Modesto City Council
July 22, 2025

22020 Modesto Crossings Cost Estimate - Phase 1
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- 2445 -
Phase 1 Improvement Plans 05/24/24
Cost Estimate
Modesto, CA

TOTAL PRICE
($)

MODESTO CROSSINGS
ITEM NO. ITEM DESCRIPTION UNIT ESTIMATED
QUANTITY UNIT PRICE ($)
20 WATER TEES EA 16 $1,500.00 $24,000
21 WATER VALVES EA 45 $2,500.00 $112,500
22 WATER BLOWOFF VALVES EA 2 $2,500.00 $5,000
23 WATER CONNECTION EA 1 $5,000.00 $5,000
24 12" PERFORATED STORM DRAIN PIPE LF 2,075 $60.00 $124,500 25 12" STORM DRAIN PIPE LF 1,038 $50.00 $51,900
26 18" STORM DRAIN PIPE LF 2,448 $80.00 $195,840
27 24" STORM DRAIN PIPE LF 661 $120.00 $79,320
28 30" STORM DRAIN PIPE LF 209 $160.00 $33,440
29 36" STORM DRAIN PIPE LF 407 $190.00 $77,330
30 42" STORM DRAIN PIPE LF 375 $220.00 $82,500
31 42" STORM DRAIN BUBBLE UP EA 2 $7,500.00 $15,000
32 STORM DRAIN INLETS EA 25 $3,000.00 $75,000
33 STORM DRAIN MANHOLES EA 14 $4,000.00 $56,000
34 UNDERGROUND STORMCAPTURE SYSTEM &
ASSOCIATED DRAIN ROCK LS 1 $2,500,000.00 $2,500,000
35 4" SANITARY SEWER PIPE LF 4,674 $50.00 $233,700
36 8" SANITARY SEWER PIPE LF 5,379 $70.00 $376,530
37 10" SANITARY SEWER PIPE LF 1,209 $80.00 $96,720
38 SANITARY SEWER CLEAN OUT EA 163 $2,000.00 $326,000
39 SANITRARY SEWER MANHOLE EA 19 $5,000.00 $95,000
Prepared by Siegfried

22020 Modesto Crossings Cost Estimate - Phase 1
#28..
- 2446 -
Phase 1 Improvement Plans 05/24/24
Cost Estimate
Modesto, CA

TOTAL PRICE
($)

MODESTO CROSSINGS
ITEM NO. ITEM DESCRIPTION UNIT ESTIMATED
QUANTITY UNIT PRICE ($)
40 SANITARY SEWER CONNECTION EA 1 $5,000.00 $5,000
41 STREET LIGHTS EA 52 $7,000.00 $364,000
42 STREET LIGHT BOXES EA 52 $250.00 $13,000
43 METER PEDS EA 2 $7,500.00 $15,000
44 CONDUIT (WIRE & BACKFILL) EA 6,700 $65.00 $435,500
45 PARK/BASIN SF 185173 $8.00 $1,481,384
46 LANDSCAPE MEDIANS & STRIPS SF 86849 $10.00 $868,490
TOTAL $13,599,984

LANDSCAPE
Prepared by Siegfried

22020 Modesto Crossings Cost Estimate - Phase 1
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 22, 2025
Date: June 27, 2025
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Public Hearing and Approval of California Statewide Communities Development Authority Revenue Bonds for the benefit of the Kaiser Permanente Project CONTACT: DeAnna Christensen, Director of Finance, [email protected], 209-577-5387
DESCRIPTION:

Hearing to consider approving the issuance of Bonds by the California Statewide Communities Development Authority (CSCDA) for the benefit of Kaiser Permanente (the “Borrower”) an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, to provide for the financing of the Project, for the purposes of satisfying the requirements of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), the Internal Revenue Code and California Government Code Section 6500, et seq. (Funding Source: Not Applicable) STRATEGIC PLAN ELEMENT:

This item advances the City of Modesto 2025-2026 Strategic Plan Area: Service Delivery Goals and Strategies: Goal J: “build a high-performance organization”.

BACKGROUND:

CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CSCDA):

CSCDA was created in 1988, under California’s Joint Exercise of Powers Act, to provide California’s local governments with an effective tool for the timely financing of community-based public benefit projects.

Although cities, counties and special districts are able to issue their own debt obligations or serve as a conduit issuer of private activity bonds that promote economic development and provide critical community services, many local agencies find stand-alone financings too costly or lack the necessary resources or experience to facilitate the bond issuance and perform postissuance activities for the term of the bonds. In response, CSCDA was created by and for local governments in California and is sponsored by the California State Association of Counties and the League of California Cities.

Currently, more than 530 cities, counties and special districts have become Program Participants to CSCDA, including the City of Modesto – which serves as their conduit issuer and #29..
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City Council, July 22, 2025
Public Hearing and Approval of California Statewide Community Development Authority Revenue Bonds for the benefit of the Kaiser Permanente Project

provides access to an efficient mechanism to finance locally-approved projects. CSCDA has issued more than $75 billion in tax-exempt bonds to help local governments build community infrastructure, provide affordable housing, create jobs, make access available to quality healthcare and education, and more.

The Tax and Equity Fiscal Responsibility Act (“TEFRA”) requires a public hearing for the proposed issuance of revenue bonds by CSCDA, in an amount not to exceed $880,000,000, (the “Bonds”), of which $162,000,000 will be allocated for the purpose of financing the construction and equipping of a new 105,000 square foot, 3-story Medical Office Building located at 4601 Dale Road, Modesto, California. Kaiser is also financing projects in the cities of Fresno and San Marcos who are conducting their own TEFRA hearing.

DISCUSSION:

Kaiser Permanente, requested that the CSCDA serve as the municipal issuer of the Bonds in an aggregate principal amount not to exceed $880,000,000, of which $162,000,000 will be used for a new Medical Office Building in Modesto which will help to meet the healthcare needs of the community.

Because the Project is located within the City, in order for all or a portion of the Bonds to qualify as tax-exempt, the City must conduct a public hearing (the “TEFRA Hearing”) providing members of the community an opportunity to speak in favor or against the use of tax-exempt bonds for the financing of the Project. Prior to such TEFRA Hearing, reasonable notice must be provided to the members of the community. Following the close of the TEFRA Hearing, an “applicable elected representative” of the governmental unit hosting the Project must provide its approval of the issuance of the Bonds for the financing of the Project.

FISCAL IMPACT:

The Bonds to be issued by the CSCDA for the Project will be the sole responsibility of the Borrower, and the City will have no financial, legal, moral obligation, liability or responsibility for the Project or the repayment of the Bonds for the financing of the Project. All financing documents with respect to the issuance of the Bonds will contain clear disclaimers that the Bonds are not obligations of the City or the State of California but are to be paid for solely from funds provided by the Borrower. The City will receive reimbursement for the advertising fees for the public notice but no additional reimbursements will be provided to the City.

COMMITTEE RECOMMENDATION:

This item was not presented to a Committee due to the time sensitivity of moving forward with this project.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving the issuance of California Statewide Communities Development Authority Kaiser Permanente Revenue Bonds in one or more Series from time to time pursuant to a plan of finance in an aggregate principal amount not to exceed $880,000,000 for the purpose of financing or refinancing the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of certain health facilities and certain other matters relating thereto.
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City Council, July 22, 2025
Public Hearing and Approval of California Statewide Community Development Authority Revenue Bonds for the benefit of the Kaiser Permanente Project

Approved by:

DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:

1. Resolution

2. TEFRA Public Hearing notice
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07/22/2025/FIN/DChristensen/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-

RESOLUTION APPROVING THE ISSUANCE OF CALIFORNIA STATEWIDE

COMMUNITIES DEVELOPMENT AUTHORITY KAISER PERMANENTE

REVENUE BONDS IN ONE OR MORE SERIES FROM TIME TO TIME

PURSUANT TO A PLAN OF FINANCE IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $880,000,000 FOR THE PURPOSE OF

FINANCING OR REFINANCING THE ACQUISITION, CONSTRUCTION,

IMPROVEMENT, EQUIPPING, RENOVATION, REHABILITATION,

REMODELING AND OTHER CAPITAL PROJECTS OF CERTAIN HEALTH

FACILITIES AND CERTAIN OTHER MATTERS RELATING THERETO
WHEREAS, Kaiser Foundation Hospitals, Kaiser Foundation Health Plan, Inc., Kaiser Health Plan Asset Management, Inc., and Kaiser Hospital Asset Management, Inc., each a California nonprofit public benefit corporation (collectively, “Kaiser”), have requested that the California Statewide Communities Development Authority (the “Authority”) participate in the issuance of one or more series of revenue bonds from time to time pursuant to a plan of finance in an aggregate principal amount not to exceed $880,000,000 (the “Bonds”) for the purpose of, among other things, financing or refinancing the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of certain health facilities (the “Facilities”) owned or operated by Kaiser Foundation Hospitals or its affiliates (the “Project”) and located in the City of Modesto (the “City”); and WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the “Code”), the issuance of the Bonds by the Authority must be approved by the City because the Facilities are located within the territorial limits of the City; and WHEREAS, the City Council of the City (the “City Council”) is the elected legislative body of the City and is one of the applicable elected representatives required to approve the issuance of the Bonds under Section 147(f) of the Code; and #29..
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07/22/2025/FIN/DChristensen/Item X 2 2025-XX
WHEREAS, the Authority has requested that the City Council approve the issuance of the Bonds by the Authority for the purposes of financing or refinancing the Project in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 9 of the Amended and Restated Joint Exercise of Powers Agreement, dated as of June 1, 1988 (the “Agreement”), among certain local agencies, including the City; and
WHEREAS, the Authority is also requesting that the City Council approve the issuance of any refunding bonds hereafter issued by the Authority for the purpose of refinancing the Bonds that financed or refinanced the Project (the “Refunding Bonds”) but only in such cases where federal tax laws would not require additional consideration or approval by the City Council; and
WHEREAS, pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Modesto as follows:

Section 1. The City Council hereby approves the issuance of the Bonds and the Refunding Bonds by the Authority from time to time pursuant to a plan of finance for the purposes of financing or refinancing the Project. It is the purpose and intent of the City Council that this Resolution constitute approval of the issuance of the Bonds and the Refunding Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of the issuer of the Bonds and the #29..
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07/22/2025/FIN/DChristensen/Item X 3 2025-XX
governmental unit having jurisdiction over the area in which the Facilities are located, in accordance with said Section 147(f) and (b) Section 9 of the Agreement.

Section 2. The City shall have no responsibility or liability whatsoever with respect to the Bonds. The adoption of this Resolution shall not obligate the City or any department thereof to (i) provide any financing to acquire or construct the Project or any refinancing of the Project; (ii) approve any application or request for or take any other action in connection with any planning approval, permit or other action necessary for the acquisition, construction, rehabilitation, installation or operation of the Project; (iii) make any contribution or advance any funds whatsoever to the Authority; or (iv) take any further action with respect to the Authority or its membership therein.

Section 3. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this Resolution and the financing transaction approved hereby.

Section 4. This Resolution shall take effect immediately upon its adoption.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the issuance of California Statewide Communities Development Authority Kaiser Permanente Revenue Bonds in one or more Series from time to time #29..
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07/22/2025/FIN/DChristensen/Item X 4 2025-XX
pursuant to a plan of finance in an aggregate principal amount not to exceed $880,000,000 for the purpose of financing or refinancing the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of certain health facilities and certain other matters relating thereto. .
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07/22/2025/FIN/DChristensen/Item X 5 2025-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 22nd day of July, 2025, by Councilmember _____, who moved its adoption, which motion being duly seconded by Councilmember _____, was was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
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NOTICE OF PUBLIC HEARING
Notice is hereby given that on July 22, 2025, a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986 (the “Code”) will be held with respect to the proposed issuance by the California Statewide Communities Development Authority of its qualified 501(c)(3) bonds to finance health care facilities in one or more series from time to time pursuant to a plan of finance in an amount not to exceed $880,000,000 (the “Bonds”). The proceeds of the Bonds will be used by Kaiser Foundation Hospitals (the “Corporation”) or certain of its affiliates to finance or refinance the acquisition, construction, improvement, equipping, renovation, rehabilitation, remodeling and other capital projects of: (i) certain health facilities located at or near 4531 and 4601 Dale Rd., Modesto, CA (not to exceed $162,000,000); and (ii) the health facilities of the Corporation and other of its affiliates located elsewhere in California.

The facilities listed above are owned and operated by the Corporation or its affiliates, each a nonprofit public benefit corporation as described in Section 501(c)(3) of the Code.

The hearing will commence at [5:30 p.m.], or as soon thereafter as the matter can be heard and will be held in the City Council Chambers, 1010 10th Street, Modesto, California.

Interested persons wishing to express their views on the issuance of the Bonds or on the nature and location of the health facilities proposed to be financed or refinanced may attend the public hearing or, prior to the time of the hearing, submit written comments.

Additional information concerning the above matter may be obtained from and written comments should be addressed to the City Clerk, City of Modesto, 1010 10th Street, Modesto, California.

July [__], 2025.

Diane Nayares-Perez
City Clerk
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CITY OF MODESTO

COUNCIL AGENDA REPORT
DATE OF MEETING:

July 22, 2025
Date: July 10, 2025
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: Jose M. Sanchez, City Attorney
Brandon Gillespie, Chief of Police
SUBJECT: Municipal Code Amendments Related to Smoke Shops and Establishment of Related Fees
CONTACT: Jose M. Sanchez, City Attorney, 209-577-5284, [email protected] DESCRIPTION:

Hearing to consider an Ordinance amending Title 10 of the Modesto Municipal Code to add Chapter 3, Article 8, “Smoke Shops,” and amending Title 4 of the Modesto Municipal Code to add Chapter 24, Smoke Shops,” establishing regulations and requirements for Smoke Shops, including permitting and enforcement, within the City and a resolution to adopt the application fee, annual permit fee, and re-inspection fee for the Smoke Shop Permit Program. (Funding Source: General Fund)
STRATEGIC PLAN ELEMENT:

This item supports the City’s 2025-2026 Strategic Plan Goal A to improve community safety and quality of life through a combination of prevention and intervention efforts that address safety and its underlying issues.

BACKGROUND:

Over the last few years, the City has seen a proliferation of smoke shops within the City that continue to engage in illegal sales and activity. The City is concerned about the proliferation of smoke shop businesses, locations of smoke shops, illegal sales and activity at smoke shops, and the harmful effects of tobacco on the health, safety, and welfare of City residents, especially the youth.

Smoke shops have been found to be affiliated with the sale of illegal products and drug paraphernalia. Smoke shops have also been seen to encourage illegal activity. Within the last year, the Modesto Police Department conducted inspections at various tobacco retailers throughout the City, resulting in the seizure of marijuana/cannabis-infused items, illicit drugs, flavored tobacco products, illegal drug paraphernalia, and illegal gambling machines. These inspections also resulted in the arrest of several individuals involved in these illegal activities. #30..
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City Council, July 22, 2025
Municipal Code Amendments Related to Smoke Shops and Establishment of Related Fees

The City currently has no specific regulations for smoke shops aimed at protecting minors, such as distance requirements from schools and/or youth-oriented areas. To give the City time to evaluate options and develop regulations, on October 8, 2024, the City Council adopted Urgency Ordinance No.3785-C.S., imposing a 45-day moratorium on the establishment of new and the relocation or physical expansion of existing tobacco retailer businesses. On November 12, 2024, the City subsequently extended the moratorium by 10 months and 15 days. During the intervening time, the City has further studied and analyzed the effects of smoke shop businesses, as well as options for regulating smoke shops in order to minimize these effects.

The Modesto Police Department has conducted numerous inspections after the adoption of the October 8, 2024 moratorium and the November 12, 2024 moratorium extension, and continued to find illegal activities and items for sale. Smoke shop inspections have resulted in a variety of violations, including offering flavored tobacco products and hemp/CBD products for sale, such as gummies and drinks, in violation of State law, and operating illegal gambling machines. On March 26, 2025, the City Council held a workshop to discuss the potential regulation of smoke shop businesses in the City.

DISCUSSION:

The proposed Ordinance establishes regulations for smoke shops within the City by amending Title 10 (Zoning) and Title 4 (Public Welfare, Safety, and Health). While generally the Planning Commission only reviews changes to the Zoning Code, staff felt it would be helpful for the Planning Commission to review the entire Ordinance in order to understand the context and purpose of the Zoning Code changes.

The proposed Ordinance defines a “smoke shop” as a retailer that primarily sells tobacco products and/or tobacco paraphernalia. This includes any retailer that has 15% or more of the square feet in the establishment or more than 15 linear feet of display area used for the sale, distribution, delivery, furnishing, marketing display, or storage of tobacco products or tobacco paraphernalia. However, a “smoke shop” is defined to exclude premium cigar retailers, hookah lounges, and cannabis dispensaries.

Zoning Code Changes
The proposed Ordinance amends the Zoning Code to identify smoke shops as a permitted use in the C-2, C-3, C-M, M-1, and M-2 Zoning Districts, subject to a number of restrictions, including:
 Smoke shops may not be located within 1,000 feet of certain sensitive uses, including schools, childcare centers, parks, and youth facilities.  Smoke shops may not be located within 1,000 feet of cannabis dispensaries or other smoke shops.
 Smoke shops may not be located within 100 feet of a residential use.  Smoke shops may not be located in Downtown Modesto.

The restrictions and regulations described above are similar to the City’s existing regulations for cannabis dispensaries. These rules will apply to new smoke shops but will not apply to existing legally established smoke shops.

