Before submitting the performance reports to HUD, pursuant to 24 CFR 91.115(d), the city must provide notice to citizens and make the full performance report, CAPER, available for citizen comment for a period not less than 15 days. The full CAPER report will be made available for public review on or before September 6, 2026, starting the public comment period. The CAPER document public comment period closes with the hearing at the Council meeting on Tuesday, September 22, 2026. Any comments received during the public review period, or during the Council meeting, will be incorporated into the final CAPER which is due to HUD no later than September 28, following the close of a fiscal year.
The City measures its data and success associated with the eligible uses of the three key programs as outlined below:
a. The CDBG program supports the development of viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low and moderate-income persons by supporting activities such as public facilities improvements, social services, affordable housing, fair housing, economic development and addressing homelessness.
b. The HOME program supports a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income individuals. c. The ESG program provides funding for a variety of services including but not limited to engaging homeless individuals and families through street outreach, emergency shelters, homeless prevention, and rapid rehousing activities with the goal of assisting people to quickly regain stability in permanent housing after experiencing a housing crisis and/or homelessness.
To be eligible for funding awards, HUD requires the City to develop and adopt a Consolidated Plan every five years. The Consolidated Plan analyzes the City’s housing and community development needs, with priority on serving low- and moderate-income individuals, households, and neighborhoods (as defined by HUD), and establishes a 5- year strategy outlining how the City will utilize CDBG, HOME and ESG funding for meeting the needs identified.
As a component of the five-year Consolidated Plan, the City must annually prepare and adopt an Annual Action Plan outlining the projects to be carried out for each Program Year within the five-year period. At the conclusion of each program year, the City is required to prepare a Consolidated Annual Performance Evaluation Report (CAPER) detailing how the City utilized its HUD funds during a particular program year, the progress of each project identified in the Annual Action Plan, and how the projects aligned with both the Annual Action Plan and Consolidated Plan.
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City Council, September 22, 2026
Program Year 2025-2026 Consolidated Annual Performance Evaluation Report
This CAPER includes the accomplishments for the fiscal year 2025-2026 Annual Action Plan, which represents the first (1st) report of the City of Modesto’s 2025-2030 Consolidated Plan by Council on June 24, 2025, by Resolution No. 2025-245, as well as the one-time HOME-ARP funding approved by Council on May 24, 2022, by Resolution No.2022-245.
DISCUSSION:
As an Entitlement Community, the City is awarded HUD funds every year for CDBG, ESG, HOME, and the City was awarded one-time HOME-ARP programs in the amount of $3,409,774 which was increased to $3,414,872 by HUD administratively on April 31, 2025. For fiscal year 2025-2026, the City of Modesto was awarded $1,898,921 in CDBG funds, $157,694 in ESG funds and $800,215.37 in HOME funds. Additionally, the City utilized the remaining HOME-ARP funds of $239,268.44.
Below is a list of some accomplishments and/or highlights that took place during Program Year 2025 identified in the CAPER:
Public Services Program- CDBG
Every year, the City provides funding opportunities (via a competitive grant application process) to local non-profits for new or expanded services to the low-income community.
A total of 462 individuals were assisted with CDBG funds by 6 non-profit subrecipients and 730 individuals were assisted with ESG funds by 3 non-profit homeless service providers. The following are highlights of some CDBG Public service and ESG service provider partners:
Project Sentinel – Fair Housing and Tenant/Landlord Mediation – CDBG Project Sentinel serves individuals and households with fair housing and tenant/landlord mediation services, one-on-one counseling and group workshops for housing providers, consumers and social service agencies to educate them about fair housing laws. During the program year, Project Sentinel served 58 unduplicated individuals, representing 19 households that resulted in a total of 19 fair housing investigation cases.
Community Housing and Shelter Services – CBDG
CHSS provided homelessness prevention assistance to households at imminent risk of homelessness by offering case management, financial assistance, and housing stabilization services that helped families remain safely housed and avoid entering the homeless service system. During the program year, CHSS assisted 35 individuals representing 11 households. All households receiving assistance benefit from ongoing case management and are guided in creating individualized action plans CAMP2HOME – ESG and other funding sources
Through a community-wide visioning and planning process, the City of Modesto has continued implementing the Camp2Home initiative, a comprehensive homelessness response strategy designed to reduce unsheltered homelessness by connecting #22..
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City Council, September 22, 2026
Program Year 2025-2026 Consolidated Annual Performance Evaluation Report
individuals to coordinated outreach, emergency shelter, employment opportunities, supportive services, and permanent housing. Below are accomplishments for the program year under each component:
• Street Outreach: The Community Health and Assistance Team (CHAT) was formed as an alternative response to handle calls for service and assisting officers with quality-of-life situations. CHAT has continued to engage and build relationships with unsheltered individuals and provide immediate support, intervention, and connections with mainstream social services, shelters, and housing programs. CHAT works closely with sworn police officers to respond to non-violent calls. This alternative response allows sworn officers to focus more on higher priority calls. During Program Year 2025-2026, CHAT conducted 9,151 outreach contacts and provided 8,174 supportive service connections, including 457 connections to vital documents, 905 referrals to case management, and 6,900 basic needs services, such as meals, hygiene resources, showers, and peer support. The City continues utilizing the ArcGIS Survey123 platform to document outreach activities, identify community trends, and improve data-driven decisionmaking to better coordinate services and allocate resources.
The City partnered with the Center for Human Services (CHS) to provide ESGfunded street outreach and navigation services to youth ages 13 through 24 experiencing homelessness. In coordination with the Stanislaus Community System of Care’s Coordinated Entry System (CES), outreach staff engaged youth throughout the community, conducted needs assessments, and connected participants to emergency shelter, transitional housing, education, employment services, behavioral health resources, and permanent housing opportunities.
During Program Year 2025–2026, CHS used remaining FY 2024–2025 City ESG funds to contact 28 individuals and engaged 15 individuals. • Emergency Shelter: Emergency shelter remains a critical component of the Camp2Home initiative by providing immediate safety and stability while individuals work toward permanent housing. Through ESG funding, the City continued supporting operations at the Salvation Army Berberian Shelter, the community's largest emergency shelter. The shelter provides overnight accommodations, meals, hygiene facilities, case management, housing navigation, and connections to supportive services designed to help individuals transition from homelessness into permanent housing. During the 2025-2026 program year, the Berberian shelter served 689 unduplicated individuals with shelter services. • Job Training and Employment: Recognizing that stable employment is a critical component of achieving long-term housing stability, the City continued supporting the HopeWorks program through a combination of State Earmark funds, private contributions, and the City's Litter Abatement Fund. This braided funding approach allows the City to expand employment opportunities and supportive services for individuals experiencing homelessness and housing instability beyond what is #22..
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City Council, September 22, 2026
Program Year 2025-2026 Consolidated Annual Performance Evaluation Report
possible through federal grant funding alone.
HopeWorks provides participants with paid work experience, employment readiness training, intensive case management, and connections to permanent employment opportunities. Using a workforce development approach, participants engage in community beautification and litter abatement projects while developing workplace skills, strengthening employment history, and addressing barriers to employment. Participants are also connected to housing navigation, behavioral health services, benefits enrollment, and other supportive services that promote long-term self-sufficiency. Through June, 48 individuals were actively working in the program with 5 clients obtaining transitional housing. • Permanent Housing: Camp2Home considers that securing stable employment is a priority to ensure housing success. Therefore, as individuals graduate from the job training program and obtain gainful and sustainable employment, they are eligible for the next step in the process – rapid rehousing assistance. As participants progress through outreach, shelter services, case management, and employment readiness programs such as HopeWorks, they become better positioned to successfully transition into permanent housing.
Through ESG funding, Turning Point Community Programs continued providing Rapid Rehousing services, including housing search assistance, landlord engagement, rental assistance, housing stabilization, and intensive case management. Participants also receive connections to employment resources, income support, healthcare, and community-based services to help ensure longterm housing success after rental assistance ends. During Program Year 2025- 2026, Turning Point assisted 13 individuals representing 8 households, in obtaining permanent housing, further advancing the City's goal of reducing homelessness through coordinated, person-centered interventions that promote housing stability and self-sufficiency.
Affordable Housing - Owner Occupied Housing Rehabilitation – CDBG Preserving the City's existing affordable housing stock remained a high priority during Program Year 2025-2026. Through the Housing Rehabilitation Loan Program, the City distributed $402,496.50 in rehabilitation loans and grants to assist 15 income-qualified homeowners with essential health and safety improvements that allow residents to remain safe and independent in their homes. Rehabilitation activities included roof replacement, electrical repairs, accessibility improvements such as ADA-compliant ramps and bathroom modifications, installation of energy-efficient windows and HVAC systems, and other code-related repairs.
Affordable Housing – CDBG & HOME
Seventh Street Village
The City continued its partnership with Visionary Home Builders on the development of Seventh Street Village, a transit-oriented, mixed-use affordable housing community #22..
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City Council, September 22, 2026
Program Year 2025-2026 Consolidated Annual Performance Evaluation Report
consisting of 79 affordable housing units. Located in downtown Modesto, the development will include a commercial space on the ground floor, creating a vibrant mixed-use environment that supports housing, education, and economic opportunity.
Construction began in December 2025 and is anticipated to be completed by winter 2027.
El Capitan
The City also continued development of the El Capitan Homekey+ project through a partnership with UPholdings, RH Community Builders, Stanislaus County Behavioral Health and Recovery Services, the Housing Authority's HUD-VASH Program, and Catholic Charities. The project will rehabilitate an existing motel into 48 fully furnished permanent supportive housing units and one manager's unit. All residential units will serve households earning 30 percent or less of the Area Median Income (AMI). Upon completion, the development will provide 24 permanent supportive housing units for individuals experiencing or at risk of homelessness with behavioral health needs and 24 permanent supportive housing units dedicated to veterans experiencing or at risk of homelessness with similar supportive service needs. By combining affordable housing with on-site supportive services, the project expands long-term housing opportunities for some of the community's most vulnerable residents.
COMMITTEE RECOMMENDATION:
This item was presented to Citizen’s Housing and Community Development Committee on September 10, 2026, and was recommended to be forwarded to Council for approval.
FISCAL IMPACT:
HUD requires the CAPER be prepared to report on the use of CDBG, ESG, HOME, and HOME ARP funds and is made available for public comment which the City will make available for public review on or before September 6, 2026. Failure to submit this required report to HUD by September 28, 2026, could jeopardize the future funding the City receives each year from HUD. There is no impact to the General Fund.
CEQA/NEPA REQUIREMENTS:
This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.
RECOMMENDED COUNCIL ACTION:
Staff Recommendations:
Resolution approving the City of Modesto’s Consolidated Annual Performance Evaluation Report for Program Year 2025-2026 and authorizing the City Manager or his designee, to sign any required certifications and documents for submittal to the U.S. Department of Housing and Urban Development.
Approved by:
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City Council, September 22, 2026
Program Year 2025-2026 Consolidated Annual Performance Evaluation Report
_____________________________________
Jessica Hill, Director of Community and
Economic Development
_____________________________________
Joseph P. Lopez, City Manager
Attachments:
1. Resolution
2. 2025-26 CAPER
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09/22/2026/CED/EGarcia/Item X 1 2026-xx
MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION APPROVING THE CITY OF MODESTO’S CONSOLIDATED
ANNUAL PERFORMANCE EVALUATION REPORT FOR PROGRAM YEAR
2025-2026 AND AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE, TO
SIGN ANY REQUIRED CERTIFICATIONS AND DOCUMENTS FOR
SUBMITTAL TO THE U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
WHEREAS, the City is an entitlement grantee under the U.S. Department of Housing and Urban Development (HUD) Office of Community Planning and Development (CPD) which allocates the following program funds to the City of Modesto through a formula-based allocation: Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME), and Emergency Solutions Grant (ESG); and
WHEREAS, as an Entitlement Community, the City is awarded HUD funds every year for CDBG, ESG, HOME; for fiscal year 2025-2026, the City of Modesto was awarded $1,898,921 in CDBG funds, $157,694 in ESG funds and $800,215.37 in HOME funds and utilized remaining HOME ARP funds in the amount of $239,268.44; and
WHEREAS, as a component of the five-year Consolidated Plan, the City must annually prepare and adopt an Annual Action Plan outlining the projects to be carried out for each Program Year within the five-year period and at the conclusion of each program year; and
WHEREAS, the City is required to prepare a Consolidated Annual Performance Evaluation Report (CAPER) detailing how the City utilized its HUD funds during a particular program year, the progress of each project identified in #22..
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09/22/2026/CED/EGarcia/Item X 2 2026-xx
the Annual Action Plan, and how the projects aligned with both the Annual Action Plan and Consolidated Plan; and
WHEREAS, this CAPER includes the accomplishments for the fiscal year 2025-2026 Annual Action Plan, which represents the first (1st) report of the City of Modesto’s 2025-2030 Consolidated Plan by Council on June 24, 2025, by Resolution No. 2025-245, as well as the one-time HOME-ARP funding approved by Council on May 24, 2022, by Resolution No.2022-245; and WHEREAS, HUD requires the CAPER, pursuant to 24 CFR 91.115(d), be prepared to report on the use of CDBG, ESG, HOME, and HOME ARP funds and this document was made available for public comment public review on September 6, 2026; and
WHEREAS, failure to submit this required report to HUD by September 28, 2026, could jeopardize the future funding the City receives each year from HUD; and
WHEREAS, the 2025-2026 CAPER outlines the program outcomes in Attachment 2 – 2025-2026 CAPER.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves the City of Modesto’s Consolidated Annual Performance Evaluation Report for Program Year 2025-2026.
BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to sign any required certifications and documents for submittal to the U.S. Department of Housing and Urban Development. #22..
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09/22/2026/CED/EGarcia/Item X 3 2026-xx
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 22nd day of September, 2026 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
#22..
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1 Program Year 2025-2026
Consolidated Annual Performance and Evaluation Report
(CAPER)
Prepared By:
Community Economic Development Department
City Of Modesto CAPER Fiscal Year 2025-2026
Approved by Resolution No. 2026-
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2 Contents
CR-05 - Goals and Outcomes .................................................................................................................... 3 CR-10 - Racial and Ethnic composition of families assisted....................................................................17 CR-15 - Resources and Investments 91.520(a) .......................................................................................19 CR-20 - Affordable Housing 91.520(b)....................................................................................................25 CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) ................................30 CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j)....................................................................................39 CR-40 - Monitoring 91.220 and 91.230...................................................................................................50 CR-60 - ESG 91.520(g) (ESG Recipients only) ..........................................................................................56 CR-65 - Persons Assisted.........................................................................................................................58 CR-70 – ESG 91.520(g) - Assistance Provided and Outcomes................................................................. 61 CR-75 – Expenditures..............................................................................................................................62 SAGE Reports..........................................................................................................................................65 PR-26 Financial Summary .......................................................................................................................66 CR-58 – Section 3 ....................................................................................................................................68 Citizen Participation................................................................................................................................70 Resolution 2025-332...............................................................................................................................73 #22..
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3 CR-05 - Goals and Outcomes
Progress the jurisdiction has made in carrying out its strategic plan and its action plan.
91.520(a)
This could be an overview that includes major initiatives and highlights that were proposed and executed throughout the program year.
During Program Year (PY) 2025-2026 (July 1, 2025 through June 30, 2026), the City of Modesto continued implementing the goals and objectives established in its 2025-2030 Consolidated Plan and PY 2025-2026 Annual Action Plan. Through the strategic investment of Community Development Block Grant (CDBG) and Emergency Solutions Grant (ESG) funds, along with leveraged federal, state, local, and regional resources, the City advanced initiatives that increased affordable housing opportunities, strengthened homelessness response efforts, improved neighborhood infrastructure and public facilities, and expanded services benefiting low- and moderate-income residents.
Throughout the program year, the City continued working collaboratively with nonprofit organizations, affordable housing developers, the Stanislaus Community System of Care (CSOC), Stanislaus Regional Housing Authority, healthcare providers, and other community partners to maximize available resources and improve outcomes for vulnerable populations. In addition to administering CDBG and ESG funding, the City leveraged state and local resources through programs including Encampment Resolution Funding Round 4 (ERF-4), Measure H, Permanent Local Housing Allocation (PLHA), and Homekey+ to support a coordinated Housing First approach focused on increasing housing stability and reducing homelessness.
Major accomplishments during PY 2025-2026 include continued investment in affordable housing development, preservation of owner-occupied housing through the Housing Rehabilitation Loan Program, expansion of public facilities and neighborhood improvements, support for emergency shelter and rapid rehousing programs, implementation of fair housing services, and continued investment in public service programs addressing the needs of seniors, youth, persons with disabilities, survivors of domestic violence, and households experiencing housing instability.
The City's homelessness response remained a significant priority through continued implementation of the Camp2Home initiative. Working alongside local service providers, the Community Health and Assistance Team (CHAT), and ESG-funded partners, the City expanded street outreach, emergency shelter, rapid rehousing, housing navigation, and supportive services for individuals experiencing homelessness. These efforts were further strengthened #22..
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4 through implementation of the City's $5.76 million Encampment Resolution Funding Round 4 (ERF-4) award, continued Measure H-funded initiatives, including the Motel Voucher Program, and HopeWorks, a workforce development initiative supported through approximately $1.25 million in State Earmark funding, private contributions, and local Litter Abatement funds.
Together, these investments expanded outreach, temporary shelter, employment readiness, case management, and pathways to permanent housing and long-term self-sufficiency.
As part of the City's ERF implementation, the City partnered with Modesto Gospel Mission to establish and operate a bridge housing program that began serving clients in August 2025.
Through June 30, 2026, the program provided interim housing and supportive services to 31 unduplicated individuals, with 12 participants successfully transitioning to permanent housing.
The bridge housing program fills a critical gap between street outreach and permanent housing by providing a stable environment where participants can address barriers to housing while receiving intensive case management and supportive services.
The City also continued advancing major affordable housing developments, including Seventh Street Village and the El Capitan Homekey+ project, while preserving existing affordable housing through its Housing Rehabilitation Loan Program. In addition, the City invested in neighborhood improvements through the Dr. Martin Luther King Jr. Park Renovation Project and other public infrastructure improvements serving low- and moderate-income neighborhoods.
Overall, the City made substantial progress toward achieving the goals identified in the 2025- 2030 Consolidated Plan by leveraging multiple funding sources, strengthening regional partnerships, preserving and expanding affordable housing opportunities, improving public facilities, and providing critical services that improve the quality of life for low- and moderateincome residents throughout Modesto.
Major Accomplishments During PY 2025-2026:
Public Facilities (CDBG)
Continued design and construction activities for the Dr. Martin Luther King Jr. Park Renovation Project, an approximately eight-acre renovation that will include a new gymnasium/multipurpose building, splash pad, fitness stations, event plaza, sports fields, basketball court, restrooms, parking improvements, landscaping, lighting, security enhancements, walking paths, and other park amenities. Construction is anticipated to be completed in late 2027.
Affordable Housing – Owner-Occupied Housing Rehabilitation (CDBG) #22..
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5 Preserving the City's existing affordable housing stock remained a high priority during Program Year 2025-2026. Through the Housing Rehabilitation Loan Program, the City distributed $402,496.50 in rehabilitation loans and grants to assist 15 income-qualified homeowners with essential health and safety improvements that allow residents to remain safely and independently in their homes.
Rehabilitation activities included roof replacement, electrical repairs, accessibility improvements such as ADA-compliant ramps and bathroom modifications, installation of energy-efficient windows and HVAC systems, and other code-related repairs. In addition to preserving affordable housing, the program helps extend the useful life of Modesto's aging housing stock, improves neighborhood stability, enhances energy efficiency, and enables lowand moderate-income homeowners—including seniors and persons with disabilities—to safely age in place.
Affordable Housing – Acquisition and Development (CDBG) Expanding the supply of affordable housing continues to be one of the City's highest priorities.
During Program Year 2025-2026, the City continued leveraging CDBG funds with significant state, federal, and local resources to advance the development of permanent affordable and supportive housing opportunities for households with the greatest housing needs.
Seventh Street Village
The City continued its partnership with Visionary Home Builders on the development of Seventh Street Village, a transit-oriented, mixed-use affordable housing community consisting of 79 affordable housing units. Located in downtown Modesto, the development will include a Head Start program and neighborhood-serving commercial space on the ground floor, creating a vibrant mixed-use environment that supports housing, education, and economic opportunity.
Construction began in December 2025 and is anticipated to be completed in winter 2027.
El Capitan Homekey+ (1121 Needham Street)
The City also continued development of the El Capitan Homekey+ project through a partnership with UPholdings, RH Community Builders, Stanislaus County Behavioral Health and Recovery Services, the Housing Authority's HUD-VASH Program, and Catholic Charities. The project will rehabilitate an existing motel into 48 fully furnished permanent supportive housing units and one manager's unit.
All residential units will serve households earning 30 percent or less of the Area Median Income (AMI). Upon completion, the development will provide 24 permanent supportive housing units #22..
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6 for individuals experiencing or at risk of homelessness with behavioral health needs and 24 permanent supportive housing units dedicated to veterans experiencing or at risk of homelessness with similar supportive service needs. By combining affordable housing with onsite supportive services, the project advances the City's Housing First strategy and expands long-term housing opportunities for some of the community's most vulnerable residents.
Public Services (CDBG & ESG)
The City continued investing in public service programs that address the critical needs of lowand moderate-income residents through a competitive funding process. CDBG and ESG funds were awarded to nonprofit organizations that provide services aligned with the priorities identified in the 2025-2030 Consolidated Plan, including homelessness prevention, rapid rehousing, emergency shelter, fair housing, youth services, and supportive services that promote housing stability and self-sufficiency.
During Program Year 2025-2026, 462 individuals received assistance through CDBG-funded public service programs administered by seven nonprofit organizations, while 706 individuals received assistance through ESG-funded homeless service programs administered by three nonprofit service providers. These partnerships leveraged the expertise of community-based organizations to deliver high-quality, client-centered services that complement the City's broader housing and community development initiatives.
Program highlights include:
• Project Sentinel provided fair housing education, discrimination complaint investigation, landlord-tenant mediation, one-on-one counseling, and outreach to promote equal housing opportunity and compliance with federal fair housing laws. • Center for Human Services – Pathways provided transitional housing and supportive services for youth experiencing homelessness, including case management, life skills development, education and employment support, and housing navigation to help youth successfully transition to permanent housing.
• Children's Crisis Center of Stanislaus County expanded its Trauma-Informed Care Program to provide trauma-informed services for children and youth experiencing the effects of abuse, neglect, homelessness, and other adverse life events. Program services included emergency shelter, case management, crisis counseling, therapeutic behavioral interventions, parent support, and referrals to health and community resources. These services promoted child safety, emotional recovery, family stability, and improved access to supportive services for low- and moderate-income households. #22..
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7 • Court Appointed Special Advocates (CASA) of Stanislaus County provided advocacy, case management, and individualized support for children and youth involved in the dependency court system. Trained CASA volunteers worked collaboratively with the courts, child welfare agencies, caregivers, and service providers to advocate for each child's best interests, connect youth to needed services, and promote safe, stable, and permanent living arrangements. These services helped improve outcomes for children in foster care by supporting family reunification, permanency, and overall well-being. • Community Housing and Shelter Services (CHSS) provided homelessness prevention assistance to households at imminent risk of homelessness by offering case management, financial assistance, and housing stabilization services that helped families remain safely housed and avoid entering the homeless service system.
Collectively, these public service investments strengthened the City's coordinated response to homelessness, expanded access to essential community services, promoted housing stability, and improved the overall quality of life for Modesto's most vulnerable residents.
CAMP2HOME – ESG
Through a community-wide visioning and planning process, the City of Modesto has continued implementing the Camp2Home initiative, a comprehensive homelessness response strategy designed to reduce unsheltered homelessness by connecting individuals to coordinated outreach, emergency shelter, employment opportunities, supportive services, and permanent housing. Guided by a Housing First approach, Camp2Home emphasizes collaboration among local government, nonprofit organizations, healthcare providers, and community partners to address both the immediate and long-term needs of individuals experiencing homelessness.
