Agenda packet — Mendota City Council, February 2, 2023

CITYOF MENDOTA
$Cantaloupe Center Of The World"

VICTOR MARTINEZ
Mayor
LIBERTAD "LIBERTY" LOPEZ
Mayor Pro Tempore

JOSE ALONSO

OSCAR ROSALES
AGENDA

MENDOTA CITY COUNCIL
Special City Council Meeting

CITY COUNCIL CHAMBERS
643 QUINCE STREET
February 2,2023
3:00 PM

CRISTIAN GONZALEZ
City Manager

JOHN KINSEY
City Attorney
The Mendota City Council welcomes you to its meetings; Regular meetings are scheduled for the 2nd and 4th Tuesday of every month. Your interest and participation are encouraged and appreciated. Notice is hereby given that Council may discuss and/or take action on any or all of the items listed on this agenda. Please turn your cell phones on vibrate/off while in the council chambers.

Any public writings distributed by the City of Mendota to at least a majority of the City Council regarding any item on this regular meeting agenda will be made available at the front counter at City Hall located at 643 Quince Street Mendota, CA 93440, during normal business hours 8 AM - 5 PM. ln compliance with the Americans with Disabilities Act, individuals requiring special assistance to participate at this meeting please contact the City Clerk at (559) 655-3291. Notification of at least forty-eight hours prior to the meeting will enable staff to make reasonable arrangements to ensure accessibility to the meeting.

CALL TO ORDER

ROLL CALL

FLAG SALUTE

FINALIZE THE AGENDA

1. Adjustments to Agenda.

2. Adoption of final Agenda.

BUSINESS
Council discussion and consideration of Resolution No. 23-06, appointing an individualto fillthe vacant seat on the City Council.
a. Receive report from City Clerk Cabrera-Garcia
b. lnquiies from Councilto staff
c. Mayor opens floor to receive any comment from the public d. Counciltakes action as appropriate

SWEARING IN

1. City Clerk Cabrera-Garcia to swear in newly appointed City Council Member.

Special City Council Agenda February 2,2023
1 1
643 Ouince Street Mendota, Calilornia 93640
Telephone: (559) 655-3291 Fax: (559) 655-4064
TDD/[TY 866-735-2919 (English) TDD/[TY 866-833-4703 (Spanish) ci.mendota.Ga.us
The City ol Mendota is an equal opportunity provider and employer 1 CITIZENS ORAL AND WRITTEN PRESENTATIONS
At this time members of the public may address the City Council onlv on matters listed on the agenda. Please complete a'request to speak" form and limit your comments to THREE (3) MINUTES. Please give the completed form to City Clerk prior to the start of the meeting. All speakers shall observe proper decorum. The Mendota Municipal Code prohibits the use of boisterous, slanderous, or profane language. All speakers must step to the podium, state their names and addresses for the record. Please watch the time.

CLOSED SESSION

CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION
Potential initiation of litigation pursuant to paragraph (4) of subdivision (d) of Government Code section 54956.9 (one potential case).

PUBLIC HEARING
Public hearing to consider and review the status of default, entitlements, and termination of development agreement with Odyssey Agricultural Development, LLC, Odyssey Agricultural Holdings, LLC, and Valley Agricultural Holdings, LLC, regarding the construction and operation of a cannabis cultivation, processing, and distribution facility on approximately 36 acres (portion of APN 013-030- 685T) located al 418 West Belmont Ave, Mendota, California 93640. At a special meeting on January 18, 2023, the Planning Commission voted, 5-0, to recommend the City Council: (1) consider implementing a revised tax structure; and (2) consider and approve the developers' proposed repayment plan. a. Receive repoft from City Manager Gonzalez
b. lnquiies from City Councilto staff
c. Mayor Martinez opens the public hearing
d. Once all comment has been received, Mayor Martinez c/oses the public hearing
e. Council provides direction to staff on how to proceed

ADJOURNMENT

CERTIFICATION OF POSTING
l, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby declare that the foregoing agenda for the Mendota City Council special meeting of February 2,2023, was posted on the outside bulletin board located at City Hall, 643 Quince Street on Wednesday, February 1,2023 at 1:30 p.m.

Clerk
1 Special City Council Agenda 2
Cabrera-Ga
February 2,2023
1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE MAYOR AND COUNCILMEMBERS
FROM: CELESTE CABRERA-GARCIA, CITY CLERK
VIA: CRISTIAN GONZALEZ, CITY MANAGER
SUBJECT: APPOINTING AN INDIVIDUAL TO FILL THE VACANT SEAT ON THE CITY COUNCIL DATE: FEBRUARY 2, 2023
ISSUE
Should City Council adopt Resolution No. 23-06, appointing an individual to fill the vacant seat on the City Council?

BACKGROUND
Due to Mr. Rolando Castro’s resignation from the City Council effective December 13, 2022, there is a vacancy on the Mendota City Council. In response, the City Council elected to fill the vacancy by appointment. The vacancy was noticed, and an application acceptance period was held from January 11, 2023 to January 20, 2023.

During the application acceptance period a total of seven (7) applications were received from the following individuals: Ramiro Espinoza, John C. Flores, Jose “Lupe” Gallardo, Veronica Rasmussen-Gill, Moses Macias, Joseph R. Riofrio, and Kevin Arias-Romero.

At its January 24th regular meeting, the City Council discussed the item, heard from the candidates, and motioned to table the item to a special City Council meeting to allow for further review. At that same meeting, applicant Kevin Arias-Romero formally withdrew his application from consideration.

The applications from the remaining six (6) candidates are attached to this report for Council’s review and consideration. The applications have been redacted to remove certain personal information due to privacy reasons.

ANALYSIS
Although the vacant position has four (4) years left in its term, the appointment would only last until the November 2024 General Election. The seat would then be up for a two-year term in November 2024. In November 2026, the seat would go back to the usual four-year term.

The City Council has until February 11, 2023 to fill the vacancy by appointment. If the appointment doesn’t occur within 60-days of the resignation notice (December 13, 2022), the City Council will need to fill the seat through a special election, which would be a significant cost to the City.
2 FISCAL IMPACT
There is no fiscal impact.

RECOMMENDATION
Staff recommends that City Council review the applications received and adopt Resolution No. 23-06, filling the City Council member vacancy with one of the applicants.

Attachments:

1. Applications:
a. Ramiro Espinoza
b. John C. Flores
c. Jose “Lupe” Gallardo
d. Veronica Rasmussen-Gill
e. Moses Macias
f. Joseph R. Riofrio

2. Resolution No. 23-06

CITY OF MENDOTA
643 QUINCE STREET
MENDOTA, CA 93540
(559) 655-329L

APPLICATION TO FILL A VACANCY ON THE CITY COUNCIL
Appricants, name. Rami ro Espi noza
Address (as listed on the registrar of voters):

Telephone number:

Present occupation: Ad m i n istrative Assistant
Number of years as a Mendota resident: 40 years
Memberships:

Are you a member of any other community boards, commissions or committees in Mendota? Yes X No.
lf yes please provide list:

Education:

Please state the highest year of school compreted Associates Please state any special areas of study, work experience or expertise that may be of value to the community if you were to serve as a member of the City Counci!:

I have previouslv served on the Mendota Planninq Commission *ha.ra..*Lr ^f ^.rF AAm-..nil., lAfhila AArrriaa ln *hia aanaal*., I tllg y\.ruLll \,rl LrLII r'rLrlllllltllllLy. YYtIllE arElvllIV lll LltlC, tl.rglHcrtrrlty I o
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Signature of Applicant: Date 1120123
Accepted:

Signature of City Clerk: Time:

Date:
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CITY OF MENDOTA
643 QUINCE STREET
MENDOTA, CA 93540
(559) 655-329L

APPLICATION TO FILL A VACANCY ON THE CITY COUNCIL
Applicants' name:

Address (as listed on the registrar of voters):

JAN l-t i0i3
Telephone number:

Present occupation:

Number of years as a Mendota resident: U}
Memberships:

Are you a member oJany other community boards, commissions or committees in Mendota? Yes r/no.
lf yes please provide list:
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Education:

Please state the highest year of school completed
Please state any special areas of study, work experience or expertise that may be of value to the community if you were to serve as a member of the City Council:
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By signins below I affirm that I am a United States citizen. a resident of Mendota. and am registered to vote under the address listed on the first page of this application.

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CITY OF MENDOTA
643 qUINCE STREET
MENDOTA, CA 93540
(559) 655-329L

APPLICATION TO FILL A VACANCY ON THE CITY COUNCIL
JAN 17 2023
Applicants' name:

Address (as listed on the registrar of voters):

Telephone number
Present occupation:

Number of years as a Mendota resident: zr+
Memberships:

Are you a member of any other community boards, commissions or committees in Mendota? Yes *- No.
lf yes please provide list:
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643 qUINCE STREET
MENDOTA, CA 93640
(559) 655-329L

APPLICATION TO FILL A VACANCY ON THE CITY COUNCIL
JAN 1 1 ?,0i3
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Telephone number:
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CITY OF MENDOTA
643 qUINCE STREET
MENDOTA, CA 93640
(559) 655-329L

APPLICATION TO FILL A VACANCY ON THE CIW COUNCIL
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Applicants' name:

Address (as listed on the registrar of voters):

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643 QUINCE STREET
MENDOTA, CA 93640
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APPLICATION TO FILL A VACANCY ON THE CITY COUNCIL
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Applicants' name:

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Telephone number:

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1 BEFORE THE CITY COUNCIL
OF THE

CITY OF MENDOTA, COUNTY OF FRESNO
A RESOLUTION OF THE CITY COUNCIL RESOLUTION NO. 23-06

OF THE CITY OF MENDOTA APPOINTING

AN INDIVIDUAL TO FILL THE VACANT SEAT

ON THE CITY COUNCIL
WHEREAS, Rolando Castro resigned from the Mendota City Council by submitting a letter of resignation to the City Clerk; and
WHEREAS, pursuant to Government Code section 1770, subdivision (c), Mr.

Castro’s resignation from the City Council was effective upon delivery to the City Clerk on December 13, 2022; and
WHEREAS, Mr. Castro’s resignation from the City Council created a vacancy that must be filled within 60 days, or before February 11, 2023; and WHEREAS, pursuant to Government Code section 36512, subdivision (b)(2)(A), the City Council may appoint an individual to fill this vacancy and serve on the City Council until the November 2024 General Election.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Mendota, that __________________ is appointed to serve on the City Council until the November 2024 General Election.
______________________________
Victor Martinez, Mayor
ATTEST:

I, Celeste Cabrera-Garcia, City Clerk of the City of Mendota, do hereby certify that the foregoing resolution was duly adopted and passed by the City Council at a special meeting of said Council, held at the Mendota City Hall on the 2nd day of February, 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Celeste Cabrera-Garcia, City Clerk
1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE MAYOR AND COUNCILMEMBERS
FROM: CRISTIAN GONZALEZ, CITY MANAGER
SUBJECT: PUBLIC HEARING TO CONSIDER AND REVIEW STATUS OF DEFAULT,

ENTITLEMENTS, AND TERMINATION OF DEVELOPMENT AGREEMENT

WITH ODYSSEY AGRICULTURAL DEVELOPMENT, LLC, ODYSSEY

AGRICULTURAL HOLDINGS, LLC, AND VALLEY AGRICULTURAL

HOLDINGS, LLC
DATE: FEBRUARY 2, 2023
ISSUE
The Planning Commission held and the City Council of the City of Mendota is holding a hearing to consider and review the status of default, entitlements, and termination of the development agreement with Odyssey Agricultural Development, LLC, Odyssey Agricultural Holdings, LLC, and Valley Agricultural Holdings, LLC, regarding the construction and operation of a cannabis cultivation, processing, and distribution facility on approximately 36 acres (portion of APN 013- 030-68ST) located at 418 West Belmont Avenue, Mendota, California 93640.

