Agenda packet — Milpitas City Council, August 11, 2026 (part 2 of 2)

casher refrains from depositing a personal check written by a customer until a specific date pursuant to a written agreement as provided in Civil Code section 1789.33. Check cashing businesses do not include state or federally chartered banks, savings associations, credit unions, or industrial loan companies. They also do not include retail sellers engaged primarily in the business of selling consumer goods, such as consumables to retail buyers, that cash checks or issue money order incidental to their main purpose or business.

Child Care Center. Establishments providing non-medical care for children on a less than 24- hour basis other than large/small family child care homes. This classification includes licensed nursery schools, preschools, and day care facilities for children, and any other day care facility licensed by the State of California. This use does not include after school program, summer camp, and tutoring facilities.

Civic/Government. Governmental facilities not otherwise included in other land use types, such as court facilities and post offices, together with storage and maintenance of City and public agency vehicles.

Collection Facility. A center for the acceptance, by donation, redemption, or purchase, of recyclable materials from the public where limited sorting and storing of such items is conducted on-site.

College/University, Private. A private college or university, excluding trade or vocational schools.

Commercial Athletic Facility. A facility for physical fitness training or athletic type games and sports, such as but not limited to, health clubs, tennis, gymnasiums, handball courts, racquetball courts; also including ancillary uses when incidental to the primary use, such as but not limited to, steam baths, weight training, aerobic classes, massage, saunas, and the retailing of athletic supplies to be used in the facility.

Commercial Fueling Facility. See “fueling facility, commercial”.

Commissary or Catering. A fixed-location kitchen where food is stored and prepared for off-site vending or delivery. Commissaries may include shared-use commercial kitchens, private commercial kitchens, restaurant kitchens, and kitchens associated with civic and community organizations such as churches or social clubs. Also, includes catering service establishments.

Community Assembly. A facility for public or private meetings including clubs and lodges, community centers, senior centers, religious assembly facilities, convention centers, civic and private auditoriums, union halls, meeting halls for clubs and other membership organizations.

This includes functionally related facilities for the use of members and attendees such as kitchens, multi-purpose rooms, and storage. It does not include gymnasiums or other sports facilities (see indoor sports and recreation) or facilities such as day care centers and schools, which are separately defined.

Major. Community assembly use that is over 2,000 gross square feet and has capacity for more than 200 seats.

Minor. Community assembly use that is 2,000 gross square feet or less and has capacity for no more than 200 seats.

Community Garden. Use of land for the cultivation, growing and harvesting of vegetables, herbs, flowers, and fruits, including the cultivation and tillage of soil and the production, cultivation, growing, and harvesting of any agricultural, floricultural, or horticultural commodity.

Community gardens are typically owned and operated by public or non-profit agencies, and each garden plot is used and kept by an individual or a household. Excludes animal keeping or animal husbandry.

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Construction Yard and Equipment Rental. Storage of construction materials or equipment on a site other than a construction site. Includes rental of large construction equipment and machinery. This classification may include parking/storage of contractor vehicles.

Convenience Store. A retail establishment selling food, beverages, and small convenience items such as personal hygiene products, cigarettes, magazines, and other everyday consumer items.

Food and beverage products sold primarily consist of packaged and canned goods, prepared foods and hot drinks for immediate consumption, fountain beverages, etc., with less than 10 percent of net retail floor area allocated for the sale of fresh fruits, fresh vegetables, fresh meat and dairy products, and other similar perishable items. Convenience stores are smaller in floor area than supermarkets/grocery stores (typically 4,000 square feet or less) and have long or late hours of operation (open before 7:00 a.m. or after 10:00 p.m.).

Correctional Facility. A facility where people are held, generally as punishment for various crimes. This includes the detention/incarceration of people awaiting trial and/or who have been convicted of civil or criminal offenses; inmates and detainees under 24-hour supervision by the California Department of Corrections and Rehabilitation; and juvenile detention facilities. This use also includes parole offices.

Court Dwelling. See “dwelling, court”.

Cultivated Agriculture. The planting, growing, and harvesting of crops or plants, or the preparation of land for this purpose, of more than one-half acre of land for viticulture, horticulture, pasturage, floriculture, or similar farming where a crop or final product is produced (but not necessarily offered for sale) for consumption. This use excludes community gardens.

Custom and Artisan Manufacturing. An establishment primarily engaged in on-site production of goods by hand manufacturing or artistic endeavor, which involves only the use of hand tools or small mechanical equipment and the incidental direct sale to consumers of only those goods produced on site. Includes, but is not limited to metalworking, pottery and ceramic studios, film processing, photo finishing, printmaking, lithography, glass furnace, or woodworking.

Data Center. A facility dedicated to the storage of computer and information technology systems and associated components for the storage, retrieval, and transmittal of electronic information.

Drive-Through Facility. A motor vehicle drive-through facility which is a commercial building or structure or portion thereof which is designed and/or used to provide goods and services to drivers while they remain seated in their vehicles. It includes, but is not limited to, banks and other financial institutions, fast food establishments, and pharmacies, but shall not include drive- in movies, service stations, or car wash operations.

Dwelling, Court. A residential development in which there are several freestanding single-family or two-family dwellings with separate walls clustered on a single lot. Units are typically arranged to face around a common open space or drive aisle. If subdivided, a maintenance agreement or homeowners association may govern common areas like driveways or open space.

Dwelling, Multi-Family. A building containing three or more dwelling units.

Dwelling, Single-Family. A dwelling unit designed for occupancy by one household, where all rooms are internally connected and internally accessible via habitable space, located on a separate lot from any other unit (except accessory dwelling units, where permitted), and have only one kitchen. This includes individual manufactured housing units installed on a foundation system pursuant to California Health and Safety Code section 18551, and the use of a single-family residential structure as employee housing for six or fewer employees consistent with California Health and Safety Code section 17021.5.

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Dwelling, Two-Family. A residential building containing two dwelling units, both of which are located on a single parcel. The dwelling units are attached and may be located on separate floors or side-by-side. Excludes accessory dwelling units (see “accessory dwelling unit”).

Elderly and Long-term Care. Establishment that provides 24-hour medical, convalescent, or chronic care to individuals who, by reason of advanced age, chronic illness or infirmity, are unable to care for themselves, and is licensed by the California Department of Public Health.

Includes, but is not limited to skilled nursing facilities, rest homes, and convalescent hospitals.

Does not include a residential care facility or hospital.

Electronic smoking device. Any device that may be used to deliver any aerosolized or vaporized substance to the person inhaling from the device, including, but not limited to, an e-cigarette, e- cigar, e-pipe, vape pen, electronic heated tobacco products, or e-hookah. Electronic smoking device includes any component, part, or accessory of the device, and also includes any substance that may be aerosolized or vaporized by such device, whether or not the substance contains nicotine. Electronic smoking device does not include any nicotine cessation product that has been approved by the U.S. Food and Drug Administration to be marketed and for sale as “drugs,” “devices,” or “combination products,” as defined in the Federal Food, Drug, and Cosmetic Act.

Emergency Shelter. Housing with minimal supportive services for homeless persons that is limited to occupancy of six months or less by a homeless person. No individual or household may be denied emergency shelter because of an inability to pay as set forth in the California Health and Safety Code section 50801(e), as may be amended.

Employee/Farmworker Housing. As described in California Health and Safety Code section 17021.6 and 17008, any employee housing consisting of no more than 36 beds in a group quarters or 12 units or spaces designed for use by a single family or household.

Family Child Care Home, Large. As defined by Health and Safety Code section 1596.78, a home in which the provider regularly provides care, protection, and supervision for up to 14 children for less than 24 hours per day.

Family Child Care Home, Small. As defined by Health and Safety Code section 1596.78, a home in which the provider regularly provides care, protection, and supervision for eight or fewer children for less than 24 hours per day.

Farmers’ Market. An establishment offering for sale produce, prepared food items, and other artisan/craft goods and merchandise by certified growers and producers authorized to sell, directly to consumers, products that are produced on land the producer controls or taken in consignment from other producers. Excludes flea markets.

Firearms Dealer. An establishment engaged in the selling, dealing in, trading, or transferring firearms.

Fleet-Based Service. Passenger transportation services, local delivery services, medical transport, and other businesses that rely on fleets of three or more vehicles. This includes parking, dispatching, and offices for taxicab and limousine operations, ambulance services, non- emergency medical transport, home cleaning services, pedicab services, and similar businesses.

This does not include towing operations (see “vehicle storage”), taxi or delivery services with two or fewer fleet vehicles on-site (see “business support services”), facilities that handle third party goods for local or worldwide delivery (see “freight and trucking yard”) or last mile parcel processing/redistribution facilities (see “parcel hub”).

Food and Beverage Processing and Preparation. Cooking, processing, packaging, bottling, and shipping of food products and/or non-alcoholic beverages for off-site sales. This does not include

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breweries, wineries, and distilleries; the slaughtering of live animals; or large-scale operations (see “commercial agricultural processing plant”).

Freight and Trucking Yard. Facilities that handle third party goods for local or worldwide freight, courier, local messenger, and postal services by truck or rail. This includes fulfillment centers and parcel sorting centers, which provide storage and distribution of e-commerce products to consumers or end-users, either directly or through a parcel hub.

Fueling Facility, Commercial. A fueling facility designed for commercial customers which dispenses gasoline, diesel, or similar vehicle fuels, and which is not open to the general public, has no cash sales and provides no personal services on-site. This excludes mobile fueling.

Funeral Parlor and Mortuary. An establishment primarily engaged in the provision of services involving the care, preparation, or disposition of human remains and conducting memorial services. Typical uses include a crematory or mortuary. This use does not include cemeteries.

Grocery Store, Large. Retail establishments that primarily sell food, but also may sell other convenience and household goods, and may include a delicatessen or specialty food shop, baked goods, frozen foods, fruits, vegetables, meats, cheeses, dairy, and prepared food, and which occupy more than 25,000 square feet of gross floor area, but not more than 80,000 square feet of gross floor area.

Grocery Store, Small. Retail establishments with gross floor area less than 25,000 square feet that primarily sell food products, such as fresh fruits and vegetables, meats and seafood, dairy products, baked goods, packaged and prepared foods, and frozen foods, but that may also sell other convenience and household goods. May also include a delicatessen or other specialty food shop.

Group Living Accommodation. A building or portion of a building designed for or accommodating a residential use by persons not living together as a household. This use includes dormitories, convents and monasteries, and other types of organizational housing. This use does not include residential care facilities, nursing homes, hotels, single-room occupancy residences, or boarding houses, which are defined separately. Group living accommodations typically provide shared living quarters without separate kitchen or bathroom facilities for each room or unit.

Guest Ranch. Short-term lodging provided to visitors on property where agricultural activities take place (e.g., animal husbandry, cultivated agriculture) and that is not considered to be another lodging uses.

Home Occupation. A commercial use conducted on residential property by the inhabitants of the subject residence, which is incidental and secondary to the residential use of the dwelling.

Hospital. A state-licensed facility providing medical, psychiatric, or surgical services for sick or injured persons primarily on an in-patient basis, and including ancillary facilities for outpatient and emergency treatment, diagnostic services, training, research, administration, and services to patients, employees, or visitors.

Hotel. A commercial establishment providing lodging accommodations for a fee for transient guests, generally for stays of 30 days or fewer, with access to rooms or units primarily from interior lobbies, courts or halls. A hotel may include limited facilities for storage and preparation of food and beverages within individual rooms, such as coffee makers, mini refrigerators and microwave ovens.

Indoor Entertainment. Predominantly spectator uses conducted within an enclosed building.

Typical uses include movie theaters, enclosed sports arenas, live performing arts venues, escape rooms, and video game activities and competitions such as e-sports.

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Indoor Sports and Recreation. Predominantly participant sports conducted within an enclosed building. Typical uses include indoor bowling alleys, billiard parlors, ice and roller skating rinks, go-kart tracks, indoor shooting ranges, and trampoline parks. Excludes operations where activities are primarily class- or appointment-based such as yoga studios and personal trainers.

Industry, General. Manufacturing of products from extracted or raw materials or recycled or secondary materials, or bulk storage and handling of such products and materials, where operations are conducted primarily within an enclosed building. Includes, but is not limited to operations such as biomass energy conversion; textile mills; furniture and related product manufacturing; photographic processing plants; leather and allied product manufacturing; wood product manufacturing; paper manufacturing; plastics and rubber products manufacturing; and nonmetallic mineral product manufacturing.

Industry, Heavy. Manufacturing of products that include petroleum products, metals and/or metal processing, and hazardous chemicals. Includes automobile assembly and manufacturing and tire retreading or recapping.

Industry, Light. Establishments engaged in light industrial activities taking place primarily within enclosed buildings and producing minimal impacts on nearby properties. Includes, but is not limited to, operations such as manufacturing finished parts or products primarily from previously prepared materials; commercial laundries and dry cleaning plants; mobile home manufacturing; monument works; printing, engraving and publishing; electronics manufacturing not included under advanced manufacturing; and production apparel manufacturing.

Instruction Services. An establishment that offers specialized programs in improvement, information, and personal growth and development such as photography, fine arts, crafts, music, yoga, martial arts, dance, driving schools, health and wellness, and academic tutoring. Attendance is typically limited to hourly classes rather than full-day instruction. These establishments do not grant diplomas or degrees, though instruction may provide credits for diplomas or degrees granted by other institutions. Retail sales are permitted as an accessory use.

Group. Group instruction includes 10 or more students or clients at any one time.

Private/Small Group. Private instruction includes fewer than 10 students or clients at any one time.

Intermediate Processing Facility. A facility that receives, sorts, compresses or bales, and stores recyclable materials for efficient transfer to other processing facilities or to an end user.

Junior Accessory Dwelling Unit. See Accessory Dwelling Unit, Junior.

Kennel. Facilities for keeping, boarding, training, breeding, or maintaining for commercial purposes, four or more dogs, cats, or other household pets more than four months of age and not owned by the kennel owner or operator for 24 hours or more.

Large Format Retail. Retail establishments over 80,000 square feet in size that sell merchandise and/or bulk goods primarily for individual consumption, including, but not limited to, department stores, home improvement stores, membership warehouses which emphasize bulk sales to the general public as well as to other businesses, and other big box format stores. Large format retail uses may include a grocery store sales component. Excludes home improvement stores with outdoor nursery or garden centers (see nursery and garden center).

Library/Museum. Public or quasi-public facilities primarily engaged in the display or preservation of objects of interest in the arts or sciences that are open to the public on a regular basis. Includes, but is not limited to aquariums, arboretums, art galleries and exhibitions, botanical gardens, historic sites and exhibits, libraries, and museums. May also include accessory retail uses such as gift/book shops, and restaurants.

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Live-Work Unit. An integrated housing unit and working space that has been constructed for such use or converted from commercial or industrial use and structurally modified to accommodate residential occupancy and work activity in compliance with the California Building Code. Living space includes, but is not limited to, a sleeping area, a food preparation area, and a full bathroom. The working space is reserved for and regularly used by one or more occupants of the unit.

Low Barrier Navigation Center. Consistent with California Government Code section 65660, a service-enriched shelter focused on moving people into permanent housing that provides temporary living facilities while case managers connect individuals experiencing homelessness to income, public benefits, health, shelter, and housing services.

Maintenance and Repair Services. Establishments engaged in the maintenance or repair of office machines, household appliances, furniture, and similar large items. This classification excludes maintenance and repair of vehicles or boats (see vehicle repair and maintenance) and personal items such as apparel, shoes, and jewelry (see Repair/Cleaning/General Services, Small).

Massage Establishment. Any establishment having a fixed place of business where any person, firm, association, partnership, corporation, or other entity engages in, conducts, or carries on, or permits to be engaged in, conducted or carried on, any massage for compensation. Also includes, but is not limited to, any business providing off-premises massage services.

Massage Establishment, Accessory. An establishment that provides massage which is incidental to the primary business, where the owner of the primary business is responsible for the massage services and conduct of the massage technician(s) employed at the location.

Medical Office/Clinic. Office use providing consultation, diagnosis, therapeutic, preventive, or corrective medical treatment services by doctors, dentists, chiropractors, optometrists, psychotherapists, alternative healing practitioners such as acupuncturists, and similar practitioners of medical and healing arts for humans licensed for such practice by the State of California.

Incidental medical and/or dental laboratories and research within the office that supports the on- site patient services is considered part of the office use. This use includes urgent care facilities.

Excludes independent research laboratory facilities and hospitals (see medical support laboratory and see hospital).

Medical Support Laboratory. A facility for scientific laboratory analysis of medical resources.

The analysis is generally performed for medical providers to support the medical provider's work on behalf of patients.

Microbreweries. A limited production brewery where beer is brewed, sold, and consumed on site and meets all applicable California Department of Alcoholic Beverage Control regulations. This use includes tasting rooms where alcoholic beverages are sold and consumed on site. Food service is subordinate to the sale of alcoholic beverages.

Mini-Storage or Self-Storage. Facilities offering enclosed storage with individual access for personal affects, furniture, and household goods. Typical provided in small individual units (e.g., 400 square feet or less) that are available for rental by the general public.

Mining and Quarrying. An operation that extracts gravel, sand, other construction aggregates, or minerals from the ground. Includes quarries and gravel pits.

Mobile Food Vending. The selling or offering to sell products from a mobile food vehicle, which includes the following uses:

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Ice Cream Truck. A motorized vehicle selling ice cream or other frozen dairy or non- dairy dessert products on streets and in other public places.

Mobile Food Park. Site with two or more mobile food vehicles located together on the same parcel and operating at the same time for more than seven consecutive days.

Mobile Food Vending (Individual Vehicle). A motorized, wheeled vehicle or towed vehicle designed and equipped to store, prepare, serve and sell food, but which does not include ice cream trucks or mobile food vending wagons or pushcarts as regulated in Milpitas Municipal Code Subsection V-100-10.11 (Unlawful Parking—Peddlers, Vendors).

Mobile Fueling. A commercial service that offers on-demand fueling of motor vehicles at a specified location instead of at a service station. Mobile fueling may be provided to individual customers via the use of a mobile app, with fuel delivered to a home, office, or other location requested by the customer. Mobile fueling may also be provided for operators of fleet vehicles at a fixed, semi-permanent or permanent location.

Mobile Home Park. A development designed for and occupied by manufactured/mobile housing units consistent with the requirements of California Health and Safety Code section 18200 to 18700. A mobile home park includes facilities and amenities used in common by occupants who rent, lease, or own spaces for mobile home units/spaces through a subdivision, cooperative, condominium, or other form of resident ownership.

Motel. A building or group of attached or detached buildings providing lodging accommodations for a fee for transient guests, for stays of 30 days or fewer, with access to each room or unit through an exterior door. Motels are distinguished from hotels primarily in that the former provide direct independent access to, and adjoining parking for, guest rooms and do not provide 24-hour guest services.

Multi-Family Dwelling. See “dwelling, multi-family”.

Nursery and Garden Center. An establishment primarily engaged in selling nursery and garden products, such as trees, shrubs, plants, seeds, bulbs, and sod that are predominantly grown offsite.

This classification includes commercial and wholesale greenhouses and nurseries offering plants for sale.