Street Outreach
The Community Health and Assistance Team (CHAT) continues to serve as the City's primary street outreach program, providing compassionate, service-focused engagement for individuals experiencing homelessness. Working alongside the Modesto Police Department, CHAT responds to non-emergency quality-of-life calls and proactively engages unsheltered individuals to build trust, assess immediate needs, and connect them with mainstream benefits, emergency shelter, behavioral health services, housing navigation, and permanent housing resources. This multidisciplinary approach allows sworn officers to focus on higher-priority public safety calls while ensuring vulnerable individuals receive appropriate support.
During Program Year 2025-2026, CHAT conducted 9,161 outreach contacts and provided 8,184 supportive service connections, including 457 connections to vital documents, 905 referrals to case management, and 6,900 basic needs services, such as meals, hygiene resources, showers, and peer support. The City continues utilizing the ArcGIS Survey123 platform to document #22..
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8 outreach activities, identify community trends, and improve data-driven decision-making to better coordinate services and allocate resources.
The City also partnered with the Center for Human Services (CHS) to provide ESG-funded street outreach and navigation services specifically targeting youth ages 13 through 24 experiencing homelessness. Working in coordination with the Stanislaus Community System of Care's Coordinated Entry System (CES), outreach staff actively engaged youth in locations throughout the community, completed needs assessments, and connected participants to emergency shelter, transitional housing, education, employment services, behavioral health resources, and permanent housing opportunities. During Program Year 2025-2026, CHS prioritized the expenditure of other time-limited funding sources that were scheduled to expire before the City's ESG funding. As a result, City ESG funds were not utilized during the reporting period, and no program accomplishments are reported for this grant. The City's funding agreement extends through December 31, 2026, and services supported by the City's ESG allocation are anticipated to be provided during the remaining grant term.
Emergency Shelter and Interim Housing
Emergency shelter remains a critical component of the Camp2Home initiative by providing immediate safety and stability while individuals work toward permanent housing. Through ESG funding, the City continued supporting operations at the Salvation Army Berberian Shelter, the community's largest emergency shelter. The shelter provides overnight accommodations, meals, hygiene facilities, case management, housing navigation, and connections to supportive services designed to help individuals transition from homelessness into permanent housing.
The City also expanded its continuum of interim housing through implementation of an Encampment Resolution Funding (ERF)-supported Bridge Housing Program operated in partnership with Modesto Gospel Mission. Beginning operations in August 2025, the bridge housing site provides temporary housing and intensive supportive services for individuals transitioning from unsheltered homelessness into permanent housing. Participants receive comprehensive case management, meals, transportation assistance, and coordinated supportive services designed to address barriers to housing and promote long-term stability.
Between August 2025 and June 30, 2026, the program served 31 unduplicated individuals, with 12 participants successfully transitioning to permanent housing. The bridge housing program fills a critical gap between street outreach and permanent housing by providing a structured environment where individuals can stabilize while permanent housing solutions are identified and secured.
Complementing these efforts, the City continued operating its Measure H-funded Motel Voucher Program, which provides short-term emergency shelter for individuals and families #22..
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9 when traditional shelter options are unavailable or when unique barriers prevent immediate shelter placement. During Program Year 2025–2026, the program assisted 157 individuals representing 100 households. Through intensive case management and housing navigation, 57 individuals (25 households) successfully exited to permanent housing, 30 individuals (22 households) transitioned into emergency shelter, and 6 individuals (6 households) entered substance use disorder treatment. The program also helped remove barriers to housing by supporting family reunification and accommodating households with pets, resulting in an additional 32 individuals (21 households) securing permanent housing through reunification or pet barrier removal. These outcomes demonstrate the Motel Voucher Program's role as a flexible housing intervention that helps bridge the gap between unsheltered homelessness and long-term housing stability while advancing the City's Housing First strategy.
Job Training and Employment – HopeWorks
Recognizing that stable employment is a critical component of achieving long-term housing stability, the City continued supporting the HopeWorks program through a combination of State Earmark funds, private contributions, and the City's Litter Abatement Fund, representing an annual investment of approximately $1.25 million. This braided funding approach allows the City to expand employment opportunities and supportive services for individuals experiencing homelessness and housing instability beyond what is possible through federal grant funding alone.
HopeWorks provides participants with paid work experience, employment readiness training, intensive case management, and connections to permanent employment opportunities. Using a Housing First and workforce development approach, participants engage in community beautification and litter abatement projects while developing workplace skills, strengthening employment history, and addressing barriers to employment. Participants are also connected to housing navigation, behavioral health services, benefits enrollment, and other supportive services that promote long-term self-sufficiency.
HopeWorks serves as an important bridge between outreach and permanent housing by helping participants gain the skills, income, and stability necessary to obtain and maintain permanent employment while reducing the likelihood of returning to homelessness. By leveraging multiple funding sources, the program complements the City's Camp2Home initiative and reinforces the City's long-term strategy of reducing homelessness through employment, housing stability, and coordinated supportive services.
Permanent Housing
#22..
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10 The City continues implementing a coordinated Housing First approach that prioritizes rapid placement into permanent housing while providing the supportive services necessary to promote long-term housing stability. As participants progress through outreach, shelter services, case management, and employment readiness programs such as HopeWorks, they become better positioned to successfully transition into permanent housing.
Through ESG funding, Turning Point Community Programs continued providing Rapid Rehousing services, including housing search assistance, landlord engagement, rental assistance, housing stabilization, and intensive case management. Participants also receive connections to employment resources, income supports, healthcare, and community-based services to help ensure long-term housing success after rental assistance ends.
During Program Year 2025-2026, Turning Point assisted 17 individuals in obtaining permanent housing, further advancing the City's goal of reducing homelessness through coordinated, person-centered interventions that promote housing stability and self-sufficiency. #22..
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11 Comparison of the proposed versus actual outcomes for each outcome measure submitted with the consolidated plan and explain, if applicable, why progress was not made toward meeting goals and objectives. 91.520(g) Categories, priority levels, funding sources and amounts, outcomes/objectives, goal outcome indicators, units of measure, targets, actual outcomes/outputs, and percentage completed for each of the grantee’s program year goals.
Goal Category Source /
Amount
Indicator Unit of
Measure
Expected
–
Strategic
Plan
Actual –
Strategic
Plan
Percent
Complete
Expected
–
Program
Year
Actual –
Program
Year
Percent
Complete
Access to Jobs,
Education, and
Other Services
Non-Housing
Community
Development
CDBG: $
Public service
activities other than
Low/Moderate
Income Housing
Benefit
Persons
Assisted pending
pending pending pending pending pending
Access to Jobs,
Education, and
Other Services
Non-Housing
Community
Development
CDBG: $ Jobs created/retained Jobs pending
pending pending pending pending pending
Access to Jobs,
Education, and
Other Services
Non-Housing
Community
Development
CDBG: $ Businesses assisted
Businesses
Assisted pending
pending pending pending pending pending
Access to Jobs,
Education, and
Other Services
Non-Housing
Community
Development
CDBG: $ Other Other pending
pending pending pending pending pending
Enhance
Infrastructure
and Public
Facilities
Non-Housing
Community
Development
CDBG: $
Public Facility or
Infrastructure
Activities other than
Low/Moderate
Income Housing
Benefit
Persons
Assisted pending
pending pending pending pending pending
#22..
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12 Improve Quality
and Increase
Affordable
Housing
Affordable
Housing
CDBG: $
/ HOME:
$
Public Facility or
Infrastructure
Activities for
Low/Moderate
Income Housing
Benefit
Households
Assisted pending pending pending pending pending pending Improve Quality
and Increase
Affordable
Housing
Affordable
Housing
CDBG: $
/ HOME:
$
Rental units
constructed
Household
Housing
Unit
pending pending pending pending pending pending
Improve Quality
and Increase
Affordable
Housing
Affordable
Housing
CDBG: $
/ HOME:
$
Rental units
rehabilitated
Household
Housing
Unit
pending pending pending pending pending pending
Improve Quality
and Increase
Affordable
Housing
Affordable
Housing
CDBG: $
/ HOME:
$
Homeowner Housing
Rehabilitated
Household
Housing
Unit
pending
pending pending pending pending pending
Improve Quality
and Increase
Affordable
Housing
Affordable
Housing
CDBG: $
/ HOME:
$
Housing for Homeless
added
Household
Housing
Unit
pending
pending pending pending pending pending
Work Towards
Ending
Homelessness
Homeless
CDBG: $
/ HOME:
$ / ESG:
$
Public service
activities other than
Low/Moderate
Income Housing
Benefit
Persons
Assisted pending
pending pending pending pending pending
#22..
- 787 -
13 Work Towards
Ending
Homelessness
Homeless
CDBG: $
/ HOME:
$ / ESG:
$
Tenant-based rental
assistance / Rapid
Rehousing
Households
Assisted
pending pending pending pending pending pending
Work Towards
Ending
Homelessness
Homeless
CDBG: $
/ HOME:
$ / ESG:
$
Homeless Person
Overnight Shelter
Persons
Assisted
pending pending pending pending pending pending
Table 1 - Accomplishments – Program Year & Strategic Plan to Date #22..
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14 Assess how the jurisdiction’s use of funds, particularly CDBG, addresses the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities identified.
The City of Modesto's 2025-2030 Consolidated Plan identifies five Priority Need areas that guide the allocation of Community Development Block Grant (CDBG), Emergency Solutions Grant (ESG), and HOME Investment Partnerships Program (HOME) funds:
• Increase the Supply of Affordable Housing
• Address and Prevent Homelessness
• Increase Access to Jobs, Education, Economic Development, and Other Services • Enhance Infrastructure and Public Facilities
• Administration for CDBG, ESG, and HOME programs
During Program Year 2025-2026, each CDBG-funded activity was evaluated to ensure it addressed one or more of these priority needs while meeting a CDBG National Objective.
The City's overarching goal is to increase self-sufficiency and economic opportunity for low- and moderate-income residents and individuals with special needs by expanding access to affordable housing, supportive services, neighborhood improvements, and community facilities.
Through these investments, the City seeks to improve housing stability, expand economic opportunity, and enhance the quality of life for residents.
Increase the Supply of Affordable Housing
Increasing the supply and preservation of affordable housing remained one of the City's highest priorities during the program year. Through the Housing Rehabilitation Loan Program, the City assisted 15 income-qualified homeowners with health and safety repairs, accessibility improvements, energy efficiency upgrades, and code-related rehabilitation, helping preserve the City's existing affordable housing stock and allowing low-income homeowners to remain safely housed.
The City also continued advancing affordable housing developments that will significantly expand housing opportunities for low-income households. Construction progressed on Seventh Street Village, a mixed-use development that will provide 79 affordable housing units along with commercial space in downtown Modesto.
Construction also continued on the 1121 Needham Street (El Capitan Homekey+) project, which will convert an existing motel into 48 permanent supportive housing units and one manager's #22..
- 789 -
15 unit. Upon completion, the development will provide permanent supportive housing for individuals and veterans experiencing or at risk of homelessness who have behavioral health needs, with all residential units serving households earning at or below 30 percent of Area Median Income (AMI).
Addressing and Preventing Homelessness
The City continued implementing its Camp2Home initiative, providing a coordinated Housing First approach to reducing homelessness through outreach, emergency shelter, rapid rehousing, employment support, and permanent housing.
Street outreach efforts were conducted by the Community Health and Assistance Team (CHAT) and the Center for Human Services, which engaged unsheltered individuals, connected them to interim housing opportunities, and linked them with supportive services designed to remove barriers to permanent housing.
Emergency shelter services continued through partnerships with the Salvation Army, providing low-barrier shelter and case management for individuals experiencing homelessness.
ESG-funded homelessness prevention services helped households remain stably housed and avoid entering homelessness, while Turning Point Community Programs provided Rapid Rehousing services that assisted households in quickly obtaining permanent housing and achieving long-term housing stability.
During the reporting period, the City also leveraged local and state resources, including Measure H and Encampment Resolution Funding Round 4 (ERF-4), to expand outreach, housing navigation, temporary shelter, employment readiness, and supportive services for individuals experiencing homelessness. These investments strengthened the City's coordinated response to homelessness while supporting long-term housing stability and self-sufficiency.
Increase Access to Jobs, Education, Economic Development, and Other Services Public services remained an important component of the City's strategy to improve quality of life and increase self-sufficiency among low- and moderate-income households. During the program year, the City awarded CDBG Public Service funding to seven (7) nonprofit organizations providing essential services, including youth transitional housing, fair housing education, food assistance, supportive services for seniors and persons with disabilities, and programs serving households experiencing housing instability. These programs helped remove barriers that can prevent individuals and families from pursuing employment, education, and other opportunities that contribute to long-term stability. #22..
- 790 -
16 The City also continued to support the HopeWorks program through local funding. HopeWorks provides outreach, intensive case management, employment readiness training, paid work experience, and community beautification projects that equip participants with workforce skills while addressing barriers to employment. Through this coordinated approach, participants gain valuable work experience, increase their employability, and move toward greater economic independence.
The City also continued partnering with Project Sentinel to provide fair housing education, discrimination complaint investigation, tenant-landlord mediation, outreach, and counseling services that promote equal access to housing opportunities throughout the community. By promoting equal access to housing and helping residents understand and exercise their housing rights, these services support housing stability, which is a critical foundation for maintaining employment, pursuing education, and achieving long-term economic success.
Enhance Infrastructure and Public Facilities
The City continued investing in public infrastructure and neighborhood improvements that benefit low- and moderate-income residents.
One of the City's most significant public facility investments is the Dr. Martin Luther King Jr.
Park Renovation Project, which remained under active construction during Program Year 2025- 2026, with completion anticipated in late 2027. The comprehensive redevelopment of approximately eight acres will transform the existing park into a modern community destination featuring a new gymnasium and multipurpose building, splash pad, fitness stations, game plaza, event stage and plaza, baseball and soccer fields, basketball court, restrooms, parking areas, landscaping, security lighting, security cameras, walking paths, and other recreational amenities.
Once completed, the project will significantly expand recreational opportunities, encourage healthy lifestyles, improve public safety, and create an accessible gathering space for residents of one of Modesto's low- and moderate-income neighborhoods. The renovation reflects the City's ongoing commitment to investing in community assets that improve neighborhood livability and provide lasting benefits for current and future generations.
Administration for CDBG, ESG, and HOME programs
The City continued administering CDBG, ESG, and HOME programs in accordance with HUD regulations by providing effective grant management, financial oversight, environmental review, subrecipient monitoring, technical assistance, and regulatory compliance. These administrative activities ensured that federal funds were invested efficiently, projects #22..
- 791 -
17 progressed in a timely manner, and all funded activities remained consistent with the priorities identified in the Consolidated Plan and Annual Action Plan.
Overall Assessment
Overall, the City's use of CDBG funds directly advanced the priority needs identified in the 2025- 2030 Consolidated Plan. By strategically investing in affordable housing, homelessness response, neighborhood improvements, public facilities, fair housing, and community services, while leveraging additional federal, state, local, and regional resources, the City continued making measurable progress toward increasing housing stability, improving living conditions, and expanding opportunities for low- and moderate-income residents.
CR-10 - Racial and Ethnic composition of families assisted Describe the families assisted (including the racial and ethnic status of families assisted).
91.520(a)
Race CDBG HOME
White - 0
Black or African American - 0
Asian - 0
American Indian or American Native - 0
Native Hawaiian or Other Pacific Islander - 0
Other - 0
Total - 0
Hispanic - 0
Not Hispanic - 0
Table 2 – Table of assistance to racial and ethnic populations by source of funds Describe the clients assisted (including the racial and/or ethnicity of clients assisted with ESG) Race HESG
American Indian, Alaska Native, or Indigenous -
Asian or Asian American -
Black, African American, or African -
Hispanic/Latina/e/o -
Middle Eastern or North African -
Native Hawaiian or Pacific Islander -
White -
Multiracial -
Client doesn't know -
Client prefers not to answer -
#22..
- 792 -
18 Data not collected -
Total -
Narrative
The demographic numbers reported in this table represent unduplicated individuals served via all PY 2025-2026 funded activities, including but not limited to, public services housing programs, and homeless services.
The City of Modesto offers services and programs to eligible households. Beneficiary demographic data is collected and validated throughout the program year. The demographic data reported in this table is a representation of beneficiaries served through each entitlement program during Program Year 2025-2026.
#22..
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19 CR-15 - Resources and Investments 91.520(a)
Identify the resources made available
Source of Funds Source Resources Made
Available
Amount Expended
During Program Year
CDBG CDBG $7,314,023.19 $986,369.88
HOME HOME $6,797,383.70 $259,174.06
ESG ESG $172,694 $147,707.47
HOME ARP HOME ARP $239,268.44 $239,268.44
Table 3 - Resources Made Available
Narrative
Table 3 identifies the resources made available and expended during the program year.
Resources made available in PY 2025-2026 include program income received and carryover funds from previous program years. Any unexpended resources will be carried over into the following program year.
Identify the geographic distribution and location of investments.
Target Area Planned Percentage
of Allocation
Actual Percentage of
Allocation
Narrative Description
LOW INCOME CENSUS
TRACTS - - See Narrative description below
Table 4 – Identify the geographic distribution and location of investments.
Narrative
The City of Modesto did not Identify target areas for the geographic distribution of investments.
However, the City of Modesto uses all CDBG, ESG, and HOME funds to primarily benefit lowincome households and individuals (at or below 80% of the Area Median Income). Area based projects are distributed only within low-income Census Block Groups as designated by HUD.
If 51 percent or more of the households in a given Census Block Group qualify as low- or moderate-income, or 51 percent or more of the population are members of minority groups, then the Block Group is defined as an area of low-income concentration.
Leveraging
Explain how federal funds leveraged additional resources (private, state and local funds), including a description of how matching requirements were satisfied, as well as how any publicly owned land or property located within the jurisdiction that were used to address the #22..
- 794 -
20 needs identified in the plan.
The City was able to leverage additional resources in several of its projects. Leverage amounts are listed under each program section below:
CDBG Leverage:
Project Name CDBG Funds Committed Leverage Amount Leverage Source Public Services $221,000 $166,321.85
Federal, State, Local,
Private, Other
Total $221,000 $166,321.85 -
HOME – 25% Match Requirement
During the 2025–2026 Program Year, the City of Modesto adhered to HOME Program match requirements through the completion and occupancy of Jenny’s Place. The project utilized $673,712 in HOME funds and $2,800,000 in HOME–ARP funds toward development costs.
Consistent with HOME regulations 24 CFR 92.220, the HOME investment generated a 25% match liability, which was fully satisfied through $33,525,488 in eligible non‑federal contributions associated with the project.
Excess match in the amount of $42,259,925.07 has carried over from the prior Fiscal Year, and $75,594,371.63 will carry over to the next as shown in Table 5 – Fiscal Year Summary - HOME Match Report below.
ESG – 100 Percent Match Requirement
The City of Modesto continues to meet and exceed the Emergency Solutions Grant (ESG) Program's required one-to-one match requirement. All ESG subrecipients are required to provide a dollar-for-dollar match for ESG funds awarded. Match contributions consist of both cash and non-cash resources, including private donations, volunteer services, foundation support, and other federal, state, and local funding sources that support eligible ESG activities.
During Program Year 2025-2026, the City awarded $92,900 in ESG entitlement funds. In support of these activities, ESG subrecipients contributed $659,161.23 in eligible matching funds, significantly exceeding HUD's required match. These leveraged resources expanded the community's capacity to provide emergency shelter, street outreach, homelessness prevention, #22..
- 795 -
21 rapid rehousing, and supportive services to individuals and families experiencing or at risk of homelessness.
Publicly Owned land to address needs identified in the Consolidated Plan The City continues to strategically utilize publicly owned property to expand affordable housing opportunities and address homelessness, consistent with the priorities identified in the 2025- 2030 Consolidated Plan.
In accordance with California's Surplus Land Act, the City maintains an inventory of surplus properties and continues evaluating publicly owned sites for future residential development opportunities. City staff actively collaborates with affordable housing developers to identify parcels suitable for multifamily and single-family residential projects, with a particular emphasis on increasing the supply of affordable housing for low- and moderate-income households. This ongoing effort supports the City's long-term housing production goals while maximizing the use of publicly owned assets.
The City also continues to partner with the Stanislaus County Affordable Housing Corporation and Behavioral Health and Recovery Services (BHRS) to support temporary housing opportunities for households experiencing or at risk of homelessness. Through the transitional housing program located at 308 Locust Avenue, BHRS provides tenant screening, behavioral health services, intensive case management, and housing navigation to assist residents in successfully transitioning to permanent housing.
Beyond the use of publicly owned land, the City continues leveraging multiple funding sources to maximize community impact. During Program Year 2025-2026, homelessness initiatives were strengthened through implementation of the City's $5.76 million Encampment Resolution Funding Round 4 (ERF-4) award, continued Measure H-funded programs, including the Motel Voucher Program, and HopeWorks, a workforce development initiative supported through approximately $1.25 million in State Earmark funding, private contributions, and local Litter Abatement funds. Together, these investments complement CDBG and ESG resources by expanding street outreach, interim housing, employment opportunities, case management, and pathways to permanent housing.
The City also utilized Encampment Resolution Funding (ERF) to support the operation of a bridge housing site in partnership with Modesto Gospel Mission. The bridge housing program provides temporary shelter and stabilization services for individuals transitioning from encampments into permanent housing. ERF funding supports comprehensive operations, including case management, security, HMIS coordination, meals, transportation assistance, site maintenance, and other essential services that help participants successfully transition to #22..
- 796 -
22 permanent housing. This investment strengthens the City's Housing First strategy by creating a critical bridge between street outreach and long-term housing solutions.
HOME Program
Fiscal Year Summary – HOME Match
1. Excess match from prior Federal fiscal year
$42,259,925.07
2. Match contributed during current Federal fiscal year $33,525,488.00
3. Total match available for current Federal fiscal year (Line 1 plus Line 2) $75,785,413.07
4. Match liability for current Federal fiscal year $191,041.44
5. Excess match carried over to next Federal fiscal year (Line 3 minus Line 4) $75,594,371.63 Table 6 – Fiscal Year Summary - HOME Match Report
* Match Liability per PR33 Report.
PY 25-26 HOME Match Reductions Waiver
CPD Memo: Suspension of the HOME Commitment and CHDO Reservation Deadline , dated November 7, 2023. The suspension of the 24-month commitment requirement waiver is in effect until December 31, 2025 and applies to any CHDO funds that were de-obligated in 2018 or that would be de-obligating through 2025 due to a participating jurisdictions failure to commit the funds to a CHDO project within 24 months. The deadlines for the 24-month CHDO commitment requirement continue to be suspended each year through the 2026 appropriation.
HOME Match Contribution for the Federal Fiscal Year
Project
No. or
Other
ID
Date of
Contribution
Cash
(non-Federal
sources)
Foregone
Taxes,
Fees,
Charges
Appraised
Land/Real
Property
Required
Infrastructure
Site
Preparation,
Construction
Materials,
Donated
labor
Bond
Financing
Total Match
Jenny’s
Place
(Activity
1525,
1505)
4/22/2025 $33,525,488.00 - - - - - $33,525,488.00
HOME PROGRAM INCOME
Program Income – Enter the program amounts for the reporting period #22..
- 797 -
23 Balance on hand
at beginning of
reporting period
$
Amount received
during reporting
period
$
Total amount
expended during
reporting period
$
Amount
expended for
TBRA
$
Balance on hand
at end of reporting
period
$
$1,257,591.89 $155,551.88 $127,051.67 $0.00 $1,286,092.10 Table 7 – HOME Program Income
Balance Reported per IDIS PR09 Report
Minority Business Enterprises and Women Business Enterprises – Indicate the number and dollar value of contracts for HOME projects completed during the reporting period Minority Business Enterprises
- Total Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black NonHispanicHispanic White NonHispanic
Contracts - - - - - -
Number 1 0 0 0 0 1
Dollar
Amount $673,712 0 0 0 0 $673,712
SubContracts - - - - - -
Number 0 0 1 0 2 0
Dollar
Amount
0 0 $300,800 0 $1,164,925.