BACKGROUND
Odyssey Agricultural Development, LLC (“OAD”), Odyssey Agricultural Holdings, LLC (“OAH”), and Valley Agricultural Holdings, LLC (“VA”; together with OAD and OAH, the “Developers”) own and operate a commercial cannabis business within the City’s borders. This business is a private enterprise subject to a development agreement with the City (the “DA”; Exhibit 1) ensuring legal compliance with the City’s applicable licensing and zoning requirements as required by the Mendota Municipal Code (“MMC”).

1. Approval of Developers’ DA
In 2017, the City amended the MMC to create a commercial cannabis overlay district to “serve and promote the public health, safety, and welfare of the citizens of Mendota, to facilitate the establishment of permitted commercial cannabis businesses within the city while ensuring that such businesses do not interfere with other lawful land uses, and to provide new sources of revenue to fund city services.” (Mendota Ord. No. 17-13; MMC, § 17.99.010, subd. (B).) The City identified approximately fifty acres of unused, surplus land it owned, and approved publication of a request for proposals seeking businesses interested in leasing and developing that land for commercial cannabis operations within the City. (Mendota Reso. No. 17-62.) Shortly thereafter, the City withdrew its request for proposals. (Mendota City Council Meeting Minutes, January 9, 2018.)
2 In 2018, the City revised its earlier request for proposals and reissued it, seeking businesses interested in purchasing and developing the land at issue from the City for any useful purpose, including commercial cannabis activity. (Mendota Reso. No. 18-74.) The City reviewed responses to its request for proposals and approved entering into negotiations with VA (also known as the Axiom Group at that time) regarding the surplus land. (See Mendota City Council Meeting Minutes, January 22, 2019, and February 12, 2019.) In October 2019, the City approved Resolution No. 19-79, approving a purchase and sale agreement (the “PSA”) whereby VA agreed to purchase the City’s surplus property for its full appraised value. (Mendota Reso. No. 19-79; Mendota City Council Meeting Minutes, October 22, 2019.) Among other things, the PSA required VA to obtain development entitlements from the City and state, including full compliance with the California Environmental Quality Act (“CEQA”; Pub. Res. Code, §§ 21000, et seq.), at its own expense.

In 2020, VA submitted Application No. 20-23 for a development agreement with the City. The City, as the lead agency responsible for approving a project in its boundaries under CEQA, engaged with environmental consultants regarding VA’s project and eventually adopted a mitigated negative declaration and mitigation monitoring and reporting program indicating the project would not have a substantial impact on the environment if using the proposed mitigation measures. (Mendota Reso. No. 21-01.) On January 26, 2021, the City approved an amendment to the PSA to split the project between two entities, thirty-six acres of which were to be purchased by OAH. (Mendota Reso. No. 21-11.) The City also approved the DA with the Developers, which was not challenged within the ninety-day statute of limitations. (Mendota Ord. No. 21-03; Gov. Code, § 65009, subd. (c)(1).) The City’s sale of thirty-six acres to OAH closed on or about March 22, 2021.

The City recorded the DA with the Office of the Fresno County Recorder on April 16, 2021.

2. Developers’ Request for Conditional Use Permit Revisions Developers requested modifications of their site plans which were approved alongside their Conditional Use Permit (“CUP”; Exhibit 2) in Planning Commission Resolution No. 20-07 and DA in City Council Ordinance No. 21-03. As presented during the August 24, 2021, City Council meeting, the revised site plans contemplate dividing the multiple commercial cannabis license uses from within one (1) 45,000 square-foot building to eight (8) separate structures of the following sizes:
 One (1) 9,000 square-foot greenhouse building;
 Two (2) 10,000 square-foot processing/manufacturing buildings;  One (1) 10,000 square-foot building for corporate offices and employee break rooms;
 One (1) 18,000 square-foot distribution building;
 One (1) 30,000 square-foot drying/processing building;  One (1) 30,000 square-foot manufacturing/drying/processing building; and  One (1) 64,000 square-foot indoor cannabis cultivation building. 3 As with the original site plans, the revised site plans contemplate using the remainder of the site for outdoor cannabis cultivation. City staff’s discussions Developers’ representatives clarified the proposed site reorganization would not affect the total square footage allocated to outdoor cannabis cultivation on the property.

The CUP tasks the City with monitoring the operation of your facility for violations of the conditions of approval. (Exhibit 2, CUP, Operations, § 4.) As approved, the site plans should “depict locations and dimensions of existing and proposed features, utilities, and other improvements.” (Exhibit 2, CUP, General & Site, § 9.)
Development and operation of the project site shall be in substantial conformance with the Site Plan dated September 29, 2020 and the operational statement dated October 13, 2020 as incorporated herein by reference. The City Planner shall determine the extent to which incremental or minor changes to the site plan, the landscape plan, and/or the operational statement meet this requirement.
(Exhibit 2, CUP, General & Site, § 16.)
Following the approval of the CUP, the site plan was flipped on its vertical axis to accommodate site access. This modification was deemed incremental or minor by the City Planner, and no further action was required beyond filing an updated site plan.

In contrast, however, the City Planner has indicated the proposed permanent structure revisions and expansions detailed on the revised site plan discussed above are potentially perceived as resulting in substantial, increased industrial uses of the site, regardless of whether the commercial cannabis license uses are listed in the CUP and DA. Also, the existing site plans did not contemplate the expansion of Developers’ operations in multiple “phases” as presented during the August 24, 2021, City Council meeting. Accordingly, an amendment to the CUP to incorporate the revised site plans and phases of construction, supported by a CEQA addendum indicating no new environmental impacts will occur as a result of these modifications, might be required here in the future.

On September 21, 2021, the City sent a letter to Developers outlining the position above, and stating:

This letter shall serve as notice that, in accordance with Article XI, Section 7 of the California Constitution, the City will exercise its discretion not to expend its enforcement resources to prevent your development of the project site during the pendency of the CUP amendments discussed above. This enforcement discretion is being exercised on a short-term, temporary basis only in recognition of the brief duration of the uses discussed above and your urgent need to proceed to harvest the plants grown in accordance with your existing CUP and DA.
4 Please be advised that, this letter is non-binding and shall not create any obligation or liability (including any obligation to start or continue negotiations), and no course of conduct or dealing (including, but not limited to, discussions, negotiations, emails, or other correspondence or the exchange of draft documents) shall create any binding obligations on the City’s behalf other than fully executed and delivered approvals. (See Cal. Code Regs., tit. 14, §§ 15004, subd. (b)(4), and 15352.) Any confirmation by the City that it has an interest or willingness to perform as laid out herein shall not foreclose the City’s future consideration of all relevant alternatives or mitigation measures that CEQA may otherwise require to be considered, including, but not limited to, the alternative of not moving forward with amendments to the project at all. All future project approvals are conditions upon your successful compliance with all statutory and regulatory requirements associated with the successful implementation of the same (e.g. obtaining all discretionary permits, including, but not limited to: CEQA documentation, review, and approvals; final adjudication of any legal challenges based on CEQA; and all environmental, title, physical, water quality, and economic aspects of the project having been assessed and resolved sufficiently for the issuance of an amended conditional use permit).

Accordingly, before engaging in any temporary or permanent construction that conflicts with your existing site plans, you must first execute the attached Acknowledgment and Waiver. In so doing, you will acknowledge your understanding that the City will be conducting a comprehensive review of your forthcoming application for an amended CUP and, as a result, you may be required to comply with new or different conditions of approval or regulations. In addition, you will agree that, if, after conducting its review, the City adopts new or different conditions of approval or regulations, you will comply with all such regulations and will not claim that your use of the Property constitutes a legal nonconforming use. (Exhibit 3.) Developers signed an Acknowledgment and Waiver indicating any work on their project site was pending future approval of a CUP amendment, including approvals of other supporting documents and decisions related thereto. (Exhibit 4.) Throughout 2022, the Developers worked to improve their property as outlined above. ///

3. 2022 DA Compliance and Public Hearings
5 Developers’ DA requires them to make Quarterly Payments in a minimum annual amount of $600,000.00, representing the Developers’ Public Benefit Fee obligations. (Exhibit 1, DA, § 4.2, subd. (a)(2)(iii).) On February 2, 2022, $150,000.00 came due, but went unpaid. (See Exhibit 5.)
At its February 22, 2022, regular City Council meeting, the City received presentations from both Developers and Boca Del Rio Agriculture, LLC (“Boca”; Developers’ neighbors conduct similar commercial cannabis activities subject to their own development agreement with the City) regarding the “state of the local cannabis industry” and the status of their respective developments. (See Mendota City Council Meeting Minutes, February 22, 2022.) During the presentation, Developers explained they have invested $8,200,000.00 in capital for infrastructure improvements, spent $3,400,000.00 in operating expenses, paid $1,500,000.00 in state tax, and provided approximately $600,000.00 in Public Benefit Fees to the City with only $462,391 in total revenue. Developers asserted they had taken approximately $13,200,000.00 in losses as a result of their operations in the City as of February 22, 2022. To that end, Developers indicated they lost 5-7% of their crop to a wind storm in the end of 2021. Developers stated there was a 50-90% decrease in the value of wholesale cannabis due to a shortage of retail outlets and overregulation throughout California.

After letting the developers explain their positions, the City Council provided informal direction to City staff regarding the formation of an ad-hoc subcommittee to discuss potential solutions to the developers’ financial issues. On February 28, 2022, the City Council held a special meeting and established this subcommittee. (See Mendota City Council Meeting Minutes, February 28, 2022.) To date, no report has been received from the subcommittee regarding any meeting with or results of a meeting with the developers.

Also on February 28, 2022, the City sent Developers a Notice of Non-Performance Late Fee identifying $150,000.00 was past due and that a penalty of $1,500 had been imposed as a result. (See Exhibit 1, DA, § 4.5; Exhibit 5.) On March 25, 2022, the City sent Developers a Notice of Interest on Unpaid Non-Performance Late Fee indicating interest in the amount of 18% per annum would begin applying to the $1,500 late fee. (See Exhibit 5.) On April 13, 2022, the City Manager contacted Developers via email to state that the City Council expects compliance with all DA payments and conditions as soon as possible. On or about April 18, 2022, Developers sent a picture of a check for the outstanding amounts due to the City Manager. On May 20, 2022, the City Manager contacted Developers to confirm Developers’ $150,000.00 check was returned for insufficient funds. In response, Developers wired a payment of $150,000.00 to the City, which cleared, satisfying Developers’ first of four Public Benefit Fee Quarterly Payment obligations for 2022.