Outdoor Entertainment. Predominantly spectator uses conducted in open or partially enclosed or screened facilities. Typical uses include outdoor theaters, partially enclosed sports arenas, racing facilities, outdoor concert facilities, amphitheaters, drive-in movie theaters, aquatic parks, and amusement parks.

Outdoor Sports and Recreation. Predominantly participant sports conducted in open or partially enclosed or screened facilities. Typical uses include commercial driving ranges, outdoor shooting and/or archery ranges, miniature golf courses, golf courses, outdoor go-karts, swimming pools, and tennis courts. This use excludes public golf courses, public swimming pools, and public tennis court or other public sport court facilities (e.g., basketball, pickleball, etc.) (see “park/playground”); and excludes common recreational facilities as accessory to a multi-family residential project or use.

Parcel Hub. A ‘last mile’ facility warehouse or similar establishment for the processing and/or redistribution of parcels or products to end-user customers. A parcel hub’s primary function is moving a shipment from one mode of transport to vehicles with rated capacities less than 10,000 pounds, for delivery directly to consumers or end-users primarily within a 10-mile radius.

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Park/Playground. Parks, playgrounds, trails, wildlife preserves, and related open spaces. This includes public playing fields, sports courts, picnic facilities, and related food concessions or community recreational buildings and structures.

Parking Lot. Open parking area(s) provided on property other than a public street, alley, or right- of-way that is the primary use on the lot (i.e., the parking lot is not providing the required off- street parking for land uses on the lot). May include park and ride lots. Use of the parking lot may be subject to a fee.

Parking Structure. A building or structure containing parking spaces that is the primary use on the lot (i.e., the parking structure is not providing the required off-street parking for land uses on the lot). May be located above or below grade, and use of the parking structure may be subject to a fee. May include park and ride structures.

Pawnbroker. A place of business where personal property is received and for which money is advanced, with the right of privilege granted to the person to whom said money is advanced to reclaim such property upon repayment of said money.

Personal Services. A commercial establishment which provides services of a personal or aesthetic nature directly to consumers, including but not limited to barber and beauty shops, nail salons, tanning salons, hair removal salons, tattoo and body piercing studios, spa/wellness center (excluding massage establishments), medical spas, and personal trainers.

Pet Day Care and Sales. Facilities for providing non-medical care for four or more dogs, cats, or other household pets not owned by the pet day care owner or operator, included but not limited to grooming services, on a less than 24-hour basis. This use includes retail sales of household pets and pet supplies, but excludes pet supply stores that do not sell animals or provide on-site animal services. Also excludes home-based pet day care services for a fee, such as dog walking services.

Primary Processing Facility. A facility that processes recyclable materials and acts as a final destination for recyclable materials.

Public Safety. Facilities providing public safety and emergency response services, including police and fire protection, with incidental storage, training, and maintenance facilities.

Public Utility. Facilities for the production, storage, treatment, transmission and/or distribution of electricity, natural gas, water, wastewater, and telecommunications and other similar essential services. Also includes service facilities, electric transmission and distribution substations, and public utility service centers.

Repair/Cleaning/General Services, Small. A commercial establishment that performs cleaning, repair, and alteration of small consumer and household items, including but not limited to dry cleaning pick-up stores without equipment that uses chemical solvents, laundromats (self-service laundries), photocopying and photo finishing services, tailor shops, watch and jewelry repair, shoe repair, home electronics repair, and locksmiths. Does not include repair of vehicles or boats (see vehicle repair and maintenance), personal services (see personal services), or maintenance and repair of large or bulky items (see maintenance and repair services).

Research and Development (R & D). Industrial or scientific research for the design, development, engineering and testing of high technology, clean technology, industrial, or scientific products. May include limited manufacturing as necessary for the production of prototypes, but excludes the full-scale manufacturing of final products. May also include storage space for raw materials and/or finished goods that actively supports the primary use.

Residential Care Facility. Consistent with Health and Safety Code section 1502, a facility licensed by the State of California to provide living accommodations and 24-hour care for persons requiring personal services, supervision, protection, or assistance for sustaining the

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activities of daily living. Living accommodations are group homes or shared living quarters with or without separate kitchen or bathroom facilities for each room or unit. This classification includes facilities that are operated for profit as well as those operated by public or not-for-profit institutions.

Resilience Hub. A community-serving facility designed to support residents and coordinate resource distribution and services before, during, or after a natural hazard event. Resilience hubs provide information as well as services and supplies, including but not limited to community gathering space, emergency supplies, basic medical care, internet access, and electronic device charging. They are typically outfitted with a solar and back-up battery storage system that can operate off the power grid and maintain power to the facility during grid outages.

Restaurant, Full Service. Restaurants that provide cooked-to-order food and beverage services to patrons who order and are served while seated and pay after eating. Takeout service may also be provided.

Restaurant, Limited Service. Establishments where food and beverages may be consumed on the premises, taken out, or delivered, but where no table service is provided. This includes, but is not limited to cafeterias, fast-food restaurants, carryout sandwich shops, limited-service pizza parlors and delivery shops, self-service restaurants, snack bars, and takeout restaurants. This use includes cafes, coffee shops, and bakeries with a retail storefront component.

Restaurant with Alcohol Service. Either a full service or limited service restaurant that includes alcohol service for on-site consumption.

Retail, Limited. An establishment which offers the sale of a limited line of merchandise that is generally necessary or desirable for everyday living or everyday business activities. Examples include small grocery stores offering primarily prepared or pre-packaged food and beverage items, small drugstores and variety stores, small stationery, office supply stores, shops selling other small household goods, and walk-out retail stores. This classification excludes convenience stores.

Retail Stores, General Merchandise. The retail sale or rental of merchandise not specifically listed under another use definition. This includes department stores, clothing stores, furniture stores, pharmacies, pet supply stores, flower shops (florist), art supply stores, music stores, book stores, and other businesses retailing (or renting) toys, hobby materials, handcrafted items, formalwear, music equipment and instruments, jewelry, cameras, candy, gifts and novelties, electronic equipment, sporting goods, hardware, appliances, antiques, art, paint and wallpaper, carpeting and floor covering, office supplies, bicycles, and new automotive parts and accessories, excluding vehicle service and installation (see vehicle repair and maintenance). Excludes large format retail and other sales-related uses more specifically described in other use definitions.

Riding Academy and Public Stables. Stables leased for the keeping of horses which may also include areas for horse riding and horse riding lessons.

Salvage and Wrecking. The dismantling of wrecked or decommissioned vehicles, appliances, or other metal products where usable parts are sold for use in operating vehicles and the unusable metal parts are sold to metal-recycling companies.

School, Private. A private institution of learning for students offering instruction in those courses of study required by the California Education Code and maintained in compliance with the standards set by the State Board of Education. This use includes kindergarten, elementary school, middle or junior high school, or high school.

School, Public. A public institution of learning for students offering instruction in those courses of study required by the California Education Code and maintained in compliance with the

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standards set by the State Board of Education. This use includes kindergarten, elementary school, middle or junior high school, and high school.

Service Station. Any premises used for supplying automotive fuel and oil at retail, direct to the customer, including minor accessories and services for automobiles such as tire air pumps and window washing, but not including automobile repairs.

Short-Term Rental (STR). The use of a dwelling unit, including, without limitation, a single- family, two-family, or multi-family dwelling unit, mobile home, or any portion of such dwellings, rented for occupancy for dwelling, lodging, or sleeping purposes for a period of 30 or fewer calendar days, counting portions of days as full calendar days.

Single-Family Dwelling. See “dwelling, single-family”.

Single-Room Occupancy (SRO) Residence. A multi-tenant building consisting of single room dwelling units that are the primary residence of its occupants, containing either individual or shared kitchen and bathroom facilities. These units are small, generally less than 350 square feet.

Smoke/Tobacco Shop. A retail establishment primarily engaged in the selling of smoking and or tobacco products, and accessories, or paraphernalia and or any other products, devices, and or components reasonably assumed to be used for smoking and/or the inhalation or ingestion of any substance. Tobacco products may include but are not limited to cigarettes, cigars, loose leaf tobacco, tobacco pipes, electronic smoking devices and accessories, vaporizers and accessories and any other product, device or component used in the inhalation of tobacco, nicotine or other substance. See “tobacco product” and “tobacco accessories or paraphernalia”. For the purposes of this definition only, "primarily engaged" means when 30 percent or more of products sold at the retail establishment are smoking or tobacco products, accessories, or paraphernalia or any other products, devices, or components reasonably assumed to be used for smoking and/or the inhalation or ingestion of any substance.

Supportive Housing. Consistent with California Health and Safety Code section 50675.14, housing with no limit on length of stay, that is occupied by the target population as defined in U.S.C. section 11302 of Title 42, and that is linked to on-site or off-site services that assist the supportive housing resident in retaining the housing, improving their health status, and maximizing their ability to live and, when possible, work in the community.

Temporary Use. A use established for a specified period of time, with the intent to discontinue the use at the end of the designated time period.

Tobacco accessories or paraphernalia. Devices or instruments for smoking, heating, chewing, absorbing, dissolving, inhaling, snorting, sniffing, or ingesting by any other means tobacco products or other controlled substances.

Tobacco product.
• Any product containing, made of, or derived from nicotine or tobacco that is intended for human consumption or is likely to be consumed, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including but not limited to, a cigarette, a cigar, pipe tobacco, chewing tobacco, snuff, or snus; • Any electronic smoking device and any substances that may be aerosolized or vaporized by such device and that contains nicotine; or
• Any component, part, or accessory of (1) or (2), whether or not sold separately and whether or not they contain nicotine or tobacco, including but not limited to filters, rolling papers, blunt or hemp wraps, hookahs, mouthpieces, and pipes.

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• Tobacco product does not include any nicotine cessation product that has been approved by the U.S. Food and Drug Administration to be marketed and for sale as “drugs,” “devices,” or “combination products,” as defined in the Federal Food, Drug, and Cosmetic Act Tobacco retailer. A tobacco retailer is any person or business that sells, offers for sale or distribution, exchanges, or offers to exchange for any form of consideration, tobacco, tobacco products, or tobacco accessories or paraphernalia.

Trade and Vocational School. An establishment where postsecondary education or training is received in a trade or craft, business, commerce, language, or other similar activity or occupational pursuit that is not otherwise described as a college/university, school, or instruction services. This use includes culinary schools.

Transitional Housing. Consistent with California Government Code section 65582, buildings configured as rental housing developments but operated under program requirements that require the termination of assistance and recirculating of the assisted unit to another eligible program recipient at a predetermined future point in time that shall be no less than six months from the beginning of the assistance.

Transportation Passenger Terminal/Facility. Facilities for passenger transportation operations, including rail stations, bus terminals, and associated service facilities, but does not include terminals serving airports or heliports.

Two-Family Dwelling. See “dwelling, two-family”.

Vehicle Rental. Establishment providing for the rental of automobiles. Includes rental of passenger vehicles and light trucks/vans under 14,000 pounds and incidental repair/servicing and cleaning of rental vehicles. This use does not include car-sharing operations.

Vehicle Repair and Maintenance, Major. Repair of automobiles, trucks, motorcycles, motor homes, boats and recreational vehicles, including the sale, installation, and servicing of related equipment and parts. This classification includes the servicing and repair of engines, body and fender, transmission, axels, wheels and brake, tire sales and installation, tire treading and recapping, and vehicle painting. Excludes vehicle dismantling or salvaging (see “salvage and wrecking”) and tire retreading or recapping (see “industry, heavy”). All activities listed under Vehicle Repair and Maintenance, Minor may also be included in major uses.

Vehicle Repair and Maintenance, Minor. The service and repair of automobiles, light-duty trucks, boats, and motorcycles, including the sale, installation, and servicing of related equipment and parts.

This classification includes the replacement of small automotive parts and liquids as an accessory use to an automotive accessories and supply store, and quick-service oil, tune-up and brake and muffler shops, auto glass sales and replacement, window tinting, stereo and alarm sales, and tire sales where repairs are made or service provided in enclosed bays and no vehicles are stored overnight. This classification excludes disassembly, removal or replacement of major components such as engines, drive trains, transmissions or axles; automotive body and fender work, vehicle painting or other operations that generate excessive noise, objectionable odors, or hazardous materials, and repair of heavy trucks, limousines, or construction vehicles (see “vehicle repair and maintenance, major”). It also excludes towing services (see “vehicle storage”) and fueling stations (see “service station”).

Vehicle Sales and Leasing. Sale or lease, retail or wholesale, of automobiles, light trucks, motorcycles, motor homes, and trailers, together with associated incidental repair services and parts sales, but excluding body repair and painting. Includes, but is not limited to, automobile dealers and recreational vehicle sales agencies.

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Vehicle Sales, Limited. A small-format showroom for the retail sale of automobiles and light trucks, typically within a retail storefront setting. Uses can include storage of no more than five vehicles onsite for display and/or test driving, which may be stored either indoors or outdoors on the same lot. Incidental vehicle repair services and parts sales are not permitted.

Vehicle Storage. The use of a site for the short-or long-term storage of automobiles, trucks, motorcycles, and/or other vehicles. Includes towing and impound lots.

Vehicle Washing. Washing, waxing, detailing, and/or cleaning of automobiles or similar light vehicles, including self-serve washing facilities.

Veterinary Clinic. Medical care for household pets on a commercial basis with no overnight (24- hour) accommodation of animals.

Veterinary Hospital or Services. Medical care for household pets on a commercial basis with 24- hour accommodation of animals, but does not include kennels. Also includes overnight (24-hour) accommodation of small animals for grooming services.

Warehousing and Distribution. A facility, primarily within an enclosed building, for the storage of commercial or industrial goods, products and materials and the associated on-site sorting, packing, staging, shipping, receiving, and distributing of goods to wholesale and retail outlets, including ancillary truck parking and dispatching. Also includes long-term, passive storage of furniture, household goods, or other commercial goods; and of industrial equipment, products, and materials. Warehousing and distribution facilities may include, but are not limited to, wholesale distribution, distribution centers, moving and transfer storage, cross-dock facilities, package handling centers, order fulfilment centers, and logistics centers. Excludes storage of raw materials and/or finished products as part of an active primary use (e.g., advanced manufacturing uses; general industry uses; light industry uses; research and development uses). Excludes parcel hubs.

Wholesale Sales. The selling and/or distributing of merchandise to retailers; industrial, commercial, or institutional buyers; or other wholesalers; or acting as agents or brokers in the buying and selling of merchandise to or for such entities.

Wireless Telecommunications Facility. A facility that transmits and/or receives electromagnetic signals. It includes antennas, microwave dishes, horns, and other types of equipment for the transmission or receipt of such signals, equipment, switches, wiring, cabling, power sources, shelters or cabinets associated with an antenna, telecommunication towers or similar structures supporting the equipment, equipment buildings, parking area and other accessory development.

Also see wireless telecommunications terms in Chapter E.2 (Definitions of Terms).

SECTION 6. CALIFORNIA ENVIRONMENTAL QUALITY ACT
The City Council finds, pursuant to Title 14 of the California Code of Regulations, Section 15061(b)(3), that this Ordinance is not subject to review under CEQA. CEQA Guidelines Section 15061(b)(3), also known as the “common sense exemption,” states that CEQA only applies to projects that have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. A “significant effect on the environment” means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the project. This ordinance would create new regulations related to tobacco retailers. Such uses have been previously allowed, and this ordinance would not affect the densities or intensities of use previously allowed. It would enact standards for the location of tobacco retailers that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that tobacco retailers comply with all applicable requirements.

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Therefore, it can be seen with certainty that there is no possibility that the ordinance in question would have a significant effect on the environment; accordingly, the ordinance is exempt from CEQA review.

As a separate and independent basis, the Ordinance is also exempt from further environmental review under CEQA Guidelines Section 15183 (Project Consistent with General Plan, Community Plan, or Zoning), which applies to projects which are consistent with the General Plan for which an EIR was certified shall not require additional environmental review, except as might be necessary to examine whether there are project-specific significant effects which are peculiar to the project or site. The project is consistent with and conforms to the goals and policies of the Milpitas General Plan 2040. The General Plan’s Community Health and Wellness (CHW) Element employs a “Health in All Policies” (HiAP) framework, which stresses the importance of infusing health awareness into all governmental programs, functions, and responsibilities.

The proposed ordinance would regulate the proximity of tobacco retailers to schools and limit their concentration, as well as allow the City to enforce performance standards for all tobacco retailers via the requirement of a Minor Conditional Use Permit and prohibit the sale of flavored tobacco products. The project advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. This ordinance satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum separation between retailers). The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure.

SECTION 7. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision, or part has no effect on the validity of the remainder.

SECTION 8. EFFECTIVE DATE AND POSTING
In accordance with Section 36937 of the Government Code of the State of California, this Ordinance takes effect 30 days from the date of its passage. The City Council hereby directs the City Clerk to cause this Ordinance or a summary thereof to be published in accordance with Section 36933 of the Government Code of the State of California.

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REGULAR

NUMBER: XX.XXX
TITLE: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MILPITAS

AMENDING THE MILPITAS MUNICIPAL CODE TITLE XIII,
CHAPTERS B.6, B.8, C.10, AND E.4 RELATING TO THE REGULATION

OF TOBACCO RETAILERS

HISTORY: This Ordinance was introduced (first reading) by the City Council at its meeting of ____________________, upon motion by_________________________ and was adopted (second reading) by the City Council at its meeting of _______________, upon motion by ____________________________. The Ordinance was duly passed and ordered published in accordance with law by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST: APPROVED:

________________________________ ______________________________ Suzanne Guzzetta, City Clerk Carmen Montano, Mayor

APPROVED AS TO FORM:

________________________________________
Christian Curtis, City Attorney

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RECITALS AND FINDINGS:

WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, tobacco use remains the number one preventable cause of death and disease in California, causing nearly 40,000 deaths in California every year. More than 22% of all adult cancer deaths in California are attributable to smoking; and WHEREAS, in Santa Clara County (“County”), one in eight deaths annually is attributed to smoking-related illness or diseases, such as cancer, heart disease, and respiratory diseases; and WHEREAS, in 2019-20, 25.3% of Santa Clara County high school students have used a tobacco product and 8.6% used tobacco in the last 30 days. E-cigarettes are the most popular tobacco product, with 23.0% of high school students having used them and 7.7% being current users; and
WHEREAS, in August 2020, the state of California adopted SB 793, which prohibits the sale of most flavored tobacco products. SB 793 specifically provides that a municipality may adopt a stricter local ordinance; and
WHEREAS, in September 2024, the state of California adopted AB 3218, which requires the creation of Unflavored Tobacco List by the California Attorney General to clearly define which products are legally allowed to be sold by retailers, wholesalers, distributors and delivery sellers in California; and
WHEREAS, mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco, helping to establish tobacco habits that can lead to long-term addiction; and
WHEREAS, studies show that youth believe flavored tobacco products are safer and less addictive than non-flavored varieties; and
WHEREAS, the vast majority of current Santa Clara County teen tobacco users report using a flavored tobacco product (93.1%), with flavored vape and hookah use being the highest (96.3% and 83.4%, respectively); and
WHEREAS, in 2019, more than 86% of Santa Clara County tobacco retailers near schools sold flavored non-cigarette tobacco products, such as e-cigarettes; and WHEREAS, more than half of Santa Clara teens who currently vape reported purchasing their own vaping product (52.9 percent), with over 1 in 5 of this group saying they buy them directly from a store. Among those who purchase their vaping products in a store, 71 percent purchased them at a tobacco shop, smoke shop, and vape shop; and WHEREAS, by selling tobacco products, pharmacies reinforce positive social perceptions of smoking, convey tacit approval of tobacco use, and send a message that it is not so dangerous to smoke; and

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WHEREAS, tobacco-free pharmacy sales policies decrease the availability of tobacco products by reducing tobacco retailer density by up to three times compared with communities that do not have such policies; and
WHEREAS, research indicates that the density and proximity of tobacco retailers increase smoking behaviors. In particular, children are more likely to smoke when they live or go to school in neighborhoods with a high density of tobacco retailers; and WHEREAS, state law prohibits the sale or tobacco products to anyone under the age of 21 and requires all tobacco retailers to be licensed by the Department of Tax and Fee Administration; and
WHEREAS, this ordinance seeks to adopt tobacco prevention strategies that have been shown to reduce youth access and exposure to tobacco products; and WHEREAS, this ordinance would prohibit new businesses from selling tobacco near schools and reduce tobacco density; and
WHEREAS, this ordinance and the regulations adopted herein are a lawful exercise of the City’s zoning and police powers and are necessary for the preservation of the public health, safety, and welfare, including to protect against preventable nicotine deaths and addiction, reduce tobacco related deaths and addition among the youth and the consequent long term public health and society costs associated thereto, encourage responsible tobacco retailing, and discourage the violation of laws and regulations governing the sale of tobacco products; and WHEREAS, the Planning Commission is an advisory body to the City Council; and WHEREAS, the City Council is the final authority on General Plan, Specific Plan, and Zoning amendments, including amendments to the Zoning Ordinance; and WHEREAS, on June 10, 2026, the Planning Commission held a duly noticed public hearing and having duly considered testimony and written materials provided recommended the adoption of this ordinance to the City Council; and
WHEREAS, on August 11, 2026, the City Council held a lawfully-noticed public hearing and after considering all testimony and written materials provided in connection with that hearing introduced this ordinance and waived the reading thereof beyond the title.

