing City employees.

Possible structures could include:
 Retaining certain City utility employees;
 Transfer opportunities to the private operator;
 Attrition-based transition;
 Maintaining City employees for regulatory and contract oversight;  Establishing employee protections in the procurement; and  Requiring the concessionaire to offer employment to qualified affected employees.

Any changes affecting represented employees would require analysis of the City's obligations under applicable labor law and memoranda of understanding.

Employee impacts should therefore be evaluated before issuance of a final RFP/RFQ/RFI.

XXII. LEGAL CONSIDERATIONS
Rialto entered its concession in 2012. Hollister would be considering a transaction approximately fourteen years later under the laws applicable at the time of a future procurement. The City should therefore not assume that every element of Rialto's transaction can be duplicated.

Specialized legal review should include:
 Proposition 218;
 Proposition 26;
 Public utility rate law;
 Public contracting requirements;
 Public finance law;
 Existing bond/debt covenants;
 Water rights;
 Environmental regulations;
 Labor obligations;
 Procurement requirements;
 Public asset restrictions;

13  Lease/concession authority;
 Tax considerations; and
 Long-term contractual obligations.

The potential upfront City consideration deserves particularly careful analysis.

XXIII. POTENTIAL PROCUREMENT PROCESS
If the feasibility study demonstrates sufficient potential value, staff could proceed through a phased procurement.

PHASE 1 – REQUEST FOR QUALIFICATIONS
The City could identify teams with demonstrated experience operating and financing municipal water and wastewater systems.

PHASE 2 – COMPETITIVE RFP
Qualified teams could be required to price the same three scenarios.

Every proposal should provide:

Scenario 1 – $105 million
Scenario 2 – $145 million
Scenario 3 – $190 million
Proposers could also be permitted to submit an alternative structure demonstrating greater value.

PHASE 3 – FINANCIAL AND RATE ANALYSIS
The City and its independent financial adviser would evaluate each proposal's complete lifecycle cost.

PHASE 4 – NEGOTIATION
The City could negotiate with the proposer offering the structure determined through the City's procurement process to best satisfy the established requirements.

PHASE 5 – COUNCIL CONSIDERATION
No concession agreement would become effective without appropriate City Council consideration and approval.

XXIV. CONCLUSION
The Rialto experience demonstrates that a California municipality can maintain ownership and rate-setting authority over its water and wastewater utilities while using a

14 long-term private concessionaire for financing, operations, maintenance, and capital improvements.

Rialto entered its 30-year concession in 2012. The City's current budget continues to identify Rialto Water Services and Veolia as its concession partners, while the City/Rialto Utility Authority retains ownership, water rights, and rate-setting authority.

The transaction produced more than $41 million in utility capital funding and $35 million in General Fund back-due rent while restructuring existing obligations. At the same time, Rialto's FY 2025 audited financial statements demonstrate the long-term nature of the financial commitment, with approximately $138.6 million in concession-related principal reported outstanding as of June 30, 2025.

The Rialto experience therefore provides both an opportunity and a caution.

For Hollister, the fundamental question should not be:
"How much money will a private company give the City?"
The appropriate question is:
"Can a public-private partnership provide greater infrastructure investment, stronger operations, financial stability, predictable long-term performance, and meaningful transfer of risk at a total cost that provides greater value to Hollister and its ratepayers than the City's existing model?"
The three illustrative scenarios provide a framework for answering that question:

Scenario 1 – Stabilization: $105 million, including $10 million potential upfront City consideration
Scenario 2 – Comprehensive: $145 million, including $20 million potential upfront City consideration
Scenario 3 – Transformation: $190 million, including $30 million potential upfront City consideration

OFFICIAL GOVERNMENT SOURCES
City of Rialto, FY 2025-26 Adopted Budget – Rialto Utility Authority.

City of Rialto, FY 2025 Audited Basic Financial Statements, Notes regarding Concessionaire Agreements and long-term liabilities.

City of Rialto, Utilities Department – Concession Agreement.

City of Rialto, Water and Sewer/Wastewater Rates and Proposition 218 Rate -Setting Process, 2025-26.

15 City of Hollister, Utilities Division.

City of Hollister, Sewer/Wastewater Treatment – Hollister Water Reclamation Facility Operations.

City of Hollister, Finance Department – Utility Billing and Current Water/Wastewater Rates.

All factual descriptions of the Rialto concession and existing Hollister utility operations in this report are based on official City of Rialto and City of Hollister sources. The three Hollister transaction scenarios are illustrative planning assumptions developed for policy analysis and are not derived from a completed valuation, rate study, or concession feasibility analysis.

STAFF REPORT

HOLLISTER CITY COUNCIL
MEETING DATE: October 5, 2026
REPORT # City Attorney-2026-05

AGENDA ITEM: RECEIVE REPORT ON USES OF HELEN ROSS FUND

DEPARTMENT: City Attorney
DEPARTMENT HEAD: Ana Cortez, City Manager

COUNCIL NEXT STEPS: Receive the report regarding the Helen M. Ross Fund and provide direction regarding staff’s proposed use of Fund 506 to support personnel costs associated with the care and feeding of animals housed at the Hollister Animal Shelter.