52 0
Table 8 - Minority Business and Women Business Enterprises Contracts Total Women Business
Enterprises
Male
Number 1 0 1
Dollar Amount $673,712
0 $673,712
Sub-Contracts Total Women Business
Enterprises
Male
Number 21
0 21
Dollar Amount $8,424,897.19 0 $8,424,897.19
#22..
- 798 -
24 Minority Owners of Rental Property – Indicate the number of HOME assisted rental property owners and the total amount of HOME funds in these rental properties assisted Minority
Property
Owners
Total Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black NonHispanicHispanic White NonHispanic
Number 0 0 0 0 0 0
Dollar
Amount
0 0 0 0 0 0
Table 9 – Minority Owners of Rental Property
Relocation and Real Property Acquisition – Indicate the number of persons displaced, the cost of relocation payments, the number of parcels acquired, and the cost of acquisition Parcels Acquired 0 0
Businesses Displaced 0 0
Nonprofit Organizations
Displaced
0 0
Households Temporarily
Relocated, not Displaced
0 0
Minority
Property
Enterprises
- - - - - -
Households
Displaced
Total Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black NonHispanicHispanic White NonHispanic -
Number 0 0 0 0 0 0
Cost 0 0 0 0 0 0
Table 10 – Relocation and Real Property Acquisition
#22..
- 799 -
25 CR-20 - Affordable Housing 91.520(b)
Evaluation of the jurisdiction's progress in providing affordable housing, including the number and types of families served, the number of extremely low-income, low-income, moderate-income, and middle-income persons served
Population Type One-Year Goal Actual
Number of Homeless households to be
provided affordable housing units 23
Number of Non-Homeless households to be
provided affordable housing units 20 -
Number of Special-Needs households to be
provided affordable housing units -
Total 43 -
Table 11 – Number of Households
Service Type One-Year Goal Actual
Number of households supported through
Rental Assistance 23 -
Number of households supported through
The Production of New Units 0 -
Number of households supported through
Rehab of Existing Units 20 -
Number of households supported through
Acquisition of Existing Units 0 -
Total 43 -
Table 12 – Number of Households Supported
Discuss the difference between goals and outcomes and problems encountered in meeting these goals.
Tables 10 and 11 represent households served or units generated with the CDBG, ESG, and HOME funding resources.
Table 10 represents the various households that were provided new units of housing through rental assistance, new construction, and/or rehabilitation of funded units. Households served in table 10 are broken out as follows:
#22..
- 800 -
26 • Rental Assistance (households; homeless/ non-homeless): 20 Households ▫ Turning Point assisted 9 households with Rapid Rehousing Rental Assistance. ▫ Community Housing and Shelter Services assisted 11 households with Homeless Prevention services.
• Production of new Units (households): 53 Units
• Hotel Conversion at 710 N 9th Street will produced 53 units of permanent supportive housing. Rehab of Existing Units (households): 15 Units ▫ The City assisted 15 households via the City’s owner-occupied housing rehabilitation program.
Table 11 represents the various households that were provided new units of housing through newly rented, new construction, and/or rehabilitation of units. Households served in table 11 are broken out as follows:
During the PY 25-26, it was anticipated that new units would be produced through the following projects:
• Rental Assistance (households; homeless/ non-homeless): 23 households combined o Turning Point Community Programs
o Community Housing and Shelter Services
• Production of new Units (0 Households): There are several projects in the pipeline that are anticipated to start construction or have started construction during the program year
• Rehab of Existing Units (20 Households): The City anticipated serving 20 households through the City’s owner-occupied housing rehabilitation program • Acquisition of Existing Units (0) The city will work with local partners and look for opportunities to acquire additional properties to provide affordable housing opportunities. There are several projects in the pipeline that are anticipated to start or have started construction during the program year.
Discuss how these outcomes will impact future annual action plans.
The City of Modesto will continue collaborating with its partners to expand the supply of affordable housing units in the upcoming Annual Action Plan program year. The City maintains ongoing dialogue with affordable housing developers and the local Continuum of Care to identify potential resources and future housing projects that address the needs of both homeless and at- risk of homelessness and or low‑income residents. #22..
- 801 -
27 The following projects are in various stages of development and pre-development underwriting:
7th Street Village will produce 79 units of affordable housing 1121 Needham St, Motel Rehabilitation/Conversion will produce 48 units of affordable housing.
Include the number of extremely low-income, low-income, and moderate-income persons served by each activity where information on income by family size is required to determine the eligibility of the activity.
Number of persons Served CDBG Actual HOME Actual
Extremely Low-income - 10
Low-income - 0
Moderate-income - 0
Non-Moderate-Income - 0
Total - 10
Table 13 – Number of Persons Served
Narrative Information
The figures on this table reflect individuals served via the City’s CDBG Public Service Program persons), CDBG ), , Housing Rehabilitation program (15 households).
During the reporting period, the City assisted 2 households through HOME‑funded activities and 8 households through HOME ARP funded activities. All households served were extremely low‑income, based on HUD income limits and household size. Reflecting the City’s continued focus on directing HOME resources to residents facing the most significant housing barriers and deepest affordability needs.
#22..
- 802 -
28 Worst-Case Housing Needs
Worst-case housing needs include extremely low-income renter households that pay more than 50 percent of their income toward housing costs, reside in severely substandard housing, experience homelessness, or have been involuntarily displaced. Addressing the needs of these households remains one of the City of Modesto's highest priorities. The City continues to work collaboratively with the Stanislaus Regional Housing Authority, the Stanislaus Community System of Care (CSOC), nonprofit service providers, healthcare partners, and affordable housing developers to coordinate housing resources, supportive services, and funding opportunities that assist the community's most vulnerable residents.
The City utilizes a comprehensive Housing First approach that combines street outreach, emergency shelter, rapid rehousing, permanent supportive housing, affordable housing development, housing preservation, and supportive services to reduce housing instability and improve long-term housing outcomes. Through strategic partnerships and the leveraging of federal, state, local, and private resources, the City continues expanding the community's capacity to respond to the increasing demand for affordable housing and homelessness services.
Through the Camp2Home initiative, the City's Community Health and Assistance Team (CHAT) continued proactive outreach to individuals experiencing unsheltered homelessness. Working in partnership with the Modesto Police Department, CHAT provides a compassionate, servicefocused response by building relationships, assessing individual needs, connecting clients with emergency shelter, healthcare, behavioral health services, housing navigation, and other community resources. During Program Year 2025-2026, CHAT conducted 9,161 outreach contacts and provided 8,184 supportive service connections, helping individuals move toward greater housing stability while allowing sworn officers to focus on higher-priority public safety calls.
The City further expanded its response to individuals with the greatest housing needs through implementation of an ERF-funded bridge housing program in partnership with Modesto Gospel Mission. Beginning operations in August 2025, the program provides interim housing and intensive supportive services for individuals exiting encampments while permanent housing solutions are identified. Through June 30, 2026, the bridge housing site served 31 unduplicated individuals, with 12 participants successfully obtaining permanent housing.
The City also continued investing in the preservation and expansion of affordable housing opportunities for low-income households. Through the Housing Rehabilitation Loan Program, fifteen income-qualified homeowners received assistance with critical health and safety #22..
- 803 -
29 improvements that preserved affordable housing, corrected substandard living conditions, improved accessibility for persons with disabilities, and enabled residents to remain safely in their homes. Simultaneously, the City continued advancing affordable housing developments, including Seventh Street Village and the El Capitan Homekey+ project, which will expand the inventory of affordable and permanent supportive housing for households with the greatest housing needs.
Recognizing that housing affordability continues to be a significant challenge, the City also invested in programs that help prevent homelessness and reduce housing instability. ESGfunded partnerships with Turning Point Community Programs and Community Housing and Shelter Services provided rapid rehousing, homelessness prevention, housing stabilization, and case management services to households experiencing or at risk of homelessness. Additional investments through Encampment Resolution Funding Round 4 (ERF-4), the Measure H Motel Voucher Program, and HopeWorks further strengthened the City's ability to provide interim housing, employment opportunities, supportive services, and pathways to permanent housing for individuals with the greatest housing needs.
Helping Meet the Needs of Persons with Disabilities
The City remains committed to ensuring that individuals with disabilities have equal access to safe, affordable, and accessible housing opportunities. Through partnerships with affordable housing developers, healthcare providers, and community-based organizations, the City supports housing developments and supportive service programs designed to serve individuals living with physical disabilities, developmental disabilities, serious mental illness, chronic health conditions, and substance use disorders.
The City continues partnering with the Stanislaus County Affordable Housing Corporation (STANCO) and other affordable housing providers to develop and preserve accessible housing opportunities that incorporate universal design principles and ADA accessibility features. Many supportive housing developments also coordinate closely with healthcare providers and behavioral health professionals to ensure residents receive the services necessary to achieve long-term housing stability.
Additionally, ESG-funded partnerships with Center for Human Services, Turning Point Community Programs, and the Salvation Army continued providing emergency shelter, street outreach, rapid rehousing, case management, and supportive services for individuals and families experiencing homelessness, including persons with disabilities and those with significant supportive service needs.
#22..
- 804 -
30 CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) Evaluate the jurisdiction’s progress in meeting its specific objectives for reducing and ending homelessness through:
Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs
The City of Modesto continued to make progress toward reducing and ending homelessness through coordinated outreach, assessment, and engagement efforts conducted in partnership with the Stanislaus Community System of Care (CSOC) and its Coordinated Entry System (CES).
Working collaboratively with local nonprofit organizations, healthcare providers, law enforcement, and behavioral health partners, the City utilizes a coordinated, person-centered approach to identify individuals experiencing homelessness, assess their needs, and connect them with appropriate housing and supportive services.
The Community Health and Assistance Team (CHAT) remained the City's primary street outreach program during Program Year 2025-2026. Through a partnership between the Community Development Department and the Modesto Police Department, CHAT conducted proactive outreach to individuals experiencing unsheltered homelessness, building relationships while connecting individuals to emergency shelter, behavioral health services, healthcare, housing navigation, and other community resources. During the program year, CHAT completed 9,161 outreach contacts and provided 8,184 service connections, including referrals for identification documents, case management, basic needs, and housing resources. The continued use of the ArcGIS Survey123 platform improved data collection, enhanced coordination among service providers, and allowed outreach teams to more efficiently assess needs and connect individuals to appropriate services.
The City continued its partnership with the Center for Human Services (CHS) by awarding ESG funding to support youth street outreach and navigation services for individuals ages 13 through 24 experiencing homelessness. The program is designed to provide outreach, needs assessment, case management, and connections to emergency shelter, housing resources, education, employment, and supportive services in coordination with the Stanislaus Community System of Care's Coordinated Entry System (CES). During Program Year 2025-2026, CHS prioritized the expenditure of other time-limited funding sources that were scheduled to expire before the City's ESG funding. As a result, City ESG funds were not utilized during the reporting period, and no program accomplishments are reported for this grant. The City's #22..
- 805 -
31 funding agreement extends through December 31, 2026, and services supported by the City's ESG allocation are anticipated to be provided during the remaining grant term.
To further strengthen coordinated service delivery, the City continued participating in the Community Assessment, Response, and Engagement (CARE) Team, a multidisciplinary partnership with Stanislaus County that brings together professionals from multiple disciplines to assess complex needs, coordinate behavioral health interventions, and connect individuals experiencing homelessness to appropriate housing and supportive services.
The City also continued collaborating with healthcare partners to support implementation of California Advancing and Innovating Medi-Cal (CalAIM). Through ongoing coordination with managed care plans, healthcare providers, and community-based organizations, the City is helping integrate Enhanced Care Management and Community Supports into the local homelessness response system, improving access to housing navigation, tenancy supports, behavioral healthcare, and other services that promote long-term housing stability.
Sheltered
Addressing the emergency shelter and transitional housing needs of homeless persons During Program Year 2025-2026, the City continued its partnership with the Salvation Army by providing ESG funding to support operations at the Berberian Emergency Shelter, the community's largest emergency shelter. The shelter provides overnight accommodations, meals, hygiene facilities, case management, housing navigation, and coordinated supportive services that assist individuals in transitioning from homelessness to permanent housing.
Through collaboration with local service providers, the shelter serves as a key entry point into the community's coordinated homeless response system.
The City also continued implementation of the Measure H-funded Motel Voucher Program, an important housing stabilization and diversion initiative operated in partnership with Turning Point Community Programs and the City's Community Health and Assistance Team (CHAT). The program provides short-term emergency motel stays for unsheltered individuals while intensive case management, housing navigation, and individualized exit planning are coordinated.
Participants enter the program with a predetermined exit strategy that may include emergency shelter, bridge housing, family reunification, or permanent housing, ensuring motel stays serve as a bridge to long-term housing stability rather than a temporary solution. Through June 30, 2026, the program successfully assisted 11 individuals into interim housing and 76 individuals into permanent housing, including individuals who achieved permanent housing through family reunification.
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32 The City further expanded its continuum of interim housing through implementation of an Encampment Resolution Funding (ERF)-supported Bridge Housing Program operated in partnership with Modesto Gospel Mission. Beginning operations in August 2025, the bridge housing site provides temporary housing and intensive supportive services for individuals transitioning from unsheltered homelessness into permanent housing. Between August 2025 and June 30, 2026, the program served 31 unduplicated individuals, with 12 participants successfully transitioning to permanent housing. The program fills a critical gap between street outreach and permanent housing by providing a structured environment where participants can stabilize while permanent housing solutions are identified and secured.
Youth Shelter – Youth Navigation Center
The City continued partnering with the Center for Human Services (CHS) to support the Youth Navigation Center, which provides a comprehensive continuum of services for youth ages 13 through 24 experiencing homelessness or housing instability. The program offers emergency shelter, coordinated entry, diversion services, street outreach, transitional housing, education and employment support, and connections to permanent housing resources. By combining emergency shelter with individualized case management and supportive services, the Youth Navigation Center helps young people safely transition toward stable housing and selfsufficiency.
Youth Housing – Pathways Program
The City continued supporting the Center for Human Services Pathways Program through a $40,000 CDBG Public Service grant. Pathways is a 15-bed transitional housing program serving youth ages 18 to 21 experiencing homelessness. Using a positive youth development and trauma-informed approach, the program provides transitional housing, case management, life skills training, employment readiness, educational support, healthcare referrals, and housing navigation to help participants successfully transition to permanent housing and independent living.
During Program Year 2025-2026, the Pathways Program served 34 unduplicated youth, providing shelter, case management, and supportive services that promoted housing stability and long-term self-sufficiency.
Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals #22..
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33 and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again
The City of Modesto, in partnership with its ESG subrecipients, the Stanislaus Community System of Care (CSOC), and other community partners, continued implementing a coordinated Housing First approach that emphasizes rapid engagement, coordinated assessment, housing stabilization, and permanent housing placement. Through coordinated outreach, emergency shelter, housing navigation, case management, bridge housing, rapid rehousing, and permanent supportive housing, the City works to reduce the length of time individuals and families experience homelessness while promoting long-term housing stability and self-sufficiency for chronically homeless individuals, families with children, veterans, youth, and other vulnerable populations.
Coordinated Entry:
The Stanislaus Community System of Care (CSOC) continued administering the Coordinated Entry System (CES), the community's centralized assessment and referral process that ensures individuals and families experiencing homelessness are connected to the housing intervention most appropriate for their needs. Through standardized assessment, housing prioritization, documentation assistance, housing navigation, and coordinated referrals, CES improves access to emergency shelter, bridge housing, rapid rehousing, permanent supportive housing, and other housing resources.
During Program Year 2025-2026, 3,027 unduplicated individuals were enrolled in the community's Coordinated Entry System. Weekly case conferencing meetings involving outreach teams, housing providers, and service agencies continued to strengthen collaboration, coordinate housing placements, and connect participants with supportive services that promote long-term housing stability.
CES meetings are held weekly with all local housing providers and outreach staff where CoC homeless service providers can assist with housing placement.
Empire Migrant Center:
Supported by the CSOC and Stanislaus Homeless Alliance, the Stanislaus County Community Services Agency’s (CSA) in partnership with the Housing Authority, sheltered homeless families during the cold-weather months in vacant family units at the Empire Migrant Center. The Empire Migrant center consists of 90 dwelling units used for farmworker housing from April to October each year. This project allowed CSA to serve 21 families experiencing homelessness during the months of November through March. This project is a multi-year partnership #22..
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34 allowing the County’s Community Services agency to place homeless families each winter in housing and provide case management services with a goal to permanently house homeless households.
Of the families who stayed at Empire this year, 2025-2026, 57% were successfully housed.
The Family Housing Facility:
In coordination with the countywide strategy to address the critical issue of homelessness especially as it affects families with school aged children, Stanislaus County entered into a fiveyear lease with a motel located at 1128 South 9th Street in Modesto. The property has 21 units and a three-room office space.
In November 2019, the Community Services Agency began operations of a year-round shelter for families using the successful model implemented at the Empire Cold Weather Family Shelter. The Family Housing Facility (FHF) operates 24 hours a day with onsite property management. CSA has contracted with the Stanislaus County Affordable Housing Corporation for property management that includes security.
The target population served at FHF are families who meet the following criteria: currently being case managed in CSA’s HSP unit, have used all available temporary shelter nights, are still engaged in permanent housing search and have been unsheltered the longest from date of referral to the HSP program. Due to the room capacity, consideration is made to match smallsized families.
Community Services Agency works in partnership with Community Housing and Shelter Services (CHSS) for placement at FHF. CHSS services include primary case management oversight which include, assisting participants with household budget, understanding their income, housing options, completing housing application), landlord outreach and housing search workshops, working with families to remove barriers to self-sufficiency, and connecting families to applicable and relevant community resources.
During the 2025-2026 program, year 41families were served with case management and employment services/employment connections were provided to program participants.
Camp2Home:
The City continued implementing Camp2Home, its comprehensive homelessness response strategy that combines proactive street outreach, housing stabilization, emergency shelter, bridge housing, and regional coordination to reduce unsheltered homelessness and increase permanent housing outcomes.
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35 Street Outreach
The Community Health and Assistance Team (CHAT) remained the City's primary street outreach program, engaging individuals experiencing unsheltered homelessness through relationship-building, crisis intervention, and housing-focused case management. Working alongside sworn police officers, CHAT responds to non-violent quality-of-life calls while connecting individuals to emergency shelter, behavioral health services, housing navigation, and community resources.
During Program Year 2025-2026, CHAT conducted [insert updated outreach contacts] outreach contacts and continued serving as the primary referral source for the City's shelter, bridge housing, and housing stabilization programs.
Housing Stabilization
The City expanded housing stabilization efforts through the Measure H-funded Motel Voucher Program, operated in partnership with Turning Point Community Programs and CHAT. The program provides short-term emergency motel stays while participants work with case managers to implement individualized exit plans leading to emergency shelter, bridge housing, family reunification, or permanent housing. Since implementation in July 2025, the program assisted 11 individuals into interim housing and 76 individuals into permanent housing, including individuals who achieved permanent housing through family reunification. The program serves as an important diversion and housing stabilization resource that shortens the time individuals remain unsheltered while promoting long-term housing outcomes.
Emergency Shelter and Bridge Housing
The City continued supporting operations at the Salvation Army Berberian Emergency Shelter, providing immediate shelter, case management, and housing navigation for individuals experiencing homelessness. The City also expanded its housing continuum through implementation of an ERF-supported Bridge Housing Program operated in partnership with Modesto Gospel Mission. Beginning operations in August 2025, the bridge housing site served 31 unduplicated individuals, with 12 participants successfully transitioning to permanent housing, providing a critical step between emergency shelter and permanent housing.
Stanislaus Community Response Guidelines for Individuals Experiencing Homelessness (SCRG).
The City and Stanislaus County continued implementing the Stanislaus Community Response Guidelines for Individuals Experiencing Homelessness (SCRG), a multi-jurisdictional agreement that standardizes outreach and encampment response across City, County, and State #22..
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36 jurisdictions. This coordinated approach strengthens regional collaboration, improves service delivery, and increases opportunities for successful housing outcomes.
Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are:
• likely to become homeless after being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); and • receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.
The City of Modesto continued working collaboratively with the Stanislaus Community System of Care (CSOC), Stanislaus County, nonprofit service providers, healthcare systems, and regional partners to prevent homelessness among individuals and families at risk of housing instability.
Through coordinated discharge planning, outreach, housing navigation, behavioral health partnerships, and youth-focused services, the City seeks to intervene early, connect vulnerable populations with appropriate resources, and reduce the likelihood of individuals entering homelessness.
Reentry and Cross-System Coordination
The City continued supporting collaborative efforts to prevent homelessness among individuals exiting publicly funded institutions and systems of care. The Community Health and Assistance Team (CHAT) works closely with the Stanislaus County CARE Team, Stanislaus County Sheriff's Office, and Stanislaus County Probation Department to connect individuals leaving incarceration with housing resources, supportive services, behavioral health referrals, and community-based assistance that promotes successful community reintegration and reduces the risk of homelessness.
The City also remained engaged in the Stanislaus County Hospital & Shelter Partners (SCHSP) collaborative, which brings together hospitals, emergency shelters, public agencies, and service providers to coordinate safe discharge planning for individuals experiencing homelessness or at risk of homelessness. These partnerships support compliance with California Senate Bill 1152 while improving coordination between healthcare providers and homeless service organizations to reduce unnecessary discharges into homelessness.
Youth Homelessness Prevention
The City continued partnering with the Center for Human Services to support the Youth Navigation Center, providing outreach, emergency shelter, coordinated entry, housing #22..
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37 navigation, and supportive services for youth and young adults experiencing or at risk of homelessness. Through coordinated case management and youth-centered programming, the Youth Navigation Center helps vulnerable youth access stable housing, education, employment resources, and supportive services designed to prevent future episodes of homelessness.
Behavioral Health and Supportive Housing
The City continued collaborating with Stanislaus County Behavioral Health and Recovery Services (BHRS) to expand housing opportunities for individuals living with serious mental illness and other behavioral health needs. This partnership supports the development and operation of permanent supportive housing and bridge housing programs that combine stable housing with behavioral health services, helping participants maintain housing stability and reduce returns to homelessness.
Regional Collaboration
The City remained an active participant in regional homelessness planning through its partnership with the Stanislaus Community System of Care (CSOC) and the Stanislaus Homeless Alliance (SHA). These collaborative efforts strengthen coordination among local governments, healthcare providers, nonprofit organizations, and housing partners, allowing the community to identify service gaps, improve system-wide responses, and develop strategies that prevent homelessness while expanding access to housing and supportive services.
CR-30 - Public Housing 91.220(h); 91.320(j)
Actions taken to address the needs of public housing
The City of Modesto and Stanislaus Regional Housing Authority (Stan Regional) continue to partner on furthering decent, safe, and affordable housing within the City of Modesto. Stan Regional is the largest affordable housing property manager of multi-family and single household public housing units for lower income people in Stanislaus County. According to Stan Regionals’ 2024 PHA Plan, Stan Regional currently provides rental subsidy and /or operates 7,645 affordable and subsidized housing units:
• 2,427Owned/ or and Managed Units
• 647 Public Housing Units
• 2121 Managed Affordable Housing Units
• 2121 Owned and Managed Affordable Units
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38 • 4455 Housing Choice Voucher Program (HCVP) including 787 Project-based Vouchers • 288 Veteran Affairs Supportive Housing (HUD_VASH) Vouchers • 111 Continuum of Care Vouchers (Formerly Shelter Plus Care SPC) • 217 Family Unification Program (FUP) Vouchers
• 135 Emergency Housing Vouchers (EHV)
• 20 Stability Vouchers (SV)
• 114 Mainstream Vouchers (MV)
The City of Modesto worked in collaboration with the Stanislaus Regional Housing Authority (Stan Regional) by seeking ways to increase and support the maintenance level of permanent supportive housing for special populations and persons with disabilities. The City and Stan Regional have partnered on several housing projects to provide decent and safe affordable housing to low-income families.