NOW, THEREFORE, the City Council of the City of Milpitas does ordain as follows:

SECTION 1. RECORD AND BASIS FOR ACTION
The City Council has duly considered the full record before it, which may include but is not limited to such things as the City staff report, testimony by staff and the public, and other materials and evidence submitted or provided to the City Council. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE XIII, CHAPTER B.6, SECTION B.6.020, TABLE B.6.020-A

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Title XIII, Chapter B.6, Section B.6.020, Table B.6.020-A (Commercial Zones Use Regulations) of the Milpitas Municipal Code is hereby amended to read as follows:

Table B.6.020-A: Commercial Zones Use Regulations
“P” = Permitted Use | “MC” = Minor Conditional Use Permit approved by Zoning Administrator required | “MCS” = Minor Conditional Use Permit approved by Director required | “C” = Conditional Use Permit required |“-“ = Not Allowed Use CO C1 C2 HS Additional Regulations
Commercial Uses
Adult-Oriented Business - - - MCS C.10.040 (Adult-Oriented Businesses)
Animal Care and Services
Kennel - - C -
Pet Day Care and Sales - P P P
Veterinary Clinic C P P P
Veterinary Hospital or
Services - C P P
Milpitas Municipal Code Section
V-210-11 (Permits for Animal
Facilities and Animal Adoption
Organizations)
Commissary or Catering P P P P n/a
Drive-Through Facility - C C C Section C.10.090 (Drive-Through Facilities)
Eating and Drinking Establishment
Bar or Nightclub - - C C
Microbreweries - - MC MC
Section C.10.100 (Eating and
Drinking Establishments)
Mobile Food Park MCS MCS MCS MCS
Mobile Food Vending
(Individual Vehicle) P P P P
Section C.10.170 (Mobile Food
Vending)
Restaurant
Restaurant, Full
Service C 1 P P P
Restaurant, Limited
Service C P P P
Restaurant with
Alcohol Service - MC MC MC
Section C.10.100 (Eating and
Drinking Establishments)
Entertainment and Recreation, Commercial
Commercial Athletic Facility - C MCS MCS n/a
Indoor Entertainment - - P P n/a
Indoor Sports and
Recreation - C P P n/a
Outdoor Entertainment - - C C n/a
Outdoor Sports and
Recreation - C C C n/a

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Table B.6.020-A: Commercial Zones Use Regulations
“P” = Permitted Use | “MC” = Minor Conditional Use Permit approved by Zoning Administrator required | “MCS” = Minor Conditional Use Permit approved by Director required | “C” = Conditional Use Permit required |“-“ = Not Allowed Use CO C1 C2 HS Additional Regulations
Financial Institution
Bank and Credit Union P P P P n/a
Check Cashing Business - - MCS MCS n/a
Pawnbroker - - MCS MCS n/a
Food and Beverage Retail Sales
Alcoholic Beverage Sales C 1 C C C n/a
Convenience Store - C C C n/a
Grocery Store, Large - P P p n/a
Grocery Store, Small - P P p n/a
Home Occupation - - - P Section C.10.130 (Home
Occupations)
Hospital C - C C n/a
Lodging
Hotel - - P P n/a
Motel - - C P n/a
Medical Support Laboratory P C C C n/a
Offices
Business and Professional
Office P p p p n/a
Medical Office/Clinic P P P - n/a
Retail
Firearms Dealer - - C C n/a
Large Format Retail - - P P n/a
Nursery and Garden Center - - P P n/a
Retail, Limited MCS P P P n/a
Retail, Accessory Tobacco
Product Sales - MCS MCS MCS Section C.10.225
(Smoke/Tobacco Uses)
Retail Store, General
Merchandise - P P p n/a
Smoke/Tobacco Shop - C C C n/a Section C.10.225
(Smoke/Tobacco Uses)
Services
Business Support Services - - P P n/a
Maintenance and Repair
Services - - P P n/a

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Table B.6.020-A: Commercial Zones Use Regulations
“P” = Permitted Use | “MC” = Minor Conditional Use Permit approved by Zoning Administrator required | “MCS” = Minor Conditional Use Permit approved by Director required | “C” = Conditional Use Permit required |“-“ = Not Allowed Use CO C1 C2 HS Additional Regulations
Massage Establishment - - MC MC
Massage Establishment,
Accessory - - MCS MCS
Section C.10.160 (Massage
Establishments)
Personal Services 2 - P P P n/a
Repair/Cleaning/General
Services, Small - P P P n/a
Vehicle-Related Uses
Auto Broker MCS MCS MCS - Section C.10.070 (Auto Broker) Commercial Fueling Facility - - - C n/a
Fleet-Based Service - - MCS P n/a
Mobile Fueling 3 P/- P/- P/- P/- Milpitas Municipal Code Chapter V-300 (Fire Code)
Service Station C C P P Section C.10.190 (Service
Stations and Car Washes)
Vehicle Rental - - P P n/a
Vehicle Repair and Maintenance
Major - - C MCS n/a
Minor - - MCS P n/a
Vehicle Sales, Limited - - MCS - n/a
Vehicle Sales and Leasing - - C C n/a
Vehicle Washing - - C C Section C.10.190 (Service
Stations and Car Washes)
Industrial Uses
Custom and Artisan
Manufacturing - - MCS - n/a
Data Center C - - - n/a
Mini-Storage or Self-Storage - - C C n/a
Recycling Facility
Collection Facility - - MCS P n/a
Public, Institutional, and Recreational Uses
Child Care
Child Care Center MC MC MC MC
Section C.10.140 (Large Family
Child Care and Child Care
Centers)

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Transportation Passenger
Terminal/Facility - - C C n/a
Wireless Telecommunications
Facility See Section C.10.240 (Wireless Telecommunications Facilities).

Residential Uses
Emergency Shelter - - P P Section C.10.110 (Emergency
Shelters)
Single-Room Occupancy
Residences - - - C Section C.10.220 (Single Room
Occupancy Residences)
Unclassified Uses
Accessory Use P P P P n/a
Parking Lot 4 MCS MCS MCS P n/a
Parking Structure 4 C C MCS P n/a

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Table B.6.020-A: Commercial Zones Use Regulations
“P” = Permitted Use | “MC” = Minor Conditional Use Permit approved by Zoning Administrator required | “MCS” = Minor Conditional Use Permit approved by Director required | “C” = Conditional Use Permit required |“-“ = Not Allowed Use CO C1 C2 HS Additional Regulations
Temporary Use See Section C.10.230 (Temporary Uses and Structures) Table Notes:
1 When intended to serve the occupants and patrons of the primary use and conducted from within the building. Entrance to the use must be provided internally or within the building, and no exterior display of advertising is allowed. 2 When located on the ground floor, retail sales of products related to the personal services provided must be offered at the front of the premises near the pedestrian entrance and must comprise at least 10% of the floor area of the business establishment.
3 Mobile fueling is permitted when fueling service is ordered by an individual vehicle owner and the amount of fuel dispensed as part of any individual order does not exceed 50 gallons. Mobile fueling for fleet vehicles is not permitted. 4 Applies to parking lots or structures that are primary uses, as defined in Part XIII-E (Definitions).

SECTION 3. AMENDMENT OF MILPITAS MUNIICPAL CODE TITLE XIII, CHAPTER B.8, SECTION B.8.020, TABLE B.8.020-A
Title XIII, Chapter B.8, Section B.8.020, Table B.8.020-A (Mixed Use Zones Regulations) of the Milpitas Municipal Code is hereby amended to read as follows:

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Transportation Passenger
Terminal/Facility C C - C n/a
Wireless Telecommunications Facility See Section C.10.240 (Wireless Telecommunications Facilities) Residential Uses
Accessory Dwelling Unit and Junior
Accessory Dwelling Unit P P P P
Section C.10.030
(Accessory Dwelling Units
and Junior Accessory
Dwelling Units)
Boarding House C C C C n/a
Court Dwelling P P - - n/a
Elderly and Long-Term Care MC MC MC MC n/a
Emergency Shelter - P - - Section C.10.110
(Emergency Shelters)
Group Living Accommodation C C C C n/a

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Table B.8.020-A: Mixed Use Zones Use Regulations
“P” = Permitted Use | “MC” = Minor Conditional Use Permit approved by Zoning Administrator required | “MCS” = Minor Conditional Use Permit approved by Director required | “C” = Conditional Use Permit required |“-“ = Not Allowed Use MXD MXD3 NCMU 1, 2, 3 TC 1, 2, 3 Additional Regulations Live-Work Unit MCS MCS MCS MCS Section C.10.150 (Live- Work Units)
Low Barrier Navigation Center P P - - California Government Code § 65660
Multi-Family Dwelling P P P 11 P n/a
Residential Care Facility P P P P n/a
Single-Room Occupancy Residences P P P P
Section C.10.220 (Single
Room Occupancy
Residences)
Supportive Housing P P P 11 P California Government
Code § 65582
Transitional Housing P P P 11 P California Government
Code § 65582
Unclassified Uses
Accessory Use P P P P n/a
Parking Lot 12 MCS MCS - - n/a
Parking Structure 12 MCS MCS MCS MCS n/a
Temporary Use See Section C.10.230 (Temporary Uses and Structures) Table Notes:
1 Commercial athletic facilities may be permitted with approval of a Minor Conditional Use Permit (Director level) in the NCMU1 subzone, in accordance with Subsection D.4.030 (Use Permits), and are permitted in the NCMU2 and NCMU3 subzones. 2 These uses shall not be located within 1,000 ft of the same use. 3 In the NCMU and TC zones only, small grocery stores up to 15,000 square feet are permitted and grocery stores exceeding 15,000 square feet may be permitted subject to approval of a Conditional Use Permit consistent with Subsection D.4.030 (Use Permits). In all other zones, small and large grocery stores are defined and permitted according to the size thresholds stated in Chapter E.4 (Definitions of Uses).
4 These uses may be allowed provided they are: no more than 10,000 sf in gross floor area if located on the ground floor and are not open past 10:00 p.m.
5 Medical offices and clinics are permitted in the NCMU Zones when located on upper floors, and may be permitted with approval of a Minor Conditional Use Permit (Director level) in accordance with Subsection D.4.030 (Use Permits) when located on the ground floor.
6 When located on the ground floor, retail sales of products related to the personal services provided shall be offered at the front of the premises near the pedestrian entrance and shall comprise at least 10% of the floor area of the business establishment.
7 Mobile fueling is permitted when fueling service is ordered by an individual vehicle owner and the amount of fuel dispensed as part of any individual order does not exceed 50 gallons. Mobile fueling for fleet vehicles is not permitted. 8 Excluding long-term parking and storage of vehicles for rent, sale, or lease, must be fully enclosed within a building. 9 Churches and religious institutions are permitted in any location within the MXD, MXD3, NCMU, and TC Zones. 10 Trade and vocational schools may be permitted subject to approval of a Conditional Use Permit consistent with Subsection D.4.030 (Use Permits), provided that they are not found objectionable due to noise, odor, vibration or other similar factors related to health, safety and welfare.

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11 Spaces serving upper-floor residential uses, such as common gathering space, lobby, and resident services, may be allowed as ground floor uses where residential uses would otherwise not be permitted. 12 Applies to parking lots or structures that are primary uses, as defined in Part XIII-E (Definitions).

SECTION 4. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE XIII, CHAPTER C.10
Title XIII, Chapter C.10 of the Milpitas Municipal Code is hereby amended to add section C.10.225 Smoke/Tobacco Uses to Chapter C.10 Specific to Uses and reads as follows:

A. Purpose. The purpose of this Section is to encourage responsible retailing of tobacco products and protect the public health, safety, and welfare by regulating the establishment, location, and operation of tobacco retailers.

B. Definitions. Terms used in this Section are defined in Chapter E.4 (Definitions of Terms).

C. Location and Distance Requirements.

1. No tobacco retailer shall be allowed:
a. Within 1,000 feet of any school or child care center; or b. Within 500 feet of any other tobacco retailer.

2. The distance between any two tobacco retailer premises shall be measured in a straight line, without regard to intervening structures or objects, from the nearest entrance of a tobacco retailer to the nearest entrance of the second tobacco retailer. The distance between any tobacco retailer and any school shall also be measured in a straight line, without regard to intervening structures or objects, from the nearest entrance of the tobacco retailer to the nearest property line of a school.

D. Exemption to Location and Distance Requirements. The prohibitions on location and distance contained in Subsection C.10.225.C shall not apply to the following:

1. Any tobacco retailer operating lawfully under the Milpitas Municipal Code on the date immediately prior to this Section first becoming effective.

2. Any tobacco retailer operating lawfully under the Milpitas Municipal Code is not in violation of these regulations by the subsequent establishment of a school, child care center, or another tobacco retailer.

3. Tobacco retailers operating under these exemptions shall be a nonconforming use that may not be continued, expanded, changed, or replaced except in conformity with Section C.18.030 (Nonconforming Uses). These exemptions do not apply to tobacco retailers whose nonconforming use is discontinued under Subsection C.18.030.A.2 (Discontinuation of Nonconforming Use). Tobacco retailers operating under these exemptions may not expand the nonconforming use under Subsection C.18.030.A.5 (Expansion of Nonconforming Use) or re-establish that use once discontinued under Subsection C.18.030. B (Re-establishment of Discontinued Nonconforming Uses Within the Midtown and Metro Specific Plan Areas).

E. Other prohibitions.

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1. Flavored tobacco products.
a. No person or entity shall sell a tobacco product containing, as a constituent or additive, an artificial or natural flavor or aroma (other than tobacco) or an herb or spice, including but not limited to strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, mint, menthol, or coffee, that is a characterizing flavor or aroma of the tobacco product, smoke, or vapor produced by the tobacco product. Prohibited flavored tobacco products also include all tobacco products or flavor enhancements otherwise prohibited by applicable law, including Section 104559.5 of the California Health and Safety Code, as it may be amended or superseded, and any tobacco product not appearing on the most current Unflavored Tobacco List maintained by the California Attorney General’s Office. b. A tobacco product shall be subject to a rebuttable presumption that the product is prohibited by paragraph (a) of this subsection if:

1. The product’s manufacturer or any other person associated with the manufacture or sale of tobacco products makes or disseminates public statements or claims to the effect that the product has or produces a characterizing flavor or aroma, other than tobacco; or

2. The product's label, labeling, or packaging includes a statement or claim– including any text and/or images used to communicate information–that the product has or produces a characterizing flavor or aroma, other than tobacco.

F. Application Procedure.

1. Minor Conditional Use Permit. The owner of a retail store, general merchandise or retail, limited store may sell tobacco products, subject to approval of a Minor Conditional Use Permit (Director review) pursuant to Subsection D.4.030.D (Use Permits – Authority).

2. Conditional Use Permit. The owner of a smoke/tobacco shop business must apply for and obtain a Conditional Use Permit before operating the business establishment. The Conditional Use Permit is subject to the provisions and issued in accordance with the Conditional Use Permit process in Section D.4.30 (Use Permits).

G. Additional eligibility requirements.

1. No permit may be issued to authorize retailing tobacco products at or from other than a fixed location. For example, retailing by persons on foot or from vehicles is prohibited.

2. No permit may be issued to authorize the retail of tobacco products at a temporary or recurring temporary event. For example, retailing at flea markets and farmers’ markets is prohibited.

3. No permit may be issued to authorize retailing tobacco products at any location where the profession of pharmacy is practiced by a pharmacist licensed by the State in accordance with the Business and Professions Code and where prescription drugs are offered for sale.

H. General Standards. The following standards shall apply to all tobacco retailers.

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1. Tobacco retailers shall not:
a. Violate any local, state, or federal law applicable to tobacco products or the retailing of such tobacco products.
b. Fail to possess and maintain in a presently valid condition all licenses, permits, and approvals otherwise necessary for their use or otherwise necessary in order to sell tobacco products in the State, including, as applicable, a Cigarette and Tobacco Product Retailer’s License from the California Department of Tax and Fee Administration.
c. Allow or tolerate smoking or the use of electronic smoking devices in places where smoking is prohibited, including within the retail outlet or area where the tobacco retailer is located and within workplaces or enclosed places. d. Cover more than 15 percent of the square footage of the windows and clear doors of a physical storefront used for tobacco retailing with any type of advertising or signs.
e. Sell or distribute tobacco products to anyone prohibited by applicable law from purchasing such products, including persons under the age of 21. f. Sell or distribute a tobacco product without first examining identification to confirm that the age of the purchaser is at least the minimum age required under state law to purchase and possess the tobacco product.

2. Tobacco retailers shall:
a. Post conspicuously, at each point of purchase, a clear and prominent notice stating that selling Tobacco Products to anyone under 21 years of age is illegal and subject to penalties.
b. Post conspicuously clear and prominent notice at each entrance to the building or structure stating “No smoking” where smoking is prohibited throughout the building or “Smoking is prohibited except in designated areas” where smoking is permitted only in designated areas of the building or structure.

I. Violation of Regulations. Violation of any provision of this Section is a public nuisance and injurious to the public health, safety, and welfare and in addition to all other remedies allowed by applicable law, including this Code, is grounds for enforcement action including modification, revocation, or suspension of any underlying use permit in accordance with Chapter D.18 (Enforcement and Penalty).