DISCUSSION:

On January 17, 2017, by Resolution No. 2017-5, the City of Hollister ("City") authorized creation of the Helen M. Ross Fund for the care and feeding of animals housed at the Hollister Animal Shelter and accepted an initial donation of $375,000 from the Helen M.

Ross Living Trust ("Trust"). These funds were set aside under Fund 506. As of the beginning of the FY26-27 Fund 506 had a balance of $519,386.

The Trust states that (1) the funds must be used for the benefit of the Hollister Animal Shelter or its successors-in-interest (e.g., person or entity that acquires the animal shelter); (2) the funds must not be commingled with the City’s general funds; and (3) the funds must be exclusively used for the care and feeding of animals housed at the Hollister Animal Shelter. The trust does not restrict the City from using the funds to pay City personnel or a third party for the care and feeding of animals housed at the shelter.

Staff proposes using these funds for personnel if the City is under a Declared State of Financial Emergency. Staff proposes creating a Helen Ross Advocate termed contracted position from January 1, 2027, to December 31, 2028. This position will be part of a two-year pilot program. The position will be a non-represented, salaried position with operational and legislative responsibilities. This position may complement or replace a permanent position. If financial conditions do not allow for the Advocate position to be an additional FTE, then employees currently in Animal Services positions will be considered for the Advocate position.

Staff is seeking Council direction regarding the proposed use of Helen M. Ross Fund resources for this purpose.

FISCAL IMPACT: The proposed use of Helen M. Ross Fund resources will not negatively impact the General Fund.

PREVIOUS COUNCIL OR COMMISSION ACTION: Resolution 2017-5

CEQA: NA

1. ATTACHMENTS:

2. Job Description with Salary Range

3. Resolution 2017-5

CITY OF HOLLISTER

ANIMAL ADVOCATE
Two-Year Limited-Term Position | Helen M. Ross Fund (Fund 506) Department TBD - Animal Care and Services
Employment Status Two-Year Limited-Term Position
Funding Source Helen M. Ross Fund (Fund 506)
Reports To Animal Care and Services Advocate
FLSA Status To be determined by Human Resources based on final duties and classification

POSITION PURPOSE
Under general supervision, the Animal Advocate supports the care, feeding, wellbeing, enrichment, adoption readiness, and humane treatment of animals housed at the City of Hollister Animal Shelter. The position serves as an advocate for shelter animals by identifying individual animal needs, coordinating appropriate care and enrichment, supporting adoption and foster outcomes, and helping connect animals with resources that directly benefit their health and welfare.

This is a two-year limited-term position funded from the Helen M. Ross Fund. Resolution No. 2017-5.

DISTINGUISHING CHARACTERISTICS
The Animal Advocate is a limited-term, animal-welfare-focused classification. The position emphasizes direct and supplemental benefit to animals housed at the shelter rather than general administrative, enforcement, or routine shelter functions. Work may include hands-on animal care, enrichment, individualized welfare planning, foster and adoption support, volunteer coordination when tied to animal care, and tracking outcomes associated with Helen M. Ross Fund-supported activities.

ESSENTIAL DUTIES
 Assess the day-to-day welfare and quality-of-life needs of animals housed at the shelter and communicate identified needs to appropriate Animal Care and Services staff.  Provide or coordinate supplemental feeding, enrichment, exercise, socialization, comfort, grooming, and other activities that directly support the wellbeing of shelter animals.  Develop individualized enrichment and care plans for animals with extended shelter stays, behavioral stress, age-related needs, or other circumstances requiring additional attention.  Assist staff in preparing animals for adoption or foster placement through socialization, enrichment, basic handling, photographs, biographies, and other animal-centered placement support.  Coordinate foster resources and follow-up for animals when foster placement advances the animal's care, recovery, socialization, or adoption prospects.
 Identify and recommend purchases from the Helen M. Ross Fund that directly support the care and feeding of animals, consistent with Resolution No. 2017-5 and City purchasing requirements.

 Help coordinate supplemental veterinary, grooming, nutritional, behavioral, enrichment, or similar animal-welfare resources when authorized by the City and eligible for Helen M. Ross Fund support.  Maintain records of services, supplies, expenditures, animals served, outcomes, and other information needed to demonstrate that Fund 506 resources are being used for their restricted purpose.  Work with volunteers and community partners on activities that directly enhance the care, feeding, enrichment, foster placement, or adoption readiness of shelter animals.  Provide public education regarding responsible animal care, shelter animal needs, adoption, fostering, enrichment, and humane treatment when such activities support shelter animals.  Assist with special animal-welfare initiatives supported by the Helen M. Ross Fund and approved by the City.
 Perform related duties consistent with the purpose and funding restrictions of the position.