In the upcoming program years, the City is planning to continue its partnership with the Housing Authority. Currently pending projects including the following:
• 1500 Robertson Road: Parque Rio – 102 units of family and senior housing • 1612 Sisk Rd Phase III - 12 senior/veteran
• Edward Estates - 33 Single Family Homes
The City of Modesto participates in the County wide CSOC (CoC) along with the local Housing Authority, the CHDOs, and other local agencies to Identify housing needs within the county, including resident initiatives. The CoC Housing and Homeless Populations Committee is inventorying and identifying all affordable housing stock designated to serve this population in order to assess needs and gaps in advance of new State one-time funding designations for affordable housing.
Actions taken to encourage public housing residents to become more involved in management and participate in homeownership
Stan Regional has a Resident Advisory Board which is comprised of Public Housing Authority (PHA) and Housing Voucher program participants. This Resident Advisory Board is engaged when there are proposed policy changes. The Resident Advisory Board is notified of substantial policy changes and is given the opportunity to support or reject subject policy changes.
Stan Regional provides homeownership resources to participants in the Housing Choice Voucher (HCV) Program. The Family Self-Sufficiency (FSS) Program has established partnerships with a variety of community resources to refer participants for services including pre- and postsecondary education, health care, childcare, employment development, supported employment, and small business development (including micro-loans). The FSS Program also encourages families to participate in financial wellness programs, including financial literacy #22..
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39 and credit repair with an emphasis on long-term financial stability for the purposes of homeownership.
The Stan Regional is actively engaging FSS participants by promoting homeownership opportunities such as the two Edwards Estates units funded with HOME funds and built by Great Valley Housing Development Corporation, a non-profit arm of the Stan Regional. In 2023, Great Valley Housing Development Corporation, took the proceeds from the HOME funded units to continue the development of 21 additional homes within this subdivision, encouraging the expansion of homeownership opportunities.
Actions taken to provide assistance to troubled PHAs
Not Applicable. Stanislaus Regional Housing Authority is a High Performer, not a troubled Public Housing Authority.
CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j)
Actions taken to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment. 91.220 (j); 91.320 (i) In order to ameliorate the negative effects of public policies that serve as barriers to affordable housing, the City of Modesto has established policies within its Capital Facilities Fee (CFF) Program to encourage the development of affordable housing. The current CFF Policies and Procedures provide fee exemptions for the following qualifying projects:
• Housing Authority Projects: Low- and very low-income housing projects constructed or expanded by the Housing Authority of the County of Stanislaus or a major partner of the Housing Authority.
• Community Housing Development Organization (CHDO) Projects: CHDOs may apply for CFF exemptions for new affordable housing units serving households earning 60 percent or less of the Area Median Income (AMI). Affordability must be maintained for a minimum of ten (10) years.
• Very Low-Income Housing Projects: Housing developments constructed or expanded for households earning 50 percent or less of the AMI. The units must remain affordable to very low-income households for a minimum of ten (10) years. • Affordable Housing Projects: Housing developments constructed or expanded for households earning 80 percent or less of the AMI. The units must remain affordable for a minimum of ten (10) years.
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40 Developers seeking these exemptions are required to submit an application requesting a CFF waiver.
During Fiscal Year 2025-2026, the City issued a total of 313 residential building permits. No projects applied for or received Capital Facilities Fee exemptions under the affordable housing provisions during the reporting period.
Through the following measures, the City of Modesto continues to reduce governmental constraints and remove barriers to affordable housing:
City of Modesto Housing Element
The City's 6th Cycle Housing Element, which the California Department of Housing and Community Development (HCD) found to be substantially in compliance with State Housing Element Law on April 10, 2024, identifies numerous programs and practices to assess and eliminate barriers to housing, particularly government constraints.
The City continues to implement reasonable accommodation procedures that allow requests related to accessibility to be reviewed at the staff level rather than requiring a variance through the Board of Zoning Adjustment, reducing both processing time and costs for applicants with Americans with Disabilities Act (ADA) accessibility needs. In addition, the City's Building and Safety Division conducts Accessibility Reviews, when appropriate, at the discretion of the Chief Building Official and/or the Community and Economic Development Director. These reviews evaluate compliance with the Americans with Disabilities Act (ADA), California Building Code Chapter 11, and Certified Access Specialist (CASp) requirements. The City remains committed to promoting equal access to housing and supporting reasonable accommodations for persons with disabilities.
Consistent with Senate Bills 35 and 330, the City has implemented an expedited permit processing system for qualifying affordable housing developments and established review checklists and procedures to facilitate timely project approvals. The City also continues implementing Housing Element programs, including zoning and land use amendments required by State law, to further reduce regulatory barriers and expand housing opportunities.
Rental Housing Safety Program
The City of Modesto continues to implement its Rental Housing Safety Program, adopted in 2019, to preserve safe and habitable rental housing throughout the community. The program requires annual self-inspections of rental units and promotes preventative maintenance by enabling landlords and property managers to identify and address deficiencies before they #22..
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41 become more significant problems. While Code Enforcement continues to respond to complaints, the Rental Housing Safety Program proactively inspects up to ten percent of rental units annually. This proactive approach reduces the need for tenants to initiate complaints and helps alleviate concerns about potential landlord retaliation.
Mobile Home Rent Stabilization Ordinance
The City of Modesto enacted its Mobile Home Rent Stabilization (MHRS) Ordinance in 2007 to help preserve affordable housing opportunities for residents of mobile home parks. The ordinance limits annual rent increases to 100 percent of the Consumer Price Index (CPI), not to exceed six percent of the base rent, for park owners who do not enter into a Memorandum of Understanding (MOU) with the City.
Park owners who voluntarily enter into an MOU agree to offer City-approved long-term leases to qualifying residents and may increase rents by 100 percent of the CPI, as well as up to 15 percent upon turnover of a mobile home space. The ordinance and MOU program help protect residents, particularly low-income households, from excessive rent increases while balancing the interests of mobile home park owners.
Accessory Dwelling Unit (ADU) Program
The City continues to support the development of Accessory Dwelling Units (ADUs) by maintaining regulations consistent with State law and HCD guidance. Amendments to the Municipal Code aligned local regulations with Assembly Bills 881 and 68, making it easier for homeowners to construct ADUs that increase the community's affordable housing supply, provide housing for family members, and generate supplemental household income.
The City has partnered with Stanislaus County to provide preapproved ADU plans, reducing design costs and shortening project review times for applicants. In addition, Capital Facilities Fees are waived for ADUs under 750 square feet.
To further encourage ADU construction, the City partnered with Valley First Credit Union in 2024 to establish a revolving loan program offering up to $50,000 in financing at interest rates five percentage points below the prime rate, with a minimum interest rate of three percent. As of June 2026, two (2) ADU loans had been funded, each for the maximum loan amount of $50,000.
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42 SB2 Housing Plan Implementation
The City continues implementing recommendations developed through its SB2 Planning Grantfunded Housing Plan. Modesto received $625,000 through California's SB2 Planning Grants Program to prepare a comprehensive Housing Plan that identified strategies to streamline housing approvals, reduce barriers to residential development, encourage appropriate housing densities, and support infrastructure improvements needed to facilitate housing production.
Adopted by the City Council in 2023, the Housing Plan informed the policies and programs incorporated into the City's 2023-2031 Housing Element. During the reporting period, the City continued implementing Housing Element programs and land use strategies designed to streamline development, reduce regulatory constraints, and expand housing opportunities for households across all income levels.
Actions taken to address obstacles to meeting underserved needs. 91.220(k);
91.320(j)
The City of Modesto continues to address the needs of underserved populations through strategic investments, regional partnerships, and policies that expand access to affordable housing, supportive services, and homelessness assistance. The City works closely with the Stanislaus Community System of Care (CSOC), which administers approximately $3.9 million annually in federal homelessness funding throughout Stanislaus County. These resources support permanent housing, transitional housing, emergency shelter, street outreach, and supportive services for individuals and families experiencing homelessness.
During the reporting period, the City prioritized Community Development Block Grant (CDBG) and Emergency Solutions Grant (ESG) funds to address critical community needs. Funded activities supported emergency shelter operations, street outreach, homelessness prevention, rapid rehousing, food security, neighborhood revitalization, and services for seniors, youth, foster youth, survivors of domestic violence, persons with disabilities, and other low- and moderate-income residents experiencing housing instability.
The City also leveraged state and local funding to expand its homelessness response and improve access to housing and supportive services. During the reporting period, the City executed a $5.76 million Encampment Resolution Funding (ERF) Round 4 award from the California Department of Housing and Community Development to implement Housing First strategies focused on resolving unsheltered homelessness. ERF-4 funding supports intensive street outreach, housing navigation, case management, interim housing, rapid rehousing assistance, and permanent housing placement for individuals residing in encampments, complementing the City's existing CDBG and ESG investments. #22..
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43 In addition, the City utilized Measure H funding to operate a motel voucher program that provides temporary emergency shelter and housing stabilization assistance for individuals and families experiencing homelessness. Measure H funding also supports the HopeWorks program, a collaborative initiative that combines street outreach, intensive case management, employment readiness, and community beautification activities to help individuals experiencing homelessness overcome barriers to housing and employment. HopeWorks is implemented through a partnership among the City of Modesto, United Way of Stanislaus County, and Modesto Gospel Mission to provide coordinated services and pathways toward long-term housing stability and self-sufficiency.
The City also continued implementing local housing policies and incentive programs designed to reduce barriers to affordable housing development. These efforts include:
• Providing financial assistance for land acquisition, infrastructure improvements, and other eligible affordable housing development activities. • Assisting income-qualified households through homebuyer assistance programs. • Offering exemptions or deferrals of Capital Facilities Fees for qualifying affordable housing developments.
• Utilizing streamlined environmental review procedures, including programmatic environmental reviews where appropriate, to reduce project processing times. • Streamlining development application review and permit processing. • Supporting affordable housing development through reduced parking standards consistent with State law.
Throughout the reporting period, the City collaborated with nonprofit organizations, affordable housing developers, healthcare providers, the Stanislaus Community System of Care, and other regional partners to strengthen coordination of housing and supportive services, identify service gaps, and connect vulnerable populations with housing, healthcare, behavioral health services, and other essential resources.
The City also continued working with regional partners to improve data collection, strengthen system coordination, and align funding priorities to maximize available resources, reduce duplication of services, and improve outcomes for underserved populations, including individuals experiencing homelessness, seniors, persons with disabilities, individuals with chronic physical or behavioral health conditions, foster youth, and other households facing barriers to stable housing.
Actions taken to reduce lead-based paint hazards. 91.220(k); 91.320(j) #22..
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44 The City of Modesto has adopted policies and procedures within its housing programs that comply with HUD regulations governing lead-based paint hazards. Consistent with HUD requirements, the level of lead-based paint evaluation, hazard reduction, and remediation performed is based on the amount of federal assistance provided and is determined on a project-by-project basis.
Most housing rehabilitation projects are subject to the federal Lead Safe Housing Rule.
Contractors performing rehabilitation work on assisted properties are required to maintain appropriate lead-safe work practice certifications and follow all applicable federal requirements. These requirements have increased the number of qualified contractors available to bid on and complete rehabilitation projects involving lead-based paint hazards.
The following summarizes lead-based paint activities completed during Program Year (PY) 2025- 2026:
• Three (3) homeowners received the EPA/HUD publication Protect Your Family from Lead in Your Home (March 2021) because their homes were constructed prior to 1978. • Three (3) rehabilitation projects were exempt from lead hazard reduction requirements because no painted surfaces were disturbed during construction activities or lead testing confirmed the absence of lead-based paint hazards.
The City's Housing Rehabilitation Loan Program includes eligible costs associated with leadbased paint stabilization when required. Lead-based paint inspections, risk assessments, and clearance testing are funded through the City's HUD entitlement funds.
The City of Modesto remains committed to protecting the health and safety of residents by incorporating lead-based paint evaluation and hazard reduction measures into its housing rehabilitation activities whenever required. Given the age and condition of much of the City's housing stock, lead-based paint evaluation continues to be a routine and important component of project planning and implementation.
Actions taken to reduce the number of poverty-level families. 91.220(k); 91.320(j) The City of Modesto continues to implement a comprehensive approach to reducing poverty by investing in programs that promote housing stability, increase access to supportive services, improve employment opportunities, and strengthen long-term self-sufficiency for low- and moderate-income households. The City recognizes that poverty is often linked to housing instability, unemployment, limited access to healthcare, and other barriers that require coordinated, community-based solutions.
As an active participant in the Stanislaus Community System of Care (CSOC), the City supports the community's Coordinated Entry System, a standardized countywide process that assesses #22..
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45 individuals and families experiencing or at risk of homelessness and connects them with the most appropriate housing and supportive services. Coordinated Entry prioritizes assistance based on vulnerability and service needs while improving collaboration among service providers, reducing duplication of services, and increasing access to available resources.
Through Community Development Block Grant (CDBG) and Emergency Solutions Grant (ESG) funding, the City supported programs that provide emergency shelter, street outreach, homelessness prevention, rapid rehousing, food assistance, case management, services for seniors and youth, assistance for persons with disabilities, and other supportive services that help low-income households achieve and maintain housing stability. These programs reduce barriers that often contribute to poverty by connecting households with essential resources and supportive services.
The City also leveraged local and state resources to expand opportunities for economic stability.
Measure H funding supported the City's motel voucher program, providing temporary emergency shelter for households experiencing homelessness while they worked with case managers to secure permanent housing and access community resources. Measure H funding also supported the HopeWorks program, which combines outreach, intensive case management, employment readiness, work experience, and community beautification activities to assist individuals experiencing homelessness in overcoming barriers to employment and achieving greater self-sufficiency. HopeWorks is implemented through a partnership between the City of Modesto, United Way of Stanislaus County, and Modesto Gospel Mission to provide coordinated services and pathways toward permanent housing and employment.
The City further supports poverty reduction through its Housing Rehabilitation Loan Program, which assists income-qualified homeowners with essential home repairs that improve health and safety, correct code deficiencies, and preserve affordable owner-occupied housing. By helping low-income homeowners maintain safe and habitable housing, the program reduces the financial burden associated with major repairs, preserves the existing affordable housing stock, and helps prevent displacement.
Through continued collaboration with nonprofit organizations, housing providers, healthcare partners, workforce development agencies, and regional stakeholders, the City remains committed to leveraging federal, state, and local resources to reduce poverty, improve housing stability, and expand opportunities for low-income households to achieve greater economic independence.
Actions taken to develop institutional structure. 91.220(k); 91.320(j) The City of Modesto maintains a well-established institutional structure and service delivery #22..
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46 system to administer federal housing and community development programs. The City serves as the lead agency responsible for preparing the Consolidated Annual Performance and Evaluation Report (CAPER) and administering its HUD entitlement programs, including the Community Development Block Grant (CDBG), Emergency Solutions Grant (ESG), and HOME Investment Partnerships (HOME) programs.
Primary oversight of the City's HUD entitlement programs is provided by the Citizens' Housing and Community Development Committee (CH&CDC). The CH&CDC reviews housing and community development policies, evaluates funding recommendations, and provides recommendations to the Modesto City Council regarding the allocation of CDBG, ESG, HOME, and other HUD-funded resources.
To prevent real or perceived conflicts of interest, any CH&CDC member who serves on the board of directors of, or is employed by, an agency applying for or receiving HUD funding is prohibited from participating in funding recommendations or voting on matters involving that organization.
The CH&CDC meets monthly in publicly noticed meetings held at Tenth Street Place, 1010 Tenth Street, Modesto, California. Meetings are open to the public, and community participation is encouraged through opportunities for public comment. All major HUD planning documents, including the Annual Action Plan and CAPER, are reviewed by the CH&CDC before being forwarded to the City Council for consideration and approval.
Throughout the reporting period, Community and Economic Development Department (CEDD) Housing Division staff worked closely with the Finance Department to monitor grant expenditures, ensure compliance with federal requirements, and maintain accurate financial records. Staff met regularly to review budget activity, reconcile expenditures, and verify supporting documentation. To facilitate accurate financial tracking and reporting in both the City's financial management system and HUD's Integrated Disbursement and Information System (IDIS), each eligible activity was assigned a unique IDIS Activity Number.
Housing Division staff also coordinated with the Public Works Department and the Parks, Recreation and Neighborhoods Department to ensure that Capital Improvement Projects (CIPs) and other multi-year activities remained on schedule and complied with applicable federal statutory and regulatory requirements. Program Year 2025-2026 accomplishments were also shared with the Citizens' Housing and Community Development Committee, the Stanislaus Community System of Care (CSOC), and other community stakeholders.
The City continued to monitor subrecipient performance through regular reimbursement reviews, expenditure tracking, contract monitoring, and technical assistance. When necessary, #22..
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47 staff worked directly with subrecipients to develop expenditure plans and resolve implementation issues to help ensure compliance with federal expenditure deadlines and timely completion of funded activities.
In addition to program oversight, City staff provided ongoing technical assistance and training to subrecipients and grant applicants. Assistance included guidance on HUD program requirements, HMIS compliance, contract administration, financial management, and capacitybuilding opportunities designed to strengthen organizational readiness and improve the ability of nonprofit organizations to successfully compete for and administer federal grant funding.
Actions taken to enhance coordination between public and private housing and social service agencies. 91.220(k); 91.320(j)
The City of Modesto continued to strengthen coordination among public agencies, nonprofit organizations, housing providers, healthcare partners, and community stakeholders to improve access to housing, supportive services, and resources for low- and moderate-income households and individuals experiencing homelessness.
During Program Year 2025-2026, the City collaborated through the following activities:
• Maintained ongoing coordination with the Stanislaus Community System of Care (CSOC), which includes HUD entitlement jurisdictions, local government agencies, nonprofit organizations, housing providers, and service agencies. Through CSOC participation, the City worked collaboratively to coordinate homelessness response efforts, identify service gaps, align funding priorities, and improve access to housing and supportive services throughout Stanislaus County.
• Participated in monthly coordination meetings with public and private affordable housing partners, including local Community Housing Development Organizations (CHDOs) and affordable housing developers such as Habitat for Humanity, Stanislaus Affordable Housing Corporation (STANCO), Great Valley Housing Development Corporation (GVHDC), the Housing Authority of the County of Stanislaus, Stanislaus County, Upholdings, and Visionary Home Builders. These meetings promoted collaboration on affordable housing development opportunities, project planning, funding resources, and implementation strategies. The City also continued outreach to new community partners to strengthen regional collaboration and expand housing opportunities.
• Continued regular coordination with Stanislaus County Behavioral Health and Recovery Services and the U.S. Department of Veterans Affairs to improve service coordination and housing stability for individuals experiencing homelessness, veterans, and persons #22..
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48 with behavioral health needs.
• Actively participated in the Stanislaus Homeless Alliance, working with regional partners to strengthen coordinated planning, share information, and support implementation of countywide strategies to address homelessness.
• Strengthened coordination among housing providers, outreach teams, behavioral health partners, case management providers, and local service agencies through implementation of the Encampment Resolution Funding (ERF) Round 4 Program. The City collaborated with multiple public and nonprofit partners to implement Housing First strategies, coordinate outreach and engagement efforts, connect individuals residing in encampments to interim and permanent housing, and improve access to supportive services. This coordinated approach enhanced communication among partner agencies, reduced duplication of services, and strengthened the regional response to unsheltered homelessness.
• Continued collaboration with public and private partners through the Camp2Home initiative, building upon partnerships established during Program Year 2023-2024.
Camp2Home supported coordinated outreach, housing navigation, case management, and connections to supportive services for individuals experiencing unsheltered homelessness throughout Program Year 2025-2026.
Through these partnerships, the City continued to improve coordination among housing providers, social service agencies, healthcare organizations, and community-based organizations, resulting in a more integrated and effective system for addressing homelessness, expanding affordable housing opportunities, and connecting vulnerable populations with needed housing and supportive services.
Identify actions taken to overcome the effects of any impediments identified in the jurisdiction’s analysis of impediments to fair housing choice. 91.520(a) The City of Modesto continued implementing actions identified in the Stanislaus County Fiscal Year 2020-2025 Regional Analysis of Impediments to Fair Housing Choice to affirmatively further fair housing and expand access to safe, decent, and affordable housing. During the reporting period, the City collaborated with the Stanislaus Regional Housing Authority, Project Sentinel, the Stanislaus Community System of Care (CSOC), nonprofit housing providers, and other community partners to reduce barriers to fair housing choice through education, outreach, housing assistance, and supportive services.
The City maintained its partnership with Project Sentinel, the region's fair housing service provider, to ensure residents have access to fair housing education, counseling, complaint investigation, mediation, and enforcement services. These efforts increase awareness of federal #22..
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49 and state fair housing protections among tenants, landlords, housing providers, and the general public.
To address barriers related to housing affordability and housing stability, the City continued investing Community Development Block Grant (CDBG) and Emergency Solutions Grant (ESG) funds in affordable housing activities and supportive services. Programs funded during the reporting period included housing rehabilitation, emergency shelter, homelessness prevention, rapid rehousing, street outreach, case management, and supportive services that assist households experiencing financial hardship or housing instability.
The City's Housing Rehabilitation Loan Program continued to preserve the existing affordable housing stock by assisting income-qualified homeowners with health and safety improvements, code-related repairs, accessibility modifications, and lead-based paint hazard remediation where required. These investments help low-income homeowners remain safely housed while improving the quality and longevity of the City's existing housing inventory.
The City also continued collaborating with regional partners to strengthen landlord engagement, expand housing opportunities for vulnerable households, and improve coordination between housing providers and supportive service organizations. Through participation in the Stanislaus Community System of Care (CSOC), the City supported coordinated housing navigation, referrals, and case management services designed to connect individuals and families with appropriate housing resources and supportive services.
Additionally, the City leveraged local and state funding, including Measure H and Encampment Resolution Funding Round 4 (ERF-4), to expand outreach, housing navigation, case management, interim housing, and housing stabilization services for individuals experiencing homelessness. These efforts complement the City's fair housing objectives by increasing equitable access to housing opportunities and reducing barriers faced by vulnerable populations.
The City remains committed to affirmatively furthering fair housing by monitoring housing trends, supporting fair housing education and enforcement, preserving affordable housing, reducing barriers to housing access, and strengthening partnerships that expand housing opportunities for all residents regardless of race, color, national origin, religion, sex, familial status, disability, or other protected characteristics. #22..
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50 CR-40 - Monitoring 91.220 and 91.230
Describe the standards and procedures used to monitor activities carried out in furtherance of the plan and used to ensure long-term compliance with requirements of the programs involved, including minority business outreach and the comprehensive planning requirements
As the lead agency responsible for administering the City of Modesto's HUD entitlement programs, the City monitors all subrecipients and funded activities to ensure compliance with applicable federal regulations, grant agreements, and Consolidated Plan objectives. Throughout Program Year 2025-2026, monitoring activities included written correspondence, telephone and virtual meetings, electronic document reviews, reimbursement reviews, on-site monitoring visits, and project file reviews. These monitoring efforts helped ensure that program activities complied with statutory and regulatory requirements and that information submitted to the City was accurate, complete, and adequately supported.
The City utilizes standardized monitoring tools and project checklists throughout each stage of the grant lifecycle. During the funding application process, staff use a project proposal checklist to evaluate organizational capacity, financial readiness, project feasibility, eligibility, and compliance with HUD requirements. This review assists the City in making informed funding recommendations and identifying technical assistance needs before projects begin.
Following award, staff utilize a comprehensive project implementation checklist to monitor activities from project start through completion. The checklist ensures required documentation is maintained in each project file, including procurement records, environmental review documentation, Section 3 compliance, Minority Business Enterprise/Women Business Enterprise (MBE/WBE) outreach documentation, Davis-Bacon labor standards compliance, project inspections, beneficiary documentation, reimbursement requests, and quarterly performance reports.