SECTION 5. AMENDMENT OF MILPITAS MUNICIPAL CODE TITLE XIII, CHAPTER E.4 Title XIII, Chapter E.4 (Definitions of Use) of the Milpitas Municipal Code is hereby amended to read as follows:

Chapter E.4 Definitions of Uses
This Chapter provides definitions for all uses established in the use tables in Part XIII-B (Zone Regulations).

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Accessory Dwelling Unit (ADU). As defined by California Government Code section 66313, an ADU is an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence. An ADU also includes an efficiency unit as defined in California Health and Safety Code section 17958.1 and a manufactured home as defined by California Health and Safety Code section 18007.

Accessory Dwelling Unit, Junior (JADU). A type of accessory dwelling unit defined by California Government Code section 66313 as a residential unit that is consistent with the following:
• Is no more than 500 square feet in size;
• Is contained entirely within an existing or proposed single-family structure; • Includes its own separate sanitation facilities or shares sanitation facilities with the existing or proposed primary dwelling; and
• Includes an efficiency kitchen.

Accessory Use. A use that is customarily associated with, and is incidental and subordinate to, the primary use and located on the same lot as the primary use.

Adult-Oriented Business. See "adult-oriented business terms" in Chapter E.2 (Definitions of Terms).

Advanced Manufacturing. The use of innovative technologies to create existing and new products or to improve products and processes. Advanced manufacturing focuses on the rapid transfer of science and technology into production activities and may incorporate high technology elements such as information, automation, computation, software, sensing, artificial intelligence, machine learning, and networking. Advanced manufacturing may include storage space for raw materials and/or finished goods that actively supports the primary use.

Agriculture. See “cultivated agriculture.”
Agricultural Processing Plant, Commercial. Facility that transforms, processes, and packages livestock or livestock products, or agricultural commodities, into goods that are used for intermediate or final consumption including goods for nonfood use. Includes animal slaughter.

Agricultural Supply Sales. An establishment or place of business primarily engaged in the retail or wholesale sale from the premises of farm supply, feed, grain, fertilizers, pesticides, and similar goods as well as the provision of agriculturally related services with incidental storage on a lot other than where the service is rendered.

Alcoholic Beverage Sales. Any beverage sales use that includes the sale of alcoholic beverages for off-premise consumption. This includes retail sales of liquor, beer, wine, and spirits and can be combined with a retail sales establishment such as a grocery store or convenience store, or it can be a stand-alone liquor store or wine shop.

Animal Husbandry. The care and raising of large livestock, including horses, cattle, swine, goats, sheep, alpacas, and similar animals. This includes any animal-related production uses incidental to the foregoing, such as grazing, grooming, shearing, and milking, but excludes animal slaughter, meat cutting and packing, stockyards or the commercial feeding of garbage or offal to swine or other animals.

Assembly. See “community assembly”.

Auto Broker. An auto dealer or auto buying service as defined in California Vehicle Code section 166, who engages in the business of arranging, negotiating, assisting, or effectuating the

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purchase of a new or used motor vehicle, not owned by the dealer, on behalf of another. This use is limited to office work and does not include storage or parking of vehicles onsite.

Bank and Credit Union. Financial institutions, including federally-chartered banks, savings associations, industrial loan companies, and credit unions that provide retail banking services to individuals and businesses. Includes only those institutions engaged in the on-site circulation of money, and whose deposits are insured by the state or federal government and/or a state or federal sponsored entity, including credit unions.

Bar or Nightclub. Businesses serving beverages for consumption on the premises as a primary use, including serving alcohol such as beer, wine, and spirits. Dancing and live entertainment may also be conducted within the establishment. This use does not include microbreweries. See “food preparation” for tasting rooms that are accessory and subordinate to a brewery, winery, or distillery.

Bed and Breakfast. A residential property with one or more bedrooms dedicated to rental for a fee for overnight lodging of periods of 30 consecutive days or fewer and where meals may be provided to guests. A bed and breakfast is typically either owner-occupied or has the manager or proprietor of the lodging business living on the premises. This use type excludes short-term rentals.

Boarding House. An establishment where housing is provided for compensation, generally for stays of more than 30 days, for up to eight persons. Boarding houses typically have individual rooms for guests, shared bathroom facilities, and a single common kitchen. Meals may be served for guests and included as part of the cost of lodging.

Breweries, Distilleries, and Wineries. An establishment engaged in the brewing, distilling, and production of beer, wine, or other spirits. Tasting rooms that are accessory and subordinate to a brewery, winery, or distillery may be included in this use. This use does not include microbreweries.

Business and Professional Office. Offices of firms or organizations providing professional, executive, business, management, or administrative services, including but not limited to accounting, architectural, computer software design, engineering, consulting, graphic design, insurance, interior design, real estate, legal, and tax preparations offices. Also includes co- working spaces designed to accommodate individuals and organizations that provide such services.

Business Support Services. Establishments primarily within structures that provide other businesses with ancillary services that further or facilitate the other businesses' primary activity, including but not limited to commercial art and design (production); copying and quick-printing services; equipment rental businesses within structures; janitorial services; mailbox rentals; mail advertising services (reproduction and shipping); outdoor advertising services; protective services (other than office-related); rental, repairs and distribution of office or business equipment; and window cleaning.

Caretaker’s Residence. A dwelling unit occupied by employees or caretakers of the primary use on the site.

Cemetery. Land used for the burial of the dead and dedicated for cemetery purposes, including crematories, mausoleums, and mortuaries only when operated in conjunction with and within the boundary of such cemetery.

Check Cashing Business. Establishments that, for compensation, engage in the business of cashing checks, warrants, drafts, money orders, or other commercial paper serving the same purpose. This classification also includes the business of deferred deposits, whereby the check

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Collection Facility. A center for the acceptance, by donation, redemption, or purchase, of recyclable materials from the public where limited sorting and storing of such items is conducted on-site.

College/University, Private. A private college or university, excluding trade or vocational schools.

Commercial Fueling Facility. See “fueling facility, commercial”.

Major. Community assembly use that is over 2,000 gross square feet and has capacity for more than 200 seats.

Minor. Community assembly use that is 2,000 gross square feet or less and has capacity for no more than 200 seats.

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Convenience Store. A retail establishment selling food, beverages, and small convenience items such as personal hygiene products, cigarettes, magazines, and other everyday consumer items.

Court Dwelling. See “dwelling, court”.

Data Center. A facility dedicated to the storage of computer and information technology systems and associated components for the storage, retrieval, and transmittal of electronic information.

Dwelling, Multi-Family. A building containing three or more dwelling units.

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Includes, but is not limited to skilled nursing facilities, rest homes, and convalescent hospitals.

Does not include a residential care facility or hospital.

Firearms Dealer. An establishment engaged in the selling, dealing in, trading, or transferring firearms.

Food and Beverage Processing and Preparation. Cooking, processing, packaging, bottling, and shipping of food products and/or non-alcoholic beverages for off-site sales. This does not include

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breweries, wineries, and distilleries; the slaughtering of live animals; or large-scale operations (see “commercial agricultural processing plant”).

Home Occupation. A commercial use conducted on residential property by the inhabitants of the subject residence, which is incidental and secondary to the residential use of the dwelling.

Indoor Entertainment. Predominantly spectator uses conducted within an enclosed building.

Typical uses include movie theaters, enclosed sports arenas, live performing arts venues, escape rooms, and video game activities and competitions such as e-sports.

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Group. Group instruction includes 10 or more students or clients at any one time.

Private/Small Group. Private instruction includes fewer than 10 students or clients at any one time.

Intermediate Processing Facility. A facility that receives, sorts, compresses or bales, and stores recyclable materials for efficient transfer to other processing facilities or to an end user.

Junior Accessory Dwelling Unit. See Accessory Dwelling Unit, Junior.

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Excludes independent research laboratory facilities and hospitals (see medical support laboratory and see hospital).

Medical Support Laboratory. A facility for scientific laboratory analysis of medical resources.

The analysis is generally performed for medical providers to support the medical provider's work on behalf of patients.

Mining and Quarrying. An operation that extracts gravel, sand, other construction aggregates, or minerals from the ground. Includes quarries and gravel pits.

Mobile Food Vending. The selling or offering to sell products from a mobile food vehicle, which includes the following uses:

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Ice Cream Truck. A motorized vehicle selling ice cream or other frozen dairy or non- dairy dessert products on streets and in other public places.

Mobile Food Park. Site with two or more mobile food vehicles located together on the same parcel and operating at the same time for more than seven consecutive days.

Multi-Family Dwelling. See “dwelling, multi-family”.

Nursery and Garden Center. An establishment primarily engaged in selling nursery and garden products, such as trees, shrubs, plants, seeds, bulbs, and sod that are predominantly grown offsite.

This classification includes commercial and wholesale greenhouses and nurseries offering plants for sale.

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Primary Processing Facility. A facility that processes recyclable materials and acts as a final destination for recyclable materials.

Public Safety. Facilities providing public safety and emergency response services, including police and fire protection, with incidental storage, training, and maintenance facilities.

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Restaurant with Alcohol Service. Either a full service or limited service restaurant that includes alcohol service for on-site consumption.

Riding Academy and Public Stables. Stables leased for the keeping of horses which may also include areas for horse riding and horse riding lessons.

School, Public. A public institution of learning for students offering instruction in those courses of study required by the California Education Code and maintained in compliance with the

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standards set by the State Board of Education. This use includes kindergarten, elementary school, middle or junior high school, and high school.

Single-Family Dwelling. See “dwelling, single-family”.

Temporary Use. A use established for a specified period of time, with the intent to discontinue the use at the end of the designated time period.

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Two-Family Dwelling. See “dwelling, two-family”.

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Vehicle Storage. The use of a site for the short-or long-term storage of automobiles, trucks, motorcycles, and/or other vehicles. Includes towing and impound lots.

Vehicle Washing. Washing, waxing, detailing, and/or cleaning of automobiles or similar light vehicles, including self-serve washing facilities.

Veterinary Clinic. Medical care for household pets on a commercial basis with no overnight (24- hour) accommodation of animals.

Also see wireless telecommunications terms in Chapter E.2 (Definitions of Terms).

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SECTION 7. SEVERABILITY
The provisions of this Ordinance are separable, and the invalidity of any phrase, clause, provision, or part has no effect on the validity of the remainder.

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AGENDA ITEM: VIII

MILPITAS PLANNING COMMISSION

STAFF REPORT

June 10, 2026

APPLICATION: Zoning Text Amendment for Tobacco Retail Buffers – Citywide – P-ZA26-0001: A City-initiated Zoning Ordinance Text Amendment to modify and add regulations to limit the concentration of tobacco retailers within the City and encourage responsible tobacco retailing.

The proposed amendments would specifically prohibit new tobacco retailers from locating within a certain distance from existing tobacco retailers and youth-sensitive areas (schools), prohibit the sale of flavored tobacco products, and adopt other local regulatory standards.

RECOMMENDATION:

Staff recommends that the Planning Commission conduct a public hearing and adopt resolution No. 26-004, recommending that the City Council approve Zoning Text Amendment No. ZA26-0001, amending the Milpitas Municipal Code Title XIII, Chapters B.6, B.8, C.10, and E.4 relating to the regulation of tobacco retailers within the City.

PROJECT LOCATION:

Citywide

PROJECT STAFF:

Lillian VanHua, AICP, Principal Planner
LAND USE:

General Plan Designation:

Zoning District:

ENVIRONMENTAL
REVIEW:

Citywide
Citywide

Exempt from further environmental review pursuant to CEQA Guidelines Section 15183 (Projects Consistent with General Plan). As a separate and independent basis, the Project is also exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption).

EXECUTIVE SUMMARY
This staff report presents work completed as part of the Santa Clara County Public Health Department Tobacco-Free Communities Program. The City was awarded a grant of $22,997 from the Santa Clara County Public Health Department (PHD) to reduce the density of tobacco retailers and location of tobacco retailers near sensitive areas (schools) within the city. Specifically, the proposed zoning ordinance amendment adds a new subsection regulating the density of tobacco retailers, new performance standards for tobacco retailers, prohibiting the sale of flavored tobacco products, and requires businesses that conduct accessory tobacco sales to obtain a Minor Conditional Use Permit to Chapter C.10 of Title XIII (Zoning). Minor amendments to various other sections of Title XIII are proposed concurrently with this update. These minor revisions relate to updating the references within the Commercial and Mixed Use tables (Table B.6.20-A

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2 and Table B.8.20-A) and adding new definitions to the Definition of Uses (Chapter E.4).

BACKGROUND
Tobacco use remains the number one preventable cause of death and disease in California, causing nearly 40,000 deaths in California every year. More than 22 percent of all adult cancer deaths in California are attributable to smoking. In Santa Clara County, one in eight deaths annually is attributed to smoking-related illness or diseases, such as cancer, heart disease, and respiratory diseases. More than one in ten youth in the County currently use tobacco products, including electronic smoking devices, and nearly one in three Santa Clara County teens report that they have used an e-cigarette at least once.

In 2019-20, 25.3 percent of Santa Clara County high school students have used a tobacco product and 8.6 percent used tobacco in the last 30 days. E-cigarettes are the most popular tobacco products, with 23 percent of high school students having used them and 7.7 percent being current users.

Mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco, helping to establish tobacco habits that can lead to long-term addiction. Studies show that youth believe flavored tobacco products are safer and less addictive than non-flavored varieties.

Moreover, the vast majority (93.1 percent) of current Santa Clara County teen tobacco users report using a flavored tobacco product, with flavored vape and hookah use being the highest (96.3 percent and 83.4 percent, respectively).

In 2019, more than 86 percent of Santa Clara County tobacco retailers near schools sold flavored non-cigarette tobacco products, such as e-cigarettes. More than half (52.9 percent) of Santa Clara teens who currently vape reported purchasing their own vaping product, with over 1 in 5 of this group saying they buy them directly from a store. Among those who purchase their vaping products in a store, 71 percent purchased them at a tobacco shop, smoke shop, and vape shop.

The retail sale of tobacco at pharmacies reinforces positive social perceptions of smoking, convey tacit approval of tobacco use, and sends a message that it is not dangerous to smoke. Tobacco-free pharmacy sales policies decrease the availability of tobacco products by reducing tobacco retailer density by up to three times compared with communities that do not have such policies.

To date, some jurisdictions have passed more comprehensive restrictions on the sale of tobacco products. The City of Beverly Hills prohibits the sale of all tobacco products (with an exception for hotels and high-end cigar clubs/lounges). The City of Livermore prohibits the sale of all e-cigarettes, while the City and County of San Francisco prohibits the sale of e-cigarettes that contains nicotine.

Recent State and Federal Laws
On August 28, 2020, California passed a law prohibiting the sale of most flavored tobacco products (Senate Bill (SB) 793). The state law contains three exemptions:

1. Hookah and shisha products (if sold by an adult-only hookah tobacco retailer);

2. Premium cigars with a wholesale price of no less than $12; and

3. Loose leaf tobacco (other than tobacco for roll-your-own-cigarettes).

On November 8, 2022, California voters upheld SB 793, prohibiting a tobacco retailer, or any of the tobacco retailer’s agents or employees, from selling, offering for sale, or possessing with the intent to sell or offer for sale, most flavored tobacco products including flavored e-cigarettes and menthol cigarettes, as well as tobacco product flavor enhancers in retail locations. On October 7, 2023,

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3 Governor Newsom signed into law Assembly Bill (AB) 935, strengthening the enforcement of the flavored tobacco retail law, and broadening the definition of a retail location. These laws specifically provide that local jurisdictions may adopt more restrictive regulations on the sale of tobacco products, including flavored tobacco products.

Previous Work
The Santa Clara County’s Healthy Cities Program seeks to address tobacco-related health concerns by promoting policies and practices to provide tobacco-free and smoke-free communities. Tobacco prevention priority areas known to have the greatest impact on reducing tobacco-related disparities and inequities include:
• Reducing secondhand smoke exposure within multi-unit housing and other outdoor public spaces.
• Establishing a local Tobacco Retail License (TRL) Program to restrict and monitor the sale of tobacco products, flavored tobacco products.
• Reducing the overall density/concentration of tobacco retailers, including prohibiting new tobacco retailers from operating near schools.
• Prohibiting the sale of e-cigarettes and vaping products, or other types of tobacco products.

The Santa Clara County Public Health Department (PHD) has provided funding to cities to support these tobacco prevention strategies known to have the highest impact on reducing tobacco-related disparities and inequities. Following the City Council’s request to explore policies to discourage tobacco use and vaping by teens, on July 20, 2020, the City executed a grant agreement in the amount of $37,560 with the PHD to explore tobacco prevention policies shown to reduce youth access and exposure to tobacco products. The City of Milpitas had previously adopted ordinances to prohibit smoking in parks and trails in 2012 and outdoor dining areas in 2017. In June 2021, the City adopted an ordinance to prohibit smoking in multi-unit residences and many outdoor areas to reduce exposure to secondhand smoke.

The City of Milpitas had previously adopted ordinances to prohibit smoking in parks and trails in 2012 and outdoor dining areas in 2017. In June 2021, the City adopted an ordinance to prohibit smoking in multi-unit residences and many outdoor areas to reduce exposure to secondhand smoke.

On March 16, 2021, the City was awarded a grant from the PHD to educate youth on the dangers of tobacco, reduce the number of tobacco retailers, and develop a licensing program for tobacco retail sales. On October 5, 2021, staff presented policy options to regulate tobacco retail permitting (TRP), flavored tobacco, electronic cigarette products, and tobacco retail location limits for future Council consideration and adoption. At a follow up meeting on June 21, 2022, Council directed staff to develop a tobacco retail permitting program in partnership with Santa Clara County to regulate tobacco retail locations and prohibit the sale of flavored tobacco and electronic cigarette products in Milpitas. However, due to the County’s enforcement requirements related to the licensing program and staffing constraints, the City ultimately did not enter into an agreement with the County.

On March 29, 2024, the City was awarded a grant of $22,997 from the PHD Tobacco-Free Communities Program to reduce the density of tobacco retailers and location of tobacco retailers near sensitive receptors (schools) within the city.

ANALYSIS
To reduce youth access to tobacco products, staff explored the following best practices:

1. Reducing the availability of tobacco by:

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4 a. Prohibiting new tobacco retailers from locating within a certain distance from schools (e.g. 1,000 feet)
b. Prohibiting new tobacco retailers from locating within a certain distance from existing tobacco retailers (e.g. 500 feet)
c. Prohibiting the sale of tobacco products at pharmacies.

2. Codifying the prohibition of sales of flavored tobacco products throughout the City

These options are discussed in more detail below and are proposed as part of the zoning text amendment.

Limit the Location of Tobacco Retailers
There are currently 38 tobacco retailers within the City. The majority of the retailers are liquor stores, gas stations and grocery stores. Three of these retailers are standalone smoke/tobacco shops. There are areas of high concentration of tobacco retailers along N Milpitas Blvd and Dixon Landing, north of W Calaveras Blvd and adjacent to I-880, and E Calaveras Blvd and S Park Victoria Dr (see Attachment B).