FUNDING AND TERM LIMITATIONS
 This position is established for a maximum term of two years unless separately extended or reauthorized by the City through an appropriate funding source.
 The position is funded by the Helen M. Ross Fund (Fund 506) and is contingent upon the continued availability and lawful use of those restricted funds.
 Duties charged to Fund 506 must be connected to the care and feeding of animals housed at the shelter and must comply with the restrictions established by Resolution No. 2017-5 and any controlling Helen M.

Ross Living Trust documents.
 Continuation of employment beyond the limited term is not guaranteed by creation of this position.

KNOWLEDGE OF
 Basic principles and practices of humane animal care, feeding, handling, enrichment, and shelter animal welfare.
 Animal behavior and signs of stress, illness, fear, or discomfort.  Adoption and foster practices that support successful placement of shelter animals.  Safe work practices around domestic animals and shelter environments.  Basic recordkeeping, public communication, and community engagement methods.  Bachelor in related discipline.
 Public speaking and presentations techniques.
 Social media content and tools.
 AI and other relevant technology tools.

ABILITY TO
 Handle animals safely and humanely and work effectively with animals of varying sizes, temperaments, and conditions.
 Recognize animal welfare needs and communicate concerns promptly to appropriate staff.  Build effective relationships with shelter staff, volunteers, foster caregivers, adopters, veterinarians, rescue organizations, and members of the public.
 Maintain accurate records and demonstrate the relationship between funded activities and direct benefits to shelter animals.
 Work independently within established policies while exercising sound judgment and compassion.  Communicate clearly and professionally, both orally and in writing.

EDUCATION AND EXPERIENCE
Bachelor degree in relevant discipline. Any combination of education, training, and experience that provides the required knowledge and abilities. A typical qualifying background would include experience in animal

care, animal welfare, veterinary support, animal sheltering, rescue, fostering, humane education, or a closely related field. College-level coursework in animal science, veterinary technology, biology, public administration, social services, or a related field is desirable.

LICENSES / SPECIAL REQUIREMENTS
 Possession of, or ability to obtain, a valid California driver license when required for assigned duties.  Ability to work occasional evenings, weekends, or special events when animal-care needs require.  Ability to work in an animal shelter environment with exposure to animal noise, odors, cleaning products, animal waste, and animals with unpredictable behavior.
 Ability to perform the physical functions necessary for assigned animal-care duties, with or without reasonable accommodation.

WORKING CONDITIONS
Work is performed in office, kennel, animal-care, and outdoor environments. The employee may be exposed to animals that are frightened, ill, injured, aggressive, or otherwise unpredictable. Duties may require standing, walking, bending, reaching, lifting or moving animal-care supplies and equipment, and assisting with the safe handling or movement of animals.

CLASSIFICATION NOTE
This job description describes the general nature and level of work expected of the classification. It is not intended to list every duty. Final compensation, bargaining-unit status, FLSA designation, benefits eligibility, recruitment standards, and appointment authority should be established through the City's normal Human Resources and classification processes.

CONTRACT AMOUNT:
$80,000 per 12 month period; 2 year period.

RESOLUTION NO. 2017 -5

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HOLLISTER ACCEPTING OF A DONATION FROM THE HELEN M. ROSS LIVING TRUST AND AUTHORIZING THE CREATION OF A HELEN M. ROSS FUND FOR THE CARE AND

FEEDING OF ANIMALS HOUSED AT THE SHELTER
WHEREAS, the police department and Animal Care and Services were honored with the volunteer service of Helen M. Ross for over 13 years; and WHEREAS, Helen M. Ross was dedicated to the Animal Shelter Animals and staff; and
WHEREAS, Helen advocated for the wellbeing of the staff, the new shelter, mandatory spay/neuter laws and often purchased items and donated them to the shelter; and
WHEREAS, Helen M. Ross created a living trust with instructions for a donation to be given to the Animal Care and Services Bureau upon her death; and WHEREAS, Helen M. Ross died in 2015 and left the money with instructions for it to be used exclusively for the care and feeding of animals; and WHEREAS, the money came with a stipulation it was not to be comingled with or used to supplant general funds for the Animal Shelter; and WHEREAS, the department will create a Helen M. Ross Fund and use the money in a manner that will bring the most benefit to the animals of our community and preserve the fund for many years to come; and
NOW, THEREFORE BE IT RESOLVED, that the City Council of the City of Hollister Accepts the initial donation of$375,000 from the Helen M. Ross Living Trust and any future donations and Authorizing the Creation of a Helen M. Ross Fund for the care and feeding of animals housed at the shelter.

PASSED AND ADOPTED at a regular meeting of the City Council of the City of Hollister on the 17th day of January 2017 by the following vote:

AYES: Council Members Sims, Klauer, Luna, and Mayor Velazquez.

NOES: None.

ABSTAINED: None.

ABSENT: Council Member Friend.