During Program Year 2025-2026, the City continued implementing the Neighborly grants management system to enhance grant administration and monitoring. As implementation progresses, Neighborly is being used to improve document management, compliance tracking, communication with subrecipients, monitoring checklists, and reporting, strengthening the City's oversight of HUD-funded activities and promoting greater consistency and efficiency in grant administration.
The City also continued its commitment to Minority Business Enterprise (MBE) and Women #22..
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51 Business Enterprise (WBE) outreach by encouraging participation of minority- and womenowned businesses in HUD-funded activities. Information regarding MBE/WBE requirements is incorporated into HUD funding application materials, homeowner rehabilitation bid solicitation packages, and subrecipient contract requirements. Staff monitor compliance with applicable outreach and reporting requirements throughout project implementation.
The City's monitoring process follows a risk-based approach consisting of multiple levels of review based on factors such as award amount, organizational capacity, prior monitoring results, and program complexity.
Limited Review: All HUD-funded contracts and activities receive at least an annual desk review.
These reviews are typically conducted in conjunction with quarterly performance reports and reimbursement requests to evaluate financial activity, program performance, and compliance with grant requirements.
On-Site Monitoring Review: Higher-risk subrecipients—including new organizations, agencies administering new program activities, or organizations identified through previous monitoring—receive on-site monitoring visits. On-site reviews include examination of program and fiscal records, facility inspections (when applicable), interviews with program and administrative staff, review of beneficiary files, and verification of compliance with federal requirements. Prior to the site visit, subrecipients complete an electronic self-certification to facilitate the monitoring process and identify areas requiring additional review.
The City's monitoring efforts also support compliance with the Consolidated Plan and Annual Action Plan by evaluating progress toward established goals and performance measures throughout the program year. Staff assess accomplishments annually, identify areas requiring corrective action or technical assistance, and use monitoring results to inform future funding recommendations and program planning. This ongoing evaluation helps ensure that HUD resources are effectively utilized to meet community needs while maintaining long-term compliance with federal program requirements.
CR-45 - CDBG 91.520(c)
Specify the nature of, and reasons for, any changes in the jurisdiction’s program objectives and indications of how the jurisdiction would change its programs as a result of its experiences.
There was no amendment to Program Year 2025-2026.
Does this Jurisdiction have any open Brownfields Economic Development Initiative (BEDI) grants?
#22..
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52 Not Applicable. The City of Modesto does not have any open Brownfields Economic Development Initiatives.
[BEDI grantees] Describe accomplishments and program outcomes during the last year.
Not Applicable.
CR-50 - HOME 91.520(d)
Include the results of on-site inspections of affordable rental housing assisted under the program to determine compliance with housing codes and other applicable regulations Please list those projects that should have been inspected on-site this program year based upon the schedule in §92.504(d). Indicate which of these were inspected and a summary of issues that were detected during the inspection. For those that were not inspected, please indicate the reason and how you will remedy the situation.
The City of Modesto monitors all HOME-assisted rental housing projects throughout their affordability periods to ensure continued compliance with HOME program requirements, including property standards, rent and occupancy requirements, and long-term affordability.
Rental properties are inspected in accordance with the inspection schedule established under 24 CFR 92.504(d) and must comply with the property standards contained in 24 CFR Part 5, Subpart G (NSPIRE) and 24 CFR 92.251.
During Program Year 2025-2026, the City continued implementation of HUD's National Standards for the Physical Inspection of Real Estate (NSPIRE) by utilizing updated written inspection procedures and standardized inspection checklists. Inspections evaluate the condition of the dwelling units, building systems, and site, with particular emphasis on identifying health and safety deficiencies that could affect residents. HOME-assisted properties are also required to comply with applicable state and local housing codes and, where applicable, the lead-based paint requirements contained in 24 CFR Part 35.
The City's written inspection procedures require property owners to correct identified deficiencies within HUD's required timeframes. City staff monitor corrective actions, review supporting documentation, and conduct follow-up inspections, when necessary, to verify that deficiencies have been resolved and that properties remain in compliance with HOME program requirements.
During Program Year 2025-2026, the City conducted on-site inspections of 307 HOME-assisted rental units in accordance with the NSPIRE inspection schedule. Of the units inspected, 244 #22..
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53 units were identified as having one or more NSPIRE deficiencies requiring corrective action. The most common deficiencies included inoperable smoke alarms, non-functioning carbon monoxide alarms, and fire extinguishers that required servicing or replacement.
The City worked closely with property owners and management companies to coordinate inspections, address identified health and safety deficiencies, and ensure corrective actions were completed within the required timeframes. Follow-up inspections and documentation reviews were conducted, as necessary, to verify compliance. As of the completion of the inspection cycle, all identified deficiencies had either been corrected or were actively being addressed in accordance with HUD's NSPIRE requirements and established correction timelines.
The City will continue monitoring HOME-assisted rental properties throughout their affordability periods to ensure they remain decent, safe, sanitary, and in good repair, while maintaining compliance with NSPIRE standards, HOME regulations, and applicable state and local housing codes.
Provide an assessment of the jurisdiction's affirmative marketing actions for HOME units.
92.351(b)
The City of Modesto continues to implement the Affirmative Marketing Policy contained in its HOME Program Policies and Procedures to ensure that all persons, particularly those least likely to apply for housing without special outreach, are informed of affordable housing opportunities created through the HOME Investment Partnerships Program.
To implement this policy during Program Year 2025-2026, the City:
• Published information regarding HOME-funded housing programs and available housing opportunities, including references to the City's Affirmative Marketing Policy and applicable federal, state, and local fair housing laws. • Required subrecipients, developers, and owners of HOME-assisted projects to comply with the City's Affirmative Marketing Policy through contractual agreements. • Required the use of the Equal Housing Opportunity logo, slogan, or statement in advertisements and marketing materials for HOME-assisted housing, as applicable. • Encouraged affirmative outreach to ensure that information regarding HOME-assisted housing opportunities was broadly disseminated to eligible households and protected classes in accordance with HOME program requirements.
The City and its HOME-funded developers and property owners share responsibility for promoting fair housing and implementing affirmative marketing practices. Through ongoing monitoring of HOME-assisted rental properties and review of project records, the City evaluates #22..
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54 compliance with affirmative marketing requirements and ensures that owners and developers maintain documentation supporting their marketing efforts. Compliance with the City's Affirmative Marketing Policy is also enforced through the provisions of the HOME Loan Agreement, Regulatory Agreement, and other recorded affordability documents, as applicable.
During Program Year 2025-2026, the City continued to monitor HOME-assisted projects for compliance with affirmative marketing requirements and found no significant issues requiring corrective action. The City remains committed to ensuring that HOME-assisted housing is marketed in a manner that promotes fair housing choice and provides equal access to housing opportunities for all eligible households.
Refer to IDIS reports to describe the amount and use of program income for projects, including the number of projects and owner and tenant characteristics.
During Program Year 2025-2026, the City of Modesto received $155,551.88 in HOME Program Income. Consistent with HOME program requirements, these funds will be committed to eligible HOME-assisted activities to expand affordable housing opportunities for low-income households. The City will report all required project completion and beneficiary data in IDIS upon completion of development and occupancy of the units, in accordance with HOME program requirements.
Describe other actions taken to foster and maintain affordable housing. 91.220(k) (STATES ONLY: Including the coordination of LIHTC with the development of affordable housing).
91.320(j)
During Program Year 2025-2026, the City of Modesto continued implementing strategies to foster and preserve affordable housing through housing rehabilitation, regional collaboration, long-term affordability monitoring, and support for new affordable housing development.
The City maintained active partnerships with its regional entitlement community partners, including Stanislaus County, the City of Turlock, and the Housing Authority of the County of Stanislaus, to coordinate affordable housing initiatives, regional planning efforts, and strategies identified in the Analysis of Impediments to Fair Housing. Through these collaborative efforts, the City continued working to address barriers to affordable housing, improve access to housing opportunities, reduce lead-based paint hazards through its housing rehabilitation activities, and strengthen coordination of housing and supportive services throughout the region.
During the reporting period, the City preserved existing affordable housing through its Homeowner Rehabilitation Loan Program by completing health and safety improvements to 15 owner-occupied housing units. The City also maintained close coordination with its Code #22..
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55 Enforcement Division to identify homeowners with housing code violations who may qualify for rehabilitation assistance. This collaborative approach helps preserve the existing affordable housing stock while improving neighborhood conditions and assisting low-income homeowners in correcting health and safety deficiencies.
The City also continued monitoring its portfolio of HOME-assisted rental housing developments to ensure compliance with affordability requirements throughout each project's affordability period. Staff reviewed affordability restrictions, monitored compliance with HOME program requirements, and identified projects approaching the end of their affordability periods. For these developments, the City began working with property owners and development partners to explore opportunities to preserve affordability and maintain these units as long-term affordable housing resources.
In addition, the City continued its partnership with Visionary Home Builders on the development of Seventh Street Village, a transit-oriented, mixed-use affordable housing community consisting of 79 affordable housing units. Located in downtown Modesto, the development will include a Head Start program and neighborhood-serving commercial space on the ground floor, creating a vibrant mixed-use environment that supports housing, education, and economic opportunity. Construction began in December 2025 and is anticipated to be completed in winter 2027.
Through these efforts, the City continued to preserve existing affordable housing, support the development of new affordable housing opportunities, strengthen regional partnerships, and maintain long-term affordability for low-income households in the Modesto community. #22..
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56 CR-60 - ESG 91.520(g) (ESG Recipients only)
ESG Supplement to the CAPER in e-snaps
For Paperwork Reduction Act
1. Recipient Information—All Recipients Complete
Basic Grant Information
Recipient Name MODESTO
Organizational DUNS Number 060125051
UEI -
EIN/TIN Number 946000374
Identify the Field Office SAN FRANCISCO
Identify CoC(s) in which the recipient or
subrecipient(s) will provide ESG
assistance
Turlock/Modesto/Stanislaus County CoC
ESG Contact Name
Prefix Ms
First Name Jessica
Middle Name -
Last Name Hill
Suffix -
Title Director of Community and Economic Development
ESG Contact Address
Street Address 1 1010 10th Street
Street Address 2 Suite 3100
City Modesto
State CA
ZIP Code 95353-
Phone Number 2095775321
Extension -
Fax Number -
Email Address [email protected]
ESG Secondary Contact
Prefix Mr
First Name Edgar
Last Name Garcia
Suffix -
Title Community Development Manager
Phone Number 2095715101
Extension -
Email Address [email protected]
#22..
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57 2. Reporting Period—All Recipients Complete
Program Year Start Date 07/01/2023
Program Year End Date 06/30/2024
3a. Subrecipient Form – Complete one form for each subrecipient Subrecipient or Contractor Name: TURNING POINT OF CENTRAL CALIFORNIA City: Fresno
State: CA
Zip Code: ,
DUNS Number: 941719862
UEI:
Is subrecipient a victim services provider: N
Subrecipient Organization Type: Other Non-Profit Organization ESG Subgrant or Contract Award Amount: 15000
Subrecipient or Contractor Name: COMMUNITY HOUSING AND SHELTER SERVICES City: Modesto
State: CA
Zip Code: 95350, 5417
DUNS Number: 835658782
UEI:
Is subrecipient a victim services provider: N
Subrecipient Organization Type: Other Non-Profit Organization ESG Subgrant or Contract Award Amount: 35000
Subrecipient or Contractor Name: Center for Human Services City: Modesto
State: CA
Zip Code: 95350, 4373
DUNS Number: 038119202
UEI:
Is subrecipient a victim services provider: N
Subrecipient Organization Type: Other Non-Profit Organization ESG Subgrant or Contract Award Amount: 40000
#22..
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58 Subrecipient or Contractor Name: THE SALVATION ARMY - MODESTO CA City: Modesto
State: CA
Zip Code: 95354, 2225
DUNS Number: 074629460
UEI:
Is subrecipient a victim services provider: N
Subrecipient Organization Type: Other Non-Profit Organization ESG Subgrant or Contract Award Amount: 48000
Narrative:
Subrecipient award amounts reflected in the Subrecipient Form above are inclusive of Entitlement awards for PY 2025.
CR-65 - Persons Assisted
4. Persons Served
Per HUD instructions, CR-65 data (tables 16 to 23) are to be reported via the Sage report. The Sage report is included as part of this document as Attachment 1. 4a. Complete for Homelessness Prevention Activities
Number of Persons in
Households
Total
Adults See SAGE Report
Children See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 16 – Household Information for Homeless Prevention Activities #22..
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59 4b. Complete for Rapid Re-Housing Activities
Number of Persons in
Households
Total
Adults See SAGE Report
Children See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 17 – Household Information for Rapid Re-Housing Activities 4c. Complete for Shelter
Number of Persons in
Households
Total
Adults See SAGE Report
Children See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 18 – Shelter Information
4d. Street Outreach
Number of Persons in
Households
Total
Adults See SAGE Report
Children See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 19 – Household Information for Street Outreach
#22..
- 834 -
60 4e. Totals for all Persons Served with ESG
Number of Persons in
Households
Total
Adults See SAGE Report
Children See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 20 – Household Information for Persons Served with ESG
5. Gender—Complete for All Activities
- Total
Male See SAGE Report
Female See SAGE Report
Transgender See SAGE Report
Don't Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 21 – Gender Information
6. Age—Complete for All Activities
- Total
Under 18 See SAGE Report
18-24 See SAGE Report
25 and over See SAGE Report
Don’t Know/Refused/Other See SAGE Report
Missing Information See SAGE Report
Total See SAGE Report
Table 22 – Age Information
#22..
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61 7. Special Populations Served—Complete for All Activities Number of Persons in Households
Subpopulation Total
Total Persons
Served –
Prevention
Total Persons
Served – RRH
Total Persons
Served in
Emergency
Shelters
Veterans See Sage
Report - - -
Victims of Domestic
Violence - - - -
Elderly - - - -
HIV/AIDS - - - -
Chronically
Homeless - - - -
Persons with
Disabilities
See Sage
Report - - -
Severely
Mentally Ill - - - -
Chronic
Substance
Abuse
- - - -
Other Disability - - - -
Total
(unduplicated if
possible)
- - - -
Table 23 – Special Population Served
CR-70 – ESG 91.520(g) - Assistance Provided and Outcomes
10. Shelter Utilization
SEE SAGE REPORTS
Number of New Units – Rehabbed
Number of New Units – Conversion
Total Number of bed - nights available
Total Number of bed - nights provided
Capacity Utilization
Table 24 – Shelter Capacity
#22..
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62 CAPER.
CR-75 – Expenditures
11. Expenditures
11a. ESG Expenditures for Homelessness Prevention
- Dollar Amount of Expenditures in Program Year
Expenditures for Rental Assistance See SAGE Report
Expenditures for Hazard Pay (Cares Act Only) -
Expenditures for Housing Relocation and
Stabilization Services - Financial Assistance
-
Expenditures for Housing Relocation &
Stabilization Services - Services
-
Expenditures for Homeless Prevention under
Emergency Shelter Grants Program
-
Subtotal Homelessness Prevention -
Table 25 – ESG Expenditures for Homelessness Prevention 11b. ESG Expenditures for Rapid Re-Housing
- Dollar Amount of Expenditures in Program Year
Expenditures for Rental Assistance See SAGE Report
Expenditures for Housing Relocation and
Stabilization Services - Financial Assistance
-
Expenditures for Housing Relocation &
Stabilization Services - Services
-
Expenditures for Homeless Assistance under
Emergency Shelter Grants Program
-
Subtotal Rapid Re-Housing -
-
Table 26 – ESG Expenditures for Rapid Re-Housing
#22..
- 837 -
63 11c. ESG Expenditures for Emergency Shelter
- Dollar Amount of Expenditures in Program Year
Essential Services See SAGE Report
Operations -
Hazard Pay (Cares Act Only) -
Renovation -
Major Rehab -
Conversion -
Subtotal -
Table 27 – ESG Expenditures for Emergency Shelter
11d. Other Grant Expenditures
- Dollar Amount of Expenditures in Program Year
Street Outreach See SAGE Report
HMIS -
Administration -
Subtotal -
Table 28 - Other Grant Expenditures
11e. Total ESG Grant Funds
Total ESG Funds Expended
See SAGE Report
Table 29 - Total ESG Funds Expended
11f. Match Source
Other Non-ESG HUD Funds See SAGE Report
Other Federal Funds -
State Government -
Local Government -
Private Funds -
Other -
Fees -
Program Income -
Total Match Amount -
Table 30 - Other Funds Expended on Eligible ESG Activities #22..
- 838 -
64 11g. Total
Total Amount of Funds
Expended on ESG
Activities
See Sage Report
ESG + Total Match
(11e+11f) -
Table 31 - Total Amount of Funds Expended on ESG Activities #22..
- 839 -
65 2025-2026
SAGE Reports
#22..
- 840 -
66 2025-2026
PR-26 Financial Summary
#22..
- 841 -
67 2025-2026
CR-58 Section 3
#22..
- 842 -
68 CR-58 – Section 3
Identify the number of individuals assisted and the types of assistance provided Total Labor Hours CDBG HOME ESG HOPWA HTF
Total Number of Activities 0 0 0 0 0
Total Labor Hours 0 0 0 0 0
Total Section 3 Worker Hours 0 0 0 0 0
Total Targeted Section 3 Worker Hours 0 0 0 0 0
Table 14 – Total Labor Hours
Qualitative Efforts - Number of Activities by Program CDBG HOME ESG HOPWA HTF Outreach efforts to generate job applicants who are Public Housing Targeted Workers
0 0 0 0 0
Outreach efforts to generate job applicants who are Other Funding Targeted Workers.
0 0 0 0 0
Direct, on-the job training (including apprenticeships). 0 0 0 0 0 Indirect training such as arranging for, contracting for, or paying tuition for, off-site training.
0 0 0 0 0
Technical assistance to help Section 3 workers compete for jobs (e.g., resume assistance, coaching). 0 0 0 0 0
Outreach efforts to identify and secure bids from Section 3 business concerns. 0 0 0 0 0
Technical assistance to help Section 3 business concerns understand and bid on contracts. 0 0 0 0 0
Division of contracts into smaller jobs to facilitate participation by Section 3 business concerns. 0 0 0 0 0
Provided or connected residents with assistance in seeking employment including: drafting resumes, preparing for interviews, finding job opportunities, connecting residents to job placement services. 0 0 0 0 0
Held one or more job fairs. 0 0 0 0 0
Provided or connected residents with supportive services that can provide direct services or referrals. 0 0 0 0 0
Provided or connected residents with supportive services that provide one or more of the following: work readiness health screenings, interview clothing, uniforms, test fees, transportation.
0 0 0 0 0
Assisted residents with finding child care. 0 0 0 0 0
Assisted residents to apply for, or attend community college or a four year educational institution. 0 0 0 0 0
Assisted residents to apply for, or attend vocational/technical training. 0 0 0 0 0 Assisted residents to obtain financial literacy training and/or coaching. 0 0 0 0 0 Bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns. 0 0 0 0 0
Provided or connected residents with training on computer use or online technologies. 0 0 0 0 0
Promoting the use of a business registry designed to create opportunities for disadvantaged and small businesses. 0 0 0 0 0
Outreach, engagement, or referrals with the state one-stop system, as designed in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.
0 0 0 0 0
Other. 0 0 0 0 0
Table 15 – Qualitative Efforts - Number of Activities by Program #22..
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69 Narrative
The Vine Street project was subject to Section 3 requirements and completed construction in the fall of 2024, however there were no reportable Section 3 labor hours. The total labor hours for the project are reported, the general contractor posted job opportunities and provided supportive backup documentation showing efforts made.
#22..
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70 Citizen Participation
Citizen Participation Plan 91.105(d); 91.115(d)
Describe the efforts to provide citizens with reasonable notice and an opportunity to comment on performance reports.
Reasonable notice and opportunity to comment was provided to citizens in the following ways:
The City of Modesto followed its citizen participation plan by releasing the Draft CAPER for public review on September 7, 2026, with a public review period to begin September 7, 2026, and end on September 22, 2026 . A public hearing notice was published in both English and Spanish in The Modesto Bee on XX, XX, 2026, defining the CAPER review process and how persons, agencies, and interested groups may participate; as well as instructions on how to submit written comments. As part of the public review process, the Draft CAPER was distributed to the Stanislaus Community System of Care (also known as the Continuum of Care), the Stanislaus Homeless Alliance, and to those that subscribe to their listserv that includes over 400 individuals.
Also, the Draft CAPER was available on September 7, for public review and input, via the internet, on the City’s Community Development Division’s Publications and Reports website and copies of the Draft CAPER were made available for review at the Community Development Division’s office. A final public hearing to consider approval of the CAPER will be held September 22, 2026, before the Modesto City Council.
The City of Modesto’s CH&CDC will review and discuss the draft CAPER on September 10, 2026, and consider recommending that the CAPER be forwarded to the City of Modesto Council for review and approval. The public review period to review and comment on the draft document will be closed with a public hearing at the City of Modesto Council meeting on Tuesday, September 22, 2026.
The following table represents the meetings held for the 2025-2026 CAPER Citizen Participation:
#22..
- 845 -
71 Date/Time Meeting Name/Location Council
District
Public
Comments
pending Citizen’s Housing & Community
Development Committee
1010 10th Street
Second floor, room B300
Modesto, CA 95354
Citywide n/a
pending Westside Modesto People of Action
Council
King Kennedy Memorial Center
601 South Martin Luther King Jr Drive,
Modesto, CA 95351
West
Modesto
- District
2 n/a
pending Airport Neighborhood Collaborative
Meeting
Family Resource Center
801 Empire Avenue
Modesto, CA 95354
District 4 n/a
pending Stanislaus Homeless Alliance
1010 10th Street
Board of Supervisors Chambers,
Basement
Modesto, CA 95354
Citywide n/a
pending Stanislaus Community System of Care
(CSOC) Meeting (local CoC)
Harvest Hall Rooms A, B & C at the Ag
Center 3800 Cornucopia Way, Modesto,
CA 95358
Citywide n/a
pending City Council Meeting/CAPER Public
Hearing
1010 10th Street
Council Chambers, Basement
Modesto, CA, 95354
Citywide n/a
Spanish-speaking translators are available at all meetings. If a request for other language translators is made at least five (5) working days prior to a public meeting, translators will be #22..
- 846 -
72 provided.
The Citizens Housing & Community Development Committee (CH&CDC) provides an overall review of the City of Modesto's HUD funds. This Council-appointed committee provides policy and funding recommendations to the City of Modesto Council regarding the City of Modesto's use of HUD entitlement funds.
In FY 2025-2026, the City conducted citizen participation meetings in disadvantaged communities to engage low-income residents.
#22..
- 847 -
73 Resolution 2026-
#22..
- 848 -
CITY OF MODESTO
COUNCIL AGENDA REPORT
DATE OF MEETING:
September 22, 2026
Date: August 15, 2026
TO: Mayor and City Council
THROUGH: Joseph P. Lopez, City Manager
FROM: DeAnna Christensen, Director of Finance
SUBJECT: Council Appeal Hearing – Cannabis Final Revenue Audit Report CONTACT: DeAnna Christensen, Director of Finance,
[email protected], 209-577-5387
DESCRIPTION:
Hearing to consider the Appeal for the Final Revenue Audit Report for the period of July 1, 2024 through June 30, 2025 for McHenry Business Services LLC (Limited Liability Corporation) doing business as (dba) Planet 8ths Herbology. (Funding Source: Cannabis Administrative Permit Fees)
STRATEGIC PLAN ELEMENT:
This item supports the City of Modesto 2025-2026 Strategic Plan focus of Governance and Service Delivery under Goal H: Achieve Financial Sustainability.
BACKGROUND:
The passage of Proposition 64, The Adult Use of Marijuana Act, in November 2016 ended the prohibition on adult-use of cannabis in California and created a statewide regulatory structure for adult-use cannabis businesses. Proposition 64 gave local governments control of taxes and fees associated with cannabis businesses operating within their jurisdictions.