Research has shown that the density of tobacco retailers, particularly in neighborhoods around schools, is associated with increased youth smoking rates. Tobacco retailers near schools with high smoking rates have also been shown to have lower cigarette prices and more in-store promotions.

A high density of tobacco retailers has been associated with increased smoking rates, particularly among youth. A study of California neighborhoods found that the density and proximity of tobacco retailers influenced smoking behaviors, including number of cigarettes smoked per day.

Excessive tobacco retailer density may exacerbate disparities in tobacco use and tobacco-related harm. Research also shows that the presence of tobacco in retail settings normalizes the use of tobacco products and triggers smoking urges among former smokers and those attempting to quit.

Additionally, children are more likely to experiment with, and use, tobacco products when tobacco retailers are located near homes.

In Santa Clara County, Cupertino, Gilroy, Los Altos, Los Gatos, Palo Alto, and Saratoga and the unincorporated area restrict the location of new tobacco retailers. More than 50 local governments in California restrict the location of tobacco retailers within a certain distance of schools. The most common buffer zone in such laws is 1,000 feet. With the exception of Gilroy, these jurisdictions also require that new tobacco retailers must be at least 500 feet away from other tobacco retailers.

The proposed ordinance seeks to adopt tobacco prevention strategies that have been shown to reduce youth access and exposure to tobacco products. The ordinance would prohibit new businesses from selling tobacco near schools (e.g. 1,000 feet away) and prohibit the citing of new tobacco retailers in close proximity of existing tobacco retailers (e.g. 500 feet away). The goal of the ordinance is to reduce tobacco density across the city.

Another strategy to reduce the availability of tobacco products is to prohibit the sale of tobacco products by a certain type of retailer, such as pharmacies. In Santa Clara County, Los Gatos, Palo Alto, Saratoga, and the unincorporated County prohibit the sale of tobacco products in pharmacies.

Notably, CVS discontinued the sale of tobacco in pharmacies in 2014. Research has shown that cigarette purchases declined nationally after CVS implemented its policy change and that smokers who had previously purchased their cigarettes exclusively at CVS were more likely to stop buying cigarettes entirely.

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5 Sales of tobacco products in pharmacies may present an inherent conflict of interest and send mixed messages about the health risks posed by tobacco. By selling tobacco products, pharmacies reinforce positive social perceptions of smoking, convey implied approval of tobacco use, and may send a message that it is safe to smoke. The Tobacco Education and Research Oversight Committee for California, the American Pharmacists Association, the California Pharmacists Association, and the California Medical Association have called for the adoption of state and local prohibitions of tobacco sales in drug stores and pharmacies.

Research has shown that more than 95 percent of consumers have said they would continue shopping at drugstores that became tobacco-free much or more often. Communities that have adopted policies prohibiting tobacco sales in pharmacies have experienced up to three times greater reduction in tobacco retailer density compared with communities without such policies, even after controlling for the presence of policies restricting tobacco density and location.

Prohibit the Sale of Flavored Tobacco Products
To be in line with recent state legislation (SB 793 and AB 935), staff has also proposed codifying the prohibition of the sale of flavored tobacco products. Such a prohibition would apply to flavored e-cigarettes, e-liquids, flavored cigars, little cigars, flavored hookah and shisha products, and menthol cigarettes. E-liquids are nicotine solutions that are used with e-cigarettes. These liquid solutions are available in thousands of flavors that are attractive to youth, such as gummy bear and cotton candy.

Flavored tobacco products are considered “starter” products for youth who begin to use tobacco, establishing tobacco habits that can lead to long-term addition. Nearly 81 percent of youth ages 12 to 17 who use tobacco products report that the first product they used was flavored. Youth believe that flavored tobacco products are safer and less addictive than non-flavored varieties. The most comprehensive approach to addressing the availability of flavored tobacco and nicotine products is to prohibit the sale of such products in the city.

In Santa Clara County, the cities of Cupertino, Los Altos, Los Gatos, Morgan Hill, Palo Alto, Saratoga, Sunnyvale, and the County of Santa Clara prohibit the sale of flavored tobacco products in their Municipal Codes.

Permitting Requirements for All Types of Sales of Tobacco Presently retail stores can sell tobacco products as an accessory use and smoke shops are allowed in certain commercial zoning districts with a Conditional Use Permit (CUP) without any required buffers from sensitive land uses. In lieu of a formal tobacco retail permitting (TRP) program, staff is recommending that business owners obtain a Minor Conditional Use Permit (MCUP) for accessory tobacco retail sales from the Planning Department. Although the State of California requires a license to sell tobacco products, more than 150 cities and counties also require a local tobacco retailer permit. Requiring a Minor Conditional Use Permit will allow staff to regulate the concentration of tobacco retailers and ensure that certain performance standards are maintained citywide.

The ordinance reflects other measures to be consistent with the County and the ordinances of neighboring cities such as Palo Alto, Los Gatos, and Cupertino:
• Require retailers to post a notice saying that the sale of tobacco products to anyone under 21 years of age is illegal and subject to penalties.

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6 • Require retailers to check the identification for any purchaser. • Prohibit retailers from covering more than 15 percent of windows and clear doors with any type of ads or signs.
• Prohibit mobile tobacco retailing or tobacco retailing at a temporary event. • Prohibit tobacco retailing at pharmacies.

Proposed Amendments to the Zoning Ordinance
The proposed ordinance includes the following amendments to Title XIII of the Milpitas Municipal Code:
• Add section C.10.225 Smoke/Tobacco Uses to Chapter C.10 Specific to Uses to establish proximity limits for all tobacco retailers to schools and other existing tobacco retailers.

Other prohibitions include a ban on flavored tobacco products. The subsection would also define legal non-conforming requirements with existing retailers as appropriate.

Additionally, the subsection would establish application procedures for Minor Conditional Use Permits and performance standards for all tobacco retailers. • Amend Table B.6.20-A Commercial Zones Use Regulations to include reference to the new subsection.
• Amend Table B.8.20-A Mixed Use Zones Use Regulations to include reference to the new subsection.
• Amend Chapter E.4 to add clarifying definitions.

Anticipated outcomes of the proposed ordinance amendment include:
• No tobacco retailer would be allowed to open a business within 1,000 feet of a school or within 500 feet or an existing tobacco retailer.
• New retailers proposing to sell accessory tobacco products would be required to obtain a Minor Conditional Use Permit from the Planning Department. • Make any existing retailers within these buffers non-conforming uses. • Adopt regulatory standards governing tobacco retailers, including prohibitions on flavored tobacco products and conduct violative of various laws, including sales to minors and smoking within a workplace.

General Plan Conformance
The City’s General Plan is the primary long-range planning document that provides the vision for the future growth and development of Milpitas. The proposed zoning text amendments for regulation of tobacco retailers conform to the policies and standards in the City’s General Plan, as demonstrated in the following table:

Table 1: General Plan Consistency

Policy / Actions Conformance
Community Health and Wellness
Policy CHW 1-1:

Recognize that community health is a
topic that is influenced and affected
by local policies and practices and
nearly all elements of the Milpitas
Consistent. The proposed zoning text
amendment would regulate the proximity of
tobacco retailers to schools and limit their
concentration, as well as adopt regulatory
standards governing tobacco retailers,
including the prohibitions on flavored

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7 General Plan and identify indicators
and legitimate data that can be
measured to gauge and ultimately
improve human health, safety and
equity.
tobacco products. This ordinance satisfies
each element of this policy by exercising
local regulatory authority over a land use
with documented public health
consequences. It also relies on measurable
spatial indicators (buffer distances from
schools and minimum separation between
retailers). The ordinance also advances
health equity by protecting youth and
vulnerable populations from
disproportionate tobacco exposure.

Community Health and Wellness
Policy CHW 7-2:

Reduce exposure to second- and third-
hand tobacco smoke and vaping
through policies and regulations that
limit smoking and vaping of all
products.

Consistent. The proposed zoning text
amendment would implement a buffer to
reduce the density of retail access points and
create performance standards for tobacco
retailers, thereby reducing exposure to
second- and third-hand tobacco smoke and
limiting the sales of smoking and vaping
products.

Community Health and Wellness
Action CHW-7e:

Annually review policies related to
nicotine and tobacco use to ensure
that all policies and regulations are
consistent with novel products and
emerging guidelines.

Consistent. Adopting a buffer ordinance
and requiring all tobacco retailers to obtain
a Minor Conditional Use Permit for tobacco
sales to maintain certain performance
standards are a direct outcome of this
ongoing review process.

FINDINGS FOR APPROVAL (OR DENIAL)
A finding is a statement of fact relating to the information that the Planning Commission has considered in making a decision. Findings shall identify the rationale behind the decision to take a certain action.

Zoning Ordinance Text Amendments (Milpitas Municipal Code Section XIII, Chapter D.6.050) a. The proposed Zoning Amendment is consistent with and conforms to the goals and policies of the General Plan.

The proposed zoning text amendment would regulate the proximity of tobacco retailers

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8 to schools and limit their concentration, as well as adopt regulatory standards governing tobacco retailers, including the prohibitions on flavored tobacco products. This ordinance satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum separation between retailers).

The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure. The proposed zoning text amendment would implement a buffer to reduce the density of retail access points and create performance standards for tobacco retailers, thereby also reducing exposure to second- and third-hand tobacco smoke and limiting the sales of smoking and vaping products. Moreover, adopting a buffer ordinance and requiring all tobacco retailers to obtain a Minor Conditional Use Permit for tobacco sales to maintain certain performance standards are a direct outcome of an ongoing review process to ensure that all policies and regulations are current.
b. The proposed Zoning Amendment is consistent with and conforms to the goals and policies of any Specific Plan, if applicable;

The proposed zoning text amendment would apply citywide as it is primarily regulating the location of tobacco retail uses and adopts regulatory standards governing tobacco retailers, including the prohibitions on flavored tobacco products. This ordinance is consistent with and conforms to the goals and policies of both the Gateway-Main Street Specific Plan (Gateway) and the Milpitas Metro Specific Plan (Metro). The Gateway Plan’s vision includes creating a walkable, mixed-use urban village accessible from the surrounding community. One of the guiding principles of the Gateway Plan is to integrate a mix of uses that serve the community’s needs. The ordinance does not prohibit tobacco retail uses outright, but it does regulate their spatial relationship to sensitive uses (schools) and to each other, as well as prohibiting the sale of tobacco at pharmacies, which is consistent with the Gateway’s intent to create a healthy, livable community. The Metro Plan’s core vision is to create a complete and unique urban neighborhood. Regulating tobacco retail density and adopting regulatory standards for tobacco retailers within the Metro Plan area is consistent with a complete neighborhood that prioritizes the health and well-being of its residents.

c. The proposed Zoning Amendment will not be detrimental to the public health, safety, convenience, and general welfare;

The proposed zoning amendment will protect the public interest, health, safety, convenience, and general welfare by establishing land use regulations intended to reduce youth access to tobacco products, decrease the normalization of tobacco use near schools and across the city, and advance the City's General Plan goals for community health and wellness. Therefore, the ordinance will not adversely affect the public health, safety, convenience, and general welfare.

d. The proposed Zoning Amendment is in compliance with the provisions of California Environmental Quality Act;

Pursuant to Section 15061(b)(3) of the California Code of Regulations (CEQA Guidelines), zoning amendment is not subject to review under CEQA. CEQA Guidelines

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9 Section 15061(b)(3), also known as the “common sense exemption,” states that CEQA only applies to projects that have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. A “significant effect on the environment” means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the project. This ordinance would create new regulations related to tobacco retailers. Such uses have been previously allowed, and this ordinance would not affect the densities or intensities of use previously allowed. It would enact standards for the location of tobacco retailers that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that tobacco retailers comply with all applicable requirements. Therefore, it can be seen with certainty that there is no possibility that the ordinance in question would have a significant effect on the environment; accordingly, the ordinance is exempt from CEQA review.

As a separate and independent basis, the project is also exempt from further environmental review under CEQA Guidelines Section 15183 (Project Consistent with General Plan, Community Plan, or Zoning), which applies to projects which are consistent with the General Plan for which an EIR was certified shall not require additional environmental review, except as might be necessary to examine whether there are project-specific significant effects which are peculiar to the project or site. The project is consistent with and conforms to the goals and policies of the Milpitas General Plan 2040. The General Plan’s Community Health and Wellness (CHW) Element employs a “Health in All Policies” (HiAP) framework, which stresses the importance of infusing health awareness into all governmental programs, functions, and responsibilities. The proposed ordinance would regulate the proximity of tobacco retailers to schools and limit their concentration, as well as allow the City to enforce performance standards for all tobacco retailers via the requirement of a Minor Conditional Use Permit and prohibit the sale of flavored tobacco products. The project advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. This ordinance satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum separation between retailers). The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure.

e. When considering a reduction of residential density, ensure compliance with California Government Code section 65863 by either finding that the remaining sites identified in the Housing Element are adequate to accommodate the City’s share of the regional housing need or by identifying sufficient additional, adequate, and available sites with an equal or greater density so that there is no net loss in residential density; and

This finding is not applicable. The zoning text amendment is not reducing residential density.

f. The proposed Zoning Amendment would not result in a net loss of potential housing units.

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10 This finding is not applicable. The zoning text amendment is not reducing potential housing units.

g. The proposed Zoning Amendment is internally consistent with other applicable provisions of this Title.

The purpose of the Milpitas Zoning Ordinance is to “promote public health, safety, comfort, and general welfare, and to enable appropriate and orderly development.” The proposed zoning amendment directly advances this stated purpose by using the City's land use authority to regulate the proximity of tobacco retailers to schools, limit the density of tobacco retail outlets, prohibit the sale of flavored tobacco products, and empower the City to require Minor Conditional Use Permits for all tobacco retailers and enforce performance standards. These are recognized public health interventions designed to reduce youth access to tobacco products. Tobacco retail establishments are currently regulated as commercial uses subject to the City's standard use permit and business licensing requirements. The proposed buffer and density provisions, as well as the additional Planning permitting requirements will supplement those existing requirements.

The amendments are consistent with the Zoning Ordinance as a whole and do not create any internal inconsistencies.

ENVIRONMENTAL REVIEW
Pursuant to Section 15061(b)(3) of the California Code of Regulations (CEQA Guidelines), staff has determined that the introduction and adoption of this ordinance is not subject to review under CEQA. CEQA Guidelines Section 15061(b)(3), also known as the “common sense exemption,” states that CEQA only applies to projects that have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

A “significant effect on the environment” means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the project. This ordinance would create new regulations related to tobacco retailers. Such uses have been previously allowed, and this ordinance would not affect the densities or intensities of use previously allowed. It would enact standards for the location of tobacco retailers that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that tobacco retailers comply with all applicable requirements. Therefore, it can be seen with certainty that there is no possibility that the ordinance in question would have a significant effect on the environment; accordingly, the ordinance is exempt from CEQA review.

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11 as allow the City to enforce performance standards for all tobacco retailers via the requirement of a Minor Conditional Use Permit and prohibit the sale of flavored tobacco products. The project advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. This ordinance satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum separation between retailers). The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure.

PUBLIC COMMENT/OUTREACH
The City conducted an online community survey as part of a previous grant award to explore tobacco prevention policies. The survey was open from July 15 to August 31, 2020 to gather feedback from the community about tobacco-related policies. The survey asked about policies to regulate tobacco retailers. The survey was advertised through the City website, social media, and postcard notices, which were mailed directly to all multi-unit properties in the City and distributed at the Senior Center and summer camps hosted by the Recreation and Community Services Department.

The survey received 125 responses. 69% of respondents said they think flavored tobacco products are more appealing to youth than unflavored tobacco products. Nearly 40% of respondents reported that they think it is easy for youth under the age of 21 to buy flavored tobacco products in Milpitas.

Staff also conducted outreach to all 38 tobacco retailers within the City. Staff visited each retailer and dropped off community meeting flyers informing the business community of an online community meeting. The meeting was held on April 29, 2026 from 4:00 to 5:00pm. No members of the community participated in the meeting.

A notice of this hearing was published in the Milpitas Post on May 15, 2026, and posted at City Hall and on the City's website at www.milpitas.gov. At the time of writing this report, no comments have been received regarding the proposed zoning ordinance amendment.

STAFF RECOMMENDATION
Staff recommends that the Planning Commission:

1. Open the Public Hearing to receive comments;

2. Close the Public Hearing; and

3. Adopt Resolution No. 26-004, recommending that the City Council approve Zoning Text Amendment No. ZA26-0001, amending the Milpitas Municipal Code Title XIII, Chapters B.6, B.8, C.10, and E.4 relating to the regulation of tobacco retailers within the City.