Ignacio Velazquez, Mayor
ATTEST: APPROVED AS TO FORM:

L+G LLP, A orneys at Law
Thomas A. Graves; i4MC, City lerk
DUPLICATE OF ORIGINAL Brad Sullivan, City AttorneyONFILEINTHE OFFICE0FHL CLERK
CITY OF Page 246 of 257

STAFF REPORT

HOLLISTER CITY COUNCIL
MEETING DATE: October 5, 2026
REPORT # Police-2026-11

AGENDA ITEM: RECEIVING THE ANIMAL CARE, CONTROL AND SERVICES REPORT

DEPARTMENT: City Manager
DEPARTMENT HEAD: Ana Cortez, City Manager

COUNCIL NEXT STEPS: Receive information regarding Animal Control, Care and Services operations.

DISCUSSION: During the September 8, 2026, City Council meeting, the City Council requested additional information as result of community testimony. The Police Department prepared the attached report and supporting information per City Manager’s direction.

The attached report presents information and options concerning spay and neuter programs, shelter hours, local ordinances, administrative hearings, dangerous-dog classifications, public communication, community partnerships, an advisory board, organizational placement, and regional service models. It distinguishes actions that may be started within existing authority and resources from matters requ iring Council policy direction, funding, an ordinance amendment, or further legal and administrative review.

The supporting attachments provide additional information concerning shelter behavioral assessments and dangerous-dog investigations, advisory-board considerations, and the August 26, 2026, community meeting.

The City Manager’s review of this information concludes with the following next steps:

The City Manager encourages the legislative body to engage in a careful and deliberate discussion regarding the benefits, limitations, and potential implications of establishing a Police Oversight Board. While the current recommendation for an advisory body is limited Action Start Date
Spay and Neuter Services Provide Vouchers for local pet owners 1-Nov Shelter Hours Tuesday-Saturday 1-Nov
Spay and Neuter Ordinance Council direction
Dangerous Dog Hearing Hire independent hearing officer 1-Nov Dangerous Dog Class Solicit a formal recommendation from UC Davis School of Veterinary Medicine 1-Nov Behavioral Assessments Solicit a formal recommendation from UC Davis School of Veterinary Medicine 1-Nov Public Communication HPD will provide a communications workplan to the City Manager 1-Nov Partnership Development
HPD to provide a directory of rescue partners and strategies for developing partnerships 1-Nov
Animal Services Board
Council to determine if an oversight board may be necessary for HPD services including animal services November/December
Business Model
The City will release a Request for Letters of Interest LROI to identify potential partners that can take over the operation 15-Oct

to animal-related services, the Council may wish to consider whether a broader oversight structure would provide a more comprehensive forum for addressing concerns, findings, allegations, complaints, and recurring issues involving the Hollister Police Department and its two divisions: Code Enforcement and Animal Services .

Should the Council wish to explore a broader model, the scope of an oversight board could include areas such as police services and practices, records management, public and media relations, recruitment and hiring practices, animal care and control, code enforcement, and community policing.

The Council needs to determine the appropriate scope, recognizing the respective legal and administrative responsibilities of the City Council, City Manager, Police Chief, and other City officials. Civilian police oversight models exist in jurisdictions throughout California and across the country and vary considerably in their purpose, authority, composition, and responsibilities. With Council direction, the City Attorney could evaluate available models and prepare an ordinance for Council consideration establishing an oversight board and clearly defining its purpose, jurisdiction, authority, membership, responsibilities, reporting requirements, and organizational structure.

FISCAL IMPACT: Receiving the report and providing direction has no immediate fiscal impact.

PREVIOUS COUNCIL OR COMMISSION ACTION: At its September 8, 2026, meeting, the City Council requested additional information from staff regarding Animal Care and Services.

CEQA: N/A

ATTACHMENTS:

1. Animal Care and Services Report- Response to City Council Direction

2. Animal Shelter Behavior Assessments and Dangerous Dog Investigations

3. Animal Services Advisory Board Considerations

4. Animal Care and Services Community Meeting Summary

1 Animal Care and Services Report
Response to City Council Direction

To: Ana M. Cortez, City Manager
From: Carlos Reynoso, Chief of Police
Date: September 30, 2026

This report addresses the Animal Care and Services items identified through Council direction. The Helen Ross Fund is excluded because the City Manager is handling it separately. 1 Spay and Neuter Funding
Current situation: The City has UC Davis grant funds available through June 30, 2027 for eligible spay and neuter services and approved intake-prevention programs.

Recommendation: One option is to use available funding for shelter spay and neuter services and a community voucher program for owned pets. The program would not cover feral animals, unowned strays, or wildlife.

Action: Develop brief program guidelines covering eligibility, participating veterinary providers, voucher amounts, reimbursement, and required tracking. All expenditures must remain within the approved purposes of the UC Davis grants.
2 Shelter Hours
Current situation: The shelter has four full-time employees and one part-time employee. The full-time staff already provide animal care coverage nearly seven days each week. The shelter previously opened to the public on Saturdays for approximately six months. No animals were adopted on Saturdays during that period, and the additional coverage resulted in substantial overtime expense. Opening the shelter to the public seven days a week would require additional staff and relief coverage.