On May 2, 2022, $150,000.00 came due, but went unpaid. (See Exhibit 6.) On May 20, 2022, the City sent Developers a Notice of Non-Performance Late Fee identifying $150,000.00 was past due and that a penalty of $1,500 had been imposed as a result. (See Exhibit 1, DA, § 4.5; Exhibit 6.)
6 On July 1, 2022, the State of California stopped charging commercial cannabis cultivators, like Developers, the state cultivation tax. (See https://www.cdtfa.ca.gov/formspubs/L856.pdf [State announcement of tax removal].)
Government Code section 65865.1 provides development agreements “shall include provisions requiring periodic review at least every 12 months, at which time the applicant, or successor in interest thereto, shall be required to demonstrate good faith compliance with the terms of the agreement.” (Gov. Code, § 65865.1.) “If, as a result of such periodic review, the local agency finds and determines, on the basis of substantial evidence, that the applicant or successor in interest thereto has not complied in good faith with terms or conditions of the agreement, the local agency may terminate or modify the agreement.” (Gov. Code, § 65865.1.) Section 8.2 of the DA provides:

Section 8.2. Annual Review. City shall, at least every twelve (12) months during the Term of this Agreement, review the extent of good faith, substantial compliance of Developer, OAH, and/or VA and City with the terms of this Agreement. Such periodic review by City shall be limited in scope to compliance with the terms of this Agreement pursuant to California Government Code section 65865.1. City shall deposit in the mail or fax to Developer, OAH, and/or VA a copy of all staff reports and, to the extent practical, related exhibits concerning this Agreement or the Project’s performance, at least seven (7) calendar days prior to such periodic review. Developer, OAH, and/or VA shall be entitled to appeal a determination of City or City Manager to the City Council. Any appeal must be filed within ten (10) calendar days of the decision of City or the City Manager, respectively. Developer, OAH, and/or VA shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before City, the City Manager, or City Council, as applicable. (Exhibit 1, DA, § 8.2.)
On Tuesday, July 5, 2022, the City of Mendota provided Developer a Notice of Annual Review of Development Agreement as required by Government Code section 65865.1 and Section 8.2 of the DA. (Exhibit 7.)
On July 12, 2022, Developers appeared before the City Council for said annual review hearing. (See Mendota City Council Meeting Minutes, July 12, 2022.) During the annual review hearing, Developers reiterated their concerns regarding the DA’s fees and the City’s generally applicable fees related to commercial cannabis activity. The City Council requested Developers come into compliance with the DA and present alternative fee structures for consideration.

On July 21, 2022, Developers sent a letter to the City Manager outlining their work under the DA, requesting reforms to the City’s generally applicable fees related to commercial cannabis 7 activity, and requesting a fee deferral in the amount of $600,000.00 for “Q2 2022, Q3 2022, Q4 2022 and Q1 2023. (Exhibit 8.) Thereafter, Developers proposed beginning repayment of those amounts in twelve quarterly installments of $50,000.00 beginning in Q2 2023.

On August 2, 2022, $150,000.00 came due, but went unpaid. (See Exhibit 9.) On August 12, 2022, the City sent Developers a Notice of Non-Performance Late Fee identifying $150,000.00 was past due and that a penalty of $1,500 had been imposed as a result. (See Exhibit 1, DA, § 4.5; Exhibit 9.) This brought the total unpaid Public Benefit Fees due to $300,000.00.

On September 30, 2022, the City sent Developers a Request for Audit Records and Request for Cure of Default. (See Exhibit 10.) This letter requested all audit records due and reportable to the City pursuant to Article 4 of the DA. (See Exhibit 1, DA, Art. IV.) The notice also stated:

The City Council reviewed Developers’ proposal dated July 21, 2022, wherein Developers requested a year’s forbearance of the public benefit fees ($600,000/year) with quarterly repayment installments to take place over the following three years ($50,000/quarter in addition to the regularly scheduled $150,000/quarter). The City cannot grant this request as it amounts to an interest-free loan which is an impermissible gift of public funds.

Developers are currently in default of the Development Agreement for failing to pay the Public Benefit Fees due to City on May 2, 2022, in the amount of $150,000 and August 2, 2022, in the amount of $150,000, for a total sum of $300,000 currently past due to the City. (See Development Agreement, §§ 4.2, subd. (a)(2)(iii),

4.2, subd. (b), 4.3, 4.5, 4.6.) Pursuant to Section 8.1, subdivisions (a) and (e), of the Development Agreement, the City demands that Developers cure this default by paying the City all outstanding amounts due within thirty days of the date of this notice. Such deadline to cure Developers’ default expires on October 29, 2022. (Exhibit 10.) Developers failed to pay the outstanding amounts due by October 29, 2022, and were in officially in default of the DA after that date. (See Exhibit 1, DA, § 8.1.) On October 11, 2022, Developers appeared at a City Council meeting to voice their concerns and explain their continued inability to comply with the DA’s fee provisions in the near term. (See Mendota City Council Meeting Minutes, dated October 11, 2022.) Among other things, Developers cited substantial investments into their facilities, State licensing fees, and lack of profitability as reasons for failing to pay the outstanding amounts due to the City.

On November 2, 2022, $150,000.00 came due, but went unpaid. (See Exhibit 11.) On November 21, 2022, the City sent Developers a Notice of Non-Performance Late Fee identifying $150,000.00 was past due and that a penalty of $1,500 had been imposed as a result. (See 8 Exhibit 1, DA, § 4.5; Exhibit 11.) This brought the total unpaid Public Benefit Fees due to $450,000.00.

On November 18, 2022, the City sent Developers a Notice of Default and Demand for Cure. (See Exhibit 12.) This notice stated:

Developers are currently in default of the Development Agreement for failing to pay the Public Benefit Fees due to City on: May 2, 2022, in the amount of $150,000; August 2, 2022, in the amount of $150,000; and November 2, 2022, in the amount of $150,000, for a total sum of $450,000 currently past due to the City. (See Development Agreement, §§ 4.2, subd. (a)(2)(iii), 4.2, subd. (b),

4.3, 4.5, 4.6.) Pursuant to Section 8.1, subdivisions (a) and (e), of the Development Agreement, the City demands that Developers cure this default by paying the City all outstanding amounts due within thirty days of the date of this notice. Such deadline to cure Developers’ default expires on December 18, 2022.
(Exhibit 12.) Developers failed to pay the outstanding amounts due by December 18, 2022, and remain in official default under the DA. (See Exhibit 1, DA, § 8.1.) On December 13, 2022, Developers sent another letter to the City Manager requesting reforms to the City’s generally applicable fees related to commercial cannabis activity as applying to 2% of gross receipts in 2023 and beyond, and requesting repayment of the outstanding $450,000.00 due to the City as follows:

4. 2023 DA Compliance and Default Review Hearings
In light of Developers’ default status, the City issued Notices of Development Agreement Review Hearings for January 18, 2023, by mailing, posting, and newspaper publication on or 9 before January 8, 2023. (See Exhibit 1, DA, § 8.1; Exhibit 14; Gov. Code, §§ 65865, 65867, 65868, 65090, 65091, 65094.)
On January 5, 2023, Developers contacted City staff to request a formal explanation of the City’s current position regarding Developers’ letter dated December 13, 2022. (See Exhibit 13.) City staff responded, stating, “The City received your proposals to amend the development agreement. To date, the City has not accepted either proposal, so the parties continue to be bound by the development agreement’s terms.”
On or about January 11, 2023, Developers sent the City $100,000.00 via wire transfer. On January 17, 2023, the City sent Developers a letter via email acknowledging receipt of the $100,000.00 and stating it had applied the $100,000.00 payment to the $450,000.00 due to the City under the DA. (See Exhibit 15.)
On January 13, 2023, City staff met with Developers to discuss the logistics of the instant hearing.

Throughout the latter half of 2022 and early weeks of 2023, the City’s attorneys were engaged defending the City after the City was named in a lawsuit filed by one of Developers’ contractors.

The lawsuit, which is ongoing as of the date of this Staff Report, alleges the Developers failed to pay Calzona Ag Management, Inc., more than $400,000.00. (See Fresno County Superior Court, Case No. 22CECG01617.) The City has since obtained a dismissal from the lawsuit at its own legal expense. (See Exhibit 16.)
On January 18, 2023, the City canceled the City Council’s January 18, 2023, review hearing which was set to take place immediately following the Planning Commission’s hearing of the same date. (Exhibit 17.) The Planning Commission’s meeting proceeded as scheduled, wherein Developers offered testimony regarding their continued inability to pay the undisputed amounts due to the City under the DA. Developers requested the Planning Commission recommend the City consider revising all cannabis businesses’ fee structures and consider approving Developers’ requested repayment plan. (See Exhibit 13.) The Planning Commission voted to forward these recommendations to the City Council for consideration.

Following this January 18, 2023, Planning Commission hearing, the City issued a Notice of Development Agreement Review Hearing for February 2, 2023, by mailing, posting, and newspaper publication on or before January 22, 2023. (See Exhibit 18.) On January 30, 2023, Developers sent the City a letter outlining procedural objections to the processes leading to the February 2, 2023, hearing. (See Exhibit 19.) City staff responded to Developers on January 31, 2023, explaining Developers’ procedural objections are unfounded where the City’s conduct has actually given Developers additional time to pay the undisputed sums due to the City. (See Exhibit 20.)
Developers remain in default under the DA and owe the City $350,000.00 as of the date of this Staff Report.
10 ANALYSIS
The instant hearing was set for the City Council to consider the status of Developer’s default under the DA and provide direction to City staff. (See Exhibits 12, 14, and 18.)

1. Relevant DA Provisions
The DA’s terms relevant to public benefit fees, default, and termination are as follows:

Section 4.2. Public Benefit.
(a) The Parties acknowledge and agree that this Agreement confers substantial private benefits upon Developer, OAH, and VA that will place burdens upon City infrastructure, services, and neighborhoods. Accordingly, the Parties
intend to provide consideration to City to offset these impacts that is commensurate with the private benefits
conferred on Developer, OAH, and VA (the “Public
Benefit Fee”). Developer, OAH, and VA acknowledge that
the Public Benefit Fees provided for herein are greater than the annual fee provided for in Mendota Municipal Code
section 17.99.070 and, despite this fact, voluntarily agree to pay the fees contemplated herein, acknowledging that the private benefits conferred are of equal or greater
consideration to the fees, and waives any right to challenge said fees as a violation of any law. In consideration of the foregoing, Developer, OAH, and/or VA shall remit to City:
(1) A one-time Public Contribution Payment in the
amount of ONE HUNDRED AND TWENTY
THOUSAND DOLLARS ($120,000) (the
“Contribution Payment”) within thirty (30) days of
Developer, OAH, and/or VA closing escrow on that
certain Purchase and Sale Agreement and Joint
Escrow Instructions entered into by and between
Developer, OAH, VA, and City on or about October
22, 2019, and thereby, Developer, OAH, and/or VA
obtaining fee title interest to the Property. City
acknowledges that Developer’s, OAH’s, and/or
VA’s obligation to remit the Contribution Payment
to the City, or any portion thereof, is strictly
conditioned on (a) the Agreement having obtained
final City approval, (b) Developer having obtained
the Conditional Use Permit as discussed in Section

2.5 above, (c) Developer having obtained any and
all “Subsequent Entitlements, Approvals, and
Permits” as discussed in Section 2.6 above, and (d)
11 Developer having obtained any and all “Subsequent
City Approvals” as discussed in Section 3.1 above.
(2) As described in Section 17.99.070 of the Mendota
Municipal Code, an annual “Public Benefit Fee” in
the greatest amount of the following, as applicable:
(i) FIVE DOLLARS ($5.00) per square foot for
so long as the Developed Portions of the
Property are less than two hundred thousand
(200,000) square feet; or
(ii) FOUR DOLLARS ($4.00) per square foot
for so long as the Developed Portions of the
Property are between two hundred thousand
(200,000) square feet and four hundred
ninety-nine, nine hundred ninety-nine
thousand (499,999) square feet; or
(iii) For so long as the Developed Portions of
the Property are five hundred thousand
(500,000) square feet or greater, the
greater amount of the following:
(A) SIX HUNDRED THOUSAND
DOLLARS ($600,000); or
(B) Four percent (4%) of the Project’s
annual Gross Receipts, as defined in
Section 1.4.