ATTACHMENTS:

A: Planning Commission Resolution No. 26-004
Exhibit 1: Draft Zoning Text Amendment Ordinance
B: Tobacco Retailer Buffer and Density Map

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Resolution No. 26-004 Page 1

RESOLUTION NO. 26-004

A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF MILPITAS

RECOMMENDING THAT THE CITY COUNCIL APPROVE ZONING TEXT AND MAP AMENDMENT ZA26-0001, AMENDING THE MILPITAS MUNICIPAL CODE TITLE XIII, CHAPTER B.6, B.8, C.10, AND E.4 RELATING TO THE REGULATION OF TOBACCO

RETAILERS

WHEREAS, the City of Milpitas, California (the “City”) is a municipal corporation, duly organized under the constitution and laws of the State of California; and WHEREAS, tobacco use remains the number one preventable cause of death and disease in California, causing nearly 40,000 deaths in California every year. More than 22% of all cancer deaths in California are attributable to smoking; and
WHEREAS, in Santa Clara County (County), one in eight deaths annually is attributed to smoking-related illness or diseases, such as cancer, heart disease, and respiratory diseases; and WHEREAS, in 2019-20, 25.3% of Santa Clara County high school students have used a tobacco product and 8.6% used tobacco in the last 30 days. E-cigarettes are the most popular tobacco product, with 23.0% of high school students having used them and 7.7% being current users; and WHEREAS, in August 2020, the state of California adopted SB 793, which prohibits the sale of most flavored tobacco products. SB 793 specifically provides that a municipality may adopt a stricter local ordinance; and
WHEREAS, in September 2024, the state of California adopted AB 3218, which requires the creation of Unflavored Tobacco List by the California Attorney General to clearly define which products are legally allowed to be sold by retailers, wholesalers, distributors and delivery sellers in California; and
WHEREAS, mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco, helping to establish tobacco habits that can lead to long-term addiction; and
WHEREAS, studies show that youth believe flavored tobacco products are safer and less addictive than non-flavored varieties; and
WHEREAS, the vast majority of current Santa Clara County teen tobacco users report using a flavored tobacco product (93.1%), with flavored vape and hookah use being the highest (96.3% and

83.4%, respectively); and
WHEREAS, in 2019, more than 86% of Santa Clara County tobacco retailers near schools sold flavored non-cigarette tobacco products, such as e-cigarettes; and WHEREAS, more than half of Santa Clara teens who currently vape reported purchasing their own vaping product (52.9 percent), with over 1 in 5 of this group saying they buy them directly from a

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Resolution No. 26-004 Page 2

store. Among those who purchase their vaping products in a store, 71 percent purchased them at a tobacco shop, smoke shop, and vape shop; and
WHEREAS, by selling tobacco products, pharmacies reinforce positive social perceptions of smoking, convey tacit approval of tobacco use, and send a message that it is not so dangerous to smoke; and
WHEREAS, tobacco-free pharmacy sales policies decrease the availability of tobacco products by reducing tobacco retailer density by up to three times compared with communities that do not have such policies; and
WHEREAS, research indicates that the density and proximity of tobacco retailers increase smoking behaviors. In particular, children are more likely to smoke when they live or go to school in neighborhoods with a high density of tobacco retailers; and WHEREAS, state law prohibits the sale or tobacco products to anyone under the age of 21 and requires all tobacco retailers to be licensed by the Department of Tax and Fee Administration; and WHEREAS, this ordinance seeks to adopt tobacco prevention strategies that have been shown to reduce youth access and exposure to tobacco products; and WHEREAS, this ordinance would prohibit new businesses from selling tobacco near schools and reduce tobacco density; and
WHEREAS, this ordinance and the regulations adopted herein are a lawful exercise of the City’s zoning and police powers and are necessary for the preservation of the public health, safety, and welfare, including to protect against preventable nicotine deaths and addiction, reduce tobacco related deaths and addition among the youth and the consequent long term public health and society costs associated thereto, encourage responsible tobacco retailing, and discourage the violation of laws and regulations governing the sale of tobacco products; and WHEREAS, the Planning Commission made and accepted as its own the findings set forth in this resolution; and
WHEREAS, the Planning Commission is an advisory body to the City Council; and

WHEREAS, the City Council is the final authority on General Plan, Specific Plan, and Zoning amendments; and
WHEREAS, on June 10, 2026, the Planning Commission held a duly noticed public hearing on the Zoning Text Amendments related to the regulation of tobacco retailers and considered all written and oral reports of staff and public testimony on the matter, and such other matters as are reflected in the record of this matter; and
WHEREAS, on June 10, 2026, the Planning Commission, following a duly noticed public hearing, adopted Resolution No. 26-004 by a vote of 6 Ayes and 0 Noes, recommending that the City Council approve Zoning Amendment ZA26-0001 to enact regulations limiting the concentration of tobacco retailers within the City, including local prohibitions on the sale of flavored tobacco products,

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Resolution No. 26-004 Page 3

the requirement of a Minor Conditional Use Permit for all tobacco retailers and buffer standards restricting the proximity of tobacco retailers to schools; and further directing staff to return to the City Council with clarifying language expanding the definition of schools subject to the buffer requirements to include both public and private schools as well as childcare centers; and WHEREAS, the Planning Commission has considered all the written and oral testimony presented at the public hearing in making its decision; and

WHEREAS, all legal prerequisites to the adoption of this resolution and the Planning Commission’s review, recommendation, and approval of the Zoning amendments and CEQA review contained herein have been met.

NOW THEREFORE, the Planning Commission of the City of Milpitas hereby finds, determines, and resolves as follows:

SECTION 1. Recitals

The Planning Commission has duly considered the full record before it, which may include but is not limited to such things as the City staff re port, testimony by staff and the public, and other materials and evidence submitted or provided to the Planning Commission. Furthermore, the recitals set forth above are found to be true and correct and are incorporated herein by reference.

SECTION 2. CEQA Finding

The Planning Commission finds, pursuant to Government Code Section 15061(b)(3), the provisions of this zoning ordinance text amendment are not s ubject to review under the California Environmental Quality Act. CEQA Guidelines Section 15061(b)(3), also known as the “common sense exemption,” states that CEQA only applies to projects that have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. A “significant effect on the environment” means a substantial, or potentially substantial, adverse change in any of the physical conditions within the area affected by the project. This ordinance would create new regulations related to tobacco retailers. Such uses have been previously allowed, and this ordinance would not affect the densities or intensities of use previously allowed. It would enact standards for the location of tobacco retailers that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that tobacco retailers comply with all applicable requirements. Therefore, it can be seen with certainty that there is no possibility that the ordinance in question would have a significant effect on the environment; accordingly, the ordinance is exempt from CEQA review.

As a separate and independent basi s, the Ordinance is also exempt from further environmental review under CEQA Guidelines Section 15183 (Project Consistent with General Plan, Community Plan, or Zoning), which applies to projects which are consis tent with the General Plan for which an EIR was certified shall not require additional environmental rev iew, except as might be necessary to examine whether there are project-specific significant effects which are peculiar to the project or site. The project is consistent with and conforms to the goals and policies of the Milpitas General Plan 2040. The General Plan’s Community Health and Wellness (CHW) Elemen t employs a “Health in All Policies” (HiAP) framework, which stresses the importance of infusi ng health awareness into all governmental programs,

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Resolution No. 26-004 Page 4

functions, and responsibilities. The proposed ordinance would regulate the proximity of tobacco retailers to schools and limit their concentration, as well as allow the City to enforce performance standards for all tobacco retailers via the requirement of a Minor Conditional Use Permit and prohibit the sale of flavored tobacco products. The project advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. This ordina nce satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distan ces from schools and minimum separation between retailers). The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure.

SECTION 3. Findings for Zoning Ordinan ce Text and Map Amendment (Milpitas Municipal Code, Subsection XIII-D.6.050)

The Planning Commission finds based upon the full record before it that all findings and prerequisites required for the Zoning Text amendment proposed have been met, including those set forth in the Government Code, including Sections 65850 et seq., and the Milpitas Municipal Code, including Subsection XIII-D.6. The Planning Commission makes the following further and specific findings based on the evidence in the public record in support of Zoning Text and Zoning Map Amendment No. ZA26- 0001:

a) The proposed Zoning Amendment is consistent wi th and conforms to the goals and policies of the General Plan;

The proposed zoning text amendment is consistent with and conforms to the goals and policies of the Milpitas General Plan 2040. The General Plan’s Community Health and Wellness (CHW) Element employs a “Health in All Policies” (HiAP) fram ework, which stresses the importance of infusing health awareness into all governmental programs, functions, and responsibilities. The proposed ordinance advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. The proposed zoning text amendment would regulate the proximity of tobacco retailers to schools and limit their concentr ation, as well as adopt regulatory standards governing tobacco retailers, including the prohibitions on flavored tobacco products. This ordinance satisfies each element of these policies by exercisi ng local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum separation between retailers). The ordinance also advances health equity by protecting youth and vulnera ble populations from disproportionate tobacco exposure. The proposed zoning text amendment would implement a buffer to reduce the density of retail access points and create performance standards for tobacco retailers, thereby also reducing exposure to second- and third-hand tobacco smok e and limiting the sales of smoking and vaping products. Moreover, adopting a buffer ordinance and requiring all tobacco retailers to obtain a Minor Conditional Use Permit for tobacco sales to maintain certain performance standards are a direct outcome of an ongoing review process to ensure that all policies and regulations are current.

b) The proposed Zoning Amendment is consistent with and conforms to the goals and policies of any Specific Plan, if applicable;

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Resolution No. 26-004 Page 5

The proposed zoning text amendment would apply citywide as it is primarily regulating the location of tobacco retail uses and adopts regulatory standards governing tobacco retailers, including the prohibitions on flavored tobacco products. This ordinance is consistent with and conforms to the goals and policies of both the Gateway-Main Street Speci fic Plan (Gateway) and the Milpitas Metro Specific Plan (Metro). The Gateway Plan’s vision includes creating a walkable, mixed-use urban village accessible from the surr ounding community. One of the guiding principles of the Gateway Plan is to integrate a mix of uses that serve the community’s needs. The ordinance does not prohibit tobacco retail uses outright, but it does regulate their spatial relationship to sensitive uses (schools) and to each other, as well as prohibiting the sale of tobacco at pharmacies, wh ich is consistent with the Gateway’s intent to create a healthy, livable community. The Metro Plan’s core vision is to create a complete and unique urban neighborhood. Regulating tobacco retail density and adopting regulatory standards for tobacco retailers within the Metro Plan area is consistent with a complete neighborhood that prioritizes the health and well-being of its residents.

c) The proposed Zoning Amendment will not be detr imental to the public interest, health, safety, convenience, and general welfare;

The proposed zoning amendment will protect the publ ic interest, health, safety, convenience, and general welfare by establishing land use regulati ons intended to reduce youth access to tobacco products, decrease the normalization of tobacco use near schools and across the city, and advance the City's General Plan goals for community health and wellness. Therefore, the ordinance will not adversely affect the public health, safety, convenience, and general welfare.

d) The proposed Zoning Amendment is in compliance with the provisions of California Environmental Quality Act;

Pursuant to Section 15061(b)(3) of the California Code of Regulations (CEQA Guidelines), zoning amendment is not subject to review under CEQA. CEQA Guidelines Section 15061(b)(3), also known as the “common sense exemption,” states that CEQA only applies to projects that have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. A “significant effect on the environment” means a substantial, or potentially substantial, adverse change in any of th e physical conditions within the area affected by the project. This ordinance would create new regulations related to tobacco retailers. Such uses have been previously allowed, and this ordinance woul d not affect the densities or intensities of use previously allowed. It would enact standards for the location of tobacco retailers that are comparable to standards for other commercial land uses, and City staff review would be required to ensure that tobacco retailers comply with all applicable requiremen ts. Therefore, it can be seen with certainty that there is no possibility that the ordinance in question would have a significant effect on the environment; accordingly, the ordinance is exempt from CEQA review.

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Resolution No. 26-004 Page 6

project is consistent with and conforms to the goa ls and policies of the Milpitas General Plan 2040.

The General Plan’s Community Health and We llness (CHW) Element employs a “Health in All Policies” (HiAP) framework, which stresses the im portance of infusing health awareness into all governmental programs, functions, and responsibilities. The proposed ordinance would regulate the proximity of tobacco retailers to schools and limit their concentration, as well as allow the City to enforce performance standards for all tobacco retailers via the requirement of a Minor Conditional Use Permit and prohibit the sale of flavored tobacco products. The project advances several General Plan goals and policies, specifically CHW Policy 1-1, CHW Policy 7-2, and CHW Action 7e. This ordinance satisfies each element of these policies by exercising local regulatory authority over a land use with documented public health consequences. It also relies on measurable spatial indicators (buffer distances from schools and minimum sepa ration between retailers). The ordinance also advances health equity by protecting youth and vulnerable populations from disproportionate tobacco exposure.

e) When considering a reduction of residential density, ensure compliance with California Government Code Section 65863 by either finding that the remain ing sites identified in the Housing Element are adequate to accommodate the City’s share of the re gional housing need or by identifying sufficient additional, adequate, and available sites with an equal or greater density so that there is no net loss in residential density;

This finding is not applicable. The zoning text amendment is not reducing residential density.

f) The proposed Zoning Amendment would not result in a net loss of potential housing units;

This finding is not applicable. The zoning text am endment is not reducing potential housing units.

g) The proposed Zoning Ordinance Text Amendment is internally consistent with other applicable provisions of this Title;

The purpose of the Milpitas Zoning Ordinance is to “promote public health, safety, comfort, and general welfare, and to enable appropriate an d orderly development.” The proposed zoning amendment directly advances this stated purpose by using the City's land use authority to regulate the proximity of tobacco retailers to schools, limit the density of tobacco retail outlets, prohibit the sale of flavored tobacco products, and empower the City to require Minor Conditional Use Permits for all tobacco retailers and enforce performance standards. These are recognized public health interventions designed to reduce youth access to tobacco products. Tobacco retail establishments are currently regulated as commercial uses subject to the City's standard use permit and business licensing requirements. The proposed buffer and density provisions, as well as the additional Planning permitting requirements will supplement those existing requirements. The amendments are consistent with the Zoning Ordinance as a whole and do not create any internal inconsistencies.

SECTION 4: Planning Commission Action

The Planning Commission of the City of Milpitas hereby adopts Resolution No. 26-004 recommending that the City Council approve Zoning Amendment No. ZA26-0001 and adopt the proposed ordinance in Exhibit 1 hereto, to enact regulations limiting the concentration of tobacco retailers within

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Resolution No. 26-004 Page 7

the City and adopt other tobacco retailer regulatio ns including local prohibitions on the sale of flavored tobacco products, based on the above Findings and the full record before it.

PASSED AND ADOPTED at a regular meeting of the Planning Co mmission of the City of Milpitas on June 10, 2026.

Parveen Gupta, Chair

TO WIT:

I HEREBY CERTIFY that the following resolution was duly adopted at a regular meeting of the Planning Commission of the City of Milpitas on June 10, 2026, and carried by the following roll call vote:

COMMISSIONER AYES NOES ABSENT ABSTAIN
Parveen Gupta
Michael Caulkins
Alexander Galang
Dipak Awasthi
Chia Ling Kong
Dawn Brown
Olania Castillo

EXHIBITS
1: Draft Zoning Text Amendment Ordinance

X
X
X
X
X
X
X

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Certificate Of Completion
Envelope Id: EFB69F33-466B-8726-81B3-2CCCC69C2212 Status: Completed Subject: Complete with Docusign: Attachment A - PC Reso 26-004 Final rev1.pdf Source Envelope:

Document Pages: 7 Signatures: 1 Envelope Originator:

Certificate Pages: 5 Initials: 0 Liz Medina
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
455 E Calaveras Blvd
Milpitas, CA 95035
[email protected]
IP Address: 165.225.242.83
Record Tracking
Status: Original
July 21, 2026 | 15:03
Holder: Liz Medina
[email protected]
Location: DocuSign
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Chair Parveen Gupta
[email protected]
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Sent: July 21, 2026 | 15:14
Viewed: July 23, 2026 | 17:43
Signed: July 23, 2026 | 17:44
Electronic Record and Signature Disclosure:

Accepted: July 23, 2026 | 17:43
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Lillian VanHua
[email protected]
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Sent: July 23, 2026 | 17:44
Viewed: August 6, 2026 | 10:20
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Accepted: May 8, 2026 | 13:28
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Certified Delivered Security Checked July 23, 2026 | 17:43 Signing Complete Security Checked July 23, 2026 | 17:44 Completed Security Checked July 23, 2026 | 17:44

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Payment Events Status Timestamps
Electronic Record and Signature Disclosure

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CITY OF MILPITAS
Planning Commission

June 10, 2026 Planning Commission Meeting Minutes Page 1

MEETING MINUTES
7:00pm
JUNE 10, 2026

CITY COUNCIL CHAMBERS,
455 E CALAVERAS BLVD, MILPITAS, CA
and
via TELECONFERENCE (Zoom Webinar)

CALL TO ORDER Chair Gupta called the meeting to order at 7:00pm.

PLEDGE OF ALLEGIANCE Commissioner Galang led the pledge of allegiance.

ROLL CALL Recording Secretary Medina called the roll.

PRESENT: Chair Gupta, Vice Chair Kong, Galang, Awasthi (*arrived at 7:10pm), and Caulkins.

ABSENT: Castillo

STAFF: Jay Lee, Christopher Creech, Lillian VanHua, Kristina Phung, and Elizabeth Medina.

CONFLICT OF

INTEREST/CAMPAIGN

CONTRIBUTION

DECLARATION

Assistant City Attorney Christopher Creech asked if any member of the commission had any personal or financial conflict of interest related to any of the items on the agenda.

APPROVAL OF THE

MEETING AGENDA

By motion, approve the meeting agenda for May 27, 202 6, with Item IX -3, Pulte Residential Townhomes – 1601–1765 S. Main St., continued to a date certain of June 24, 2026.

Motion/Second Kong/Brown
Motion carried by a vote of AYES: 5 NOES: 0

APPROVAL OF THE

MEETING MINUTES

By motion, approve the meeting minutes for May 27, 2026.

Motion/Second Caulkins/Brown
Motion carried by a vote of AYES: 4 NOES: 0 ABSTAIN: 1 (Galang)

ANNOUNCEMENTS

Planning Director Lee announced that the next Planning Commission meeting is scheduled for June 24, 2026, at 7:00 p.m. in the Council Chambers. He also noted that the Commission will observe its regular July recess following that meeting.

PUBLIC FORUM Chair Gupta invited members of the public to address the commission, and there were two speakers.

Wilfred Kong , a resident of the Pines neighborhood for over 24 years, expressed concerns regarding the proposed South Bay Tech Center redevelopment project. He stated that the project would remove existing mature trees and construct three -story residential units adjac ent to existing homes, resulting in privacy impacts for nearby residents. Mr. Kong also expressed concerns regarding increased traffic and parking demands in the area and requested that the City help preserve the privacy and character of the neighborhood.

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June 10, 2026 Planning Commission Meeting Minutes Page 2

Helen Tu et, a resident of Pinewood Court, stated that she had submitted written comments regarding the South Bay Tech Center project, which was continued to the June 24, 2026 meeting. She encouraged the Planning Commissioners to visit the project site and surroundin g neighborhood to better understand potential impacts on residents, businesses, and existing trees. Ms. Tuitt expressed concerns regarding the loss of privacy for adjacent homeowners, the displacement of businesses and services, and the removal of mature t rees. She advocated for retaining business uses at the site or pursuing a mixed-use development approach and requested that the Commission carefully consider community impacts before making a decision.

No additional speakers came forward, and the Chair closed the Public Forum.

PUBLIC HEARING

IX-1 ZONING TEXT AMENDMENT FOR TOBACCO RETAIL BUFFERS – CITYWIDE (P-ZA26-0001): A City-initiated Zoning Ordinance Text Amendment to modify and add regulations to limit the concentration of tobacco retailers within the City and encourage responsible tobacco retailing. The proposed amendments would specifically prohibit new tobacco reta ilers from locating within a certain distance from existing tobacco retailers and youth -sensitive areas (schools), prohibit the sale of flavored tobacco products, and adopt other local r egulatory standards. The Project is exempt from further environmental review pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15183 (Projects Consistent with General Plan). As a separate and independent basis, the Project is also exempt from further environmental review pursuant to CEQA Guidelines Section 15061(b)(3) (Common Sense Exemption). Project Manager: Lillian VanHua, Principal Planner

(34:46) Commissioners asked staff whether an analysis had been conducted to map existing tobacco retailers, schools, and applicable buffer areas to determine where future tobacco retailers could potentially locate under the proposed regulations. Staff explained that, based on the mapping completed to date, additional tobacco retailers could still be established in areas not affected by the proposed retailer -to-retailer and school buffer requirements. Staff noted that additional analysis could be completed prior to City Council consideration to better identify eligible locations.

Commissioners inquired about the rationale for the proposed 1,000 -foot separation between tobacco retailers and the 500 -foot buffer from schools. Staff stated that the proposed distances were based on public health best practices and standards adopted by other jurisdictions. Staff also noted that representatives from the County of Santa Clara were available to provide additional information regarding the research supporting the proposed regulations.

Commissioners discussed the proposed Minor Conditional Use Permit (MCUP) process and associated fees for tobacco retailers. Staff reported that the current MCUP fee is approximately $1,526.

Several Commissioners expressed concern regarding youth access to tobacco products and referenced recent enforcement actions involving local tobacco retailers.

Questions were raised regarding the City's enforcement capabilities and whether proactive inspections or enforcement efforts could be implemented. Staff explained that code enforcement activities are largely complaint -driven due to limited staffing resources and that criminal violations fall under the jurisdiction of the Police Department and other enforceme nt agencies. Staff noted that proactive inspection programs would require additional staffing and resources.