In addition, all smoke shops, both new and existing, will be required to obtain a smoke shop permit.
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City Council, July 22, 2025
Municipal Code Amendments Related to Smoke Shops and Establishment of Related Fees

Smoke Shop Permit
All existing smoke shops are required to apply for a smoke shop permit and meet all applicable requirements by November 14, 2025 (which is approximately 90 days after the anticipated date the Ordinance will be adopted). After that date, no new smoke shop permit will be issued until the number of existing smoke shops in the City is less than one per 25,000 residents (except that an existing smoke shop may be transferred to a new owner, as long as the new owner obtains a smoke shop permit). Smoke shop permits will be issued by the Chief of Police, who will be responsible for reviewing and either approving or rejecting applications based on the requirements of the Ordinance. A permit lasts for one year, is subject to renewal, may not be transferred, and does not run with the land. Applicants who violate any preexisting laws after adoption of the Ordinance, such as selling flavored tobacco, will be ineligible to obtain a permit.

The Ordinance requires all smoke shops to comply with certain operational requirements, including a requirement that no one under the age of 21 being permitted to enter the smoke shop. Other requirements include:
 Exterior lighting requirements;
 Requirement to promptly remove graffiti and trash from the premises;  Prohibition on vending machines of any kind;
 Regulations on the permitted signs advertising the business, as well as mandatory signs prohibiting smoking or loitering on the premises, and identifying legal requirements such as a prohibition on the sale of tobacco to those under 21 years of age;  Limits on window and door obstructions, to ensure the inside of the store is visible;  Maximum hours of operations from 8:00 a.m. to 10:00 p.m.;  Prohibition on the consumption of tobacco products, cannabis, or alcohol on the premises;
 Prohibition on any gambling product or activity other than the California Lotto;  Prohibition on the sale of certain identified products, including cannabis and flavored tobacco; and
 Training requirements.

Smoke shops will be required to submit a security plan to the Chief of Police for approval and must maintain a fully functional color digital video camera system monitoring the interior, main entrance, all entries and exists (from both the inside and outside of the building), and the exterior smoke shop area to discourage loitering, crime, and illegal or nuisance activities. The camera system must meet other specified requirements and offer the Police Department remote and real-time live access to the video footage.

As part of the Smoke Shop Permit Program, each smoke shop will be inspected at least once per year by the Police Department.

Any smoke shop that violates any operating standards or any other requirement of the Ordinance may be subject to enforcement actions. The City may issue administrative fines for violations, with the fine amount ranging from $500 to $5,000 depending on the number of violations. A smoke shop operating without a permit is subject to a fine of up to $20,000. In #30..
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City Council, July 22, 2025
Municipal Code Amendments Related to Smoke Shops and Establishment of Related Fees

addition, the Chief of Police may suspend or revoke the permit of any smoke shop violating the Ordinance. Finally, serious violations of the Ordinance may result in individuals being charged with misdemeanors. These remedies are cumulative and not exclusive of each other. The property owner, the smoke shop operator, and any other responsible party will be jointly responsible for any violations.

FISCAL IMPACT:

There is no direct fiscal impact from the adoption of the proposed Ordinance. The proposed Resolution will adopt a smoke shop application fee, a smoke shop permit fee, and a reinspection fee, which will cover the City’s cost to implement the Smoke Shop Permit Program, including annual inspections of all permitted smoke shops. If the Smoke Shop Permit is approved and issued, the City would apply the application fee as part of the first-year permit fee.

If the permit is not approved, the application fee will be non-refundable. The proposed fees are:

Application Fee $500
Annual Permit Fee $1,100
Re-inspection Permit Fee $530
Implementation of the proposed regulations may lead to decreased police enforcement activity over time and increased economic activity as the negative impacts of smoke shops are decreased.

COMMITTEE RECOMMENDATION:

The Planning Commission considered the proposed Ordinance during a noticed public hearing on June 2, 2025, and voted 5-0 to recommend forwarding the proposed Ordinance to the City Council for consideration and approval.

CEQA/NEPA REQUIREMENTS:

The proposed Code text amendments are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15061(b)(3), which states that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The City currently does not regulate the number, location, or operating standards of smoke shops, and the proposed Ordinance would place limits on the number, location, and operating standards of smoke shops, which will limit their environmental impact in comparison to the status quo. Accordingly, it can be seen with certainty that there is no possibility that the proposed action may result in a significant effect on the environment, and the proposed revisions to the Municipal Code are exempt from further review under CEQA.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Motion introducing and waiving the first reading of an ordinance amending Title 10 of the Modesto Municipal Code to add Chapter 3, Article 8, “Smoke Shops,” and amending Title 4 of the Modesto Municipal Code to add Chapter 24, Smoke Shops,” establishing regulations and requirements for Smoke Shops, including permitting and enforcement, within the City.

Resolution adopting the application fee, annual permit fee, and re-inspection fee for the Smoke Shop Permit Program.
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City Council, July 22, 2025
Municipal Code Amendments Related to Smoke Shops and Establishment of Related Fees

Approved by:

Jose M. Sanchez, City Attorney
_____________________________
Brandon Gillespie, Chief of Police
Joseph P. Lopez, City Manager
Attachments:

1. Ordinance establishing regulations and requirements for smoke shops.

2. Resolution establishing fees related to permitting of smoke shops. #30..
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ORDINANCE NO. _______-C.S.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
MODESTO AMENDING TITLE 10 OF THE MODESTO MUNICIPAL
CODE TO ADD CHAPTER 3, ARTICLE 8, “SMOKE SHOPS,”
AMENDING TITLE 4 OF THE MODESTO MUNICIPAL CODE TO ADD
CHAPTER 24, “SMOKE SHOPS,” ESTABLISHING REGULATIONS

AND REQUIREMENTS FOR SMOKE SHOPS, INCLUDING

PERMITTING AND ENFORCEMENT, WITHIN THE CITY
WHEREAS, the City of Modesto (“City”) is a municipal corporation duly organized as a Charter City under the constitution and laws of the State of California; and WHEREAS, the City Council has broad discretion pursuant to Article II, Sections 200 and 201 of the City Charter; California Constitution Article XI, Section 5 and Section 7; and the general law of the state, including, but not limited to, the California Planning and Zoning Law (Gov. Code section 65000 et seq.), to legislate for public purposes and for the general welfare, including, but not limited to, matters of public health and safety; and WHEREAS, the City protects the public health, safety, and welfare of the community through numerous avenues, including by establishing and enforcing zoning, licensing, and health and safety regulations on specified commercial activities; and WHEREAS, over the last few years, the City has seen a proliferation of smoke shops within the City that continue to engage in illegal sales and activity; and WHEREAS, the City is concerned about this proliferation of smoke shop businesses, locations of smoke shops, illegal sales and activity at smoke shops, and the harmful effects of tobacco on the health, safety, and welfare of City residents, especially the youth; and WHEREAS, many state laws have been adopted that acknowledge the public health impacts of tobacco, especially flavored tobacco products, and specifically their effect on minors.