Recommendation: Consider changing public operating days from Monday through Friday to Tuesday through Saturday, with the shelter closed to the public on Sunday and Monday. This would provide Saturday access without adding more public-service days.

Action: Evaluate the Tuesday-through-Saturday schedule as a pilot. If Council wants seven-day public operations, additional positions and funding will be necessary. 3 Spay and Neuter Ordinance
Current situation: Hollister Municipal Code Chapter 6.20 currently applies to restricted dogs identified as Chihuahuas and pit bulls. It generally requires those dogs over six months old to be altered unless the owner receives an unaltered-dog certification or qualifies for an exemption. It does not apply to every dog and cat.

Comparison: Seaside uses a broader ordinance covering dogs and cats through unaltered-animal licenses and breeder permits, with exemptions and enforcement provisions.

Recommendation: Council should decide whether to retain the current ordinance, expand it to all dogs, or expand it to dogs and cats. Any expansion should include medical exemptions, breeder provisions, an implementation period, affordable licensing, and access to vouchers. The ordinance should also establish a fee structure under which owners who choose to keep an unaltered animal pay a higher licensing fee.

Individuals operating as breeders should be required to obtain a breeder permit, pay the applicable permit fee, and undergo an annual or biennial inspection of the breeding property. The permit and inspection fees should be structured to recover the City's reasonable administrative and enforcement costs.

2 Action: If Council selects an expansion option, direct the City Attorney to prepare the ordinance amendment, including unaltered-animal licensing fees, breeder permits, inspection requirements, and legally supportable cost-recovery fees.
4 Dangerous Dog Hearings
Current situation: Animal Control investigates dangerous-dog incidents under Hollister Municipal Code Chapter 6.13. The City previously used a retired police chief to conduct administrative hearings. Council later directed the City to discontinue that arrangement and explore using an attorney or another person with appropriate legal experience. At that time, estimated hearing-officer costs exceeded $200 per hour.

The proposal did not move forward because of budget concerns, particularly when a typical citation was approximately $250 and the cost of conducting the hearing could substantially exceed the citation amount.

HPD sergeants currently conduct the hearings.

Recommendation: Replace HPD sergeants with an independent hearing officer who has judicial, administrative-hearing, legal, or appropriate law-enforcement experience. The hearing officer should be retained through the City Manager's Office and may be used for other City administrative hearings. The officer should be paid a set amount per hearing, such as $250 or $500, rather than an hourly rate. The final amount should reflect the hearing fee approved by Council and the reasonable cost of providing the hearing. This would separate the investigation from the hearing decision and provide a predictable cost for each case.

Hearing cost: The City could establish a $500 hearing fee or deposit. It could be refunded when the appellant prevails and applied toward hearing costs when the City's determination is upheld. Santa Clara County uses an independent hearing officer and charges a $250 filing fee for potentially dangerous and vicious-dog hearings.

Action: Council would need to authorize the hearing-officer program, the set per-hearing payment, and funding. The City Attorney should prepare a legally supportable fee, refund, and hardship process. The agreement should require the hearing officer to follow the applicable ordinance and law and should allow Animal Control and HPD to submit concerns to the City Manager's Office if decisions appear to rely on personal views rather than the governing ordinance, evidence, or law. The City Manager's Office would oversee the contract without directing the outcome of an individual hearing. Council may also consider increasing the current $250 citation when it does not cover the cost of the investigation and hearing. 5 Dangerous Dog Classifications
San Jose model: San Jose uses three classifications: potentially dangerous, dangerous, and vicious. The classifications consider threatening conduct, injury or death to another domestic animal, injury to a person, severity, and repeat behavior.

Gilroy model: Gilroy uses a clearer three-level system. Level 1 covers menacing, chasing, threatening, aggressive, or endangering behavior toward a person or domestic animal. Level 2 covers an aggressive bite to a person or aggressively killing a domestic animal. Level 3 covers serious injury or death to a person, dog fighting or training for fighting, or repeat Level 2 conduct after notice.

Recommendation: Use the Gilroy levels as the starting point and incorporate useful San Jose provisions.

The ordinance should distinguish threatening behavior, attacks on animals, bites to people, serious injury or death, repeat conduct, provocation, confinement requirements, owner responsibilities, insurance, permits, and the permitted outcome at each level. The Ian Dunbar Dog Bite Scale may be used as a supplemental documentation tool for bites to people because it describes wound severity using six levels, from aggressive behavior without tooth-to-skin contact through a fatal attack. It is useful for describing injury consistently, but it should not replace the ordinance or the full investigation because it does not address animal-on-animal attacks, provocation, prior incidents, owner conduct, or every legal element.

Microchipping: Hollister already requires a dog or cat to be microchipped at the owner's expense before release after a second impound under Municipal Code section 6.08.125. Council could consider expanding this requirement by making microchipping and current registration a condition of obtaining or renewing an animal license. This would be broader than the existing second-impound requirement and would require

3 Council direction, an ordinance amendment, and procedures for verification, exemptions, and owner information updates.

Action: Council would need to direct preparation of a tiered ordinance amendment. 6 Behavioral Assessments
Current situation: The shelter does not use two different behavioral assessments. Staff observes and assesses animals in the shelter using the animal's history, behavior over time, applicable law, and accepted shelter practices, including UC Davis shelter-medicine guidance.