Commissioners discussed the City's existing smoke -free ordinance and suggested increasing public awareness through additional signage at businesses and shopping centers. Staff noted that smoking is already prohibited within specified distances of entrances and exits to public businesses and in various public areas throughout the City. Staff further stated that signage requirements are already included in the City's

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June 10, 2026 Planning Commission Meeting Minutes Page 3

municipal code and that tobacco prevention signage had previously been distributed to local businesses through County programs.

Commissioners also discussed potential tobacco control measures adopted in other jurisdictions, including minimum pricing and minimum package size requirements for tobacco products. Staff explained that such regulations had been considered during ordinance development but were not included due to anticipated enforcement challenges. Staff noted that the Planning Commission could recommend that the City Council consider such measures.

A Commissioner asked how Milpitas compares to neighboring jurisdictions in terms of the number of tobacco retailers. Staff stated that while a per -capita analysis had not been completed, Milpitas is believed to have a relatively high number of tobacco retailers compared to other cities that have previously adopted tobacco retail regulations.

Chair Gupta opened the public hearing.

Brian Lam, representing the California Fuels and Convenience Alliance, expressed support for efforts to reduce youth tobacco use but raised concerns regarding potential impacts on existing convenience stores and gas stations. He stated that the proposed proximity requirements could negatively affect busi ness owners seeking to sell or transfer ownership of their businesses. Mr. Lam requested that the Commission consider exempting gas stations and convenience stores from the proposed separation requirements.

No additional speakers came forward.

Chair Gupta closed the public hearing.

Following public comment, Commissioners discussed tobacco advertising regulations and expressed interest in obtaining additional information regarding the proposed ordinance, including enforcement mechanisms, the inclusion of private schools in the school buffer requirements, and the overall regulatory framework.

Staff explained that previous efforts to establish a tobacco retailer licensing program had been evaluated but were determined to be infeasible due to staffing and budget limitations. Staff indicated that grant funding was available for the current ordinan ce effort but that timelines existed for completing the project.

Commissioners discussed expanding the definition of schools subject to the buffer requirements. Staff clarified that the ordinance currently applies to schools serving kindergarten through twelfth grade and recommended expanding the buffer requirements to include both public and private schools as well as childcare centers.

Commissioners also discussed potential enforcement recommendations, including increased coordination with the Police Department and consideration of licensing - based enforcement programs. Staff explained that such programs would require additional resources and had previously been considered by the City Council.

The Commission generally expressed support for strengthening protections for youth while ensuring that staff return with clarifying language regarding school definitions and related buffer requirements prior to City Council consideration.

Recommendation: Staff recommends that the Planning Commission conduct a public hearing and adopt resolution No. 26-004, recommending that the City Council approve Zoning Text Amendment No. ZA26-0001, amending the Milpitas Municipal Code Title XIII, Chapters B.6, B.8, C.1 0, and E.4 relating to the regulation of tobacco retailers within the City. * The Commission requested staff to provide additional clarification regarding school definitions and associated buffer requirements for City Council consideration.

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June 10, 2026 Planning Commission Meeting Minutes Page 4

Motion/Second Caulkins/Galang
Motion carried by a vote of AYES: 6 NOES: 0

(1:39:22) IX-2 NEW BUSINESS PARK RESEARCH AND DEVELOPMENT BUILDINGS - 710-790 SYCAMORE DRIVE, 1511 BUCKEYE DRIVE, AND 1610 -1630 MCCARTHY BLVD – P-SD25-0007, P-EA26-0002, AND MASTER SIGN PROGRAM -- SD25-0009:

A request for a Site Development Permit, Environmental Assessment, and Sign Program to allow redevelopment of an approximately 16.79 -acre site located at 710 –790 Sycamore Drive, 1511 Buckeye Drive, and 1610 –1630 McCarthy Boulevard within the Business Park Research and Development (BPRD) Zoning District. The project proposes construction of three new two -story speculative industrial buildings with ancillary office space, totaling approximately 330,718 -square feet, including 293,218 -square feet of industrial warehouse space and 37,500 -square feet of office space, consistent with the BPRD land use designation. The maximum building height would be approximately 40 - feet to the top of parapet. Site improvements include new internal roadways, landscaping, off-site public improvements, and seven driveway access points. The project would provide a surface parking lot with 432 vehicle parking spaces, six drive -in doors, and 39 loading dock doors. The Sign Program includes installation of 22 signs, consisting of five primary building identification signs, two monument signs, seven wayfinding totem signs, three building address signs, and five tenant identification signs.

(2:04:34) Project Planner Sean Manalo and applicant team addressed commissioners' clarifying questions.

Commissioners questioned the applicant regarding projected economic benefits associated with the proposed development, including job creation, annual economic activity, and construction-related impacts. Concerns were raised regarding the range of uses permitted within the proposed facilities and whether the project would ultimately be occupied by advanced manufacturing tenants, as anticipated, or by other permitted industrial uses such as warehousing, logistics, or research and development operations.

The applicant stated that the project was specifically designed to attract advanced manufacturing users and that market demand for modern industrial facilities in Silicon Valley strongly supports that expectation. While no specific tenant commitments have been secured, the applicant indicated that the building design, infrastructure investments, and anticipated rental rates are intended to attract advanced manufacturing businesses rather than traditional warehouse operators.

Commissioners requested information regarding the potential fiscal benefits to the City.

Staff referenced estimates provided by the Economic Development Department indicating that the project could support more than 1,000 middle -income jobs, generate approximately $100 million in annual economic activity, and create an estimated $62 million in one -time construction -related economic impact. Staff noted that a detailed analysis of recurring City revenues, such as property and sales tax generation, had not been prepared as part of the Site Development Permit review.

Staff reminded the Commission that the application under consideration was a Site Development Permit focused on the proposed building improvements and site design.

Future tenant occupancy would be reviewed for consistency with the zoning regulations and permitted uses within the Business Park Research and Development (BPRD) zoning district.

Commissioners also inquired about anticipated tenant occupancy, project marketing, and leasing efforts. The applicant stated that the buildings are designed to accommodate multiple tenants and that marketing activities would begin following project approvals and during construction.

Several Commissioners expressed support for the project, noting its potential to strengthen Milpitas' advanced manufacturing sector, generate employment opportunities,

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and contribute to the City's economic development goals. Comparisons were made to the growth of advanced manufacturing in neighboring communities, particularly Fremont.

Questions were raised regarding sustainability features and energy demands associated with the project. The applicant confirmed that solar installations are required and will be incorporated into the development.

Commissioners also discussed potential construction impacts, particularly traffic congestion during demolition and construction activities. The applicant stated that construction operations would be managed in accordance with City requirements and permit conditions, with efforts made to minimize impacts on surrounding roadways and adjacent properties. Commissioners encouraged coordination with City staff to avoid scheduling heavy truck traffic during peak commute periods.

Additional discussion addressed building tenant improvements, parking, electric vehicle infrastructure, and demolition procedures. The applicant explained that tenant spaces would be delivered as shell buildings with completed office components, allowing f uture tenants to customize manufacturing and operational areas to meet their specific needs.

Staff confirmed that the project includes 432 parking spaces, including 91 electric vehicle- capable spaces distributed throughout the site.

Commissioners also asked whether the facility could accommodate a future data center use. Staff noted that data centers are a permitted use within the zoning district; however, the applicant stated that the project was not designed to support the electrica l demands typically associated with modern data center operations

Chair Gupta opened the public hearing.

Albert Alcorn, Vice President of the Milpitas Chamber of Commerce, expressed the Chamber's strong support for the project, citing the need for modern industrial space, job creation, and economic growth opportunities within the community.

Allison Soper spoke in support of the project, stating that redevelopment of the long - vacant site would return productive use to the property, create quality employment opportunities, and strengthen the local economy.

Leticia Samame also expressed support for the proposal, emphasizing the importance of expanding local employment opportunities and reducing commute times for Milpitas residents through the creation of advanced manufacturing jobs.

No additional speakers came forward.

Chair Gupta closed the public hearing.

Recommendation: Staff recommends that the Planning Commission open and close the public hearing, consider the exemption from further environmental review pursuant to CEQA Guidelines Section 15183 (Projects Consistent with a Community Plan, General Plan, or Zoning). and adopt Resolution 26-012, approving Site Development Permit No. SD25 -0007, Environmental Assessment No. 26 -0002, and Master Sign Program Permit No. 25-0009 subject to the findings and Conditions of Approval.

Motion/Second Awasthi/Brown
Motion carried by a vote of AYES: 6 NOES: 0

NEW BUSINESS

Commissioner Caulkins requested an update regarding the use of City -issued email accounts for Planning Commissioners. Recording Secretary Medina reported that, after consultation with the Information Technology Director, City -issued email accounts will continue to be used solely for calendaring purposes. Staff explained that providing and maintaining individual email accounts involves licensing co sts, account administration, and ongoing monitoring by Information Technology staff. Given the limited term lengths

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June 10, 2026 Planning Commission Meeting Minutes Page 6

of Planning Commissioners and associated resource requirements, Commissioners will continue to use personal email accounts for correspondence.

ADJOURNMENT Chair Gupta adjourned the meeting at 9:25 pm

Meeting Minutes submitted by
Planning Commission Secretary Elizabeth Medina

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Attachment G
Santa Clara County Tobacco Retailers

Jurisdiction Total # of
Retailers1
Retailers per 1,000
People
Retailers per Square
Mile2
Campbell 38 0.9 6.3
Cupertino 20 0.3 1.8
Gilroy 50 0.9 2.9
Los Altos 11 0.4 1.6
Los Altos Hills 0 0 0
Los Gatos 15 0.5 1.25
Milpitas 40 0.5 2.9
Monte Sereno 0 0 0
Morgan Hill 32 0.7 2.5
Mountain View 50 0.6 4.1
Palo Alto 21 0.3 0.8
San Jose 583 0.6 3.2
Santa Clara (city) 82 0.6 4.5
Santa Clara (county,
unincorporated)
12 0.1 0.01
Saratoga 6 0.2 0.5
Sunnyvale 67 0.4 2.9
Average
(excluding jurisdictions
with no retailers or
missing data)

73.35 0.5 2.5

Milpitas has the same amount of tobacco retailers per 1,000 people as the Santa Clara County Average.
● Jurisdictions with fewer retailers per 1,000 people than Milpitas: 8 ● Jurisdictions with more or the same number of retailers per 1,000 people than Milpitas: 7

1 Data Source: CTHAT. Licensed tobacco retailers with valid addresses from a list of tobacco retail licenses obtained from California Department of Tax and Fee Administration (CDTFA), September 2025. 2 Jurisdiction Size Data Source: Local Agency Formation Commission of Santa Clara County.

Commented [LZ1]: Don: I couldn't find a good source
for the square miles of just the unincorporated area. Do you know what it is?

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Attachment G
Milpitas has more retailers per square mile than the Santa Clara County Average. ● Jurisdictions with fewer retailers per square mile than Milpitas: 9 ● Jurisdictions with more or the same number of retailers per square mile than Milpitas: 6

Sensitive Use Buffer Zones for Tobacco Retailers in Santa Clara County3

Jurisdiction Citation Sensitive Use Buffer Zone, Areas Included Campbell None None
Cupertino 5.50.040 1,000 feet, schools
Gilroy4 13.68 1,000 feet, schools
Los Altos 4.48.040 1,000 feet, schools
Los Altos Hills NA - no retailers NA - no retailers
Los Gatos 18.60.020 1,000 feet, schools
Milpitas None None
Monte Sereno NA - no retailers NA - no retailers
Morgan Hill None None
Mountain View None None
Palo Alto 4.64.040 1,000 feet, schools
San Jose 6.87.370 1,000 feet, schools, community and recreation centers, parks, libraries
Santa Clara (city) None None
Santa Clara (county) B11-579 1,000 feet, schools
Saratoga 4-90.040 1,000 feet, schools and city parks
Sunnyvale None None

3 There are likely jurisdictions in California that limit new tobacco retailers with a certain distance of childcare centers. Many other jurisdictions prohibit new retailers within a certain distance of youth- sensitive areas. However, data is not available about which specific areas are defined as youth-sensitive for these laws.
4 Gilroy is currently considering whether to expand the types of youth-sensitive areas.

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CITY OF MILPITAS

AGENDA REPORT
(AR)

Item Title: Receive a Presentation on Municipal Bonds 101 (Staff Contact: Luz Cofresí- Howe, Finance, 408-586-3111)
Category: Leadership and Support Services
Meeting Date: 8/11/2026
Recommendation: Receive a presentation from the City's municipal advisor and bond counsel on municipal bond financing, including the types of debt available to the City, the financing process and financing team roles, the City Council's disclosure and approval responsibilities, and an overview of the City's outstanding long-term debt obligations.

BACKGROUND:

The City of Milpitas uses long-term debt to finance capital assets that serve the community over many years, spreading the cost of those assets across the period they are in service rather than funding them entirely from current-year resources. The City has issued debt through several structures, including lease revenue bonds backed by the General Fund, water and sewer revenue bonds secured by utility net revenues, and tax allocation refunding bonds issued by the Successor Agency to the former Redevelopment Agency. The City's Debt Management Policy, adopted October 17, 2017 and revised October 15, 2019 in accordance with Senate Bill 1029 (California Government Code Section 8855), governs the issuance and ongoing administration of that debt.

The City's most recent issuance was the 2020 Lease Revenue Bonds approved on October 20, 2020 through Resolution 9013 which financed Fire Station No. 2. As the City continues to plan for capital needs and evaluates financing alternatives, staff has scheduled this workshop to provide the City Council with a foundational overview of municipal bond financing in advance of future financing items.

The Successor Agency to the former Milpitas Redevelopment Agency is planning a refunding of its outstanding 2015 Tax Allocation Refunding Bonds which were approved by the Successor Agency Board (acting jointly with the City Council) at the City Council meeting held on December 2, 2014 . Staff anticipates bringing the financing documents forward for consideration at the September 1, 2026 meeting.

ANALYSIS:

The presentation is being delivered by the City's municipal advisor, Fieldman, Rolapp & Associates, and the City's bond counsel, Jones Hall LLP. It is educational in nature and does not request or authorize any financing. The workshop covers six areas:

Overview. Why public agencies finance capital assets, and what distinguishes a municipal bond – a security sold to many investors in the public capital market – from a loan from a single lender.

Tax status and types of debt. The difference between tax-exempt and taxable bonds, and a comparison of the principal financing structures available to California cities: general obligation bonds, tax increment/tax allocation bonds, lease revenue bonds and Certificates of Participation, utility revenue bonds, and land- secured financings through Community Facilities Districts and Assessment Districts. Each structure is compared on voter approval requirements, repayment source, security pledge, and relative credit quality.

The financing team and process. The roles of the issuer, municipal advisor, bond counsel, disclosure counsel, underwriter, rating agency, trustee, and bond insurer; the eight-step financing process from kick-off through

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post-issuance compliance; credit ratings and what rating agencies review; and the methods of sale, including competitive sale, negotiated sale, and private placement.

Financing structure. How sources and uses of funds balance in a financing, how level debt service is structured over the life of an issue, and the relationship between borrowing cost, term, and total interest paid.

Disclosure and Council duties. The City's obligations under the federal securities anti-fraud rules, including SEC Rule 10b-5, and its continuing disclosure obligations under SEC Rule 15c2-12; the role of the Official Statement; and the City Council's responsibility to review and understand the disclosure documents it approves. The presentation also describes the Council's role in approving the form of financing documents and delegating final pricing terms to staff within parameters set by resolution, including maximum par amount, maximum interest rate, and maximum underwriter's discount.

The City's outstanding debt. A summary of the City's long-term debt obligations as of July 16, 2026, is set out below:

Obligation Dated Date S&P
Rating
Final
Maturity Original Par Par Outstanding
General Fund Backed Lease Revenue
Bonds, Series 2020 (Fire Station No. 2) 11/10/2020 AA+ 6/1/2041 $18,445,000 $15,985,000 Water System Revenue Bonds, Series 2019 11/13/2019 AA+ 6/1/2049 $17,210,000 $15,130,000 Sewer System Revenue Bonds, Series 2017 12/20/2017 AA+ 11/1/2026 $4,725,000 $615,000 Sewer System Revenue Bonds, Series 2019 11/13/2019 AA+ 11/1/2049 $29,840,000 $26,725,000 Tax Allocation Refunding Bonds, Series 2015 3/18/2015 AA 9/1/2032 $127,790,000 $46,835,000 Total — — — $198,010,000 $105,290,000

The City carries an AAA issuer credit rating from S&P Global Ratings, with AA+ ratings on its lease revenue, water revenue, and sewer revenue bonds and an AA rating on the tax allocation bonds. The Series 2015 Tax Allocation Refunding Bonds are obligations of the Successor Agency to the former Redevelopment Agency, payable solely from pledged property tax increment, and are not obligations of the City's General Fund.

The Series 2017 Sewer System Revenue Bonds were issued to refinance the City's 2006 Wastewater System Certificates of Participation and reach final maturity on November 1, 2026. The remaining $615,000 of principal outstanding will be retired in FY2026-27 through scheduled debt service payments already included in the Sewer Enterprise Fund's adopted budget, after which the City's outstanding long-term debt will consist of four remaining bond issues.

Supplemental Information

The Municipal Securities Rulemaking Board (MSRB) was established by Congress in 1975 and charged with the mandate to protect municipal securities investors, municipal entities, obligated persons and the public interest. As part of their mission, the MSRB improves market understanding with free educational resources.

Links to the following educational materials are provided to further Council’s understanding and knowledge of the municipal bond market.

• Municipal Bond Basics – a brief four-page description of municipal bonds • MSRB-Glossary-of-Municipal-Securities-Terms-Third_Edition-August-2013.pdf – interactive glossary of municipal bond terms searchable by term and in alphabetical order.

Additionally, the California Debt and Investment Advisory Commission (CDIAC) was created in 1981 and is part of the State Treasurer’s Office. CDIAC was established as the State’s clearinghouse for public debt issuance information and assists state and local agencies with the monitoring, issuance and management of public debt. CDIAC also provides educational materials. The Education Portal can be accessed after a username and password is created. A copy of the Education for Elected Officials course offerings for Debt & Administration Series is attached to the staff report.

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POLICY ALTERNATIVE(S):

Alternative 1: Do not receive the presentation.

Pros: Reserves Council meeting time for other agenda items.

Cons: Forgoes an opportunity for the City Council to receive background information on municipal bond financing and the City's outstanding debt in advance of any future financing consideration, and to ask questions of the City's municipal advisor and bond counsel outside the time pressures of a specific transaction.

Reason for Not Recommending: The workshop is informational, commits the City to no action or expenditure, and supports informed Council review of future financing items and the disclosure obligations that accompany them.