For example, state law was amended to increase the minimum age for purchasing tobacco from 18 years old to 21. State law also prohibits smoking in playgrounds. State law also prohibits smoking within 20 feet of the main entrances and exits of public buildings; and WHEREAS, on November 8, 2022, California voters approved Proposition 31 to uphold the state law (“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; and WHEREAS, on October 7, 2023, Governor Newsom signed into law AB 935, strengthening the enforcement of the flavored tobacco retail law and broadening the definition of retail location; and
WHEREAS, on September 23, 2024, the California Department of Public Health (“CDPH”) promulgated emergency regulations related to industrial hemp and the threat to public health, safety, and welfare, particularly to minors; and #30..
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WHEREAS, the CDPH regulations come after California Governor Gavin Newsom directed the CDPH to draft emergency regulations, citing the increasing amounts of safety concerns from the adverse health effects of intoxicating hemp food and beverage products; and WHEREAS, the emergency regulations aim to combat hemp products containing tetrahydrocannabinol (“THC”) that skirt the age and sale restrictions that have been placed on recreational marijuana sold through licensed and regulated dispensaries; and WHEREAS, hemp products have been found to be sold in tobacco retailer businesses or smoke shops, with marketing aimed toward children featuring colorful packaging designs and sweet candy flavors; and
WHEREAS, as currently defined under state law, “industrial hemp” is permitted to contain a delta-9 THC concentration of no more than 0.3 percent on a dry weight basis; however, the emergency regulations prohibit industrial hemp final form food and beverage products, specifically, from containing any detectable level of THC; and WHEREAS, the emergency regulations expand on the number of psychoactive cannabinoids that will need to be undetectable in industrial hemp final food form products, including edibles such as gummies, other candies, and drinks, as well as restricting the serving sizes such products contain to five servings or less and limiting sales of the products to consumers who are at least 21 years of age; and
WHEREAS, the City has no specific regulations for smoke shops aimed at protecting minors, such as distance requirements from schools and/or youth-oriented areas; and WHEREAS, smoke shops have been found to be affiliated with the sale of illegal products and drug paraphernalia. Smoke shops have also been seen to encourage illegal activity; and
WHEREAS, within the last year, the Modesto Police Department conducted inspections at various tobacco retailers throughout the City, resulting in the seizure of marijuana/cannabisinfused items, illicit drugs, flavored tobacco products, illegal drug paraphernalia, and illegal gambling machines. These inspections also resulted in the arrest of several individuals involved in these illegal activities; and
WHEREAS on October 8, 2024, the City Council of the City of Modesto adopted Urgency Ordinance No.3785-C.S., imposing a forty-five (45) day moratorium on the establishment of new and the relocation or physical expansion of existing tobacco retailer businesses; and
WHEREAS, on November 12, 2024, the City subsequently extended the moratorium by 10 months and 15 days; and
WHEREAS, the City has further studied and analyzed the effects of smoke shop businesses; and
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WHEREAS, the Modesto Police Department conducted inspections after the adoption of the October 8, 2024 moratorium and November 12, 2024 moratorium extension and continued to find illegal activities and items for sale; and
WHEREAS, on March 20, 2025, the Modesto Police Department inspected eight smoke shop businesses, where all eight businesses were found to be out of compliance with State tobacco laws, and 1,635 prohibited products were seized; and WHEREAS, on March 27, 2025, the Modesto Police Department inspected an additional eight smoke shop businesses, and all eight businesses were found to be out of compliance with State Tobacco laws. 1,621 tobacco products were seized, in addition to 129 illegal hemp/CBD products and 349 pieces of drug paraphernalia; and
WHEREAS, on April 28, 2025, the Modesto Police Department inspected five smoke shop businesses. All five businesses were found to be out of compliance, including one business, which was a repeat offender. The Police Department seized 1,733 illegal tobacco products, 80 hemp/CBD/Delta products, two gambling machines, and 195 pieces of drug paraphernalia; and WHEREAS, on May 5, 2025, the Modesto Police Department inspected 13 smoke shop businesses, and 12 were found to be out of compliance. The Modesto Police Department seized flavored tobacco, hemp consumables, and/or CBD drinks at the twelve noncompliant businesses; and
WHEREAS, on May 6, 2025, the Modesto Police Department inspected six smoke shop businesses in the City and all six businesses were found to be out of compliance. 1,829 tobacco products were seized in addition to 63 Hemp/CBD/Delta products; and WHEREAS, on May 14, 2025, the Modesto Police Department inspected ten smoke shop businesses in the City, and nine were found to be out of compliance. 995 tobacco products and 155 hemp/CBD/delta products were seized, as well as one firearm; and WHEREAS, on May 22, 2025, the Modesto Police Department inspected eight smoke shop businesses. Six businesses were found to be out of compliance. 1,338 illegal tobacco products were seized, in addition to 30 hemp/CBD/delta products; and WHEREAS, smoke shop inspections have resulted in a variety of violations, including offering flavored tobacco products and hemp/CBD products for sale, such as gummies and drinks, in violation of State law, and operating illegal gambling machines; and WHEREAS, on March 26, 2025, the City Council held a workshop to discuss the potential regulation of smoke shop businesses in the City; and WHEREAS, the City, through its police power, is authorized to regulate local zoning to promote public health, safety, and welfare; and
WHEREAS, the City, through its police power, is authorized to require the licensing of a specific class of business in order to promote public health, safety, and welfare; and #30..
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WHEREAS, staff recommends requiring a permit to sell tobacco products and smoke paraphernalia in the City, due to the potential to create significant negative effects on the community and surrounding properties; and
WHEREAS, staff additionally recommends amending the Zoning Code to prohibit the establishment of smoke shops within certain sensitive areas and locations; and WHEREAS, a public hearing was held by the Planning Commission on June 2, 2025, in the Chambers, 1010 Tenth Street, Modesto, California, at which hearing evidence, both oral and documentary, was received and considered; and
WHEREAS, a public hearing was held by the City Council on July 22, 2025, in the Chambers, 1010 Tenth Street, Modesto, California, at which hearing evidence, both oral and documentary, was received and considered; and
WHEREAS, the proposed Code text amendments are exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3), which states that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The City currently does not regulate the number, location, or operating standards of smoke shops, and the proposed Ordinance would place limits on the number, location, and operating standards of smoke shops, which will limit their environmental impact in comparison to the status quo. Accordingly, it can be seen with certainty that there is no possibility that the proposed action may result in a significant effect on the environment, and the proposed revisions to the Municipal Code are exempt from further review under CEQA; and WHEREAS, the City Council of the City of Modesto now desires to add Article 8 “Smoke Shops,” to Chapter 3, Land Use Regulations, of Title 10, Zoning Regulations, of the Modesto Municipal Code, requiring certain location and proximity requirements; and WHEREAS, the City Council of the City of Modesto further desires to add Chapter 24, Smoke Shops, to Title 4, Public Welfare, Safety, and Health, of the Modesto Municipal Code, requiring a Smoke Shop Permit.

NOW, THEREFORE, THE COUNCIL OF THE CITY OF MODESTO DOES ORDAIN AS FOLLOWS:

SECTION 1. RECITALS.

The recitals above are true and correct and hereby made a part of this Ordinance by reference.

SECTION 2. FINDINGS.

Based on the whole of the record related to the Ordinance, including but not limited to, the Recitals above and the Agenda Report related to this Ordinance, the City Council hereby finds and determines as follows:

A. The requested change will not be detrimental to the public health, safety, or welfare because it establishes reasonable regulations to address illegal activity currently #30..
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occurring at smoke shops within the City and reduce the negative impacts caused by smoke shops.

B. The requested change will result in an orderly planned use of land because it limits new smoke shops to certain zoning districts where such uses are appropriate and compatible with other allowed uses, mandates separation between new smoke shops, and requires separation from other sensitive uses.

C. The requested change is in accordance with the community’s objectives as set forth in the General Plan and any applicable specific plan(s) because the requested change is in accordance with the community’s objectives as set forth in the General Plan and any applicable specific plan(s) because the amend is consistent with, and furthers, the goals and policies of the General Plan.

SECTION 3. AMENDMENT TO MODESTO MUNICIPAL CODE TITLE 10 – ADDITION OF TITLE 10, CHAPTER 3, ARTICLE 8.

The Modesto Municipal Code is hereby amended by adding Article 8, “Smoke Shops,” to Chapter 3, Land Use Regulations,” of Title 10, “Zoning Regulations,” to read as follows:
“Article 8. – Smoke Shops
10-3.801 Purpose
10-3.802 Definitions
10-3.803 Location and Minimum Proximity Requirements
10-3.804 Smoke Shop Permit Required
10-3.805 Existing Smoke Shops
10-3.801 Purpose
The purpose of this Article is to regulate the locations in the City where Smoke Shops may be established in order to preserve and protect public health, safety, and welfare. 10-3.802 Definitions
(a) “Existing Smoke Shop” shall mean any Smoke Shop lawfully established with a City business license and all other required permits, licenses, and/or land use entitlements as of October 8, 2024.
(b) “Hookah Lounge” shall mean a business establishment that qualifies as a smokers’ lounge, as defined in California Labor Code section 6404.5(e), and in which the entire premises is dedicated exclusively to the Smoking of Shisha or Shisha Tobacco, and which does not sell Tobacco Products for off-site consumption.
(c) “Premium Cigar Retailer” shall mean a retailer that sells no tobacco products other than premium cigars and looseleaf tobacco as defined under California Health and Safety Code section 104559.5.
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(d) “Smoke Shop” shall mean a retailer or any person that primarily sells, offers for sale, or offers to exchange for any form of consideration Tobacco Products and/or Tobacco Paraphernalia. A retailer or person who is primarily engaged in such activities includes, but is not limited to, a retailer or person that has fifteen percent (15%) or more of the square feet in the establishment, or more than fifteen (15) linear feet of display area projected to the floor (whether contiguous or noncontiguous), used for the sale, distribution, delivery, furnishing, marketing display, or storage of Tobacco Products or Tobacco Paraphernalia. Smoke Shop, for purposes of this Article, does not include a Premium Cigar Retailer, Hookah Lounge, or establishments operating as a Cannabis Dispensary under Title 10, Chapter 3, Article 7. Nothing herein is intended to permit a Premium Cigar Retailer, Hookah Lounge, or Cannabis Dispensary, except as otherwise authorized by Title 10 of this Code.
(e) “Smoke Shop Permit” shall mean a permit to operate a Smoke Shop issued by the Chief of Police pursuant to Chapter 4-24 of the Modesto Municipal Code. (f) “Tobacco Paraphernalia” shall mean any device, product, equipment, or material of any kind that is intended or designed for use for smoking, inhaling, or ingesting tobacco, notwithstanding that the device, product, equipment, or material may also be used for smoking, inhaling, or ingesting cannabis or and any controlled substance. Tobacco paraphernalia includes, but is not limited to, all of the following: (i) metal, ivory, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured bowls; (ii) water pipes; (iii) bongs; (iv) chillums; (v) ice pipes or chillers; (vi) cigarette papers or wrappers; (vii) cigarette rolling machines; (viii) blunt wraps, as defined in Section 308 of the Penal Code; (ix) hookahs and similar devices constructed with a receptacle or container in which water or some other liquid may be placed into which smoke passes and is cooled in the process of being inhaled or ingested; and (x) any electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including, but not limited to an electronic cigarette, cigar, pipe, or hookah. Tobacco Paraphernalia shall include any component, part, or accessory of the foregoing, whether or not sold separately. (g) “Tobacco Product” shall mean any product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, an electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including an electronic cigarette, cigar, pipe, or hookah (with or without flavoring), cigars, little cigars, chewing tobacco, pipe tobacco, or snuff, or vaping accessories. Tobacco Product shall include any component, part, or accessory of the foregoing, whether or not sold separately. Tobacco Product does not include a product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes, where the product is marketed and solely for such an approved purpose. (h) “Youth facility or center” shall have the same meaning as in Health and Safety Code section 11353.1, as may be amended from time to time: any public or #30..
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private facility that is primarily used to host recreational or social activities for minors, including, but not limited to, private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.
10-3.803 Location and Minimum Proximity Requirements
(a) Smoke Shops are permitted in the zones identified in Table 3.8-1 and prohibited in all other zones.