To the extent that Section 4.2(a)(2) is applicable for the calculation of the Public Benefit Fee, said fee will be adjusted pursuant to the Consumer Price Index for the
Fresno/Clovis metropolitan area (All Urban Consumers)
published by the United Stated Department of Labor,
Bureau of Labor and Statistics (“Index”). The adjustment shall be made based on the first Index published in the year for which the Public Benefit Fee is paid and shall be
subject to a maximum increase of 2% in any given year.
(3) The annual Public Benefit Fee described in Section

4.2, above, shall be paid in quarterly installments on
the first (1st) business day of every third (3rd)
month (“Quarterly Payment”).
(b) Developer, OAH, and/or VA shall remit the Contribution Payment and the Public Benefit Fee as applicable, to City as described in subdivisions (a.1), (a.2), and (a.3) of this Section. Failure to remit the Contribution Payment and
Public Benefit Fee, as applicable, is a material breach of this Agreement and shall be sufficient grounds for
revocation of all entitlements associated with the
Project. For purposes of clarity and avoidance of doubt, the Parties agree and acknowledge that Developer’s,
12 OAH’s, and/or VA’s obligation to commence making the Public Benefit Fee payment to the City shall commence on the first day of Project operation when the first crop is planted and not prior to that date.
(Exhibit 1, DA, § 4.2, emphasis added.)
Section 4.5. Late Fee.

Developer, OAH, and VA acknowledge that, to ensure proper compliance with the terms of this Agreement and any applicable laws, City must engage in costly compliance review, inspections, and, if necessary, enforcement actions to protect the health, safety, and welfare of its residents. Liquidated damages and interest provisions are necessary to assist City in compliance review and enforcement actions. If Developer, OAH, or VA fail to make any payment when due as required by this Agreement, including the Public Benefit Amount, City may impose a “Non-Performance Late Fee.” A Non-Performance Late Fee of one percent (1%) shall be applied to all past due payments. City shall deliver to Developer, OAH, and/or VA a “Notice of Non-Performance Late Fee,” attached hereto as Exhibit C. Payment of the NonPerformance Late Fee shall be in a single installment due on or before a date fifteen (15) calendar days following delivery of the Notice of Non-Performance Late Fee. The Parties hereto
acknowledge and agree that the sums payable under this Section

4.5 shall constitute liquidated damages and not penalties and are in addition to all other rights of the City, including the right to call a default. The Parties further acknowledge that (i) the amount of loss or damages likely to be incurred is incapable or is difficult to precisely estimate, (ii) the amounts specified herein bear a reasonable relationship to, and are not plainly or grossly disproportionate to, the probable loss likely to be incurred in connection with any failure by Developer, OAH, or VA to remit payment as required by this Agreement, (iii) one of the reasons for the Parties’ agreement as to such amounts was the uncertainty and cost of litigation regarding the question of actual damages, and (iv) the Parties are sophisticated business parties and have been represented by sophisticated and able legal counsel and negotiated this Agreement at arm’s length.

Section 4.6. Interest on Unpaid Non-Performance Late Fee.

If Developer, OAH, and/or VA fail to pay the Non-Performance Late Fee after City has delivered the Notice of Non-Performance Late Fee, then, in addition to the principal amount of the Non- 13 Performance Late Fee, Developer, OAH, and/or VA shall pay City interest at the rate of eighteen percent (18%) per annum, computed on the principal amount of the Non-Performance Late Fee, from a date fifteen (15) calendar days following delivery of the Notice of Non-Performance Late Fee.
(Exhibit 1, DA, §§ 4.5, 4.6.)
Section 8.1. General Provisions.
(a) Subject only to any extensions of time by mutual consent in writing, or as otherwise provided herein, the failure or delay by any Party to perform in accordance with the terms and provisions of this Agreement shall constitute a default.

Any Party alleging a default or breach of this Agreement (“Charging Party”) shall give the other Party (“Charged Party”) not less than thirty (30) calendar days’ written notice, which shall specify the nature of the alleged default and the manner in which the default may be cured. During any such thirty (30) calendar day period, the Charged Party shall not be considered in default for purposes of
termination of this Agreement or institution of legal
proceedings for the breach of this Agreement.
(b) After expiration of the thirty (30) calendar day period, if such default has not been cured or is not in the
process of being diligently cured in the manner set forth in the notice, or if the breach cannot reasonably be
cured within thirty (30) calendar days, the Charging
Party may, at its option, institute legal proceedings
pursuant to this Agreement or give notice of its intent to terminate this Agreement pursuant to Government
Code section 65868. In the event City is the Charging
Party, City may, in its sole discretion, give notice, as required by law, to the Charged Party of its intent to
revoke or rescind any operable Conditional Use Permit
or other entitlement related to or concerning the
Project.
(c) Prior to the Charging Party giving notice to the
Charged Party of its intent to terminate, or prior to
instituting legal proceedings, the matter shall be
scheduled for consideration and review by City in the
manner set forth in Government Code sections 65865,
65867, and 65868 or the comparable provisions of the
Mendota Municipal Code within thirty (30) calendar days from the expiration of the thirty (30) day notice period. 14 (d) Following consideration of the evidence presented and said review before City, and after providing the
Charged Party an additional five (5) calendar day
period to cure, the Charging Party may institute legal
proceedings against the Charged Party or may give
written notice of termination of this Agreement to the
Charged Party.
(e) Evidence of default may arise in the course of a regularly scheduled periodic review of this Agreement pursuant to Government Code section 65865.1, as set forth in Section

8.2. If any Party determines that another Party is in default following the completion of the normally scheduled
periodic review, without reference to the procedures
specified in Section 8.1(c), said Party may give written notice of termination of this Agreement, specifying in the notice the alleged nature of the default and potential actions to cure said default where appropriate. If the alleged default is not cured in thirty (30) calendar days or within such longer period specified in the notice or the defaulting Party is not diligently pursuing a cure or if the breach cannot reasonably be cured within the period or the defaulting party waives its right to cure such alleged default, this Agreement may be terminated by the non-defaulting Party by giving written notice.
(f) In the event Developer, OAH, and/or VA are in default under the terms and conditions of this Agreement, no
permit application shall be accepted by City nor will
any permit be issued to Developer, OAH, and/or VA
until the default is cured, or the Agreement is
terminated.
(g) In the event that a person or entity other than the Developer, OAH, and/or VA are in default, Developer,
OAH, and/or VA shall use commercially reasonable efforts to bring the person or entity in default into compliance.

The City shall provide the Developer, OAH, and/or VA
with notice and opportunity to cure as provided for in
paragraph (a) through (e) above, except that the time
periods in paragraphs (a), (b), (c), and (e) shall be ninety (90) days.
(Exhibit 1, DA, § 8.1, emphasis added.)
Section 8.5. Cumulative Remedies of Parties.

In addition to any other rights or remedies, City, Developer, OAH, and/or VA may institute legal or equitable proceedings to cure, 15 correct, or remedy any default, enforce any covenant, or enjoin any threatened or attempted violation of the provisions of this Agreement, so long as any such action conforms to Section 8.1(c) of this Agreement.
(Exhibit 1, DA, § 8.5.)

2. Potential Hearing Results
In light of the provisions reproduced in the previous section, the City Council must consider Developers’ payment default before any other entitlement-based decisions may be issued. (Exhibit 1, DA, § 8.1, subd. (f).)
In the event the City Council decides it wants to pursue a compromise with Developers, it may indicate so by directing City staff to prepare an amendment to the DA and schedule public hearings required to effect the same. Alternatively, the City Council could direct City staff to meet with all similarly situated commercial cannabis developers to discuss a City-wide revision of commercial cannabis fees and/or schedule public hearings required to effect the same.

In the event the City Council decides it wants to pursue its legal remedies against Developers based on their default, it may indicate so by directing City staff to pursue termination of the DA, including, but not limited to, holding public hearings to terminate the DA and/or filing suit to recover unpaid fees. If the City Council pursues this path, Developers are entitled to an additional five calendar days from the instant review hearing to cure the default before the City may proceed with issuing a notice of termination. (Exhibit 1, DA, § 8.1, subd. (c).) In that scenario, Developers may avoid termination of the DA by paying the City all outstanding monies due on or before February 7, 2023.

FISCAL IMPACT
Developers currently owe the City $350,000.00 under the applicable provisions of the DA. The two review hearings required public notices that cost the City $852.96 and $648.24, respectively, plus legal fees yet to be determined. (See Exhibits 14 and 18.) The City also incurred legal fees in an amount yet to be determined as a result of being named in a lawsuit by one of Developers’ contractors. (See Exhibit 16.)
The fiscal impact of the many potential City actions related to Developers’ DA and generally applicable revisions to the City’s cannabis regulations are not quantifiable in the abstract.

RECOMMENDATIONS
Staff recommends the City Council discuss Developers’ performance under the DA, consider the recommendations of the Planning Commission, and provide direction to City staff regarding:

1. Outstanding monies due to the City under the DA;

2. Next steps regarding City enforcement of Developers’ DA; and/or

3. City fees charged to cannabis businesses, either generally or as to Developers specifically.
16 Attachments:

1. Development Agreement

2. Conditional Use Permit

3. City Letter regarding Request for Conditional Use Permit Modifications

4. Acknowledgment and Waiver from Odyssey Agricultural Holdings, LLC

5. Invoice due February 2, 2022; Notice of Non-Performance Late Fee dated February 28, 2022; Notice of Interest on Unpaid Non-Performance Late Fee dated March 25, 2022

6. Invoice due May 2, 2022; Notice of Non-Performance Late Fee dated May 20, 2022

7. Staff Report and Notice of Development Agreement Annual Review Hearing regarding July 12, 2022, Hearing

8. Developers’ Letter dated July 21, 2022

9. Invoice due August 2, 2022; Notice of Non-Performance Late Fee dated August 12, 2022

10. Request for Audit Records; Request for Cure of Default dated September 30, 2022.

11. Invoice due November 2, 2022; Notice of Non-Performance Late Fee dated November 21, 2022

12. Notice of Default and Demand for Cure dated November 18, 2022

13. Developers’ Letter dated December 13, 2022

14. Notice of Development Agreement Review Hearings on January 18, 2023

15. City Letter Acknowledging Payment dated January 17, 2023

16. Notice of Dismissal of City of Mendota from First Amended Complaint filed by Calzona Ag Management, Inc.

17. Notice of Cancellation of January 18, 2023, City Council Special Meeting

18. Notice of Development Agreement Review Hearing on February 2, 2023

19. Developers’ January 30, 2023, Letter to City Staff

20. City Staff’s January 31, 2023, Letter to Developers EXHIBIT 1

EXHIBIT 2
EXHBIT “A” TO RESOLUTION NO. PC 20-07
SITE PLAN FOR APPLICATION NO. 20-23
3 4
EXHBIT “B” TO RESOLUTION NO. PC 20-07

CONDITIONS OF APPROVAL
APPLICATION NO. 20-23; PORTION OF APN 013-030-68ST

VALLEY AGRICULTURAL HOLDINGS, LLC
As may be used herein, the words “applicant”, “owner,” “operator”, and “developer” shall be interchangeable, excepting when the word is indicated in bold italics. In that event, the condition of approval is specific to the entity named.

Operations

1. The operator shall acquire and maintain any licenses, approvals, waivers, or similar that may be issued by the State of California requisite to cannabis operations and shall comply with all provisions of any State regulatory agency that may have oversight over said operations.

2. The operator shall acquire and maintain all City of Mendota licenses pursuant to Mendota Municipal Code Chapter 8.37, including payment of applicable fees.

3. The contractor and any subcontractor(s) shall acquire a City of Mendota business license, including payment of any applicable business license fees, prior to commencing construction.

4. The City will monitor the operation for violations of conditions of approval. Penalty for violation may include but is not limited to warnings, fines, and/or permit revocation.