Clarification: A dangerous-dog investigation is not a second behavioral assessment. It is a legal and factual investigation of an incident and may result in an administrative hearing and court appeal.

Action: Please review the attached copy of the process difference, titled Shelter Behavioral Assessments and Dangerous-Dog Investigations.
7 Public Communication
Recommendation: Use scheduled social-media posts for adoptable animals, hours, services, volunteer opportunities, grants, events, and verified monthly statistics. Continue periodic community meetings and hold quarterly shelter open houses so residents can meet staff, learn how the shelter operates, see adoptable animals, and ask questions. Volunteer orientations can also help residents understand shelter operations firsthand.

Staffing impact: These activities can begin on a limited schedule. A larger or more frequent communication program would require assigned staff time because the same employees are responsible for animal care, field response, investigations, adoptions, records, and front-office duties. 8 Nonprofit and Rescue Relationships
Recommendation: Designate one shelter contact for nonprofit and rescue communications, maintain a current partner list, use a standard transfer and rescue-request process, hold quarterly partner meetings, and publish basic response expectations. Invite partners to adoption events, open houses, and program discussions.

Action: Use written agreements when a partner receives City animals, records, funding, facility access, or continuing responsibilities. The City must retain responsibility for legal compliance, safety, records, and final operational decisions.
9 Animal Services Advisory Board
Recommendation: If Council wishes to establish an advisory board, it should be designed to provide balanced community input and policy recommendations while leaving day-to-day operations, personnel matters, enforcement decisions, and individual animal cases with City staff.

Cost and impact: The primary impact would be staff and City Clerk time for meetings, records, reports, and Brown Act compliance. Membership and authority would need to be carefully structured so the board remains balanced, active, and focused on Citywide policy matters.

Action: Please review the attached Animal Services Advisory Board Considerations for recommended membership, authority, safeguards, and implementation options. 10 Placement of Animal Care and Services
Current structure: Animal Care and Services is within HPD. This provides direct access to dispatch, enforcement, investigations, after-hours response, and established supervision. The concern is that shelter priorities compete with police workload and the public may view animal care and enforcement as insufficiently separated.

City options: The division could remain within HPD, report directly to the City Manager, move into a community-services or community-development department, or become a separate department.

4 Sacramento places Animal Care within Community Development, while Los Angeles operates a separate Department of Animal Services.

Recommendation: Retaining the division within HPD is the least disruptive option and can be improved with an independent hearing officer, written procedures, public reporting, and stronger partner engagement. If Council wants separation, a division reporting to the City Manager or a community-services department is more practical than creating a standalone department. Placement under Finance, the Airport, Parks and Recreation, or Public Works would not eliminate the need for qualified animal-services management, enforcement coordination, shelter operations, and veterinary contracting.

Cost: A standalone department would require a director or department head and administrative support for budgeting, contracting, personnel, records, and policy. It would be the most expensive City-operated option.
11 JPA and Other Service Options
Examples: California animal-services JPAs include the Stanislaus Animal Services Agency, Sutter Animal Services Authority, Coastal Animal Services Authority, Santa Cruz County Animal Shelter, and Yolo Animal Services Planning Agency.

Requirements: A JPA requires at least two participating public agencies and an agreement establishing the governing board, voting rights, budget, member contributions, service levels, staffing and labor responsibilities, facilities and equipment, insurance, liability, records, audits, withdrawal, and dissolution. It also requires management, shelter and field staff, veterinary services, finance, contracting, human resources, records, technology, and board administration.

Cost: There is no standard JPA price. Member costs may be allocated by population, service calls, animal intake, a fixed share, or a combination. Startup costs may include legal formation, employee transition, recruitment, insurance, technology, vehicles, facilities, reserves, and transfer of assets and contracts.

Benefits: Regional consistency, shared facilities and specialized staff, shared capital costs, and regional governance. Hollister already receives a significant cost-sharing benefit because San Benito County pays 55 percent of Animal Care and Services costs under the current agreement.

Drawbacks: Reduced City control, startup complexity, disputes over costs or service levels, employee impacts, uncertain savings, long-term commitments, and difficulty withdrawing. A JPA shares costs but does not eliminate them. Unlike the current County contract, a JPA would distribute policy, budget, and service decisions among multiple member agencies. The City could lose the ability to operate the shelter according to its own priorities, and changing to a JPA could place the existing County agreement and its 55-percent contribution at risk.

Recommendation: Keep the current HPD structure and County cost-sharing agreement unless Council directs a broader organizational change. The current arrangement provides a primary financial benefit associated with regional cooperation while preserving City operational control. If Council wants to consider a JPA, compare any proposal directly with the current 55-percent County contribution and require clear answers concerning governance, City voting authority, service standards, control of shelter operations, continuation or replacement of the County contribution, withdrawal rights, and total transition and operating costs.