In November 2017, the City Council placed before the voters a ballot measure, “Measure T,” allowing the City Council to implement an excise tax on cannabis businesses within the City. Modesto voters approved Measure T, with 82.5% voting in favor of the tax. #23..
- 849 -
City Council, September 22, 2026
Council Appeal Hearing – Cannabis Final Revenue Audit Report
On January 16, 2018, the Modesto City Council adopted Ordinance No. 3684-C.S. which permitted certain commercial cannabis uses, subject to land use and zoning criteria.
Staff and Council recognized that expert consultant assistance would be necessary to review and evaluate cannabis business applications, to assist City staff in establishing tax rates and an annual permit fee, facilitate approved-permitted annual cannabis inspections and annual financial audits in coordination with City staff.
As part of facilitating the cannabis inspections and annual financial audits, the City utilizes a third-party consultant who specializes in compliance and audit requirements related to cannabis businesses. For the audit period being discussed for this hearing, the thirdparty consulting firm was Hinderliter, de Llamas & Associates (HDL)1 .
Planet 8ths Herbology original permit was approved as a Microbusiness – Manufacturing, Distribution and Retail on December 19th, 2018. They were approved their last renewal permit on June 24, 2025, and have been operational since October 2021. The annual financial audits have been occurring for this business since Fiscal Year 2023-2024.
DISCUSSION:
As part of the annual financial audit, various audit procedures are performed to ensure the appropriate tax is being remitted to the City. HDL conducted the Final Revenue Audit Report for the period of July 1, 2024 through June 30, 2025. As part of this audit, there were two main findings identified as part of HDL’s audit which included the following:
• HdL identified related entity transactions in the Planet 8ths Herbology accounting reports which were recorded as $0. HdL reviewed Marijuana Enforcement Tracking Reporting Compliance (METRC) to track the movement of the product, which showed that Planet 8ths Herbology received completed product in their inventory, then transferred some or all of that same product to a related entity.
HDL used data from METRC to calculate these transfers which results in taxes owed in the amount of $448.73.
• Planet 8ths Herbology provided HDL accounting reports which were used to verify the gross reports reported on their City Monthly Cannabis Tax Remittance form.
The accounting reports reported a higher amount than what was reported on these City forms. No documentation was provided by Planet 8ths Herbology to justify any exemption to these amounts not being reported to the City. Based on this variance, this resulted in additional taxes owed in the amount of $5,308.32.
This Final Revenue Audit Report was issued on May 4, 2026 to Planet 8ths Herbology, and under Modesto Municipal Code 8-2.1131, Planet 8ths Herbology may request a 1 HDL Agreement was approved by Council on June 13, 2023 under Resolution 2023-274. #23..
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City Council, September 22, 2026
Council Appeal Hearing – Cannabis Final Revenue Audit Report
hearing by the City Tax Administrator. Planet 8ths Herbology exercised the hearing request option by the required deadline.
On June 17, 2026, the City Tax Administrator held an Administrative Hearing at the request of Planet 8ths Herbology allowing the business to dispute the findings outlined in the Final Revenue Audit Report.
During this hearing, Planet 8ths testified they disagree with $0 transfers being treated as taxable gross receipts, as they were self-manufactured products sent to related entities.
However, HdL testified that METRC records do not support the self-manufactured claim.
Planet 8ths also stated these products were already subject to manufacturing tax. During the testimony and supporting documentation provided by Planet 8ths, nothing was provided to show these $0 transfers were already subject to the manufacturing tax. It has been communicated during the last prior two audits that these $0 transfers were considered taxable. For the audit period of business inception through March 31, 2023, similar transfers to related entities captured reimbursement values and were included as audit findings. For the audit period of April 1, 2023, through June 30, 2024, the audit report captured $0 transfers and included a similar calculation to determine the tax owed to the City. That audit tax finding amount was paid by Planet 8ths for the audit period of April 1, 2023, through June 30, 2024. For the audit period of July 1, 2024, through June 30, 2025, the audit finding related to $0 transfers, only makes up $448.73 of the overall tax due to the City. The Tax Administrator upheld the finding.
Lastly, on the second audit finding related to the discrepancies between the accounting records provided by Planet 8ths as part of the audit and the City Monthly Cannabis Tax Remittance forms, Planet 8ths testified that the sales reports were not accurate. This wholesale variance is captured in the Final Revenue Audit Report as part of the audit report and amounts to $5,308.32 of taxes due to the City.
Planet 8ths testified during the hearing, and in subsequent email correspondence, that the Modesto Municipal Code does not specifically identify transactions between related entities as subject to the Cannabis Business Tax. However, this is a fundamental misunderstanding of the Modesto Municipal Code. The Cannabis Business Tax applies to all “Gross Receipts” unless a specific exemption applies. Modesto Municipal Code Section 8-1103(F) defines Gross Receipts to mean:
“the total amount actually received or receivable from all sales from the cannabis business,…the total amount or compensation actually received or receivable for the performance of any act or service…all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever.”
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City Council, September 22, 2026
Council Appeal Hearing – Cannabis Final Revenue Audit Report
Modesto Municipal Code Section 8-1103(F) exempts transactions between certain specific types of related entities from the Gross Receipts tax. However, based on records provided during the audit, Planet 8ths and its related entities involved in this matter are not the types of related entitles identified in Section 8-1103(F). Planet 8ths did not dispute this determination during the hearing. Accordingly, no exemption applies and the transactions between Planet 8ths and its related entities are subject to the Cannabis Business Tax. Planet 8ths was provided an opportunity to provide a reconciliation and supporting documentation to explain why the accounting records and the City Monthly Cannabis Tax Remittance forms had a variance. The City received a Wholesale Revenue Reconciliation on July 9th which acknowledges part of the variance is related to revenues booked by Planet 8ths for product transferred to related entities McHenry Comic Management LLC and MMC Management Services LLC in the amount of $148,040.44 in gross receipts. No additional support was provided, and these amounts are not considered exemptions in the City’s Cannabis Ordinance. The Tax Administrator upheld the audit finding.
Planet 8ths Herbology has the right to appeal the Tax Administrator decision to the City Council pursuant to Modesto Municipal Code Title 1, Chapter 4 by filing a written notice of appeal which was requested by Planet 8ths Herbology by the required deadline. This will be the final appeal allowed by Planet 8ths Herbology to determine the final decision.
Staff’s recommendation is to adopt a resolution upholding the tax administrator’s decision, but if the Council make a different decision following the appeal hearing, the resolution can be updated.
FISCAL IMPACT:
As part of the findings in the Final Revenue Audit Report for the period of July 1, 2024, through June 30, 2025, the total amount due to the City is $8,340.30 is comprised of the following:
• Cannabis Tax - $5,855.91
o Retail Tax (8%) - $98.86
o Wholesale Tax (2.5% - 4%) - $5,757.05
• Penalties and Interest - $2,484.39
The fee for the annual financial audit performed by HDL amounts to $10,000 which is fully funded through the annual Commercial Cannabis Permit Fee for operational businesses.
The current Permit fee paid by the operational businesses is $22,821. In addition, as part of these hearings, the City incurred additional fees in the amount of $2,400.
CEQA/NEPA REQUIREMENTS:
This item does not constitute a “project” within the meaning of California Environmental Quality Act (CEQA) Guidelines Section 15378 and requires no environmental review.
COMMITTEE RECOMMENDATION:
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City Council, September 22, 2026
Council Appeal Hearing – Cannabis Final Revenue Audit Report
This item was not presented to a Committee since the hearing is required to be presented directly to the City Council.
RECOMMENDED COMMITTEE ACTION:
Staff Recommendations:
Resolution upholding the Tax Administrator’s decision regarding the Final Revenue Audit Report for the period of July 1, 2024 through June 30, 2025 for McHenry Business Services LLC dba Planet 8ths Herbology.
Approved by:
DeAnna Christensen, Director of Finance
Joseph P. Lopez, City Manager
Attachments:
1. Resolution
2. Ordinance 3672-C.S.
3. Final Revenue Audit Report of McHenry Business Services LLC – Prepared May 4, 2026
4. Planet 8ths Request for Administrative Hearing with Documents
5. Notice of Appeal and Request for Hearing – July 23, 2026 Final Decision
6. Email Communication provided on June 18, 2026 on additional information
7. 06-17-26 Administrative Hearing Decision - Planet 8th_FINAL
8. Wholesale Revenues Reconciliation 7.9.2026
9. Adjusted Distribution Transfer Detail
10.Management Agreement Mission Nurseries
11.Email Communication on Prior Audit
12.Appellant Document
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09/22/2026/FIN/DChristensen/Item X 1 2026-XX
MODESTO CITY COUNCIL
RESOLUTION NO. 2026-XX
RESOLUTION UPHOLDING THE TAX ADMINISTATOR’S DECISION
REGARDING THE FINAL REVENUE AUDIT REPORT FOR THE PERIOD OF JULY 1, 2024 THROUGH JUNE 30, 2025 FOR MCHENRY BUSINESS SERVICES LLC DBA PLANET 8THS HERBOLOGY
WHEREAS, the passage of Proposition 64, The Adult Use of Marijuana Act, in November 2016 ended the prohibition on adult-use of cannabis in California and created a statewide regulatory structure for adult-use cannabis businesses; and
WHEREAS, Proposition 64 gave local governments control of taxes and fees associated with cannabis businesses operating within their jurisdictions; and WHEREAS, in November 2017, the City Council placed before the voters a ballot measure, “Measure T,” allowing the City Council to implement an excise tax on cannabis businesses within the City. Modesto voters approved Measure T, with 82.5% voting in favor of the tax; and
WHEREAS, on January 16, 2018, the Modesto City Council adopted Ordinance No. 3684-C.S. which permitted certain commercial cannabis uses, subject to land use and zoning criteria; and
WHEREAS, as part of facilitating the cannabis inspections and annual financial audits, the City utilizes a third-party consultant who specializes in compliance and audit requirements related to cannabis businesses; and WHEREAS, for the audit period being discussed for this hearing, the thirdparty consulting firm was Hinderliter, de Llamas & Associates (HDL); and #23..
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09/22/2026/FIN/DChristensen/Item X 2 2026-XX
WHEREAS, Planet 8ths Herbology original permit was approved as a Microbusiness – Manufacturing, Distribution and Retail on December 19th, 2018.
They were approved their last renewal permit on June 24, 2025 and have been operational since October 2021; and
WHEREAS, the annual financial audits have been occurring for this business since Fiscal Year 2023-2024; and
WHEREAS, as part of the annual financial audit, various audit procedures are performed to ensure the appropriate tax is being remitted to the City. HDL conducted the Final Revenue Audit Report for the period of July 1, 2024 through June 30, 2025; and
WHEREAS, as part of this audit, there were two main findings identified as part of HDL’s audit which included (1) HdL identified related entity transactions in the Planet 8ths Herbology accounting reports which were recorded as $0. HdL reviewed Marijuana Enforcement Tracking Reporting Compliance (METRC) to track the movement of the product, which showed that Planet 8ths Herbology received completed product in their inventory, then transferred some or all of that same product to a related entity. HDL used data from METRC to calculate these transfers which results in taxes owed in the amount of $448.73. (2) Planet 8ths Herbology provided HDL accounting reports which were used to verify the gross reports reported on their City Monthly Cannabis Tax Remittance form. The accounting reports reported a higher amount than what was reported on these City forms. No documentation was provided by Planet 8ths Herbology to justify #23..
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09/22/2026/FIN/DChristensen/Item X 3 2026-XX
any exemption to these amounts not being reported to the City. Based on this variance, this resulted in additional taxes owed in the amount of $5,308.32; and WHEREAS, this Final Revenue Audit Report was issued on May 4, 2026 to Planet 8ths Herbology and under Modesto Municipal Code 8-2.1131, Planet 8ths Herbology may request a hearing by the City Tax Administrator; and WHEREAS, Planet 8ths Herbology exercised the hearing request option by the required deadline; and
WHEREAS, on June 17, 2026, the City Tax Administrator held an Administrative Hearing at the request of Planet 8ths Herbology allowing the business to dispute the findings outlined in the Final Revenue Audit Report; and WHEREAS, during this hearing, Planet 8ths testified they disagree with $0 transfers being treated as taxable gross receipts, as they were self-manufactured products sent to related entities; however, HdL testified that METRC records do not support the self-manufactured claim; and
WHEREAS, Planet 8ths also stated these products were already subject to manufacturing tax; and
WHEREAS, during the testimony and supporting documentation provided by Planet 8ths, nothing was provided to show these $0 transfers were already subject to the manufacturing tax; and
WHEREAS, it has been communicated during the last prior two audits that these $0 transfers were considered taxable; and
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09/22/2026/FIN/DChristensen/Item X 4 2026-XX
WHEREAS, for the audit period of business inception through March 31, 2023, similar transfers to related entities captured reimbursement values and were included as audit findings; and
WHEREAS, for the audit period of April 1, 2023 through June 30, 2024, the audit report captured $0 transfers and included a similar calculation to determine the tax owed to the City; and
WHEREAS, that audit tax finding amount was paid by Planet 8ths for the audit period of April 1, 2023 through June 30, 2024 and for the audit period of July 1, 2024 through June 30, 2025, the audit finding related to $0 transfers, only makes up $448.73 of the overall tax due to the City; and WHEREAS, the Tax Administrator upheld the finding; and
WHEREAS, on the second audit finding related to the discrepancies between the accounting records provided by Planet 8ths as part of the audit and the City Monthly Cannabis Tax Remittance forms, Planet 8ths testified that the sales reports were not accurate; and
WHEREAS, this wholesale variance is captured in Final Revenue Audit Report as part of the audit report and amounts to $5,308.32 of taxes due to the City; and
WHEREAS, Planet 8ths testified during the hearing, and in subsequent email correspondence, that the Modesto Municipal Code does not specifically identify transactions between related entities as subject to the Cannabis Business Tax; and
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09/22/2026/FIN/DChristensen/Item X 5 2026-XX
WHEREAS, this is a fundamental misunderstanding of the Modesto Municipal Code. The Cannabis Business Tax applies to all “Gross Receipts” unless a specific exemption applies. Modesto Municipal Code Section 8-1103(F) defines Gross Receipts to mean:
“the total amount actually received or receivable from all sales from the cannabis business,…the total amount or compensation actually received or receivable for the performance of any act or service…all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever.”; and WHEREAS, Modesto Municipal Code Section 8-1103(F) exempts transactions between certain specific types of related entities from the Gross Receipts tax and based on records provided during the audit, Planet 8ths and its related entities involved in this matter are not the types of related entitles identified in Section 8-1103(F); and
WHEREAS, Planet 8ths did not dispute this determination during the hearing; and
WHEREAS, no exemption applies and the transactions between Planet 8ths and its related entities are subject to the Cannabis Business Tax; and WHEREAS, Planet 8ths was provided an opportunity to provide a reconciliation and supporting documentation to explain why the accounting records and the City Monthly Cannabis Tax Remittance forms had a variance; and
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09/22/2026/FIN/DChristensen/Item X 6 2026-XX
WHEREAS, the City received a Wholesale Revenue Reconciliation on July 9th which acknowledges part of the variance is related to revenues booked by Planet 8ths for product transferred to related entities McHenry Comic Management LLC and MMC Management Services LLC in the amount of $148,040.44 in gross receipts; and
WHEREAS, no additional support was provided, and these amounts are not considered exemptions in the City’s Cannabis Ordinance. The Tax Administrator upheld the audit finding; and
WHEREAS, Planet 8ths Herbology has the right to appeal the Tax Administrator decision to the City Council pursuant to Modesto Municipal Code Title 1, Chapter 4 by filing a written notice of appeal which was requested by Planet 8ths Herbology by the required deadline; and
WHEREAS, this will be the final appeal allowed by Planet 8ths Herbology to determine the final decision.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby upholds the Tax Administrator’s decision regarding the Final Revenue Audit Report for the period of July 1, 2024 through June 30, 2025 for McHenry Business Services LLC dba Planet 8ths Herbology.
BE IT FURTHER RESOLVED THAT McHenry Business Services LLC dba Planet 8ths Herbology shall pay the City $5,855.91 in outstanding Cannabis Tax and $2,484.39 in penalties and interest within five (5) business days. #23..
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09/22/2026/FIN/DChristensen/Item X 7 2026-XX
The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 22nd day of September, 2026, 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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CITY OF MODESTO
CITY COUNCIL
ORDINANCE NO. 3672-C.S.
AN ORDINANCE AMENDING THE MODESTO MUNICIPAL CODE BY ADDING ARTICLE 11, "CANNABIS BUSINESS TAX" TO CHAPTER 2, "TAXATION" OF TITLE 8, "FINANCE, REVENUE AND TAXATION"
WHEREAS, in 1996 the California voters approved Proposition 215, "The Compassionate Use Act," which provides that qualified patients may obtain and use marijuana for medical purposes with a physician's recommendation and will not be subject to certain criminal penalties under state law; and
WHEREAS, in 2003, the state Legislature enacted Senate Bill 420, the "Medical Marijuana Program Act," as a supplement to The Compassionate Use Act, which allows cities to adopt and enforce rules consistent with the Medical Marijuana Program Act; and WHEREAS, in 2015, the state Legislature enacted the Medical Marijuana Regulation and Safety Act, which creates a regulatory, permitting, and oversight structure for the medical marijuana industry at the state level but does not impede on land use and police powers of local governments; and
WHEREAS, the City Council of the City of Modesto desires to impose a tax on all cannabis businesses that may operate within Modesto if future land use regulations allow for such businesses; and
WHEREAS, California Constitution Article XIIIC, Section 2(b), provides that no local government may impose a general tax unless and until that tax is submitted to the electorate and approved by a majority vote; and
WHEREAS, the tax imposed by this Ordinance is an excise tax on the privilege of conducting business within the City and will only become effective if approved by a majority of the City' voters at the November 7,2017 municipal election.
NOW, THEREFORE, the City Council of the City of Modesto does ordain as follows:
SECTION 1. Voter Approval. This Ordinance shall impose a general tax, as defined by Article XIIC, Section 1(a) of the California Constitution and Government Code section 53723, on cannabis businesses, and therefore must be approved by a majority of voters voting on the tax. Approval of this Ordinance is therefore subject to and conditioned upon the approval by the voters of the imposition of the general tax imposed by this Ordinance.
This Ordinance shall not take effect if a majority of the voters voting in the election on this Ordinance do not vote in favor of it.
SECTION 2. Amendment of Code. Article 11 , "CANNABIS BUSINESS TAX," of Chapter 2, "Taxation" of Title 8, "Finance, Revenue and Taxation" of the Modesto Municipal Code is added to read as follows:
Ordinance 3672-C.S.
Effective: November 28,2017
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Article 11
CANNABIS BUSINESS TAX
Sections:
8-2.1101 Purpose of article.
8-2.1102 Tax imposed.
8-2.1103 Definitions.
8-2.1104 Other licenses, permits, taxes, fees or charges. 8-2.1105 Payment of tax does not authorize unlawful business. 8-2.1106 Registration with tax administrator.
8-2.1107 Payment - Location.
8-2.1108 Amount of business tax owed.
8-2.1109 Payment - Time limits.
8-2.1 110 Payments and communications made by mail- Proof of timely submittal.
8-2.1111 Payment - When taxes deemed delinquent.
8-2.1112 Notice not required by City.
8-2.1113 Payment - Penalty for delinquency.
8-2.1114 Waiver of penalties.
8-2.1115 Refunds - Credits.
8-2.1116 Refunds and procedures.
8-2.1117 Exemptions - Application - Issuance conditions. 8-2.1118 Exemptions - General.
8-2.1119 Enforcement - Duties of tax administrator and police chief. 8-2.1120 Rules and regulations.
8-2.1121 Apportionment.
8-2.1122 Audit and examination of records and equipment. 8-2.1123 Tax deemed debt to City.
8-2.1124 Lien - Recordation.
8-2.1125 Warrant for collection of tax.
8-2.1126 Seizure and sale.
8-2.11 27 Successor's and assignee's responsibil ity.
Ordinance 3672-C.S.
Effective: November 28, 2017
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8-2.1 128 Deficiency determinations.
8-2.1 129 Tax assessment - authorized when - nonpayment - fraud. 8-2.1 130 Tax assessment - notice requirements.
8-2.1 131 Tax assessment - hearing - application and determination. 8-2.1132 Tax assessment - appeal.
8-2.1133 Conviction for article violation - taxes not waived. 8-2.1134 Violation deemed misdemeanor - penalty.
8-2.1135 Effect of state and federal reference/authorization. 8-2.1136 Remedies cumulative.
8-2.1137 Amendment or repeal.
8-2.1101 Purpose of article.
This article shall be known as the "cannabis business tax" and is enacted solely to raise revenue for the general governmental purposes of the City. All of the proceeds from the tax imposed by this article shall be placed in the City's general fund and used for the usual current expenses of the City. The cannabis business tax under the provisions of this article is not a sales or use tax and shall not be calculated or assessed as such.
The cannabis business tax shall not be separately identified or otherwise specifically assessed or charged to any member, customer, patient, or caretaker. 8-2.1102 Tax imposed.
There is established and imposed a cannabis business tax on every such business operating in the City at the rate set forth in this article. 8-2.1103 Definitions.
The definitions set forth in this section shall govern the application and interpretation of this Article 11 .
(A) "Business" shall include all activities engaged in or caused to be engaged in within the City, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to his or her employer.
Ordinance 3672-C.S.
Effective: November 28, 2017
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(8) "Employee" means each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner's family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, or commission.
(C) "Engaged in business" means the commencing, conducting, operating, managing or carrying on of a cannabis business and the exercise of corporate or franchise powers, whether done as owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the City or coming into the City from an outside location to engage in such activities. A person shall be deemed engaged in business within the City if:
(1) Such person or person's employee maintains a fixed place of business within the City for the benefit or partial benefit of such person; (2) Such person or person's employee owns or leases real property within the City for business purposes;
(3) Such person or person's employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business;
(4) Such person or person's employee regularly conducts solicitation of business within the City;
(5) Such person or person's employee performs work or renders services in the City on a regular and continuous basis;
(6) Such person or person's employee utilizes the streets within the City in connection with the operation of motor vehicles for business purposes.
The foregoing specified activities shall not be a limitation on the meaning of "engaged in business."
(0) "Evidence of doing business" means whenever any person shall, by use of signs, circulars, cards or any other advertising media, including the use of intemet or telephone solicitation, represent that such person is engaged in cannabis business in Ordinance 3672-C.S.
Effective: November 28, 2017
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the City, then these facts may be used as evidence that such person is engaged in business in the City.
(E) "Fraud" means any intentional deception, misrepresentation and/or intentional non-payment of taxes to the City.
(F) "Gross receipts," except as otherwise specifically provided, means the total amount actually received or receivable from all sales from the cannabis business, including membership dues and fees ; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed , whether or not such act or service is done as a part of or in connection with the sale of materials, goods, memberships, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" shall be all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:
(1) Cash discounts allowed and taken on sales;
(2) Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as gross receipts;
(3) Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;
(4) Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts; (5) Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities, and gains from the sale or exchange of stock or securities solely for a person's own account, not derived in the ordinary course of a business; Ordinance 3672-C.S.
Effective: November 28, 2017
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(6) Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business;
(7) Cash value of sales, trades or transactions between departments or units of the same business;
(8) Transactions between a partnership and its partners; (9) Receipts from services or sales in transactions between affiliated corporations. An affiliated corporation is a corporation:
(a) The voting and nonvoting stock of which is owned at least eighty percent by such other corporation with which such transaction is had; or
(b) Which owns at least eighty percent of the voting and nonvoting stock of such other corporation; or
(c) At least eighty percent of the voting and nonvoting stock of which is owned by a common parent corporation which also has such ownership of the corporation with which such transaction is had; (10) Transactions between a limited liability company and its member(s), provided the limited liability company has elected to file as a Subchapter K entity under the Intemal Revenue Code and that such transaction(s) shall be treated the same as between a partnership and its partner(s) as specified in subsection (E)(9);
(11) Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business, shall not be excluded when in excess of one dollar;
(12) Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the finance department with the names and the addresses of the others and the Ordinance 3672-C.S.