General & Site

5. Approval of this conditional use permit is contingent upon of additional processes contained within Application No. 20-23, to wit:
a. City Council approval of a proposed amendment to the General Plan Land Use designation of the site from Public/Quasi-Public Facilities to Light Industrial.
b. City Council approval of a proposed amendment to the zoning of the site from P-F/CO (Public Facilities with the Commercial Cannabis Overlay District) to M-1/CO (Light Manufacturing with the Commercial Cannabis Overlay District).
c. Recordation of a development agreement pursuant to MMC Section

8.37.050(1).
d. Conveyance of the Project Site from the City of Mendota to the Applicant as detailed in the purchase and sale agreement approved October 22, 2019. 5 6. The conditional use permit detailed within Application No. 20-23 shall expire two (2) years following the date of its approval unless, prior to expiration, a building permit for the requested site modifications is issued by the City of Mendota and construction is commenced and being diligently pursued. At the discretion of the City Manager, and upon valid request not less than thirty (30) days prior to its expiration, this conditional use permit may be extended for a period or periods not to exceed two (2) additional years in the aggregate.

7. Development shall comply with all applicable provisions of the City of Mendota General Plan and the Mendota Municipal Code (MMC), including but not limited to: potable water protection regulations (Chapter 13.30), business licensing requirements (Title 5), and Building Code Standards (Title 15); the Subdivision Ordinance (Title 16); the regulations of the applicable zone district(s) and other relevant portions of the Zoning Ordinance (Title 17); and the City of Mendota Standard Specifications and Standard Drawings, unless exceptions therefrom are approved by the City Engineer.

8. Use of the site shall conform to all applicable requirements for the M-1 Light Manufacturing Zone District as modified by the provisions of the CO Commercial Cannabis Overlay District.

9. The site plan shall be revised to reflect the comments of the City Engineer and City Planner provided October 31, 2020 and to depict locations and dimensions of existing and proposed features, utilities, and other improvements.

10. Construction drawings (building and improvement plans; site, grading, irrigation, and landscaping, as applicable) shall be submitted to the Planning and Building Department and City Engineer for review and approval. A building permit shall be acquired prior to start of any construction activities.

11. No new landscaping is required. Any existing landscaping damaged or destroyed as a result of construction shall be repaired or replaced in-kind by the applicant at the discretion of the City Planner.

12. The applicant shall provide a lighting plan for the review and approval of the City Engineer. All exterior lights shall be shielded or otherwise oriented to prevent disturbance to surrounding or neighboring properties or traffic on abutting rightsof-way.

13. The applicant shall consult with and shall comply with the requirements of the San Joaquin Valley Air Pollution Control District, including but not limited to compliance with Regulation VIII (Fugitive PM10 Prohibitions) and Rule 9510 (Indirect Source Review).

14. The applicant shall consult with and shall comply with the requirements of the Fresno County Fire Protection District/CAL FIRE, including but not limited to requirements related to sprinklers, fire hydrants, and fire access. 6 15. The developer shall comply with Health and Safety Code Section 7050.5 and Public Resources Code Sections 5097.98, and 21083.2 and related statutes regarding regulation of cultural and historical resources that may be discovered on the site.

16. Development and operation of the project site shall be in substantial conformance with the Site Plan dated September 29, 2020 and the operational statement dated October 13, 2020 as incorporated herein by reference. The City Planner shall determine the extent to which incremental or minor changes to the site plan, the landscape plan, and/or the operational statement meet this requirement.

17. Following any changes made to the site plan as a result of these conditions or other commentary, correspondence, or official requirement, the applicant shall submit a copy of the final site plan as revised to the Planning Department for inclusion in the project file. Changes made pursuant to these conditions shall be considered minor or incremental.

18. Prior to issuance of a certificate of occupancy, all relevant conditions of approval shall be verified as complete by the Planning Department, and any and all outstanding fees shall have been paid. Any discrepancy or difference in interpretation of the conditions between the subdivider and the Planning Department shall be subject to review and determination by the Planning Commission.

19. All above-ground features including but not limited to lighting, fire hydrants, postal boxes, electrical and related boxes, and backflow devices shall be installed outside of the public-right-of-way. All utilities shall be installed underground.

20. Hours of construction shall be limited to 6:00 AM to 7:00 PM, Monday through Saturday.

21. Construction debris shall be contained within an on-site trash bin and the project site shall be watered for dust control during construction.

22. Any non-structural fencing shall be subject to approval by the Community Development Department consistent with Standard Drawing Nos. M-3 through M7.

23. The applicant shall comply with all relevant components of the California Building Code and associated trade codes.

24. All signage must be approved pursuant to the standards and guidelines of the Mendota Municipal Code prior to installation.

25. Development shall at all times respect existing or new easements by, for, and between all private and public entities, including but not limited to the City of Mendota.
7 26. It shall be the responsibility of the subdivider to grant/secure easements as necessary for the installation and maintenance of private utilities, including but not limited to electricity, gas, telephone, and cable television.

27. Connection points for water and wastewater shall be determined by the City Engineer. Connections shall be made in accordance with City of Mendota standards and shall be coordinated with the Director of Public Utilities.

28. The applicant shall comply with the City of Mendota Cross-Connection Control Regulations contained within MMC Section 13.24.

29. The applicant shall coordinate with the City Engineer and Mid Valley Disposal to establish necessary solid waste procedures and facilities.

Water System Improvements

30. The project is subject to the provisions of the Conditional Will-Serve Letter issued by the City of Mendota on September 8, 2020.

31. The site plan shall be revised to illustrate existing and proposed water facilities.

32. The project shall make connection(s) to the City water system as determined by the City Engineer.

33. The improvement plans shall include the location of existing water mains, valves, and valve boxes located in adjacent streets that the proposed water system is to be connected to.

34. All connections to the existing water mains shall include a temporary reduced pressure double check backflow preventer (see Standard Drawing No. W-8) and follow the connection procedures outlined in that standard, or exhibit compliance with AWWA Standard C651-05.

35. Fire hydrants shall be spaced not to exceed 300 feet on center and shall be individually valved between the hydrant and the water system.

36. Fire flow conditions are subject to review and approval by the Fresno County Fire Protection District/CAL FIRE.

37. A meter, meter box, and service shall be installed to each unit. Applicant shall obtain meter type, size and service requirements from the Public Utilities Department and/or the City Engineer. The construction of the water service with meter shall be installed per Standard Drawing No. W-1 and Standard Specifications.

38. All water meters shall be Badger Model E Series with Nicor Connector (E-Series Ultra Plus for sizes 3/4” and 5/8”) with Badger Model Orion CMNA-N Cellular Endpoint with Nicor Connector fully loaded with through lid mounting kit

39. No water services are allowed within drive approaches. 8 =

40. The project shall comply with City of Mendota's Automated Water Meter Reading System
Sewer System Improvements

41. The site plan shall be revised to illustrate existing and proposed sewer facilities.

42. The project shall connect make connection(s) to the City wastewater system as determined by the City Engineer.

43. No sewer laterals are allowed within driveways. All laterals and cleanouts shall be installed per Standard Drawings No. S-7A and M-1.

Storm Drain Improvements

44. To ensure proper spacing between underground facilities and allow for unimpeded placement of brass cap monuments in the road surfaces at the intersections of the streets, the location of sewer mains shall conform to Standard Drawing No. M-1.

45. Storm drainage facilities shall be constructed per City of Mendota Standard Drawings and Specifications.

46. If applicable, valley gutter construction shall be consistent with City of Mendota Standard Drawing No. ST-14 unless an alternate design is approved by the City Engineer.

Streets

47. The applicant shall provide for acquisition of any and all necessary easements to accommodate access to the site from the current northerly terminus of Belmont Avenue.

48. Any work within the City of Mendota right-of-way shall require an encroachment permit.

49. Any work within Caltrans right-of-way shall require an encroachment permit.

50. All concrete work, including curbs, gutters, valley gutters, sidewalks, drive approaches, curb ramps, and other concrete features shall contain a minimum of six (6) sacks of cementous material per cubic yard unless otherwise approved by the City Engineer.

51. Any broken, damaged, or substandard sidewalk, curb, gutter, or pavement along the project frontages, or any of the above damaged during construction wherever located, shall be removed and replaced as directed by the City Engineer consistent with City Standard Drawings.

52. Drive approaches, as necessary, shall be installed consistent with Standard Drawing No. ST-15.
9 Fees

53. This project is also subject to a development agreement. Fees discussed in that agreement are not included herein and are in addition to this section.

54. The applicant shall be responsible for payment of any and all outstanding planning, building, plan check, engineering, and attorney fees prior to issuance of a certificate of occupancy. This shall include all fees incurred by the City’s consultants or contract staff resulting from preliminary review, correspondence, review of formal application materials, peer review of documents, processing of application materials, attendance at and/or participation in meetings and conference calls, or other services rendered in relation to the project.

55. Concurrently with submittal of improvement and/or building plans, the applicant shall deposit with the City of Mendota funds in an amount estimated by the City Engineer and/or Building Official, respectively, to be sufficient to offset costs to the City for review of such plans. In the event that such funds are not sufficient to cover costs to the City, the City Engineer and/or Building Official, as appropriate, shall contact the applicant to request additional funds, which the applicant shall then deposit with the City.

56. The applicant shall pay to the City of Mendota development impact fees consistent with the City’s current Development Impact Fee Schedule (January 2007). Fees are due in full prior to issuance of a certificate of occupancy.

57. The applicant shall be responsible for payment of fees to the Mendota Unified School District and shall provide the City with evidence of payment, or evidence of the District’s determination that no payment is required, prior to issuance of a certificate of occupancy.

58. The applicant shall be responsible for payment of Fresno County Regional Transportation Mitigation Fees and Fresno County Public Facilities Impact Fees and shall provide the City with evidence of payment, or evidence of the County’s determination that no payment is required, prior to issuance of a certificate of occupancy.

EXHIBIT 3

CITYOF MENDOTA
ocCantaloupe Center Of The World"
VIA II.S. MAIL & EMAIL:
&ti clraE I Jen se n @ o Sr.s s qy:lg$tg}3lg. c A ffil
Odyssey Agricultural Development, LLC
2222 E Olympic Blvd
Los Angeles, CA 90021
Attn: Legal Department
Re: Conditional Use Permit Revisions and Delayed Enforcement The City of Mendota ("City") has received your requests to modiff the site plans that were attached to and approved alongside your Conditional Use Permit ("CUP") in Planning Commission Resolution No. 20-07 and Development Agreement ("DA") in City Council Ordinance No. 21-03.

As presented during the August 24,2021, City Council meeting, the revised site plans contemplate dividing the multiple commercial cannabis license uses from within one (1) 45,000 square-foot building to eight (8) separate structures of the following sizes:

One (l) 9,000 square-foot greenhouse building;
Two (2) 1 0, 000 square-foot processing/manufacturing buildings ; One (1) 10,000 square-foot building for corporate offices and employee break rooms;
One (l) 18,000 square-foot distribution building;
One (1) 30,000 square-foot drying/processing building;
One ( I ) 3 0,000 square-foot manufacturing/drying/processing building; and One (1) 64,000 square-foot indoor cannabis cultivation building.

As with the original site plans, the revised site plans contemplate using the remainder of the site for outdoor cannabis cultivation. Discussions with your representatives have clarified the proposed site reorganization will not affect the total square footage allocated to outdoor cannabis cultivation on the property.