Recommended Next Steps
Actions that can begin promptly:
 Develop guidelines for a community spay and neuter voucher program using available UC Davis grant funds.
 Evaluate a Tuesday-through-Saturday shelter schedule.  Begin a limited communication schedule and quarterly open houses.  Formalize nonprofit and rescue communications.
 Review the attached summary distinguishing shelter behavioral assessments from dangerous-dog investigations and use it when explaining the two processes.

5 Items requiring Council direction and funding:
 The scope, fee structure, breeder permits, inspections, and licensing requirements for any expanded spay and neuter ordinance.
 An independent hearing officer and hearing-fee structure.  A tiered dangerous-dog ordinance and any expanded microchipping requirement.  A one-year advisory-board pilot.
 Separation of Animal Care and Services from HPD.
 Formal JPA or regional-service discussions.
 Additional positions for seven-day public operations or other service expansion.

Sources
 UC Davis grant agreements and amendments.
 Hollister Municipal Code section 6.08.125 and Chapters 6.13 and 6.20.  San Jose Municipal Code Title 7, Gilroy City Code sections 4.1 and 4.30, and Dr. Ian Dunbar's Dog Bite Scale.
 Seaside Municipal Code Chapter 6.04.
 California Government Code sections 6500 and following.  Official agency information from Santa Clara County, Sacramento, Stanislaus, Sutter, Coastal Animal Services Authority, Santa Cruz County, Yolo County, Lake County, San Bernardino, Los Angeles, Monterey County, and UC Davis.

1 Shelter Behavioral Assessments and Dangerous -Dog Investigations Explanation of the Process Difference
These are separate processes with different purposes. A shelter behavioral assessment supports the care, management, and placement of an animal in City custody. A dangerous-dog investigation determines whether a reported incident meets legal standards and whether restrictions or other legal action are warranted. One process does not replace the other.

Shelter Behavioral Assessment
Purpose: To understand an animal's current behavior and welfare needs so staff can make informed decisions about housing, handling, enrichment, treatment, foster placement, adoption, rescue transfer, training, and safety.

Information considered: Available history from the owner or finder; intake observations; medical condition and pain; behavior in the kennel and outside the kennel; handling observations; interactions with staff, volunteers, and, when appropriate, other animals; changes over time; foster or rescue information; and the context and triggers associated with observed behavior.

Method: Assessment is an ongoing process rather than a single pass-or-fail test. Staff should document observable behavior, circumstances, frequency, intensity, recovery, and changes after medical care, decompression, enrichment, or behavior support. A single observation in the stressful shelter environment should not be treated as a complete prediction of behavior in every future setting.

Outcome: An individualized care and placement plan. Depending on the facts, the plan may include enrichment, handling precautions, veterinary evaluation, behavior modification, foster placement, rescue transfer, adoption counseling, or another disposition permitted by law and policy.

Dangerous-Dog Investigation
Purpose: To determine whether reported conduct satisfies the definitions and procedures in Hollister Municipal Code Chapter 6.13 and applicable California law, and to identify any legally authorized restrictions or consequences.

Information considered: The incident report; statements from the reporting party, owner, witnesses, and responding personnel; photographs and video; injury and medical or veterinary records; bite location and severity; damage; prior incidents; confinement and control; licensing and vaccination status; the location of the incident; provocation or other statutory exceptions; owner knowledge and compliance; and any other relevant evidence.

Method: Animal Control conducts a factual and legal investigation. The investigator compares the evidence with the ordinance and state-law definitions, documents findings, gives required notice, and follows the City's hearing process when a determination is contested. The hearing officer evaluates the evidence and applicable law; the hearing is not a shelter temperament test.

Outcome: A finding that the legal standard is or is not met, together with any authorized licensing, confinement, warning, corrective, or other requirements. The process may include an administrative hearing and any appeal provided by law.

Practical Difference
The shelter process asks: What does this animal need while in care, and what is a safe and appropriate placement plan? The dangerous-dog process asks: What happened in a specific incident, what do the ordinance and state law require, and what legal safeguards or restrictions are authorized? Shelter observations may be relevant evidence when appropriate, but they do not establish or disprove a dangerous-dog designation by themselves. Likewise, a dangerous-dog investigation does not replace ongoing shelter observation and care planning.

Animal Services Advisory Board Considerations
This attachment outlines considerations if the City Council decides to establish an Animal Services Advisory Board. The board could provide structured community input and policy recommendations, but operational authority should remain with the City.

Potential Role
An advisory board could review general trends, public education, volunteer and rescue coordination, shelter needs, budgets, performance information, and proposed policies. Its recommendations should be submitted to the City Council and designated City staff through a defined reporting process.

Membership
A five- to seven-member board should include a balanced mix of residents and people with relevant animal - services, veterinary, rescue, volun teer, public-safety, administrative, or community experience. Applicants should disclose organizational affiliations and potential conflicts. Selection should consider qualifications, dependability, the ability to consider Citywide interests, and willingness to remain within an advisory role. No single organization, interest, or viewpoint should control the board.