PROJECT SCHEDULE/KEY MILESTONES

Milestone Date
Debt Management Policy initially adopted (Joint Resolution No. 8705 / SA 10 / PFA 21) October 17, 2017 Debt Management Policy revised and adopted by the Milpitas Municipal Financing Authority (Resolution No. MFA 1) October 15, 2019
Most recent City bond issuance (2020 Lease Revenue Bonds, Fire Station No. 2) November 10, 2020 City Council workshop — Municipal Bonds 101 August 11, 2026 Successor Agency 2026 Tax Allocation Refunding Bonds financing documents presented to Council September 1, 2026
Series 2017 Sewer System Revenue Bonds final maturity November 1, 2026 Future financing items presented to City Council as capital needs are identified As applicable

FISCAL IMPACT:

There is no fiscal impact associated with receiving this presentation. No financing is authorized, and no appropriation is requested. Preparation and delivery of the workshop by the City's municipal advisor and bond counsel are covered under the firms' existing agreements with the City, and sufficient funds are available in the Finance Department's current fiscal year operating budget to cover those costs.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):

This item is not a project under the California Environmental Quality Act (CEQA) Guideline 15378(b).

ATTACHMENT(S):
(a) Presentation – Municipal Bonds 101
(b) CDIAC Education for Elected Officials – Debt Issuance and Administration Series Course Listing

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CITY COUNCIL WORKSHOP
August 11, 2026
Presented by Fieldman, Rolapp & Associates and Jones Hall LLP Municipal Bonds 101
City of Milpitas

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Agenda
01 Overview Why cities finance, and what a municipal bond is 02 Tax status & types Tax exemption and the main types of debt 03 Team & process The financing team, the process, and how bonds are sold 04 Financing structure Sources and uses, debt service, and credit ratings 05 Duties Disclosure obligations, approvals, and the Council's role 2 06 City’s outstanding debt Overview of the City’s current long-term debt obligations

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OVERVIEW
Introduction
Presentation Participants
• Luz Cofresí-Howe, Finance Director
• James Fabian, Principal, Fieldman, Rolapp & Associates • James Wawrzyniak, Partner, Jones Hall LLP
3

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OVERVIEW
Why public agencies use financing
Debt spreads the cost of long-
lived assets across the years
they serve the community.

Instead of paying the full cost today, financing spreads the cost over time so the people who benefit from the
project also help pay for it.

Common purposes
Acquire land
Construct or improve public buildings and facilities
Construct utility infrastructure
$ Fund working capital and manage cash flow
Refinance existing obligations or leases for savings
4

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OVERVIEW
What is a municipal bond?
A security sold in the public
capital market to many
investors — not a single
lender.

Key features
• Divided into serial maturities, with different repayment dates and interest rates, typically 1 to 30 years, to reach different investors
• The City receives cash at issuance and repays principal plus interest over time
• The term matches the useful life of the financed asset • For larger projects, the capital markets usually offer the lowest borrowing cost
Repayment comes from a defined pledge of revenue, such as tax increment (Redevelopment Property Tax Trust Fund), utility revenues, or lease payments.
5

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TAX STATUS
Tax-exempt and taxable bonds
Tax-exempt
• Interest paid to bondholders is generally exempt from federal and California income tax
• City borrows at lower rates than a taxable borrower
• Requires meeting IRS rules; proceeds fund public capital improvements
• Proceeds must be spent on a reasonable schedule (a three- year expectation for “new money” projects or 90 days for “refunding” projects)
Taxable
• Used when the project or use does not meet the IRS tax- exempt rules
• Carries a higher interest rate than tax-exempt debt
• Allows more flexibility in how proceeds are used
6

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TYPES OF DEBT
Common types of financings
General Obligation
Lease Revenue /
Certificates of
Participation (COP)
Utility Revenue
Tax Increment
Voter approval Yes, two-thirds No No; Prop 218 rules for rate increasesNo
Repaid from Property owners
citywide City's General Fund Utility system net
revenues
Incremental property
tax growth
Security pledge Unlimited ad valorem
tax
Lease payments on an
essential asset
Pledge of net system
revenues
Lien on the property for
the special tax /
assessment district
Credit quality Highest Moderate to high Moderate to high Land-Secured
Community Facilities
District/Assessment
District (CFD/AD)
Yes; owners or
registered voters in the
district
Special taxes /
assessments in the
district
Pledge of tax increment
7 Low to moderateModerate to high
1 A direct tax calculated “according to value” of property. Ad valorem tax is based on the assessed value of real property.

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TYPES OF DEBT
General obligation bonds
Overview
• Secured by an unlimited ad valorem
property tax
• Requires two-thirds voter approval
• Strongest security, lowest borrowing
cost
• Funds the projects named in the
ballot measure
Advantages
• Lowest borrowing cost
• No debt service reserve required
• Does not require General Fund
resources, repayment from ad
valorem property tax levy, i.e. new
revenue stream
Considerations
• Long lead time, typically 9 to 12
months
• High vote threshold
• Limited flexibility in use of proceeds
Commonly used for essential public facilities including citywide capital programs with a defined project list. 8

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TYPES OF DEBT
Tax increment/tax allocation bonds
Overview
• Refinances existing redevelopment
tax allocation debt
• Secured by property tax increment in
the former project area
• Issued by the Successor Agency to the
former redevelopment agency
• Not a General Fund obligation
Advantages
• Lowers debt service by refinancing at
today's interest rates
• No impact on the General Fund or
existing tax rates
• Repaid solely from the pledged tax
increment
Considerations
• Repayment depends on assessed
value in the former project area
• Requires oversight board and
Department of Finance approval
• Weaker credit and higher rate than
citywide debt
• Since 2012, no new tax allocation
bonds — only refundings of existing
debt
9 California also allows tax increment financing through newer financing districts, such as Enhanced Infrastructure Financing Districts (EIFDs) and Community Revitalization and Investment Authorities (CRIAs). This presentation focuses on Successor Agency Tax Allocation Refunding Bonds because they are the financing structure relevant to the City of Milpitas.

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TYPES OF DEBT
Lease revenue bonds and
Certificates of Participation (COPs)
Overview
• Secured by lease payments on an
essential City asset
• City leases the asset to a financing
authority, which leases it back
• Lease payments flow to bondholders
• A General Fund obligation, subject to
abatement
Advantages
• No voter approval required
• Highly flexible structure
• Widely used and accepted in the
market
Considerations
• Obligation of the General Fund
• Encumbers an essential City asset
• Abatement risk; mitigated by rental
interruption insurance
A Certificate of Participation (COP) is a variation of the lease financing structure used to fund public facilities and other long-term capital improvements, rather than day-to-day operating expenses. The City used the same underlying lease financing structure when it issued its 2020 Lease Revenue Bonds to finance Fire Station No. 2.
10

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TYPES OF DEBT
Lease revenue bonds: legal structure
City of Milpitas
Lessee
Site lease
Milpitas Municipal
Financing
Authority
Lessor / Issuer
Bond proceeds
Trustee
Bank
Bonds
Investors
Bondholders
• City leases an essential asset to the Financing Authority under a site lease. • Authority issues bonds and leases the asset back to the City. • Investors purchase the bonds; bond proceeds fund the project. • City's lease payments flow through the Trustee to bondholders as debt service payments. • Lease payments must reflect fair market value and are subject to abatement2. 11 2 Abatement is a provision in the lease that relieves the lessee (the City) of the obligation to make the lease payments in the event that the leased property cannot be utilized for causes such as construction delays, property damage from fire, earthquakes, floods or other causes.

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TYPES OF DEBT
Water and sewer revenue bonds
Overview
• Secured by and repaid from the utility's net revenues3 • Preserves General Fund capacity for other services
• A Prop 218 process applies if rates must be increased • Often a stronger credit as a self-supporting system
• City has two Sewer Revenue Bond issues and one Water
Revenue Bond issue outstanding
Investor safeguards
• Rate covenant: rates set so net revenues cover debt service, typically 1.15x to 1.25x
• Additional bonds test: new parity4 debt only if that coverage level is maintained

1.15x
Net revenues must cover at least
$1.15 of every $1.00 of debt service
— a margin that absorbs a weak
year, maintained for the life of the
bonds.
12 3 Net Revenues is the amount of money available after subtracting from gross (total) revenues costs and expenses that are permitted to be deducted per the bond documents. Most common costs and expenses deducted are operations and maintenance expenses. 4 Parity bonds are two or more bond issues or series of bonds that have the same priority (order) of a claim or lien against the pledged revenue.

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TYPES OF DEBT
Land-secured bonds:

Community Facility Districts (CFDs) and
Assessment Districts (ADs)
Overview
• Secured by a special tax (CFD) or
assessment (AD)
• Approved by the affected property
owners or voters
• Fund infrastructure such as streets,
sewers, and drainage
• Not an obligation of the City
Advantages
• Not a General Fund obligation
• Can be tailored to a project and
phased over time
• Often more feasible than a GO bond
when improvements primarily benefit
a specific area
Considerations
• Repayment depends on district
property values
• Complex to set up, administer, and
amend
• Assessment districts require strict
benefit linkage
• Requires approval of land owners or
registered voters in the District
pursuant to State Law provisions
Common in new development areas; carries a lower credit and higher rate than citywide debt. 13

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TYPES OF DEBT
City’s current outstanding long-term debt
14

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THE PROCESS
The financing team and their roles
C
Issuer / City
Decides to borrow, sets key parameters, and authorizes the bonds.

M
Municipal Advisor
Fiduciary to the City; advises on structure, timing, and pricing.

B
Bond Counsel
Prepares all legal documents and the tax opinion.

D
Disclosure Counsel
Prepares the Official Statement disclosing the bonds and their risks, and the Continuing Disclosure Agreement outlining the annual updates provided to investors.

U
Underwriter
Purchases the bonds and resells them to investors; acts for its own account.

T
Trustee / Fiscal Agent
Administers payments and redemptions on behalf of
bondholders.

R
Rating Agency
Assigns a credit rating to the bonds.

I
Bond Insurer
On some deals, guarantees payment for a premium to improve marketability.

The team's shared goals are sound structure, minimal legal liability, and strong market acceptance. 15

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THE PROCESS
The bond financing process
1 Kick-off financing
City and its advisors
launch the financing
2 Structure & size
Team sizes the bonds
and sets the
repayment plan
3 Documents &
disclosure
Legal documents and
Official Statement
prepared
4 Rating
Rating agency reviews
the City's credit
5 Authorize
Council approves the
sale and final terms
7 Closing
Funds delivered; the
project proceeds
Timing. A typical issue runs three to four months. After closing, the City administers the debt for its full term: payments, covenants, IRS tax compliance and continuing disclosure (reporting) to the market. 16 6
Sale & pricing
Bonds offered to
investors and priced
8 Post Issuance
Compliance
City meets ongoing IRS
tax and disclosure
obligations

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THE PROCESS
Credit ratings
AAA AA A BBB BB B <CCC
◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ ◄ Investment grade Non-Investment Grade ► ► ► ► ► ► ► ► ► ► ► ► ► ► What the rating agencies review
• Local economy, tax base, and demographics
• City’s financial results and reserve levels
• Existing debt and pension obligations
• Management, policies, and reporting
• Governance and political environment
Rated vs. unrated
• A rating is an independent read on the City's ability to repay the bonds
• A stronger rating means broader demand for the bonds and a lower interest rate
• Small or private issues may skip a rating when it would not improve pricing
AAA and AA are highest quality with the lowest rates; A is strong; BBB is the lowest investment grade; below BBB is non-investment grade and priced higher.

City’s Current S&P Ratings: AAA City | AA+ on Lease, Water & Wastewater Revenue Bonds | AA on Tax Allocation Bonds 17

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THE PROCESS
Methods of sale
Competitive
Negotiated
Private placement
Process Underwriters bid on the sale date Underwriter engaged early; helps structure Direct sale to one bank or investor
Basis of award Lowest true interest cost Negotiated structure, timing, price Direct negotiation; no public offering
Best when Frequent issuer, strong credit,
simple deal Complex deal or less familiar credit Small borrowing, short-term, or need for short closing
18 PUBLIC OFFERING

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THE PROCESS
Public offering vs. private placement
Public offering
Private placement
Credit rating Required Not required
Typical size Flexible Often smaller; may be capped by the bank Typical term Up to about 30 years Generally up to about 20 years Offering statement Required Not required
Time to close Four or more months Three or more months
Continuing disclosure SEC-mandated More flexible
Pricing Lower rate, higher issuance cost Higher rate, lower issuance cost 19

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FINANCING STRUCTURE
Sources and uses of funds
Every financing balances the money raised (sources) against where it goes (uses).

Sources
Par amount of bonds $10.0M
Original issue premium $0.5M
Total sources $10.5M
Uses
Project fund $10.0M
Debt service reserve fund $0.2M
Costs of issuance $0.3M
Total uses $10.5M
• Premium is the extra investors pay for higher coupons; it can raise more than par (bond proceeds) • A debt service reserve fund is a cushion held for bondholders, when required. The reserve is generally limited to the lesser of the IRS permitted reserve fund tests and can be funded by purchasing an insurance policy. • Costs of issuance cover legal, rating, municipal advisor, and printing fees • Capitalized interest, when used, pays early interest due to bondholders from bond proceeds Figures are illustrative.
20

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FINANCING STRUCTURE
Debt service structure
Level debt service
• The annual payment stays roughly level
• Early years are mostly interest
• Principal grows as the balance falls
• Optional redemption is typically 10 years at par, i.e. no prepayment penalty
$10.0M
Amount borrowed
$14.7M
Total repaid, 20 years
$4.7M
Of which, interest
$M
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
0 0.1

0.2 0.3

0.4 0.5

0.6 0.7

0.8 Interest Principal
Illustrative: $10M borrowed at a level 4% over 20 years. 21

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DISCLOSURE & DUTIES
Disclosure: speaking to investors
Official Statement
• The City's invitation to invest in the bonds
• Sets out all material information about the bonds and their repayment
• Investors rely on it, so the City must reasonably believe it is accurate and complete
• Prepared with disclosure counsel
• A Disclosure Coordinator, often the Finance Director, works with staff, the City Attorney, and counsel
Continuing disclosure
• An ongoing obligation under SEC Rule 15c2-12
• Annual report with financial statements and operating data • Notices of listed events, such as rating changes, defaults, and defeasances
• Filed to the MSRB's EMMA system
A dissemination agent can track deadlines and file on time, but the City decides what to disclose. 22

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DISCLOSURE & DUTIES
The City Council's disclosure responsibility
What the law requires
• Municipal bonds are exempt from U.S. Securities and Exchange Commission (SEC) registration, but not from the anti-fraud rules • Rule 10b-5: no untrue statement of material fact, and no misleading omission
• Material means a reasonable investor would find it important — no bright-line test, and judged in hindsight
• Since 2010, the SEC can fine issuers and individual officials directly What the Council should do
• Read and understand the disclosure documents you approve • Ask staff and consultants about material information
• Adopt written disclosure policies and train everyone involved • Disclose the bad with the good; if in doubt, disclose Enforcement actions against issuers and their officials, such as Orange County and San Diego, established these duties. 23

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DISCLOSURE & DUTIES
The City Council's role in approving a
financing
Approving the financing
• Council approves the form of the financing documents
• Authorizes the sale of the bonds and the offering materials • Delegates authority to staff to finalize pricing and terms • Bounded by parameters set in the resolution: maximum par, maximum rate, and maximum underwriter’s discount
Reviewing the disclosure
• Reviews the Preliminary Official Statement used to market the bonds
• Brings any known material misstatement or omission to the attention of City staff
• “Material” means a reasonable investor would consider it important to an investment decision
• Approval rests on informed review, supported by staff and counsel
Approving the form lets the transaction close efficiently, while the Council keeps control through the parameters it sets. 24

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DISCLOSURE & DUTIES
Policy framework and key takeaways
Policy framework
• Debt Management Policy*, adopted by the City Council in October 2019 in accordance with SB 1029 (Government Code Section 8855)
• Reserve and investment policies
• Continuing disclosure to the market (SEC Rule 15c2-12) • CDIAC reports of proposed and final sale, plus annual debt report • Periodic debt reporting to the Council
• Consistency with the Debt Management Policy, capital
improvement plan, and any applicable rate study
Key takeaways
• Debt is the City's debt and must be actively managed
• The financing team works for the City
• The security pledged is the central question in any issue • Accurate disclosure is a continuing legal duty
• The Council approves the form of documents and delegates final terms within set parameters
• A strong policy framework protects the City's credit
• Public Council discussions are closely watched by investors and rating agencies and can influence perceptions of the City's credit 25 * Debt Management Policy - https://www.milpitas.gov/257/Investment-Debt-Management-Policies#docaccess- c1e9d370d1a1152b5326cd24642f63ae2daab147928c42a661e1576d59f7dc44

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DISCUSSION
Questions
Fieldman · Jones Hall

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EDUCATION FOR ELECTED OFFICIALS

DEBT ISSUANCE AND ADMINISTRATION SERIES
MODULE 1 Why Do Public Agencies Use Debt Financing 15 MINS Provides an overview of why public agencies use debt financing and when it is appropriate, the three “Ws” of project planning as well as making decisions within the context of economic conditions and past financial and management actions.

MODULE 2 What You Need to Know Before Issuing Debt 13 MINS Discusses the relationship between long-term planning and short-term decision making, key principles of capital finance that create long-term budget impacts, and the value of strategic financial management.

MODULE 3 Strategy Drives Structure 25 MINS
Covers structuring debt in a way that is consistent with the agency’s authority to borrow and raise revenue for repayment, implications of com- mon debt structures on taxpayer equity, and legal considerations for appropriate uses of proceeds based on relevant tax and securities laws.

MODULE 4 The Use of Debt Policies to Manage Risk 22 MINS Discusses the various interlocking financial, legal, and political risks of debt financing as well as how a well-developed debt policy is instrumental in assessing and managing risks on the path to a successful debt issuance.

MODULE 5 It Takes a Team: The Role of External Professionals in a Successful Issuance 20 MINS Explores the functions, fiduciary responsibilities, interests, and compensation of external finance team members and discusses their roles in the context of the typical debt issuance process.

MODULE 6 Marketing and Structuring Strategies for a Win-Win Debt Issuance 29 MINS Provides an overview of the market for municipal debt and discusses the alignment of debt marketing and structuring strategies with market preferences to achieve desired financing objectives.

MODULE 7 Implications and Documentation of Your Long-term Debt Commitments 17 MINS Discusses the high-level policy implications of the most frequently issued types of long-term debt and summarizes the fundamental documentation used to formalize the commitments made through debt issuance.

MODULE 8 Becoming a Model Borrower 19 MINS
Explores post-issuance responsibilities with a focus on the disclosure, communication, internal control, and administrative practices that garner a strong borrower reputation and enable an agency to achieve its long-term financing goals.

PENSION FUNDAMENTALS SERIES
PART 1 Pension Introduction 27 MINS
This part introduces the topic of pensions, explains the most common retirement plan types, introduces pension terminology and ac - tuarial and investment concepts, and discusses how pension benefits are structured and funded.

PART 2 Elected Officials’ Role in Pension Management 40 MINS This part discusses common policy considerations and risk as well as risk mitigation strategies such as advanced unfunded liability pay- ments, establishing reserves and trust funds, and pension obligation bonds.

CDIAC’s education for elected officials, known as “elect>Ed”, provides on-demand education focused on public debt
financing for elected officials and mem -
bers of governing bodies. All courses can
be accessed in CDIAC’s Education Portal at
edportal.treasurer.ca.gov. Program content
is free to access with a registered account.

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Milpitas City CouncilAugust 11, 2026

Milpitas City Council
August 11, 2026