Use C-2 C-3 C-M M-1 M-2
Smoke Shop SSL SSL SSL SSL SSL
(b) Additionally, the following location and proximity requirements shall apply:
(1) No Smoke Shop shall be located within one thousand (1,000) feet, as measured from the nearest property lines, of the following locations:
(i) A public or private State-licensed or accredited school providing instruction to students in kindergarten or any grades 1 through 12; (ii) State-licensed childcare center;
(iii) Public park, playground, or recreational area, including a trail that is immediately adjacent to a public park or public library; (iv) Youth facility or center; or
(v) An alcohol or other drug abuse recovery or treatment facility. (2) No Smoke Shop use shall be located within one thousand (1,000) feet of any Commercial Cannabis Uses or another Smoke Shop, as measured from the nearest property lines.
(3) No Smoke Shop use shall be located within one hundred (100) feet of any residential use; this distance shall be measured from any building or structure containing a Smoke Shop use to an existing residential structure used for residential purposes.
(4) Smoke Shops are prohibited in the Downtown Cannabis Prohibition Overlay, regardless of a property’s zoning designation. The Downtown Cannabis Prohibition Overlay is that area shown in Figure 3.7.1 under Title 10, Chapter 3, Article 7 of this Code, and further described as the area including all properties that front either side of or are within the area bound by the following streets: Kansas Avenue, from Highway 99 to 9th Street; Needham Street; Downey Avenue, from McHenry Avenue to Burney Street; Burney Street, from Downey Avenue to Jennie Street; D Street, from Jennie Street to Highway 99; and the area fronting Highway 99 within the boundary. If any parcel is partially within the Downtown Cannabis Prohibition Overlay, Smoke Shops shall be prohibited on the entire parcel.
10-3.804 Smoke Shop Permit Required
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(a) All Smoke Shops permitted by Section 10.3.803 must, prior to establishing and operating any such Smoke Shop use, obtain and maintain at all times a valid Smoke Shop Permit from the City pursuant to Chapter 4-24 of the Modesto Municipal Code.
10-3.805 Existing Smoke Shops
(a) Notwithstanding Section 10-3.803, any existing and lawfully operating Smoke Shop that holds a City business license and all other required permits, licenses, and/or land use entitlements as of October 8, 2024, may continue to lawfully operate subject to the requirements of this Section.
(b) All Existing Smoke Shop shall apply for a Smoke Shop Permit pursuant to Chapter 4-24 of the Modesto Municipal Code and comply with all related requirements no later than November 14, 2025. An Existing Smoke Shop that fails to timely obtain a Smoke Shop Permit and comply with all related requirements shall cease to be an Existing Smoke Shop under Subsection (a) and shall be subject to all requirements of Section 10-3.803. (c) Notwithstanding anything in Section 10-3.502, “nonconforming uses,” to the contrary, any Existing Smoke Shop that ceases to operate for a period of sixty (60) consecutive days shall be discontinued, except that the Director of Community Economic and Development may extend this period by ninety (90) days if the Director determines that the cessation of the business is due to a cause outside of the preexisting Smoke Shop’s reasonable control, such as a natural disaster or declared emergency.
(d) Notwithstanding anything in Section 10-3.502, “nonconforming uses,” to the contrary, an Existing Smoke Shop shall not expand the square footage of the establishment or display area dedicated to tobacco products or tobacco paraphernalia as of July 22, 2025, without first complying with Section 10-

3.803.”
SECTION 4. AMENDMENT TO MODESTO MUNICIPAL CODE TITLE 4 – ADDITION OF TITLE 4, CHAPTER 24.

The Modesto Municipal Code is hereby amended by adding Chapter 24, “Smoke Shops,” to Title 4, “Public Welfare, Safety, and Health,” to read as follows:
“Chapter 24. – Smoke Shops
4-24.101 Purpose
4-24.102 Definitions
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4-24.103 Smoke Shop Permit Requirements, Total Number and Limitations 4-24.104 Smoke Shop Permit Application and Permit Procedures 4-24.105 Operational Standards
4-24.106 Security Requirements
4-24.107 Training
4-24.108 Inspections
4-24.109 Violations and Enforcement
4-24.110 Appeal of Denial, Suspension, or Revocation
4-24.101 Purpose
The purpose of this Chapter is to establish a licensing requirement and regulations for the operation of Smoke Shops in the City of Modesto in order to preserve and protect public health, safety, and welfare.
4-24.102 Definitions
(a) “Existing Smoke Shop” shall mean any Smoke Shop lawfully established with a City business license and all other required permits, licenses, and/or land use entitlements as of October 8, 2024.
(b) “Chief of Police” shall mean the Chief of Police of the City of Modesto, or their designee, or such other person designated by the City Manager of the City of Modesto to carry out the duties of the Chief of Police hereunder. (c) “Hookah Lounge” shall mean a business establishment that qualifies as a smokers’ lounge, as defined in California Labor Code section 6404.5(e), and in which the entire premises is dedicated exclusively to the Smoking of Shisha or Shisha Tobacco, and which does not sell Tobacco Products for off-site consumption.
(d) “Premium Cigar Retailer” shall mean a retailer that sells no tobacco products other than premium cigars and looseleaf tobacco as defined under California Health and Safety Code section 104559.5.
(e) “Smoke Shop” shall mean a retailer or any person that primarily sells, offers for sale, or offers to exchange for any form of consideration Tobacco Products and/or Tobacco Paraphernalia. A retailer or person who is primarily engaged in such activities includes, but is not limited to, a retailer or person that has fifteen percent (15%) or more of the square feet in the establishment, or more than fifteen (15) linear feet of display area projected to the floor (whether contiguous or noncontiguous), used for the sale, distribution, delivery, furnishing, marketing display or storage of Tobacco Products or Tobacco Paraphernalia. Smoke Shop, for purposes of this Article, does not include a Premium Cigar Retailer, Hookah Lounge, or establishments operating as a Cannabis Dispensary under Title 10, Chapter 3, Article 7.
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(f) “Smoke Shop Operator” shall mean all individuals or entities who own or operate a Smoke Shop. An owner is any individual or entity that has any ownership interest, regardless of size, in the Smoke Shop.
(g) “Smoke Shop Permit” shall mean a permit to operate a Smoke Shop issued by the Chief of Police pursuant to Chapter 4-24 of the Modesto Municipal Code. (h) “Tobacco Paraphernalia” shall mean any device, product, equipment, or material of any kind that is intended or designed for use for smoking, inhaling, or ingesting tobacco, notwithstanding that the device, product, equipment, or material may also be used for smoking, inhaling, or ingesting cannabis or any controlled substance. Tobacco paraphernalia includes, but is not limited to, all of the following: (i) metal, ivory, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without screens, permanent screens, hashish heads, or punctured bowls; (ii) water pipes; (iii) bongs; (iv) chillums; (v) ice pipes or chillers; (vi) cigarette papers or wrappers; (vii) cigarette rolling machines; (viii) blunt wraps, as defined in Section 308 of the Penal Code; (ix) hookahs and similar devices constructed with a receptacle or container in which water or some other liquid may be placed into which smoke passes and is cooled in the process of being inhaled or ingested; and (x) any electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including, but not limited to an electronic cigarette, cigar, pipe, or hookah. Tobacco Paraphernalia shall include any component, part, or accessory of the foregoing, whether or not sold separately. (i) “Tobacco Product” shall mean any product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, an electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including an electronic cigarette, cigar, pipe, or hookah (with or without flavoring), cigars, little cigars, chewing tobacco, pipe tobacco, or snuff, or vaping accessories. Tobacco Product shall include any component, part, or accessory of the foregoing, whether or not sold separately. Tobacco Product does not include a product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes, where the product is marketed and solely for such an approved purpose. 4-24.103 Smoke Shop Permit Requirements, Total Number, and Limitations (a) All Smoke Shops must obtain a Smoke Shop Permit prior to commencing operations, in addition to a City business license and any other permit, licenses, or approval required by the City, State, or other public agency. (b) The total number of Smoke Shop Permits within the City shall be limited to one (1) per twenty-five thousand (25,000) residents in the City. For the purposes of this Subsection, the total population of the City shall be determined by the most current published total available from the U.S. Census Bureau or the California State Department of Finance, whichever has been more recently updated, as of the date the permit application is filed. Existing Smoke Shops may apply for a Smoke #30..
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Shop Permit prior to November 14, 2025, regardless of whether or not the maximum number of permits established by this Section has been reached. No Smoke Shop Permit may be issued to any Smoke Shop, other than to an Existing Smoke Shop, prior to November 14, 2025.
(c) If, at any time after all applications for a Smoke Shop Permit submitted by Existing Smoke Shops by November 14, 2025 have been approved or denied, the number of Smoke Shop Permits that have been issued is fewer than the number authorized by Section 4-24.103(b), the Chief of Police shall, within a reasonable period of time, open an application period for available Smoke Shop Permit(s). If at the end of the application period, the number of eligible applicants exceeds the number of available permits, the Chief of Police shall award the Smoke Shop Permits by random lottery. Notwithstanding the foregoing, in no event shall a Smoke Shop Permit be awarded for a proposed location if there are already two (2) other Smoke Shops operating in the same Council-District. (d) No new Smoke Shop Permit may be issued if the number of issued Smoke Shop Permits equals or exceeds the total number authorized pursuant to Section 10-