Authority and Limitations
The board should be advisory only. It should not:
 Direct employees or manage daily operations.
 Review personnel matters or individual complaints involving employees.  Intervene in enforcement cases or determine the disposition of individual animals.  Conduct dangerous-dog hearings or investigations.
 Control contracts, expenditures, or City programs.

Structure and Safeguards
 Adopt written bylaws defining the board's purpose, authority, limitations, membership, terms, quorum, meeting schedule, and reporting requirements.
 Establish attendance and vacancy rules so the board can maintain a quorum and remain active.  Assign a City staff liaison to provide accurate operational information without transferring management authority to the board.
 Adopt conflict-of-interest and conduct standards and keep meetings focused on policy rather than individual disputes.
 Create an annual work plan with measurable responsibilities, documented recommendations, and an annual report.

Cost and Administrative Impact
Members could serve without compensation, but the board would require City Clerk and staff time for agendas, public notices, minutes, reports, records, staff presentations, and Brown Act compliance. The City should account for this workload before determining the meeting schedule.

Recommended Approach
If Council proceeds, consider a one-year pilot with quarterly meetings. At the end of the pilot, Council should evaluate attendance, vacancies, recommendations, public participation, staff workload, and the board's value before deciding whether to continue it.

1 Animal Control Community Meeting Summary
Summary of Community Suggestions and Discussion
The meeting produced community suggestions and discussion points; it did not make policy decisions. The ideas below are grouped by subject for review.

Dangerous-Dog Process
Participants discussed reviewing the dangerous-dog ordinance, distinguishing provoked from unprovoked conduct, and using clearer levels for different conduct and injury. Suggestions included reviewing San Jose's three-level approach, using the Ian Dunbar Dog Bite Scale to describe the severity of bites to people, establishing licensing or permit fees, and requiring microchipping after a first offense. Hollister already requires microchipping before release after a second impound; changing that requirement to a first offense would require an ordinance amendment.

Shelter Hours, Staffing, and Volunteers
The group discussed Saturday public hours, including a possible Saturday 8:00 a.m. to noon schedule, and closing on Monday rather than adding another public-service day. Participants also requested more staff, separate field and shelter supervision, a volunteer coordinator, more volunteers, and volunteer assistance with data entry and administrative duties.

Public Communication and Community Access
Participants requested stronger public relations and education, regular statistics and donation updates, and clearer information about licensing, adoption, volunteering, and animals at risk. Quarterly shelter open houses were suggested so residents, businesses, donors, rescues, and potential volunteers could meet staff, see the facility, learn about services, and discuss concerns. Other ideas included social-media outreach, an application, appointment scheduling, QR-code licensing, online payments, and video walkthroughs for home inspections.

Rescue, Nonprofit, and Community Partnerships
The discussion included inviting rescues to open houses, developing after-hours rescue and lost-pet partnerships, reaching out to 4-H, matching pets with families, offering group classes, and using sponsorships and fundraisers. A community participant also offered to assist with pet matching or classes.

Organizational Placement
The group raised the possibility of separating Animal Care and Services from HPD and discussed the difference between law-enforcement responsibilities and animal-care responsibilities.

Facilities, Animal Care, and Programs
Suggestions included a sound-reduced quiet area, a larger play yard, a barn or farm-animal area, on-site veterinary or registered veterinary technician capacity, shelter upgrades, youth or adult training programs, group training, pet-food and donation support, and improved microchip information.

Licensing and Customer Service
Participants suggested cat licensing, license and adoption appointments, QR-code licensing, online payments, improved access to microchip and AAHA information, and a direct process for dispatch to access new microchip information.

2 Helen Ross Fund
Participants suggested using the Helen Ross Fund for shelter upgrades and on-site veterinary or registered veterinary technician capacity.

Items That Can Be Considered Promptly
 Evaluate Saturday public hours with a corresponding Monday closure.  Publish a basic schedule of social-media updates, verified monthly statistics, and clear licensing, adoption, volunteer, and donation information.
 Plan a quarterly shelter open house with rescues, community partners, businesses, and donors invited.  Define volunteer roles for animal support, events, data entry, and administrative assistance, subject to screening, training, supervision, and records safeguards.  Develop rescue, lost-pet, 4-H, pet-matching, training, sponsorship, and fundraising partnerships.

Items Requiring Council Direction, Funding, or Legal Review  Tiered dangerous-dog classifications, new definitions, fees, permits, or expansion of the existing microchipping requirement.
 Cat licensing or other ordinance changes.
 Additional staff, supervisors, a volunteer coordinator, seven-day public hours, or expanded after-hours services.
 Separation of Animal Care and Services from HPD.
 Facility expansion, quiet-room improvements, larger exercise areas, farm-animal space, or on-site veterinary staffing.
 New applications, online payment or licensing systems, and other technology purchases.