The CUP tasks the City with monitoring the operation of your facility for violations of the conditions of approval. (CUP, Operations, $ 4.) As approved, the site plans should "depict locations and dimensions of existing and proposed features, utilities, and other improvements." (CUP, General & Site, $ 9.)
Development and operation of the project site shall be in substantial conformance with the Site Plan dated September 29,2020 and the operational statement dated October 13,2020 as incorporated herein by reference. The City Planner shall determine the extent to 643 Quince Street Mendota, Galilornia 93640
Telephone: (559) 655-3291 Fresno Line: (559) 266-6456 Fax: (559) 655-4064 TDDfTTY 866-735-2919 (English) TDD/ITY 866-833-4703 (Spanish) ci. mendota.ca.us
The Gity ol Mendota is an equal opportunity prouider and employer which incremental or minor changes to the site plan, the landscape plan, and/or the operational statement meet this requirement.
(CUP, General &, Site, $ L6, emphasis added.)
Following the approval of the CUP, the site plan was flipped on its vertical axis to accommodate site access. This modification was deemed incremental or minor by the City Planner, and no further action was required beyond filing an updated site plan.

In contrast, however, the City Planner has indicated the proposed permanent structure revisions and expansions detailed on the revised site plan discussed above are perceived to result in substantial, increased industrial uses of the site, regardless of whether the commercial cannabis license uses are listed in the CUP and DA. AIso, the existing site plans do not contemplate the expansion of your operations in multiple "phases" as presented during the August 24,2021, City Council meeting. Accordingly, an amendment to the CUP to incorporate the revised site plans and phases of construction must be obtained here. This CUP amendment should be supported by a California Environmental Quality Act ("CEQA") addendum indicating no new environmental impacts will occur as a result of these modifications.

Please be advised that, this letter is non-binding and shall not create any obligation or liability (including any obligation to start or continue negotiations), and no course of conduct or dealing (including, but not limited to, discussions, negotiations, emails, or other correspondence or the exchange of draft documents) shall create any binding obligations on the Crty's behalf other than fully executed and delivered approvals. (See Cal. Code Regs., tit.14, $$ 15004, subd. (b)(4), and 15352.) Any confirmation by the City that it has an interest or willingness to perform as laid out herein shall not foreclose the City's future consideration of all relevant altematives or mitigation measures that CEQA may otherwise require to be considered, including, but not limited to, the alternative of not moving forward with amendments to the project at all. All future project approvals are conditions upon your successful compliance with all statutory and regulatory requirements associated with the successful implementation of the same (e.g. obtaining all discretionary permits, including, but not limited to: CEQA documentation, review, and approvals; final adjudication of any legal challenges based on CEQA; and all environmental, title, physical, water quality, and economic aspects of the project having been assessed and resolved sufficiently for the issuance of an amended conditional use permit).

Please do not hesitate to contact me if you need to discuss the matters outlined above further
Very truly yours,
Cristian Gonzalez
City Manager for the City of Mendota
3 EXHIBIT 4

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EXHIBIT 6

EXHIBIT 7
1 AGENDA ITEM – STAFF REPORT
TO: HONORABLE MAYOR AND COUNCILMEMBERS
FROM: CRISTIAN GONZALEZ, CITY MANAGER
SUBJECT: HOLDING THE DEVELOPMENT AGREEMENT ANNUAL REVIEW HEARING FOR

ODYSSEY AGRICULTURAL DEVELOPMENT LLC
DATE: JULY 12, 2022
ISSUE
Shall the City Council hold the Development Agreement Annual Review Hearing for Odyssey Agricultural Development LLC?

BACKGROUND
Government Code section 65865.1 provides development agreements “shall include provisions requiring periodic review at least every 12 months, at which time the applicant, or successor in interest thereto, shall be required to demonstrate good faith compliance with the terms of the agreement.” (Gov. Code, § 65865.1.) “If, as a result of such periodic review, the local agency finds and determines, on the basis of substantial evidence, that the applicant or successor in interest thereto has not complied in good faith with terms or conditions of the agreement, the local agency may terminate or modify the agreement.” (Gov. Code, § 65865.1.) Section 8.2 of the Development Agreement with Odyssey Agricultural Development LLC (“Developer”) provides:

Any appeal must be filed within ten (10) calendar days of the decision of City or the City Manager, respectively. Developer, OAH, and/or VA shall be permitted an opportunity to be heard orally or in writing regarding its performance under this Agreement before City, the City Manager, or City Council, as applicable.

On Tuesday, July 5, 2022, the City of Mendota provided Developer a Notice of Annual Review of Development Agreement (the “Notice). The Notice included the Development Agreement and all Resolutions and Ordinances related to its approval. The Notice also informed Developer 2 that it would be permitted an opportunity to be heard orally or in writing regarding its performance under the Development Agreement at this hearing.

RECOMMENDATION
Staff recommends that the City Council discuss Odyssey Agricultural Development LLC’s performance under the development agreement and provides direction to staff.

Attachment(s):

1. Notice of Annual Review Hearing

2. Development Agreement for Odyssey Agricultural Development LLC

3. Electronic Link to: Documents related to Development Agreement’s Approval CITYOF MENDOTI\
'oCanttaloupe Center Of The World"

NOTICE OT'DEVELOPMENT AGREEMENT ANNUAL REVIEW HEARING
Government Code S 65865.1
VIA U.S. MAIL:

Odyssey Agricultural Development LLC
2222 E Olympic Boulevard
Los Angeles, CA 9002I
Attn: Legal Department
Weinberg Gonser LLP
10866 Wilshire Boulevard, Suite 1650
Los Angeles, CA 90024
Attn: Russell Greenman, Esq.

Annual Review of Development Agreement, Mendota California Odyssev Asricultural Development. LLC
To Whom It May Concern:

On Tuesday, July 12,2022, at 6:00 p.m., the City of Mendota shall host an annual review hearing to determine the extent of your good faith, substantial compliance with the Development Agreement dated March 26, 2021, between you and the City of Mendota (the "Hearing"). This annual review hearing is scheduled pursuant to Government Code section 65865.1 and Section 8.2 of the Development Agreement. During the Hearing, you shall be permitted an opportunity to be heard orally or in writing regarding your perfornance under the Development Agreement.

Pursuant to Section 8.2 of the Development Agreement, the City of Mendota has enclosed copies of all staff reports and agenda items related to your performance.

Please contact Cristian Gorralez, City Manager for the City of Mendota, by phone at (559) 655-3291or via email at [email protected] if you have any concerns.

Very truly
Celeste Cabrera-G arcia, C
Re:
643 0uince Street Mendota, Calilornia 93640
Telephone: (559) 655-3291 Fresno Line: (559) 266-6456 Fax: (559) 655-4064 TDD/[TY 866-735-2919 (English) TDDffTY 866-833-4703 (Spanish) ci.mendota.Ga.us
The City ol Mendota is an equal opportunity prouider and employel EXHIBIT 8

ODYSSEY AGRICULTURAL DEVELOPMENT LLC
418 W. BELMONT AVE. | MENDOTA, CA 93640
July 21, 2022
Sent via Email to:

Cristian Gonzalez
City Manager
Re: Odyssey Agricultural Development LLC Development Agreement Dear City Manager Gonzalez,
I am the President of Odyssey Agricultural Development LLC (“Odyssey”) and write in follow up to my presentation to the Mendota City Council on July 12, 2022 (“July 12 Meeting”) as part of the annual review of OAD’s Development Agreement (“DA”) for the property located at 418 W Belmont Ave (the “Property”).

Odyssey greatly appreciates the opportunity granted to it by the City of Mendota to develop one of the largest cannabis farms in the state. Odyssey further appreciates the ongoing support provided by the City Manager and his staff and the openness of the City Council to consider ways to improve the City’s cannabis licensing program. The purpose of this letter is to present proposals for ensuring that Odyssey and Mendota can achieve the shared goals of the DA.

Development Agreement Background
Odyssey and the City entered into the DA in March 2021 with the shared goal of turning the Property into one of the largest cannabis cultivation complexes in the state, which would employ dozens of Mendota residents and support local businesses and vendors. The DA calls for Odyssey to pay to the City a quarterly public benefit fee (“Public Benefit Fee”) of $150,000 or 4% of gross receipts, whichever is greater. Put another way, the City is guaranteed a minimum of $150,000 every quarter, but will be owed more if Odyssey’s annual gross receipts exceed $15 million. From the start, Odyssey has intended to fully realize the potential of the Property as soon as possible to generate well over $15 million in gross receipts and thereby significantly increase the size of Public Benefit Fee.

After signing the DA, Odyssey immediately got to work developing the Property, and between June 2021 and October 2021, Odyssey took a vacant 36-acre parcel and turned it into one of the largest outdoor farms in the state with 11 acres of planted fields and over 35,000 square feet of structures. After dealing with intense windstorms and rains and a myriad of other challenges, Odyssey harvested approximately 10,000 pounds of cannabis at the Property.

Unfortunately, the harvest of the first crop coincided with the beginning of the worst downturn in the cannabis market ever experienced in the California. Whereas wholesale prices for premium outdoor flower were around $800-1000/pound at the time Odyssey planted the 11 acres in July, by October wholesale prices had dropped below $200/pound, which made it impossible for Odyssey to even recoup its investment in the cost of harvest, let alone turn a 2 profit. In fact, to date, Odyssey has generated less than $800,000 in revenue from the first harvest despite investing millions of dollars into the Property. To put that number in context, Odyssey has paid $575,000 in Public Benefit Fees to date, which constitutes approximately 70% of the revenues generated at the Property thus far.

Since October 2021, the market downturn has only worsened, and it is now clear that the California cannabis industry is in for a prolonged price depression. Thousands of cultivators have ceased operations because there is simply no way for them to make a profit or break even under current market conditions. Many predict that only a small percentage of these cultivators will ever plant again.

Despite the incredibly challenging market conditions, Odyssey has stayed true to its word to turn the Property into one of the largest year-round cannabis cultivation farms in California. In February 2022, Odyssey began construction of 48 greenhouses on the Property that, when completed, will allow Odyssey to generate over $15 million per year in gross receipts and employ more than 100 people on the Property full time. This will add to Odyssey’s already substantial economic impact in Mendota, which is currently at least $100,000 per month when accounting for money spent at local businesses and wages paid to two dozen Mendota and Firebaugh residents employed full time at the Property.

Realizing the Property’s full economic impact, however, will require Odyssey to invest millions more in capital and operational expenditures. Under current market conditions, the cashflows generated by the Property are nowhere near sufficient to cover those capital requirements, and Odyssey, as a self-funded company, cannot call on the support of investors to expedite completion of its developments. While Odyssey will be able to eventually finish developing the Property as promised, it will be significantly delayed in allocating the capital necessary to do so if it must continue to pay Public Benefits Fees over the next year. Put simply, Odyssey faces a choice of paying the Public Benefit Fees or finishing the development as soon as possible. It cannot do both. The delay in completing the development will hurt not just Odyssey, but also the City and its residents who will be left to wait for the far greater Public Benefit Fees and employment that will be realized when the Property is fully developed.

Fee Deferral Request
As discussed at the July 12 Meeting, Odyssey believes it is in the shared interest of Odyssey and the City for the City to grant Odyssey a deferral of payment of the Public Benefits Fees to allow Odyssey to finish development of the Property as soon as possible. Odyssey therefore respectfully requests that the City grant Odyssey a deferral of payment of Public Benefit Fees totaling $600,000 for Q2 2022, Q3 2022, Q4 2022 and Q1 2023 (“Deferred Fees”).

Thereafter, Odyssey would pay the Deferred Fees in twelve (12) quarterly installments of $50,000 beginning in Q2 2023. By way of example, in Q2 2023, Odyssey would pay the first $50,000 installment of the Deferral Fee plus the Public Benefit Fee due in that quarter.