Effective: November 28,2017
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amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees. "Gross receipts" subject to the cannabis business tax shall be that portion of gross receipts relating to business conducted within the City. (G) "Cannabis" means all parts of the plant Cannabis sativa L., Cannabis indica, and Cannabis ruderalis, whether growing or not; the seeds thereof; the resin extracted from any part of the plant, whether crude or purified; and every compound, manufacture, oil, salt, derivative, mixture, or preparation of the plant, its seeds or resin, including food products containing cannabis. "Cannabis" also means marijuana as defined by Section 11018 of the California Health and Safety Code and Section 19300.5 of the California Business and Professions Code.
(H) "Cannabis business" means any business activity which entails the distribution, delivery, dispensing, exchanging, bartering or sale of either medical or non-medical cannabis, including but not limited to, cultivating, planting, harvesting, transporting, manufacturing, compounding, converting, processing, preparing, labeling, storing, packaging, wholesale, testing, and/or retail sales of cannabis, products including cannabis, and any ancillary products in the City, whether or not carried on for gain or profit and specifically excludes legal personal cultivation activities allowed under State law and City ordinances.
(I) "Cannabis business tax," "business tax," or "cannabis tax" means the tax due for engaging in cannabis business in the City pursuant to this article. (J) "Medical Cannabis" means cannabis authorized in strict compliance with Health & Safety Code Sections 11362.5, 11362.7 et seq., as such sections may be amended from time to time.
(K) "Non-medical cannabis" means cannabis authorized in strict compliance with any state law pertaining to cannabis that is not medical cannabis. (L) "Person" means, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club, joint stock company, joint venture, limited liability company, corporation (including foreign, Orclinance 3672-C.S.
Effective: November 28, 2017
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domestic, and nonprofit), cooperative, receiver, trustee, guardian, or other representative appointed by order of any court.
(M) "Operator" shall mean any person conducting, operating, or maintaining in whole or in part as principal, agent, officer, employee or independent contractor, any cannabis business or medical marijuana business as defined in this chapter, taxable under this article.
(N) "Sale" means and includes any sale, exchange, or barter. (0) "Tax administrator" or "administrator" means the Director of Finance or such other administrator designated by the City Manager to administer this article. 8-2.1104 Other licenses, permits, taxes, fees or charges.
Nothing contained in this article shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any license or permit required by, under or by virtue of any provision of any other title or chapter of this code or any other ordinance or resolution of the City or under any applicable state or federal law, nor be deemed to repeal, amend , be in lieu of, replace or in any way affect any tax, fee or other charge imposed, assessed or required by, under or by virtue of any other title or chapter of this code or any other ordinance or resolution of the City.
8-2.1105 Payment of tax does not authorize unlawful business. (A) The payment of a business tax required by this article, and its acceptance by the City, shall not entitle any person to carry on any cannabis business unless the person has complied with all of the requirements of this code and all other applicable laws, nor to carry on any cannabis business in any building or on any premises in the event that such building or premises are situated in a zone or locality in which the conduct of such cannabis business is in violation of any law.
(8) No taxes paid under the provisions of this article shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any ordinance of the City.
Ordinance 3672-C.S.
Effective: November 28, 2017
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8-2.11 06 Registration with tax administrator.
(A) Each operator of any cannabis business operating in the City shall register the business with the tax administrator and obtain from him or her a cannabis business tax license prior to the commencement of any business operations, which shall be at all times posted in a conspicuous place on the premises.
(8) The license shall, among other things, state the following:
1. The name of the business;
2. The address of the business;
3. The date upon which the license shall expire.
8-2.1107 Payment - location.
The tax imposed under this article shall be paid to the administrator in lawful money of the United States at the offices of the Director of Finance in Modesto, California. "Lawful money" shall mean any coin, currency or negotiable instrument, exchangeable for said coin or currency, which the United States Congress or the State of California has declared to be a national legal tender. The City may impose a fee for processing the negotiable instrument.
8-2.1108 Amount of business tax owed.
(A) Every person engaged in cannabis business in the City shall pay, for the privilege of operating a cannabis business in the City, a business tax at a rate of up to ten percent (10%) of gross receipts. The tax under this article shall not be imposed on cannabis businesses unless and until the City Council, by resolution, takes action to set a tax rate not to exceed ten percent (10%) of gross receipts. (8) Notwithstanding the maximum tax rate of ten percent (10%) of gross receipts established under subsection (A), the City Council may, in its discretion, at any time by resolution, implement a lower tax rate for all cannabis businesses or establish differing tax rates for different categories of cannabis businesses, as defined in such resolution, subject to the maximum rate of ten (10%) percent of gross receipts. The City Council Ordinance 3672-C.S.
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may, by resolution, also increase any such tax rate from time to time, not to exceed the maximum tax rate often percent (10%) of gross receipts established under subsection (A).
(C) In establishing different tax rates for different categories of cannabis businesses pursuant to subsection (8), the City Council may enact a rate using a basis other than gross receipts. 8y way of example only and without imposing any limitation on the basis of the tax rate for a category of cannabis business, the rate may be based on the square footage of the building used by or number of employees of a cannabis business.
If the City Council establishes a tax rate for a cannabis business on a basis other than gross receipts, in no event shall that tax paid by a cannabis business in that category exceed ten percent (10%) of the business's gross receipts. 8-2.1109 Payment - time limits.
The business tax imposed by this article shall be due and payable as follows:
(A) Each person owing a tax under this article shall, on or before the fifteenth (15th) day of the close of the calendar month in which the tax is due, or at the close of any reporting period which may be established by the tax administrator, prepare a tax statement to the administrator of the total gross receipts and the amount of tax owed for the preceding calendar month. At the time the tax statement is filed , the full amount of the tax owed for the preceding calendar month shall be remitted to the administrator. A tax statement is due following each calendar month, even if there are no taxes due. (8) All tax statements shall be completed on forms provided by the administrator. (C) Tax statements and payments for all outstanding taxes owed to the City are immediately due to the administrator upon cessation of business for any reason. (D) The administrator may establish longer reporting periods for any licensee if the administrator deems it necessary in order to insure collection of the tax and the administrator may require further information in the tax statement. 8-2.1110 Payments and communications made by mail - proof of timely submittal.
Ordinance 3672-C.S.
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Whenever any payment, statement, report, request or other communication received by the administrator is received after the time prescribed by this chapter for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this article for the receipt thereof, or whenever the administrator is furnished substantial proof that the payment, statement, report, request or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the administrator may regard such payment, statement, report, request or other communication as having been timely received. If the due date falls on Saturday, Sunday or a holiday, the due date shall be the next regular business day on which the City Hall building at 1010 10th Street, Modesto, CA 95353 is open. Any payment or correspondence sent via electronic communication will be deemed received upon receipt by the City.
8-2.1111 Payment - when taxes deemed delinquent.
Unless otherwise specifically provided under other provisions of this article, the taxes required to be paid pursuant to this article shall be deemed delinquent if not paid on or before the due date specified in Section 8-2.1109.
8-2.1112 Notice not required by City.
The administrator is not required to send a delinquency or other notice or bill to any person subject to the provisions of this article, and failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this article. 8-2.1113 Payment - penalty for delinquency.
(A) Any person who fails or refuses to pay any business tax required to be paid pursuant to this article on or before the due date shall pay penalties and interest as follows:
(1) A penalty equal to twenty-five percent (25%) of the amount of the tax in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax; and
Ordinance 3672-C.S.
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(2) An additional penalty equal to twenty-five percent (25%) of the amount of the tax if the tax remains unpaid for a period exceeding one calendar month beyond the due date, plus interest on the unpaid tax and on the unpaid penalties.
(3) In addition to the penalties imposed, any person who fails to remit any tax imposed by this article shall pay interest at the rate of one and one-half percent (1 .5%) per month or fraction thereof on the amount of tax, exclusive of penalties, from the last day of the month following the monthly period for which the amount or any portion thereof should have been paid until the date of payment.
(4) Full payment of the tax owed is to be made to the City, except in cases where an alternate payment agreement is reached with the administrator. (5) The penalties stated herein are cumulative and may be imposed singularly and/or in addition to other legal remedies for nonpayment available to the City.
(8) Whenever a check is submitted in payment of a business tax and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the tax amount due plus the return check fee; penalties and interest as provided for in this section; and any amount allowed under state law.
(C) The cannabis business tax due shall be that amount due and payable from the first date on which the person was engaged in cannabis business in the City, together with applicable penalties and interest calculated in accordance with subsection (A). (0) Any person whose cannabis business tax is delinquent by at least sixty calendar days may be subject to revocation of a City use permit or other City permit associated with the subject cannabis business.
8-2.1 114 Waiver of penalties.
The administrator may waive the first and second penalties imposed upon any person if:
Ordinance 3672-C.S.
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(A) The person provides evidence satisfactory to the administrator that failure to pay timely was due to circumstances beyond the control of the person and occurred, notwithstanding the exercise of ordinary care and the absence of willful neglect, and the person paid the delinquent business tax and accrued interest owed the City prior to applying to the administrator for a waiver.
(8) The waiver provisions specified in this subsection shall not apply to interest accrued on the delinquent tax and a waiver shall be granted only once during any twenty-four-month period.
(C) A request for relief from the first and second penalties must be filed in writing within thirty days of the date the remittance was due to the City, but no later than ten (10) days of the City's notice to the operator of the delinquent remittance. 8-2.1115 Refunds - credits.
(A) No refund shall be made of any tax collected pursuant to this article, except as provided in Section 8-2.1116.
(8) No refund of any tax collected pursuant to this article shall be made because of the discontinuation, dissolution or other termination of a business. (C) Any person entitled to a refund of taxes paid pursuant to this article may elect in writing to have such refund applied as a credit against such person's business taxes for the next calendar month.
8-2.1116 Refunds and procedures.
(A) Whenever the amount of any business tax, penalty or interest has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City under this article, it may be refunded to the claimant who paid the tax; provided, that a written claim for refund is filed with the administrator within one year of the date the tax was originally due and payable.
(8) The administrator or the administrator's authorized agent shall have the right to examine and audit all the books and business records of the claimant in order to Ordinance 3672-C.S.
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determine the eligibility of the claimant to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of claimant's books and business records after a request by the administrator to do so. (C) In the event that the business tax was erroneously paid and the error is attributable to the City, the entire amount of the tax erroneously paid shall be refunded to the claimant. If the error is attributable to the claimant, the City shall retain an amount from the refund reasonably calculated to cover expenses in verifying the error. 8-2.1117 Exemptions - application - issuance conditions.
Any person desiring to claim exemption from the payment of the tax set forth in this article shall make application upon forms prescribed by the administrator and shall furnish such information and make such affidavits as may be required by the administrator.
8-2.1118 Exemptions - general.
Except as may be otherwise specifically provided in this article, the terms hereof shall not be deemed or construed to apply to any person when imposition of the tax upon that person would violate the Constitution of the United States or that of the state of California or preemptive federal or state law.
8-2.1119 Enforcement - duties of tax administrator and police chief.
It shall be the duty of the administrator to enforce each and all of the provisions of this article, and the police chief shall render such assistance in the enforcement of this article as may from time to time be required by the administrator. 8-2.1120 Rules and regulations.
For purposes of apportionment as may be required by law and for purposes of administration and enforcement of this article generally, the administrator, with the Ordinance 3672-C.S.
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concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations.
8-2.1121 Apportionment.
(A) None of the tax provided for by this article shall be applied so as to occasion an undue burden upon interstate commerce or be violative of the equal protection and due process clauses of the Constitutions of the United States or the state of California. (8) If any case where a business tax is believed by a taxpayer to place an undue burden upon interstate commerce or be violative of such constitutional clauses, the taxpayer may apply to the administrator for an adjustment of the tax. It shall be the taxpayer's obligation to request in writing for an adjustment within one year after the date of payment of the tax. If the taxpayer does not request in writing within one year from the date of payment, then taxpayer shall be conclusively deemed to have waived any adjustment for that year and all prior years.
(C) The taxpayer shall, by sworn statement and supporting testimony, show the method of business and the gross volume of business and such other information as the administrator may deem necessary in order to determine the extent, if any, of such undue burden or violation. The administrator shall then conduct an investigation and shall fix as the tax for the taxpayer an amount that is reasonable and nondiscriminatory, or if the tax has already been paid, shall order a refund of the amount over and above the tax so fixed . In fixing the tax to be charged, the administrator shall have the power to base the tax on a percentage of gross receipts or any other measure which will assure that the tax assessed shall be uniform with that assessed on businesses of like nature, so long as the amount assessed does not exceed the tax as prescribed by this article. (D) Should the administrator determine that the gross receipt measure of tax to be the proper basis, the administrator may require the taxpayer to submit a sworn statement of the gross receipts and pay the amount of tax as determined by the administrator. 8-2.1122 Audit and examination of records and equipment.
Ordinance 3672-C.S.
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(A) The administrator shall have the power to audit and examine all books and records of persons engaged in cannabis business including both state and federal income tax returns, California sales tax returns, or other evidence documenting the gross receipts of persons engaged in cannabis business, and, where necessary, all equipment of any person engaged in cannabis business in the City for the purpose of ascertaining the amount of business tax, if any, required to be paid by the provisions hereof, and for the purpose of verifying any statements or any item thereof when fi led by any person pursuant to the provisions of this article. If such person, after written demand by the administrator, refuses to make available for audit, examination or verification such books, records or equipment as the administrator requests, the administrator may, after full consideration of all information within his or her knowledge concerning the cannabis business and activities of the person so refusing, make an assessment in the manner provided in Sections 8-2.1126 through 8-2.1128 of any taxes estimated to be due.
(B) It shall be the duty of every person liable for the collection and payment to the City of any tax imposed by this article to keep and preserve, for a period of at least four years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the City, which records the administrator shall have the right to inspect at all reasonable times. (C) The City may recoup the costs, expenses, and fees associated with any audit, including, but not limited to, investigation costs, audit expenses, internal staff costs, administrative overhead, third-party contractor costs and fees, and attorneys' fees. 8-2.1123 Tax deemed debt to City.
The amount of any tax, penalties and interest imposed by the provisions of this article shall be deemed a debt to the City and any person carrying on any cannabis business without first having paid such tax shall be jointly and severally liable to the City in an action in the name of the City in any court of competent jurisdiction for the amount of the applicable tax, penalties, and interest imposed on such business and for attorneys' fees in the enforcement of this article. The City may collect amounts owed through any legal means, such as special assessments, real property liens, personal property liens, attachments, charging orders, garnishments, Franchise Tax Board Intercepts, and seizures of business property.
Ordinance 3672-C.S.
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8-2.1124 Lien - recordation.
If any amount required to be paid to the City under the ordinance codified in this article is not paid when due, the administrator, upon expiration of the second delinquency period referenced in Section 8-2.1113(A)(2), may, within four years after the amount is due, record in the office(s) of the county recorder(s) of any county in the state of California a certificate specifying the amount of tax, penalties and interest due, the name and address of the operator liable for the same and the fact that the administrator has complied with all provisions of this article in the determination of the amount required to be paid. From the time of the recording, the amount required to be paid together with penalties and interest shall constitute a lien upon any and all real property in any county owned by the operator or thereafter acquired by the operator. The lien shall have the force, effect, and priority of a judgment lien and shall continue for ten (10) years from the time of filing of the certificate unless sooner released or otherwise discharged.
8-2.1125 Warrant for collection of tax.
At any time within four years after any operator is delinquent in the payment of any amount herein required to be paid off after the last recording of a certificate of lien under Section 8-2.1124, the administrator may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the City under this article. The warrant shall be directed to any sheriff, qualified law enforcement officer, marshal or constable and shall have the same effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner and with the same effect as a levy of and a sale pursuant to a writ of execution. The administrator may pay or advance to the sheriff, law enforcement officer, marshal or constable the same fees, commissions and expenses for his or her services as are provided by law for similar services pursuant to a writ of execution.
8-2.1126 Seizure and sale.
At any time within four years after any operator is delinquent in the payment of any amount, the administrator may forthwith collect the amount in the following manner: The administrator shall seize any property, real or personal, of the operator and sell the Ordinance 3672-C.S.
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property, or a sufficient part of it, at public auction to pay the amount due together with any penalties and interest imposed for the delinquency and any costs incurred on account of the seizure and sale. Any seizure made to collect taxes due shall be only of the property of the operator not exempt from execution under the provisions of the California Code of Civil Procedure.
8-2.1127 Successor's and assignee's responsibility.
If any operator, while liable for any amount under this article, sells, assigns or otherwise transfers the business, whether voluntarily or involuntarily, the operator's subsequent successor, assign or other transferee, or other person or entity obtaining ownership or control of the business, shall satisfy any tax liability owed to the City associated with the business. Failure to do so for the benefit of the City will result in the successor being personally liable to the City for the full amount of the tax liability, which includes interest and penalties.
The successor operator, assign, purchaser, transferee, or other person or entity seeking to obtain ownership or control of the business shall notify the administrator of the date of transfer at least thirty days prior to the transfer date; or if the agreement to sell, transfer, or otherwise dispose of the business was made less than thirty days prior to the date of transfer, notice shall be provided immediately.
The successor operator, assign, purchaser, transferee, or other person or entity who obtains ownership or control of the business shall be deemed to have complied with the requirement of this section to satisfy the unpaid tax liability if that person or entity complies with the requirements of California Revenue and Taxation Code Section 7283.5 by withholding from the purchase price an amount sufficient to cover the tax liability, or by otherwise paying the tax liability until the administrator provides a "Tax Clearance Certificate" showing that it has been paid and stating that no amount is due through the date of transfer.
The administrator, within ninety days of receiving a written request from a successor operator, assign, purchaser, transferee, or other person or entity who obtains or attempts to obtain ownership or control of the business, may issue a "Tax Clearance Certificate" stating either the amount of tax liability due and owing for the business, or Ordinance 3672-C.S.
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stating that there is no tax liability due and owing for the business. The administrator may also request financial records from the current or former owner or operator to conduct an audit of the tax that may be due and owing. After completing the audit within ninety days after the date that the records were made available, the administrator may issue a tax clearance certificate within thirty days of completing the audit, stating the amount of the tax liability owed, if any. If the City determines that the records provided for an audit are insufficient, the administrator may rely on the facts and information available to estimate any tax liability associated with the property. The administrator may issue a tax clearance certificate stating the amount of the tax liability, if any, based on such facts and information available. A written application for a hearing on the amount assessed on the tax clearance certificate must be made within ten (10) days after the serving or mailing of the certificate. The hearing provision of Section 8-2.1131 shall apply. If an application for a hearing is not made within the time prescribed, the tax clearance certificate shall serve as conclusive evidence of the tax liability associated with the property as of the date specified on the certificate. 8-2.1128 Deficiency determinations.
If the administrator is not satisfied that any statement filed as required under the provisions of this article is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within three years of the date the tax was originally due and payable. One or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concemed in the same manner as notices of assessment are given under Sections 8-2.1129 through 8-2.1131 . 8-2.1129 Tax assessment - authorized when - nonpayment - fraud.
Ordinance 3672-C.S.
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(A) Under any of the following circumstances, the administrator may make and give notice of an assessment of the amount of tax owed by a person under this article at any time:
(1) If the person has not filed any statement required under the provisions of this article;
(2) If the person has not paid any tax due under the provisions of this article;
(3) If the person has not, after demand by the administrator, filed a corrected statement, or furnished to the administrator adequate substantiation of the information contained in a statement already filed, or paid any additional amount of tax due under the provisions of this article; or (4) If the administrator determines that the nonpayment of any business tax due under this article is due to fraud, a penalty of forty percent of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this article.
(8) The notice of assessment shall separately set forth the amount of any tax known by the administrator to be due or estimated by the administrator, after consideration of all information within the administrator's knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this article, and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment.
8-2.1130 Tax assessment - notice requirements.
The notice of assessment shall be served upon the person either by handing it to him or her personally, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business or to such other address as he or she shall register with the administrator for the purpose of receiving notices provided under this article; or, should the person have no address registered with the administrator for such purpose, then to such person's last known Ordinance 3672-C.S.
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address. For the purposes of this section, a service by mail is complete at the time of deposit in the United States mail.
8-2.1131 Tax assessment - hearing - application and determination.
Within ten (10) days after the date of service, the person may apply in writing to the administrator for a hearing on the assessment. If an application for a hearing before the City is not made within the time herein prescribed, the tax assessed by the administrator shall become final and conclusive. Within thirty days of the receipt of any such application for hearing, the administrator shall cause the matter to be set for hearing before him or her not later than thirty-five days after the receipt of the application, unless a later date is agreed to by the administrator and the person requesting the hearing.
Notice of such hearing shall be given by the administrator to the person requesting such hearing not later than five days prior to such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the administrator should not be confirmed and fixed as the tax due. After such hearing, the administrator shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 8-2.1130 for giving notice of assessment. The amount determined to be due shall be payable after fifteen days unless appealed.
8-2.1132 Tax assessment - appeal.
Any operator aggrieved by any decision of the tax administrator with respect to the amount of such tax, penalties, or any amount determined to be owed, may appeal the decision in accordance with the procedure established by Chapter 4 of Title 1 of this Code.
8-2.1133 Conviction for article violation - taxes not waived.
The conviction and punishment of any person for failure to pay the required tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions of this article or of any state law requiring the payment of all taxes.
Ordinance 3672-C.S.
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8-2.1134 Violation deemed misdemeanor - penalty.
Any person violating any of the provisions of this article, or any regulation or rule passed in accordance herewith, shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than five hundred dollars or by imprisonment for a period of not more than six months, or by both such fine and imprisonment.
8-2.1135 Effect of state and federal reference/authorization. (A) Unless specifically provided otherwise, any reference to a state or federal statute in this article shall mean such statute as it may be amended from time to time; provided, that such reference to a statute herein shall not include any amendment thereto, or to any change of interpretation thereto by a state or federal agency or court of law, with the duty to interpret such law, to the extent that such amendment or change of interpretation WOUld , under California law, require voter approval of such amendment or interpretation, or to the extent that such change would result in a tax decrease. To the extent voter approval would otherwise be required or a tax decrease would result, the prior version of the statute, or interpretation thereof, shall remain applicable; for any application or situation that would not require voter approval or result in a decrease of a tax, provisions of the amended statute, or new interpretation thereof, shall be applicable to the maximum possible extent.
(B) To the extent that the City's authorization to collect or impose any tax imposed under this article is expanded as a result of changes in state or federal law, no amendment or modification of this article shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this article. 8-2.1136 Remedies cumulative.
All remed ies and penalties prescribed by this article or which are available under any other provision of law or equity, including but not limited to the California False Claims Act (Government Code Section 12650 et seq.) and the California Unfair Practices Act (Business and Professions Code Section 17070 et seq.), are cumUlative. The use of Ordinance 3672-C.S.
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one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this article.
8-2.1137 Amendment or repeal.
This article of the Modesto Municipal Code may be repealed or amended by the City Council without a vote of the people. However, as required by Chapter XIIIC of the California Constitution and Government Code section 53750(h), voter approval is required for any amendment provision that would increase the rate of any tax levied pursuant to this article beyond the maximum amount of ten percent (10%) of a cannabis business's gross receipts or revise the methodology by which the tax is calculated, if the revision would result in an increased tax being levied on any cannabis business.
The people of the City of Modesto affirm that the following actions shall not constitute an increase of the rate of a tax:
(A) The restoration of the rate of the tax to a rate that is no higher than the maximum ten percent (10%) tax rate set by this article, if the City Council has previously acted to reduce the rate of the tax;
(8) The City Council's adoption of a resolution, as authorized by Section 8-2.11 08(A), to raise the tax rate provided the tax rate is not raised to a rate higher than ten percent (10%) of a cannabis business's gross receipts;
(C) An action that interprets or clarifies the methodology of calculating the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this article;
(D) The establishment of a class of persons that are exempt or excepted from the tax or the discontinuation of any such exemption or exception (other than the discontinuation of an exemption or exception specifically set forth in this article); or (E) The collection of the tax imposed by this article, even if the City had, for some period of time, failed to collect the tax.