3.804(b) above. A new proprietor that has not had a business in violation of this Chapter may apply for a Smoke Shop Permit to continue operating in the same location as an existing Smoke Shop, and such Permit shall not be considered a new Smoke Shop Permit for purposes of this Section, as long as the existing Smoke Shop has not ceased operating.
(e) An Existing Smoke Shop that is ineligible to receive or renew a Smoke Shop Permit for a location pursuant to Section 10-3.803, and any Smoke Shop operating lawfully that becomes ineligible to receive or renew a Smoke Shop Permit due to the creation of a new sensitive use under Section 10-3.803(b), may apply for and receive a Smoke Shop Permit for that location as long as all the following conditions are met:
(1) The Smoke Shop Permit application is submitted no later than November 14, 2025;
(2) The Smoke Shop is not closed for business for more than sixty (60) consecutive days, except that the Police Chief may extend this period by ninety (90) days if the Police Chief determines that the cessation of the business is due to a cause outside of the Smoke Shop’s reasonable control, such as a natural disaster or declared emergency;
(3) The Smoke Shop Operator retains the right to operate under all other applicable laws; and
(4) The Smoke Shop has complied with all Operating Standards under Section 4-24.105, Security Requirements under Section 4-24.106, and Training Requirements under Section 4-24.107 of this Article no later than November 14, 2025.
4-24.104 Smoke Shop Permit Application and Permit Procedures (a) An application for a Smoke Shop Permit shall be submitted on forms provided by the City and accompanied by the appropriate application fee established by the #30..
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City Council by Resolution. The application form provided by the City shall include, but not be limited to, the following information:
(1) The name, address, email address, and telephone number of the property owner.
(2) The name, address, email address, and telephone number of all Smoke Shop Operators.
(3) The name, address, email address, and telephone number of the individual designated as the primary point of contact for the management of the Smoke Shop.
(4) A site plan of the property.
(5) Such other information as the Chief of Police deems reasonably necessary to administer this Chapter.
(b) The Chief of Police may refer the application to other City departments to determine whether the Smoke Shop’s location will comply with building, health, zoning, and fire ordinances or other applicable ordinances or laws. City departments may conduct an inspection of the premises to determine compliance with the ordinances and other laws they administer. They may subsequently prepare reports summarizing their inspections and recommend whether to approve or deny the application based on their inspections.
(c) A Smoke Shop Permit shall be non-transferable, shall not run with the land, and shall be valid only at the site described in the application. (d) A Smoke Shop Permit shall be valid for one (1) year from the date of issuance and may be renewed upon submission of a renewal application and fee established by the City Council by Resolution to the City.
(e) The Chief of Police may deny an application for a new Smoke Shop Permit or renewal of an existing Smoke Shop Permit for any of the following reasons:
(1) The application is incomplete, or the full application fee has not been paid; (2) The application contains a false or misleading statement or omission of a material fact;
(3) The property is subject to an enforcement action under any provision of the Modesto Municipal Code or state law;
(4) The applicant is delinquent on any payment to the City of any fees, penalties, taxes, or any other monies related to the property or business; (5) The applicant has previously owned, in whole or in part, or been an officer for a Smoke Shop found to be in violation of applicable law or that had its Smoke Shop Permit revoked.
(6) Within twenty-four (24) months of application, a Smoke Shop Permit was revoked or renewal denied at the property subject to the application; (7) The operation of a Smoke Shop at the property is a threat to the public health, safety, or welfare; or
(8) The Smoke Shop does not comply with, or has violated, one or more of the applicable requirements of this Chapter, the Modesto Municipal Code, or any other applicable law, including the Modesto Building Code or Fire #30..
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Code.
(9) For Existing Smoke Shops applying for a Smoke Shop Permit prior to November 14, 2025, noncompliance with a requirement of Section 4-

24.105 occurring after August 12, 2025, but before November 14, 2025, shall not be a basis to deny an application, unless such conduct is also a violation of another section of applicable law, including, but not limited to, the sale of flavored tobacco or other illegal products. 4-24.105 Operational Standards
All Smoke Shops shall comply with the operational standards listed in this Section. (a) Lighting. The exterior of the premises, including adjacent public sidewalks and all parking lots under the control of the Smoke Shop, shall be illuminated in accordance with the lighting requirements of the underlying zoning district. (b) Litter and Graffiti. Trash and recycling receptacles shall be provided near public entrances to and exits from the building. The Smoke Shop Operator shall provide for daily removal of trash, litter, and debris from the premises and on allsidewalks that abut the premises, including the Smoke Shop’s parking areas.