Odyssey has demonstrated its commitment to a long-term partnership with the City of Mendota despite facing the worst market conditions ever seen in the cannabis industry. That Odyssey continues to invest millions of dollars to operate and develop the Property (and employ 3 dozens of Mendota residents) when thousands of its competitors have shut down their operations is proof alone of its commitment to the City. Odyssey is not seeking to evade its commitment to the residents of Mendota; rather it is seeking a path forward through the most challenging of economic circumstances to ensure that it can fully meet it promises under the DA for the long term. Odyssey also certainly understands that a deferral of the Public Benefits Fees will have impacts on the City’s current fiscal year budget, however Odyssey, in good faith, fully believes that the City’s long-term fiscal position will be improved by helping Odyssey expedite completion of the development of the Property so that its full economic potential can be realized.

Tax Reform Discussion
Odyssey appreciated the recognition by members of the City Council at the July 12 Meeting of the need to discuss long-term reforms to the City’s Public Benefit Fee/tax structure for all licensed cannabis businesses in Mendota. The cannabis industry is evolving rapidly – for good and bad – and the lofty projections made by businesses and policymakers alike to justify the enormous taxes on cannabis activity have been brought down to earth by the stark reality of current market conditions. Across the state, policy makers and stakeholders are continuously discussing the proposals to lower taxes, and just last month the State of California eliminated the state cultivation tax. While these initial reforms are welcomed, far more is needed to address the layers of state and local taxes that make cannabis the most taxed industry in the state by a large margin.

Many jurisdictions are now realizing that it is not a given that the cannabis businesses they have licensed will be able to survive and prosper in the long term under existing tax structures. Further, as the industry rapidly consolidates, the largest, most successful operators are increasingly picking jurisdictions to invest in based on the local tax structures. This approach is increasingly becoming a necessity because in the hyper-competitive cannabis industry even a small edge on taxes can give a business a major advantage over its competitors.

Odyssey would welcome the opportunity, alongside its fellow Mendota cannabis businesses, to present to the City Council for its consideration a variety of tax policy proposals to set a foundation for the long-term success of the cannabis industry in Mendota.

I am available at your convenience to discuss these matters further. Thank you.

Sincerely,
/s/Alexander Freedman
President, Odyssey Agricultural Development LLC
cc: Hunter C. Castro, Esq. ([email protected])
John Kinsey, Esq. ([email protected])
EXHIBIT 9

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EXHIBIT 12

EXHIBIT 13

ODYSSEY AGRICULTURAL DEVELOPMENT LLC
418 W. BELMONT AVE. | MENDOTA, CA 93640
December 13, 2022
Sent via Email to:

Cristian Gonzalez
City Manager
Re: Odyssey Agricultural Development LLC Development Agreement with the City of Mendota (“City”)
Dear City Manager Gonzalez,
I write on behalf of Odyssey Agricultural Development LLC (“Odyssey”) in follow up to Odyssey’s written fee deferral request dated July 21, 2022, and its presentations to the Mendota City Council concerning the same on July 12, 2022, and October 12, 2022.

Despite not having come close to a profit in 18 months of operation at its farm in the City, Odyssey has already paid the City almost $600,000 in public benefit fees and has injected millions of dollars into the local economy. Now, at the worst time in the history of the cannabis industry in California, Odyssey is investing every available dollar to finish development of the farm and make it economically sustainable. This investment will create a foundation for Odyssey to contribute millions of dollars in public benefit fees in years to come. Odyssey greatly appreciates the support of the City thus far and respectfully asks for the City’s further support to help realize the full economic potential of the farm.

As of today, the unpaid public benefit fees under Odyssey’s Development Agreement total $450,000. On July 21, 2022, Odyssey requested a deferral of these fees plus the Q1 2023 fee in the form of a payment plan of $50,000 per quarter for 12 quarters. Per the default notice dated September 29, 2022, the City rejected this request on the grounds it would constitute a gift of public funds. The City did not provide further detail as to any other objection to the payment plan request. Nonetheless, Odyssey proposes a revised payment schedule for the $450,000 in fees currently outstanding:

Payment Date Payment Amount
January 2023 $100,000
April 1, 2023 $35,000
July 1, 2023 $35,000
October 1, 2023 $35,000
January 1, 2024 $35,000
April 1, 2024 $35,000
July 1, 2024 $35,000
October 1, 2024 $35,000
January 1, 2025 $35,000
April 1, 2025 $35,000
July 1, 2025 $35,000
2 In addition to the fee deferral proposal, Odyssey wishes to continue the discussion with the City regarding a general reform of the cannabis fee/tax structure in the City. As shared with City officials on numerous occasions, at the end of 2021 the cannabis industry entered a severe downturn that has only worsened over the course of 2022. While there was initial hope that the industry would quickly recover, hard truths about the industry have become apparent, namely that the industry is heading rapidly towards commoditization where profits margins are a small fraction of what they were in the early days of legalization.

Policy makers across the state have responded to the economic reality of the cannabis industry with significant tax reforms, including the State of California’s elimination of the state cultivation tax entirely. Many cities and counties have followed suit and adopted significant cannabis tax reform in 2022. Below is a non-exhaustive survey of recent tax reductions adopted in local jurisdictions that are major centers of outdoor cultivation.

Jurisdiction Legislative Action
Monterey County -Reduced outdoor cultivation tax from $2.50/sq ft to $1/sq ft
-Directed County Treasurer to offer cultivators
payment plans for taxes owed through 2023
Sonoma County Reduced cultivation tax by 45% through at least June 30, 2023
-Postponed tax payment due dates and suspended
late fees
Calaveras County -60% reduction in square footage canopy tax rate for cultivators (NOTE: This proposal was
considered for adoption on 12/13/22)
Humboldt -Suspended 85% of cultivation tax for 2021
-Suspended 100% of cultivation tax for 2022 and
2023
Lake County -Reduced cultivation tax by 50%
-Postponed tax payment due dates and waived
late fees
Nevada County -Reduced cultivation tax by 50%
These reforms acknowledge several important facts about cannabis tax policy. First, the original tax structures conceived in the first few years after passage of Proposition 64 have been shown to be a simply incompatible with the development of healthy industry and therefore require long-term reform. Second, the extensive fees and taxes cannabis businesses originally agreed to pay, especially those not pegged entirely to a percentage of gross receipts, have become so untenable in these current market conditions that deferrals and postponements of existing obligations are necessary to keep local cannabis businesses afloat. The fact that so many jurisdictions referenced above have decided to suspend and/or postpone collection of taxes says it all. It also demonstrates that the City of Mendota could take legislative action to defer its collection of fees without running afoul of gift of public funds regulations. 3 Considering these facts, Odyssey proposes that beginning in 2023, all public benefit fees for cannabis businesses should be calculated based on 2% of a business’ quarterly gross receipts.

A percent-based fee ensures that the City and cannabis businesses are aligned both in good times and bad. When the cannabis business does well, the City is guaranteed its proportional share that will fund numerous public benefits. When the cannabis business does not do well, the business is not saddled with disproportionate fees that only make it more difficult for the business to recover and generate greater fee revenue in the future. Case in point: despite generating little over $1 million in revenue in 18 months of operation, Odyssey has already incurred $1 million in public benefit fee obligations. No cannabis business can survive, let alone thrive, under such a burdensome tax structure.

In summary, Odyssey proposes payment of the outstanding $450,000 in fees over the course of the next 30 months in addition to a public benefit fee of 2% of quarterly gross receipts beginning in January 2023.

I am available at your convenience to discuss these matters further. Thank you.

Sincerely,
/s/Alexander Freedman
President, Odyssey Agricultural Development LLC
cc: Hunter C. Castro, Esq. ([email protected])

EXHIBIT 14

NOTICE OF PUBLIC HEARINGS

CITY OF MENDOTA

REGULAR MEETING OF THE PLANNING COMMISSION &

SPECIAL MEETING OF THE CITY COUNCIL
NOTICE IS HEREBY GIVEN THAT, on January 18, 2023, at 6:00 p.m., or as soon thereafter as possible, the Planning Commission of the City of Mendota will hold a public hearing at a special meeting at Mendota City Hall, City Council Chambers, 643 Quince Street, Mendota, CA 93640 to conduct the following business:

1. PUBLIC HEARING TO CONSIDER AND REVIEW STATUS OF DEFAULT, ENTITLEMENTS, AND TERMINATION OF DEVELOPMENT AGREEMENT with

FURTHER NOTICE IS HEREBY GIVEN THAT, on January 18, 2023, at 6:30 p.m., or as soon thereafter as possible, the City Council of the City of Mendota will hold a public hearing at a special meeting at Mendota City Hall, City Council Chambers, 643 Quince Street, Mendota, CA 93640 to conduct the following business:

1. PUBLIC HEARING TO CONSIDER AND REVIEW STATUS OF DEFAULT, ENTITLEMENTS, AND TERMINATION OF DEVELOPMENT AGREEMENT with

All interested persons are invited to appear at the times and places specified above to give testimony regarding the proposed action listed above. Written comments may be forwarded to the City of Mendota at 643 Quince Street. Requests for information may be directed to the City Clerk, Celeste Cabrera-Garcia, at (559) 655-3291 or [email protected].

If you challenge the above matter(s) in court, you may be limited to raising only those issues you or someone else raised at the Public Hearings, or in written correspondence delivered to the Planning Commission or City Council of the City of Mendota, respectively, at, or prior to, the Public Hearings, or any comments received during the public review period of the associated entitlements.

AFFIDAVIT OF PUBLICATION
Account # Order Number Identification Order PO Amount Cols Depth 19359 368033 Print Legal Ad-IPL01046100 - IPL0104610 $852.96 2 49 L Attention: Nancy M. Diaz

CITY OF MENDOTA
643 QUINCE ST
MENDOTA, CA 93640

COUNTY OF DALLAS

STATE OF TEXAS
The undersigned states:

McClatchy Newspapers in and on all dates herein stated
was a corporation, and the owner and publisher of The
Fresno Bee.

The Fresno Bee is a daily newspaper of general
circulation now published, and on all-the-dates herein
stated was published in the City of Fresno, County of
Fresno, and has been adjudged a newspaper of general
circulation by the Superior Court of the County of
Fresno, State of California, under the date of November 28, 1994, Action No. 520058-9.

The undersigned is and on all dates herein mentioned
was a citizen of the United States, over the age of
twenty-one years, and is the principal clerk of the
printer and publisher of said newspaper; and that the
notice, a copy of which is hereto annexed, marked
Exhibit A, hereby made a part hereof, was published in
The Fresno Bee in each issue thereof (in type not
smaller than nonpareil), on the following dates.
1 insertion(s) published on:
01/08/23
I certify (or declare) under penalty of perjury that the foregoing is true and correct.

Dated: 01/09/2023
Notary Public in and for the state of Texas, residing in Dallas County
Extra charge for lost or duplicate affidavits.

Legal document please do not destroy!
EXHIBIT 15

EXHIBIT 16
ATTORNEY OR PARTY WITHOUT ATTORNEY; STATE BAR NO: 325463 FOR COURT USE ONLY NAME: Ryan W. Porte, Esq.

FIRM NAME: RAIMONDO I MILLER, ALC
srnEETA□□ REss: P.O. Box 28100
CITY: Fresno STATE: CA ZIP CODE: 93729
TELEPHONE NO.: (559) 432-3000 FAX NO.: (559) 432-2242
E-MAIL A □ DREss: rwp@raimondomil!er.com
ATTORNEY FOR (Name): Plaintiff CALZONA AG MANAGEMENT, INC.

SUPERIOR COURT OF CALIFORNIA, COUNTY OF FRESNO
STREET ADDRESS: 1130 "O" Street
MAILING ADDRESS:

CITY AND ZIP CODE: Fresno, CA 93721
BRANCH NAME: B.F. Sisk Courthouse
Plaintiff/Petitioner: CALZONA AG MANAGEMENT, INC.