The Smoke Shop Operator shall remove graffiti from the building and premises within forty-eight (48) hours.
(c) Vending Machines. Internal and external vending machines of any and all kinds are prohibited.
(d) Signage.
(1) All signs on the premises of the Smoke Shop shall comply with Chapter 6, Signs of Title 10, Zoning, of the Modesto Municipal Code. (2) The Smoke Shops shall comply with the requirements of the California Cigarette and Tobacco Products Licensing Act of 2003, and all other applicable state and federal laws and regulations, including any amendments and successor statutes or regulations.
(3) In addition to the requirements above, the following copy is required to be prominently posted in a readily visible manner on an interior wall or fixture and not on windows of the Smoke Shop:
(i) “California State Law Prohibits the Sale of Tobacco Products to Persons Under 21 Years of Age.”
(ii) “No Persons Under the Age of Twenty-One (21) Shall be Allowed on the Premises.”
(iii) “No Loitering is Allowed on or in Front of These Premises.” (iv) “No Smoking or Vaping Allowed on These Premises.”
(v) “Sale of Flavored Tobacco is Prohibited.”
(4) In the event of a conflict between any of the above requirements, the most restrictive requirements shall apply.
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(e) Windows & Doors.
(1) At least fifty percent (50%) of any street-facing facade must be glazed with a clear, non-tinted material.
(2) No more than five percent (5%) of the square footage of each window that is visible to the public from a public thoroughfare, sidewalk, or parking lot of Smoke Shop shall bear advertising, signs, or other obstructions of any sort.
(3) Doors must be free from signs, regardless of door type or material. The area covered by signs or advertising shall be measured using the border of such sign and shall include all areas within a sign or advertisement that may not include writing, such as the clear area within neon signs. (4) Signage, advertising, or other obstructions inside or outside the Smoke Shop that are not physically attached to the windows or doors but are visible from a public thoroughfare, sidewalk, or parking lot in the same manner as if they were physically attached are included in the five percent (5%) limitation.
(5) Any signage required by law shall not count towards the five percent (5%) limitation but shall nonetheless follow the rules related to visual obstruction.
(6) Advertising and signage on windows shall be placed and maintained in a manner that ensures that law enforcement personnel have a clear and unobstructed view of the interior of the business. Including the area in which the cash registers are maintained, from exterior public sidewalks, parking lots, or the entrance to the business.
(7) Any Smoke Shop located within one thousand (1,000) feet of uses listed in Section 10-3.803(b)(1) or within one hundred (100) feet of uses listed in Section 10-3.803(b)(3), shall not advertise Tobacco Product sales in a manner visible from the outside of the Smoke Shop, such as from a public thoroughfare, sidewalk, or parking lot.
(f) Hours of Operation. Smoke Shops are prohibited from operating except from 8:00 a.m. to 10:00 p.m.
(g) Consumption of Tobacco Products. Smoke Shops are prohibited from selling Tobacco Products for onsite consumption.
(h) Consumption of Alcohol & Cannabis. The consumption of alcoholic beverages or cannabis in any form is prohibited on the premises of a Smoke Shop.
(i) Minimum Age Requirement.
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(1) Smoke Shop Operators and Smoke Shop employees must be twenty-one (21) years of age or older.
(2) No person under the age of twenty-one (21) shall be allowed on the premises of a Smoke Shop.
(j) Loitering and Other Nuisance Activities.
(1) The operation of a Smoke Shop shall not result in nuisance activities on the property, which may include, but are not limited to, disturbances of the peace, illegal drug activity, public intoxication, drinking in public, tobacco product sales to minors, harassment of members of the public, gambling, prostitution, sale of stolen goods, public urination, theft, assaults, batteries, acts of vandalism, loitering, excessive littering, graffiti, illegal parking, excessively loud noises (especially in the late night or early morning hours), traffic violations, curfew violations, lewd conduct, or other violations of City, state, or federal laws (2) The Smoke Shop Operator shall post the property with readily visible signs advising that consumption of alcoholic beverages and cannabis, gambling, trespassing, or loitering on private property is a violation of the Modesto Municipal Code and providing appropriate citations to the relevant Sections of this Code.
(3) At least every twelve (12) months, the Smoke Shop Operator must provide the Modesto Police Department, on a form provided by the City, with written authorization for the Modesto Police Department peace officers to enter the Smoke Shop premises and remove trespassers when the business is closed to the public, in accordance with Penal Code section 602(0), including any amendments or successor statutes thereto. Such a form shall include the notarized signature of the Smoke Shop Operator.
(4) Any violations of this Section shall be considered an egregious violation of this Chapter and a public nuisance that isimminently dangerous to life, health, safety, or adjacent property, such that it requires immediate correction or elimination. Such a violation shall subject the Smoke Shop Operator to immediate suspension or revocation of the Smoke Shop Permit.
(k) Prohibited Products. The sale or distribution of one or more of the following is prohibited:
(1) Cannabis or Cannabis products as defined in Modesto Zoning Code section 10-3.702.
(2) Drug paraphernalia, as defined in Health and Safety Code section 11014.5, not directly related to legal Tobacco Products. (3) Nitrous oxide.
(4) Flavored tobacco products as defined in California Health and Safety #30..
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Code section 104559.5.
(5) Other products prohibited by law.
(l) Gambling Prohibited. On-site or online gambling activities not related to the California Lottery are prohibited on the Smoke Shop premises. (m) Code Requirements. The Smoke Shop shall comply with such other requirements as established by the Modesto Municipal Code, including the Modesto Building Code.
4-24.106 Security Requirements
(a) Security Plan Required. Smoke Shop Operators/Applicants shall submit a security plan consistent with the Modesto Police Department policy on the sale of agerestricted materials. Prior to the approval of the Smoke Shop Permit, the applicant shall prepare and submit, for review by the Modesto Police Department Chief of Police or their designee, a security plan for approval. Approval of the security plan by the Chief of Police or their designee shall not be unreasonably denied.

The content of the security plan shall be incorporated as conditions of approval for the Smoke Shop Permit. As a part of the annual inspection process, the security plan shall be resubmitted for approval by the Chief of Police or their designee.
(b) Additional security measures such as reduced hours of operation, security guards, door monitors, and burglar alarm systems may be required if harm, nuisance, or related problems are demonstrated to occur as a result of business practices or operations. This will be determined on a case-by-case basis upon review by the Police Department.
(c) Video Surveillance. Smoke Shops must maintain a fully functional color digital video camera system meeting the following requirements:
(1) Security surveillance cameras and a video recording system shall be installed to monitor the interior, main entrance, all entries and exits (from both the inside and outside of the building), and the exterior Smoke Shop area to discourage loitering, crime, and illegal or nuisance activities. (2) The camera and recording system must be of adequate quality (at least HD), color rendition, and resolution to allow the identification of any individual present in the Smoke Shop area.
(3) At each point-of-sale location, camera coverage must enable recording of the customer(s) and employee(s) facial features with sufficient clarity to determine identity.
(4) In addition, remote and real-time, live access to the video footage from the cameras shall be provided to the Chief of Police or his/her designee(s) using such software as designated by the Chief of Police.

The Smoke Shop Operator shall be responsible for ensuring that the security surveillance camera's footage is remotely accessible by the Chief of Police or his/her designee(s), and that it is compatible with the City's software and hardware.
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(5) All surveillance equipment, records, and recordings must be stored in a secure area that is only accessible to management staff. Operators must keep a current list of all authorized employees who have access to the surveillance system and/or alarm system.
(6) Video from the security surveillance cameras shall be maintained for a period of not less than forty-five (45) days and shall be made available to the City upon request.
4-24.107 Training
(a) Initial Training. The Smoke Shop Operator and all employees of the Smoke Shop who are involved in the sale of Tobacco Products must complete approved course(s) in training of Tobacco Product sales and handling within sixty (60) days after approval of the Smoke Shop Permit becomes final, or for employees hired after the approval of the Smoke Shop Permit, within sixty (60) days from the date of hire. Existing Smoke Shops Operators and employees shall have until November 14, 2025, to come into compliance with the training requirement, and thereafter, new employees shall obtain the necessary training within sixty (60) days of the date of hire. To satisfy this requirement, a certified program must meet the standards of the California Department of Public Health on the Stop Tobacco Access to Kids Enforcement (“STAKE”) Act or other certifying orlicensing body designated by the State of California.

If the Smoke Shop Operator is a legal entity, the manager or executive responsible for the Smoke Shop shall obtain the requisite training. (b) Annual Training. The Smoke Shop Operator and all employees shall also be required to complete annual trainings which comply with State standards, including changes to tobacco sales laws and regulations. (c) Records. Smoke Shops shall be required to keep up to date records which prove that all individuals listed above have completed the requisite trainings and shall furnish these records to the City during inspections and upon a reasonable request from the City.
4-24.108 Inspections
(a) Smoke Shops shall be subject to routine unannounced inspections at least annually to ensure compliance with this Chapter and any additional conditions of the Smoke Shop Permit.
(b) In the event that the inspection identifies violations, the Smoke Shop Operator shall pay a reinspection fee to reimburse the City for the cost of the City performing a follow-up inspection to ensure all identified violations have been corrected. The amount of such reinspection shall be established by the City Council by Resolution.
(c) If an annual inspection results in a finding that a Smoke Shop Operator is not in compliance with this Chapter or the specific conditions of the Smoke Shop License, that finding may be used as a basis for enforcement pursuant to Section #30..
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4-24.109.
4-24.109 Violations & Enforcement
If the Smoke Shop violates any provision of this Chapter, or if any of the circumstances identified in 4-24.104(e) exist, the Smoke Shop and Smoke Shop operator may be subject to one or more of the following.
(a) Suspension or Revocation of the Smoke Shop Permit. The Chief of Police may suspend or revoke the Smoke Shop Permit of any business violating this Chapter. (b) Administrative Enforcement.
(1) Notwithstanding the schedule of fines established in Section 1-6.404(b) for administrative citations, the penalties assessed for each violation of this Chapter shall be as follows:
(i) A fine of five hundred dollars ($500) to two thousand dollars ($2,000) for the first violation.
(ii) A fine of one thousand dollars ($1,000) to three thousand dollars ($3,000) for the second violation within a five (5) year period. (iii) A fine of two thousand dollars ($2,000) to five thousand dollars ($5,000) for the third violation and all subsequent violations within a five (5) year period.
(iv) Notwithstanding the foregoing, operating a Smoke Shop without a valid Smoke Shop Permit shall be subject to a fine of up to twenty thousand dollars ($20,000).
(c) Criminal Enforcement. Violation of this Chapter shall be punishable as a misdemeanor pursuant to Chapter 1-2 of this Code. The property owner of the site on which the Smoke Shop is located, the Smoke Shop Operator(s), and the Smoke Shop’s employees may all be subject to criminal enforcement consistent with applicable laws.
(d) Notwithstanding anything to the contrary in this Code, the property owner of the site on which the Smoke Shop is located, as well as the Smoke Shop Operator(s), and all responsible parties who cause or permit a violation of this Chapter, may be jointly and severally liable for violations of this Chapter. (e) Additional Signage. The Chief of Police, or designee, may require any Smoke Shop that violates this Ordinance to post a sign in a prominent location near the cash register identifying that the business has violated applicable law and the specific violations. The text of the sign shall be as specified by the Chief of Police or designee and shall be readily readable. The Chief of Police shall determine the length of time that the sign shall remain posted, which shall not exceed one (1) year.
(f) Any other remedy authorized by Chapter 1-6 of this Code or other applicable law, including but not limited to California Health and Safety Code section 104559.5. #30..
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(g) These remedies are cumulative and not exclusive of each other. Each violation and each day on which the same violation occurs constitutes a separate offense for which a separate penalty may be imposed.
(h) The Chief of Police shall select the remedy and penalty based on the severity of the violation, as well as any past violations committed by the Smoke Shop or Smoke Shop Operator, including violations that occurred prior to the issuance of the Smoke Shop Permit.
4-24.110 Appeal of Denial, Suspension, Revocation, or Nonrenewal (a) Appeal of Proposed Denial, Suspension, Revocation, or Nonrenewal. Any applicant or Smoke Shop Permit holder may appeal a proposed Smoke Shop denial, suspension, revocation, or nonrenewal by filing a written appeal with the City Manager’s office within ten (10) days from the date of the notice of denial, suspension, revocation, or nonrenewal. The written appeal must contain the following:
(1) A brief, clear statement, including material facts, to support the appellant's position and the relief sought;
(2) The signature of the Smoke Shop Permit holder with verification under penalty of perjury of the truth of the statements in the written appeal; and (3) Any required appeal fee, which may be approved via Resolution of the City Council.
(b) Appeal Hearing Procedure.
(1) Upon receipt of a valid written appeal, the City Manager shall schedule an appeal hearing no earlier than twenty (20) days from the receipt of the appeal.
(2) A Hearing Officer, appointed by the City Manager, will conduct the appeal hearing.
(3) The Hearing Officer may only consider evidence that is relevant to whether the Smoke Shop Permit should be denied, suspended, revoked, or not renewed. However, the formal rules of evidence shall not apply to the hearing.
(4) The person contesting the action will be given the opportunity to testify and present witnesses and evidence concerning the action. Unless requested in advance by the person contesting the action, a representative of the City is not required to attend the hearing, provided that any such appearance may be made at the discretion of the City Manager. (5) The Hearing Officer may continue the hearing and request additional information from either party prior to issuing a written decision. #30..
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(6) After considering all of the testimony and evidence submitted at the hearing, the Hearing Officer must issue a written decision within a reasonable time after the hearing to uphold or deny the recommended action and must list in the decision the reasons for that decision. The Hearing Officer will use the preponderance of evidence as the standard of evidence in deciding issues. The decision of the Hearing Officer will be final.
(7) If the Hearing Officer determines that the action should not be upheld, the City will promptly refund the applicable amount of the appeal hearing fee. (8) The City shall serve the recipient of the notice of appeal or nonrenewal with a copy of the Hearing Officer's written decision by first-class mail.” SECTION 5. AMORTIZATION OF OPERATIONAL STANDARDS AND SECURITY REQUIREMENTS UNDER SECTIONS 4-24.105, 4-24.106, and 4-24.107 OF THIS ORDINANCE.

Nothing in this Ordinance prohibits a Smoke Shop lawfully established with a City business license and all other required permits, licenses, and/or land use entitlements as of October 8, 2024, from continuing to operate as long as the Smoke Shop complies with the licensing, operational, security, and training requirements established by this Ordinance by November 14, 2025, which is more than ninety (90) days after adoption of the Ordinance.

While compliance with the requirement of this Ordinance will create new costs for existing Smoke Shops, such requirements do not place a significant burden on existing Smoke Shops because the Ordinance does not place a limit on how long Smoke Shops in compliance may continue operating. Accordingly, the owners and operators of Smoke Shops will be able to recover the cost of complying with these new requirements. For this reason, the benefits to the public health and safety of these regulations far outweigh any minor hardship to the owners/operators of Smoke Shops or the owners of the property on which a Smoke Shop is located.

SECTION 6. TERMINATION OF MORATOIRUM
The temporary moratorium on the establishment of new and relocation or physical expansion of existing tobacco retailer businesses enacted by Ordinance No. 3785-C.S. and extended by Ordinance No. 3788-C.S. is terminated as of the effective date of this Ordinance.

SECTION 7. CALIFORNIA ENVIRONMENTAL QUALITY ACT (“CEQA”) FINDINGS.

The City Council has reviewed the proposed activity for compliance with the California Environmental Quality Act (“CEQA”) and determined that the proposed Code text amendments are exempt from the CEQA pursuant to CEQA Guidelines section 15061(b)(3), which states that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The City currently does not regulate the number, location, or operating standards of smoke shops, and the proposed Ordinance would place limits on the number, location, and operating standards of Smoke Shops, which will limit their environmental impact in comparison #30..
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to the status quo. Accordingly, it can be seen with certainty that there is no possibility that the proposed action may result in a significant effect on the environment, and the proposed revisions to the Municipal Code are exempt from further review under CEQA.

SECTION 8. SEVERABILITY.

The provisions of this Ordinance are severable, and if any provision, clause, sentence, section, word, or part thereof is held illegal, invalid, unconstitutional, or inapplicable to any person or circumstance, such holding shall not affect or impair any of the remaining provisions, clauses, sentences, sections, words, or parts thereof, or their applicability to other persons or circumstances.

SECTION 9. PUBLICATION AND EFFECTIVE DATE.

This Ordinance shall take effect and be in force thirty (30) days from and after the date of its passage. The City Clerk shall cause this Ordinance to be published or be posted in at least three (3) public places in the City in accordance with Section 36933 of the Government Code of the State of California.

PASSED, APPROVED, AND ADOPTED this ____ day of _________, 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

APPROVED: ___________________________
SUE ZWAHLEN, Mayor
ATTEST: _____________________________
DIANE NAYARES-PEREZ, CMC City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
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FINAL ADOPTION CLAUSE
The foregoing ordinance, having been published as required by the Charter of the City of Modesto, and coming on for final consideration at the regular meeting of the Council of the City of Modesto held on the ____ day of _______, 2025, _____________ moved its final adoption, which motion being duly seconded by Councilmember ____________, was upon roll call carried and the ordinance adopted by the following vote:

AYES: Councilmembers: Name, Name, Name, Name, Name, Name, Mayor Name
NOES: Councilmembers: None
ABSENT: Councilmembers: None
APPROVED:_________________________
SUE ZWAHLEN, Mayor
ATTEST: _____________________________
DIANE NAYARES-PEREZ, CMC City Clerk
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07/22/2025/CAO/JSanchez/Item X 1 2025-XX

MODESTO CITY COUNCIL
RESOLUTION NO. 2025-XX

RESOLUTION ADOPTING THE APPLICATION FEE, ANNUAL PERMIT FEE,

AND RE-INSPECTION FEE FOR THE SMOKE SHOP PERMIT PROGRAM WHEREAS, on July 22, 2025, the City Council will consider introducing an Ordinance establishing a regulatory framework for smoke shop businesses, as defined in the Ordinance, to operate within the City of Modesto (the “Smoke Shop Ordinance”); and WHEREAS, as part of the Smoke Shop Ordinance, the City is developing application and permit procedures, inspections, forms, and administration protocols for Smoke Shop Permits in anticipation of the Smoke Shop Ordinance being adopted and becoming effective (the “Smoke Shop Permit Program”), and WHEREAS, staff time and City materials have been estimated to establish the application process and procedures, and inspections to administer the Smoke Shop Permit Program; and
WHEREAS, the City may collect fees to recover City costs related to administering the Smoke Shop Permit Program and required inspections; and WHEREAS, a duly noticed City Council meeting was held by the City Council on July 22, 2025, at 5:30 p.m. in the Tenth Street Place Chambers located at 1010 Tenth Street, Modesto, California, at which all interested persons were given the opportunity to be heard relative to the proposed fees for specific activities and services related to the Smoke Shop Ordinance.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the fee schedule related to fees for specific activities and services related to the Smoke Shop Permit Program, attached hereto as Exhibit A. #30..
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07/22/2025/CAO/JSanchez/Item X 2 2025-XX
The foregoing Resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 22nd day of July, 2025, by Councilmember _____, who moved its adoption, which motion being duly seconded by Councilmember _____, was upon roll call carried and the Resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: _____________________________

DIANE NAYARES-PEREZ, CMC,
City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: ________________________________
JOSE M. SANCHEZ, City Attorney
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07/22/2025/CAO/JSanchez/Item X 3 2025-XX

EXHIBIT A

CITY OF MODESTO SMOKE SHOP PERMIT PROGRAM

FEE SCHEDULE
Smoke Shop Permit Fee Fee
Application Fee- Non -Refundable $500
*This amount will be applied to the first year Annual Permit Fee if the Smoke Shop Permit is approved.

Annual Permit Fee $1,100
Re-inspection Permit Fee $530
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