Defendant/Respondent: ODYSSEY AG. DEVELOPMENT, LLC, et al.

CASE NUMBER:

REQUEST FOR DISMISSAL 22CECG01617
A conformed copy will not be returned by the clerk unless a method of return is provided with the document.

This form may not be used for dismissal of a derivative action or a class action or of any party or cause of action in a action. (Cal. Rules of Court, rules 3.760 and 3.770.)

1. TO THE CLERK: Please d1sm1ss this action as follows:
a. (1) D With prejudice (2) [ZJ Without prejudice
b. (1) D Complaint (2) Petition
(3) D Cross-complaint filed by (name):
(4) Cross-complaint filed by (name):
(5) D Entire action of all parties and all causes of action (6) [ZJ Other (specify):' Only as to: City of Mendota

2. (Complete in all cases except family law cases.)
on {date):
on (date):

CIV-110
class
The court [!] did D did not waive court fees and costs for a party in this case. (This information may be obtained from the clerk. If court fees and costs were waived, the declaration on the back of thi rm must be co pleted).

Date: Januarv 5. 2023 ► , ') '/ __,- Ryan W. Porte, Esq. ~_/..,/:;':.~~'.\c.\lJ.o,L,'--IJ~~~------------ (TYPE OR PRINT NAME OF QJ ATTORNEY [:] PARTY WITHOUT ATTORNEY) *If dismissal requested is of specified parties only of specified causes of action only, or of specified cross-complaints only, so state and identify the parties, causes of action, or cross-complaints to be dismissed.
(SIGNATURE)
Attorney or party without attorney for:
[ZJ Plaintiff/Petitioner D Defendant/Respondent
D Cross Complainant

3. TO THE CLERK: Consent to the above dismissal is hereby given." Date:
(TYPE OR PRINT NAME OF C:J ATTORNEY C:J PARTY WITHOUT ATTORNEY) ► 0 If a cross-complaint - or Response (Family Law) seeking affirmative relief- is on file, the attorney for cross-complainant (respondent) must sign (S!GNATURE)
Attorney or party without attorney for:
this consent if required by Code of Civil Procedure section 581 (i) or (j). D Plaintiff/Petitioner D Defendant/Respondent D Cross Complainant
(To be completed by clerk)

4. D Dismissal entered as requested on (date):
5 D Dismissal entered on (date): as to only (name):

6. D Dismissal not entered as requested for the following reasons (specify):

7. a. D Attorney or party without attorney notified on (date):
b. D Attorney or party without attorney not notified. Filing party failed to provide D a copy to be conformed D means to return conformed copy Date: Clerk, by
Form Adopted for Mandatory Use
Judicla! Council of California
CIV-110 [Rev. Jan.1, 2013]

REQUEST FOR DISMISSAL
, Deputy Page 1 of 2
Code of Civil Procedure,§ 581 et seq.; Gov. Code,
§ 68637(c): Cal. Rules of Court, rule 3.1390
www.courts.ca.gov

E-FILED
1/5/2023 3:08 PM
Superior Court of California
County of Fresno
By: Mitchell Tigchelaar, Deputy
X
1/5/2023
X 1/5/2023
1/5/2023 Mitchell Tigchelaar
EXHIBIT 17

CITYOF MENDOTA
,,Cantaloupe Center Of The World"

MENDOTA CITY COUNCIL

PUBLIC NOTICE
Please be advised that the Wednesday, January
18, 2023, special meeting of the [\4endota City
Council has been cancelled.

GERTIFICATION OF POSTING
l, Antonio Pizano, Deputy City Clerk of the City of Mendota, do hereby declare that the foregoing public notice of the special City Council meeting cancellation was posted on the outside bulletin board at City Hall, 643 Quince Street on Wednesday, January 18,2022 at 5:00 p.m.

Antonio izano, Deputy City Clerk
643 Ouince Street Mendota, Galilornia 93640
Telephone: (559) 655-3291 Fax: (559) 655-4064
TDD/[TY 866-735-2919 (English) TDD/[TY 866-833-4703 (Spanish) ci.mendota.Ga.us
The Gity of Mendota is an equal opportunity prouider and employer EXHIBIT 18

NOTICE OF PUBLIC HEARINGS

CITY OF MENDOTA

SPECIAL MEETING OF THE CITY COUNCIL
NOTICE IS HEREBY GIVEN THAT, on February 2, 2023, at 3:00 p.m., or as soon thereafter as possible, the City Council of the City of Mendota will hold a public hearing at a special meeting at Mendota City Hall, City Council Chambers, 643 Quince Street, Mendota, CA 93640 to conduct the following business:

1. PUBLIC HEARING TO CONSIDER AND REVIEW STATUS OF DEFAULT, ENTITLEMENTS, AND TERMINATION OF DEVELOPMENT AGREEMENT with

ODYSSEY AGRICULTURAL DEVELOPMENT, LLC, ODYSSEY AGRICULTURAL HOLDINGS, LLC, and VALLEY AGRICULTURAL HOLDINGS, LLC, regarding the construction and operation of a cannabis cultivation, processing, and distribution facility on approximately 36 acres (portion of APN 013-030-68ST) located at 418 West Belmont Ave, Mendota, California 93640. At a special meeting on January 18, 2023, the Planning Commission voted, 5-0, to recommend the City Council: (1) consider implementing a revised tax structure; and (2) consider and approve the developers’ proposed repayment plan.

All interested persons are invited to appear at the times and places specified above to give testimony regarding the proposed action listed above. Written comments may be forwarded to the City of Mendota at 643 Quince Street, Mendota, CA 93640. Requests for information may be directed to the City Clerk, Celeste Cabrera-Garcia, at (559) 655-3291 or [email protected].

If you challenge the above matter(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing, or in written correspondence delivered to the City Council of the City of Mendota at, or prior to, the public hearing, or any comments received during the public review period of the associated entitlement(s).

AFFIDAVIT OF PUBLICATION
Account # Order Number Identification Order PO Amount Cols Depth 19359 373320 Print Legal Ad-IPL01064020 - IPL0106402 $648.24 2 37 L Attention: Nancy M. Diaz

CITY OF MENDOTA
643 QUINCE ST
MENDOTA, CA 93640

COUNTY OF DALLAS

STATE OF TEXAS
The undersigned states:

McClatchy Newspapers in and on all dates herein stated
was a corporation, and the owner and publisher of The
Fresno Bee.

The undersigned is and on all dates herein mentioned
was a citizen of the United States, over the age of
twenty-one years, and is the principal clerk of the
printer and publisher of said newspaper; and that the
notice, a copy of which is hereto annexed, marked
Exhibit A, hereby made a part hereof, was published in
The Fresno Bee in each issue thereof (in type not
smaller than nonpareil), on the following dates.
1 insertion(s) published on:
01/22/23
I certify (or declare) under penalty of perjury that the foregoing is true and correct.

Dated: 01/31/2023
Notary Public in and for the state of Texas, residing in Dallas County
Extra charge for lost or duplicate affidavits.

Legal document please do not destroy!
EXHIBIT 19

ODYSSEY AGRICULTURAL DEVELOPMENT LLC
418 W. BELMONT AVE. | MENDOTA, CA 93640
January 30, 2023
Sent via US Mail and Email to:

City of Mendota
643 Quince Street
Mendota, California 93640
c/o Cristian Gonzalez, City Manager
[email protected]
Wanger Jones Helsley PC
256 E. River Park Circle, Suite 310
Fresno, California 93720
c/o John Kinsey, Esq
[email protected]
Re: Development Agreement by and between the City of Mendota and Odyssey Agricultural Development, et al.

Dear Cristian and John:

I write on behalf of Odyssey Agricultural Development LLC, Odyssey Agricultural Holdings LLC, and Valley Agricultural Holdings, LLC (collectively, “Odyssey”) regarding their Development Agreement with the City of Mendota dated March 26, 2021 (the “Development Agreement”). More specifically, I write regarding the special meeting of the Mendota City Council on February 2, 2023, at which the City Council intends to consider the status of the Development Agreement, including potential action to terminate the Development Agreement.

On January 18, 2023, the Mendota Planning Commission considered Odyssey’s request to amend the terms of the Development Agreement and voted unanimously to recommend to the City Council that it consider implementing a revised tax structure and consider and approve Odyssey’s proposed plan for deferred payment of public benefit fees. Odyssey is hopeful that the City Council will adopt the Planning Commission’s recommendation and work with Odyssey and other cannabis operators in Mendota to develop a revised cannabis tax structure that will ensure the long-term success of the cannabis industry in the City.

Without undermining that hopefulness, Odyssey nevertheless reserves all rights under the Development Agreement and applicable law and must submit this letter for the record that any action by the City Council at the February 2, 2023, special meeting to terminate the Development Agreement would be invalid and ineffective.

Under Section 8.1 of the Development Agreement, the City must give Odyssey no less than 30 calendar days to cure a default. If the default is not cured within the 30-day notice period, then the City may give Odyssey notice of its intent to terminate the Development Agreement. However, prior to the City giving notice to Odyssey of its intent to terminate the Development Agreement, the City must schedule the matter for consideration and review in a 2 public hearing within 30 calendar days of the expiration of the 30-day notice period. After the duly noticed public hearing within the requisite time frame, the City may give written notice of the termination of the Development Agreement.

On November 18, 2022, the City issued Odyssey a Notice of Default and Demand for Cure (“Notice of Default”), which provided Odyssey until Sunday, December 18, 2022, to cure the alleged default. While December 18, 2022, was 30 calendar days from November 18, 2022, Section 10.11(p) (“Calculation of Time Periods”) of the Development Agreement provides that “[a]ll time referenced in this Agreement shall be calendar days, unless the last day falls on a legal holiday, Saturday, or Sunday, in which case the last day shall be the next business day.” As such, the City was required to provide Odyssey until Monday, December 19, 2022—not Sunday December 18, 2022—to cure the alleged default. The City’s failure to give accurate notice and an opportunity to cure as required under the Development Agreement renders any decision stemming from the defective notice invalid and ineffective.

Even if the Notice of Default was not defective, the City Council may not terminate the Development Agreement at its special meeting on February 2, 2023, because the public hearing to consider and review the matters contained in Notice of Default was not scheduled within the time frame required under Section 8.1(c) of the Development Agreement, which requires the City Council to schedule a public hearing for consideration and review “within thirty (30) calendar days from the expiration of the thirty (30) day notice period.” Here, the latest the City Council could have scheduled the requisite public hearing for consideration and review of the Notice of Default was January 18, 2023. The City Clerk scheduled a meeting relating to the Notice of Default for January 18, 2023, but later cancelled the meeting several hours before it was scheduled to be held.

While the City Council is of course free to schedule meetings to consider and review the Development Agreement at its discretion—and Odyssey welcomes the opportunity to engage with the City Council on this matter at any time the City Council desires—its opportunity to terminate the Development Agreement under Section 8.1 as it relates to the Notice of Default has expired.

Again, Odyssey remains hopeful that it will find common ground with the City Council at the upcoming special meeting, and it is simply making a record of the matters referenced in this letter to preserve its rights should the City Council vote to terminate the Development Agreement. I am available at your convenience to discuss these matters to the extent the City feels such a discussion is necessary prior to the February 2, 2023 special meeting. Thank you.

Sincerely,
/s/Alexander Freedman
President, Odyssey Agricultural Development LLC,
Odyssey Agricultural Holdings LLC, and
Valley Agricultural Holdings, LLC
3 cc: Hunter C. Castro, Esq. ([email protected]) Celeste Cabrera-Garcia, City Clerk ([email protected]) EXHIBIT 20

Mendota City CouncilFebruary 2, 2023

Mendota City Council
February 2, 2023