SECTION 3. CEQA.
Orclinance 3672-C.S.
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The approval of this Ordinance is exempt from the California Environmental Quality Act (Public Resources Code §§ 21000 et seq., "CEQA," and 14 Cal. Code Reg. §§ 15000 et seq., "CEQA Guidelines"). The Cannabis Business Tax to be submitted to the voters is a general tax that can be used for any legitimate governmental purpose; it is not a commitment to any particular action. As such, under CEQA Guidelines section 15378(b)(4), the tax is not a project within the meaning of CEQA because it creates a government funding mechanism that does not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment. If revenue from the tax were used for a purpose that would have either such effect, the City would undertake the required CEQA review for that particular project. Therefore, pursuant to CEQA Guidelines section 15060 CEQA analysis is not required.
SECTION 4. Severability.
If any section, subsection, sentence, clause or phrase of this Article is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Article. The City Council hereby declares that it would have passed the ordinance codified in this Article, and each and every section, subsection, sentence, clause or phrase not declared invalid or unconstitutional without regard to whether any portion of this Article would be subsequently declared invalid or unconstitutional.
SECTION 5. Effective Date.
The City Clerk shall certify the adoption of this Ordinance, and the City Clerk shall cause this Ordinance or a summary thereof to be published as required by law. If this Ordinance is approved by a majority of the voters as set forth in Section 1 of this Ordinance, it shall take effect immediately upon certification of the election results by the City Council.
APPROVED by the following vote of the People of the City of Modesto at the November 7, 2017 election: 82 % voting in favor; and
Ordinance 3672-C.S.
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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 28th day of November, 2017, Councilmember Madrigal moved its final adoption, which motion being duly seconded by Councilmember Kenoyer, was upon roll call carried and the ordinance adopted by the following vote:
AYES: Councilmembers: Ah You, Greway, Kenoyer, Madrigal, Ridenour, Zoslocki, Mayor Brandvold
NOES: Council members: None
ABSENT: Councilmembers: None
APPROV~ ----- D
MAYOR TED BRANDVOLD
Effective Date: November 28, 2017
Ordinance 3672-C.S.
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The foregoing ordinance was introduced at a regular meeting of the Council of the City of Modesto held on the 27th day of June, 2017, by Councilmember Kenoyer, who moved its introduction and passage to print, which motion being duly seconded by Councilmember Grewal, was upon roll call carried and ordered printed and published and ADOPTED this 2ih day of June, 2017 by the following roll call vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Ah You, Grewal, Kenoyer, Madrigal, Mayor Brandvold
Ridenour, Zoslocki
None
None
APPROVED: p ~ ......... ------ ~:::=:==;\;
, ""j.-,
Ted Brandvold, Mayor ie Lopez, City CI ~
r
Adam U. Lindgren, City A 0 ey
Ordinance 3672-C.S.
Effective: November 28, 2017
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FINAL REVENUE AUDIT REPORT OF
McHENRY BUSINESS SERVICES LLC DBA
PLANET 8ths/HERBOLOGY
For the
CITY OF MODESTO
Date Prepared: May 4, 2026
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 2 of 8 May 4, 2026
DeAnna Christensen
City of Modesto
P.O. Box 642
Modesto, CA 95353‐0642
Dear Ms. Christensen,
Enclosed is the report of HdL Companies’ (HdL) audit of McHenry Business Services LLC dba Planet 8ths/Herbology (Planet 8ths/Herbology), a cannabis microbusiness located in Modesto, CA (City). The purpose of the review was to determine if sales reported to the City for the period July 1, 2024 through June 30, 2025, were accurate and complete and to adjust taxes paid if necessary. Concurrently, HdL reviewed if sales reporting controls were in place and operating effectively. A copy of the draft report was provided to Planet 8ths/Herbology on April 14, 2026.
The business disagreed with the draft report findings, stating that $0 transfers shown in accounting reports and valued by HdL using METRC data are not taxable because they involve products transferred between related entities. However, according to the municipal code and the City’s guidance, related-party transfers are not exempt from the cannabis tax. Planet 8ths/Herbology also clarified that these $0 related-party transfers involved products that were not self-manufactured, so the 4% manufacturing tax rate should not apply. The business additionally stated that during the review period, Planet 8ths/Herbology lacked a full distribution license; it instead held a distributor-transport only license, which the business said allowed it to only transport between related entities. Nonetheless, the transfer of third-party-manufactured products from Planet 8ths/Herbology to related retailers is a taxable distribution activity under the City’s rules. Consequently, HdL verified the business’s statement and applied a 2.5% distribution tax rate to the related-party transfers in this final report. HdL also updated the following adjustment calculations in the draft report, which decreased total taxable revenues by $8,650: 1) The adjustment for manifest #7366772 totaling $2,800 was duplicated in the draft audit report. 2) Two of the related-party transfers valued by HdL as $5,850 were within the same business, Planet 8ths/Herbology, which are not subject to tax.
The audit, conducted pursuant to the City of Modesto Municipal Code (MMC) Article 11 8-2.1122 Cannabis Business Tax, is now complete and this letter serves as the final report. Below are highlights from the review:
01 Audit Information 04 Revenue Summary 07 Tax Calculation 02 Business Structure 05 Revenue Comparison 08 Additional Comments 03 Data and Methodology 06 Revenue Variance Analysis 09 Exhibits #23..
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 3 of 8 This concludes the audit of McHenry Business Services LLC dba Planet 8ths/Herbology. If you have any questions, please contact me at (714) 879-5000.
Sincerely,
Elizabeth Eumurian
Audit Manager
HdL Companies
cc: Marlowe Mercado, Owner, McHenry Business Services LLC dba Planet 8ths/Herbology Gina Brown, Revenue Collections and Compliance Manager, City of Modesto Cristina Hernandez, Financial Analyst III, City of Modesto Stacey Pratt, Financial Analyst III, City of Modesto
Jennifer Erwin, Auditor, HdL Companies
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 4 of 8 01 AUDIT
INFORMATION
Business Reviewed McHenry Business Services LLC dba Planet 8ths/Herbology
Business Address 500 E. Glenn Ave
Modesto, CA 95358
Review Period July 1, 2024 through June 30, 2025
02 BUSINESS
STRUCTURE
Business Type Microbusiness – manufacturing, distribution, retail Business Markets Consumers, retailers, distributors
Business Inception October 1, 2021
Products / Services Sold
Accessories, capsules, clones, edibles, extracts,
flower, prerolls, seeds, tinctures, topicals, vape
cartridges
03 DATA AND
METHODOLOGY
The standard set of data HdL uses for this type of audit includes point of sale (POS) system data, accounting transaction reports, financial statements, METRC track and trace system data, CDTFA sales and use tax returns, CDTFA excise tax returns, federal and state income tax returns, and bank statements. HdL’s methodology reviews the data from these sources to determine if they are in line with revenue reported to the City. Furthermore, HdL attempts to identify any patterns that can indicate the need for further review based on experience, common financial rules, and industry norms or best practices.
RECORDS RECEIVED AND REVIEWED
• POS & Accounting System Reports • CDTFA Sales and Use Tax Returns • METRC Reports • CDTFA Excise Tax Returns
• Receipt and Invoice Samples • Bank Statements
• City Tax Returns
Note on tax basis and business activity
Planet 8ths/Herbology is licensed as a microbusiness per the Department of Cannabis Control (DCC). The cannabis activity types listed under the business license include manufacturing, distribution, and retail. While all cannabis activities identified are subject to a gross receipts tax in the City, the method of identifying those gross receipts can vary by cannabis activity. Due to this, retail and wholesale (manufacturing/distribution) sales have been separately identified as necessary throughout this report.
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 5 of 8 04 REVENUE
SUMMARY
Reported Revenue $2,326,445.27
Reportable Revenue $2,478,337.23
Reportable Source POS and Accounting Reports
Variance $151,891.96 in underreported revenue
05 REVENUE
COMPARISON
RETAIL REVENUES
Planet 8ths/Herbology used the Meadow POS system during the review period. The business provided HdL with login access to the POS system to independently run and download reports.
HdL analyzed the POS reports and identified revenue that was reportable to the City per the MMCi
. HdL then compared the POS revenue to other data sources to confirm consistency and to determine which source would be used to calculate taxes due to the City. Ultimately, HdL used the POS reports to calculate retail reportable revenue.
Reference Exhibit A
The following data sources showed revenues higher than the POS reports, however HdL did not use them to calculate reportable revenue for the reasons identified below.
Data Source Reason Not Used
Bank Statements Included tax not subject to City tax
CDTFA Sales and Use Tax
Returns
Included tax not subject to City tax
CDTFA Excise Tax Returns Amounts approximated POS reports, but did not offer as much detail as POS
WHOLESALE REVENUES
Planet 8ths/Herbology used the Quickbooks accounting system during the review period. The business provided the wholesale accounting reports to HdL for review.
HdL analyzed the accounting reports and identified revenue that was reportable to the City per the MMCi
. HdL then compared the accounting revenue to other data sources to confirm consistency and to determine which source would be used to calculate taxes due to the City. Ultimately, no other data source exceeded accounting reports, and HdL used them to calculate wholesale reportable revenue. Reference Exhibit A Note on wholesale revenues
Since distribution and manufacturing sales are subject to different City tax rates, HdL used METRC transfer report details, such as origin facility and item name, to identify the applicable tax rate for wholesale transfers.
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 6 of 8 Adjustments to wholesale revenues
During the analysis, HdL observed related entity transactions in the accounting report that were recorded as $0. HdL reviewed METRC to track the movement of the product, which showed that the business received finished product into Planet 8ths/Herbology’s inventory, then transferred some or all of that same product to a related entity. HdL noted in prior audits that the business received cost reimbursements from related entities for these products that left inventory, but Planet 8ths/Herbology did not provide supporting documentation to show any reimbursements were received in the current review period. Per MMC 8-2.1128, Deficiency Determinations and City guidance, HdL assigned values to those $0 transactions. To calculate the value, HdL used the dollar amount of the product when it was first transferred into the business. As a result, HdL valued approximately $15,149 in transfers from the business and has separately identified them in Exhibit B, adjusted distribution revenues.
Additional distribution revenue adjustments were made for the following observed by HdL:
• In July 2024, METRC transfer reports showed higher product quantities transferred out of the business than were shown in the accounting reports. HdL identified 800 prerolls that were not included in accounting report totals, but were included in METRC manifest #7366772. First, HdL verified that these products were not included in the prior audit. Then, HdL valued these products at $2,800 using the dollar amount of the product when it was first transferred into the business.
Manufacturing revenue adjustments were made for the following observed by HdL:
• Sample invoice #1358 showed that the business increased product quantities and dollar amounts after the original invoice was issued, but they did not record the additional revenue in accounting reports. METRC transfer reports confirmed the higher quantity was received by the vendor, therefore HdL included $21.30 in adjusted manufacturing revenues in Exhibit B. 06 REVENUE
VARIANCE
ANALYSIS
RETAIL REVENUES
The business had a consistent pattern of reporting and payment to the City during the review period, reporting a total of $1,349,924.45 in revenue and paying $107,993.93 in cannabis tax.
Revenue reported to the City was lower than reportable revenue in the POS reports by $1,235.47. Reference Exhibit B
Cause of retail variance
In July 2024, the business slightly undercalculated the tax due but reported revenues correctly, within a small rounding variance. In November 2024, it appears the business copied the prior month’s revenues and taxes, resulting in a small additional amount due. The cause of the remaining variances is unclear.
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 7 of 8
WHOLESALE REVENUES
The business had a consistent pattern of reporting and payment to the City during the review period, reporting a total of $976,520.82 in revenue and paying $39,060.81 in cannabis tax.
Revenue reported to the City was lower than reportable revenue in the accounting reports by $150,656.49. Reference Exhibit B
Cause of wholesale variance
Underreporting was identified in each month of the review period due to various omissions and adjustments as listed below:
• July 2024 – Adjusted value of product transfers and METRC manifest #7366772 reported as $0 to the City
• August 2024 – Adjusted value of product transfers reported as $0 to the City • September 2024 – Adjusted value of product transfers reported as $0 to the City, and underreported invoice #1358
• October 2024 – Unreported related entity sales
• November 2024 – Unreported related entity sales and invoice #1388 • December 2024 through January 2025 – Unreported related entity sales • February 2025 – Unreported invoice #1440
• March through June 2025 – Unreported related entity sales 07 TAX
CALCULATION
Since amounts reported to the City were lower than reportable revenue per the POS and accounting reports, there are additional amounts due, as shown below:
AMOUNT REFERENCE
Reportable Revenue 2,478,337.23 Exhibits A&B
City Cannabis Tax 2.5% - 8% Endnoteii
Amount Due 152,910.65 Exhibit B
Amount Paid 147,054.74 Exhibit B
Additional Tax Due 5,855.91 Exhibit B
Penalties and Interest 2,484.39 Exhibit B
Additional Tax, Penalties and Interest Due 8,340.30 Exhibit B Penalties and Interest
Due to prior audit finding related to retail and wholesale, penalties and interest have been applied as of March 15, 2026. These penalties are based on the past audit findings and are due within 30 days of the final audit report (estimated by June 4, 2026).
If the balance is not paid by the due date, an additional 25% penalty and ongoing interest will be assessed.
Amended Reporting
Any incorrectly reported revenues, after the audit period (July 2025 – present) must be amended by June 4, 2026, and any taxes due must be paid by that date, if applicable, to avoid penalties and interest. If the balance is not paid by the due date, a 25% penalty will be added, and interest will continue accruing. The City can help calculate the any #23..
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Confidentially prepared for the City of Modesto: McHenry Business Services LLC dba Planet 8ths/Herbology Page 8 of 8 penalties and the interest due on the retail and/or distribution amended reports. If you need any additional time to file amended tax reports, contact the City directly to make arrangements.
It is recommended the audit findings are reviewed and addressed to ensure your business is in compliance with the City code and avoids penalties and interest in future audits.
Tax Assessment Hearing
Per MMC, within ten (10) days after the date of the final audit report, the business may apply in writing to the City Administrator for a hearing on the assessment. If a request for a hearing is not made to the City with the ten (10) days after the final audit report is issued, the tax assessed shall become final and conclusive. 08 ADDITIONAL
COMMENTS
No comments at this time.
09 EXHIBITS
See following pages.
i
MMC Title 8-2.1103 defines gross receipts as “… the total amounts actually received or receivable from all sales from the cannabis business, including membership dues and fees; the total amounts or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, memberships, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom: (1) Cash discounts allowed and taken on sales’ (2) Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as gross receipts; (3) Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser; (4) Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipt …” ii Modesto Resolution No. 2021-211 amended the Microbusiness (Retail) tax rate to eight percent (8%), the Microbusiness (Manufacturing – Wholesale) tax rate to four percent (4%), and the Distribution tax rate to two and a half percent (2.5%) effective July 1, 2021.
Note: HdL’s conclusions and findings noted above were based on review of the evidence, which comprised of documents provided by the business owner and the City. While every reasonable effort was made to conduct the audit with due diligence, as the focus of the audit was on higher risk matters, not all issues or deficiencies may have been identified. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. #23..
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Reportable Reported Reportable Reported
Month Bank Deposits
CDTFA Sales &
Use Tax
Returns
CDTFA Excise
Tax Returns POS Reports
Modesto Tax
Remittances
METRC Sales
Transaction
Reports Month
Accounting
Reports
Modesto Tax
Remittances
METRC
Transfer
Reports
Jul-24 246,350.00 114,861.14 114,861.05 113,910.98 Jul-24 90,945.86 84,145.86 0.00 Aug-24 327,964.54 110,834.06 110,834.06 109,790.05 Aug-24 89,835.46 78,690.26 0.00 Sep-24 80,000.00 107,303.70 107,303.70 106,630.54 Sep-24 140,543.92 140,518.62 11,048.80 Oct-24 211,246.00 110,900.16 110,797.13 110,054.95 Oct-24 110,917.44 99,268.43 11,649.00 Nov-24 96,000.00 111,700.35 110,797.13 110,998.48 Nov-24 177,826.69 162,524.60 12,154.04 Dec-24 102,364.00 116,062.12 115,970.27 115,280.56 Dec-24 116,070.75 111,256.15 4,811.60 2024 Subtotal 1,063,924.54 806,875.00 671,638.00 671,661.53 670,563.34 666,665.56 2024 Subtotal 726,140.12 676,403.92 39,663.44 Jan-25 266,740.79 113,647.00 113,555.03 113,646.88 113,011.99 Jan-25 172,279.30 132,560.10 32,219.20 Feb-25 157,909.00 101,278.00 101,277.85 101,277.85 100,765.58 Feb-25 180,125.89 167,556.80 19,865.00 Mar-25 152,072.30 120,850.00 120,849.84 120,849.84 120,185.58 Mar-25 6,080.00 0.00 7,660.80 Apr-25 175,550.00 119,193.00 119,193.06 119,105.54 118,321.24 Apr-25 4,032.00 10,112.00 0.00 May-25 256,338.96 118,005.00 118,042.37 117,910.96 117,477.97 May-25 34,580.00 26,250.00 0.00 Jun-25 112,439.54 106,618.00 106,580.24 106,570.04 105,813.68 Jun-25 3,940.00 11,270.00 0.00 2025 Subtotal 1,121,050.59 764,250.00 679,591.00 679,498.39 679,361.11 675,576.04 2025 Subtotal 401,037.19 300,116.90 107,377.00 Total 2,184,975.13 1,571,125.00 1,351,229.00 1,351,159.92 1,349,924.45 1,342,241.60 Total 1,127,177.31 976,520.82 147,040.44 343,816.00
CITY OF MODESTO: MCHENRY BUSINESS SERVICES LLC dba PLANET 8THS/HERBOLOGY
REVENUE COMPARISON
REVIEW PERIOD: JULY 1, 2024 THROUGH JUNE 30, 2025
Below is a comparison of business revenue as compiled from various sources. Sources are sorted from largest to smallest revenue data.
Retail Revenues Wholesale Revenues
382,930.00 333,067.00
423,945.00 338,571.00420,434.00
Exhibit A
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POS Reports
Month Retail Revenue
City Tax Due
(8%)
[1]
Reported
Revenue City Tax Paid
Revenue
Reported
Under/(Over)
Tax Amount
Due/
(Overpaid)
Penalty #1
25%
Interest
1.5% monthly
Total Tax,
Penalty, and
Interest Due
Jul-24 114,861.14 9,188.89 114,861.05 9,188.88 0.09 0.01 0.00 0.00 0.01 Aug-24 110,834.06 8,866.72 110,834.06 8,866.72 0.00 0.00 0.00 0.00 0.00 Sep-24 107,303.70 8,584.30 107,303.70 8,584.30 0.00 0.00 0.00 0.00 0.00 Oct-24 110,900.16 8,872.01 110,797.13 8,863.77 103.03 8.24 2.06 1.85 12.15 Nov-24 111,700.35 8,936.03 110,797.13 8,863.77 903.22 72.26 18.07 15.17 105.50 Dec-24 116,062.12 9,284.97 115,970.27 9,277.62 91.85 7.35 1.84 1.43 10.62 2024 Subtotal 671,661.53 53,732.92 670,563.34 53,645.06 1,098.19 87.86 21.97 18.45 128.28 Jan-25 113,555.03 9,084.40 113,646.88 9,091.75 (91.85) (7.35) 0.00 0.00 (7.35) Feb-25 101,277.85 8,102.23 101,277.85 8,102.23 0.00 0.00 0.00 0.00 0.00 Mar-25 120,849.84 9,667.99 120,849.84 9,667.99 0.00 0.00 0.00 0.00 0.00 Apr-25 119,193.06 9,535.44 119,105.54 9,528.44 87.52 7.00 1.75 0.95 9.70 May-25 118,042.37 9,443.39 117,910.96 9,432.86 131.41 10.53 2.63 1.26 14.42 Jun-25 106,580.24 8,526.42 106,570.04 8,525.60 10.20 0.82 0.20 0.09 1.11 2025 Subtotal 679,498.39 54,359.87 679,361.11 54,348.87 137.28 11.00 4.58 2.30 17.88 Total 1,351,159.92 108,092.79 1,349,924.45 107,993.93 1,235.47 98.86 26.55 20.75 146.16 [1] The cannabis activity rate for retail is 8%.
Combined
Month
Manufacturing
Revenue
Adjusted
Manufacturing
Revenue
Adjusted
Distribution
Revenue
Total
Wholesale
Revenue
City Tax Due
(2.5%-4%)
[2]
Reported
Revenue City Tax Paid
Revenue
Reported
Under
Tax Amount
Due
Penalty #1
25%
Interest
1.5% monthly
Total Tax,
Penalty, and
Interest Due
Jul-24 84,145.86 0.00 6,800.00 90,945.86 3,535.83 84,145.86 3,365.83 6,800.00 170.00 42.50 45.90 258.40 Aug-24 78,690.26 11,145.20 0.00 89,835.46 3,426.24 78,690.26 3,147.61 11,145.20 278.63 69.66 71.05 419.34 Sep-24 140,518.62 21.30 140,543.92 4.00 5,621.70 140,518.62 5,620.74 25.30 0.96 0.24 0.23 1.43 Oct-24 110,917.44 0.00 110,917.44 0.00 4,436.70 99,268.43 3,970.73 11,649.01 465.97 116.49 104.84 687.30 Nov-24 177,826.69 0.00 177,826.69 0.00 7,113.07 162,524.60 6,500.98 15,302.09 612.09 153.02 128.54 893.65 Dec-24 116,070.75 0.00 116,070.75 0.00 4,642.83 111,256.15 4,450.25 4,814.60 192.58 48.15 37.55 278.28 2024 Subtotal 708,169.62 21.30 17,949.20 726,140.12 28,776.37 676,403.92 27,056.14 49,736.20 1,720.23 430.06 388.11 2,538.40 Jan-25 172,279.30 0.00 172,279.30 0.00 6,891.17 132,560.10 5,302.40 39,719.20 1,588.77 397.19 285.98 2,271.94 Feb-25 180,125.89 0.00 180,125.89 0.00 7,205.04 167,556.80 6,702.27 12,569.09 502.77 125.69 82.96 711.42 Mar-25 6,080.00 0.00 0.00 6,080.00 243.20 0.00 0.00 6,080.00 243.20 60.80 36.48 340.48 Apr-25 4,032.00 0.00 0.00 4,032.00 161.28 0.00 0.00 4,032.00 161.28 40.32 21.77 223.37 May-25 34,580.00 0.00 34,580.00 0.00 1,383.20 0.00 34,580.00 0.00 1,383.20 345.80 165.98 1,894.98 Jun-25 3,940.00 0.00 0.00 3,940.00 157.60 0.00 0.00 3,940.00 157.60 39.40 16.55 213.55 2025 Subtotal 401,037.19 0.00 401,037.19 0.00 16,041.49 300,116.90 12,004.67 100,920.29 4,036.82 1,009.20 609.72 5,655.74 Total 1,109,206.81 21.30 17,949.20 1,127,177.31 44,817.86 976,520.82 39,060.81 150,656.49 5,757.05 1,439.26 997.83 8,194.14 [2] Cannabis activity rates for distribution and manufacturing are 2.5% and 4%, respectively.
POS Reports Combined
Total Retail
Revenue
Total
Manufacturing
Revenue
Total
Distribution
Revenue
Total
Reportable
Revenue City Tax Due
Reported
Revenue City Tax Paid
Revenue
Reported
Under
Tax Amount
Due
Penalty #1
25%
Interest
1.5% monthly
Total Tax,
Penalty, and
Interest Due
Grand Total 1,351,159.92 1,109,228.11 17,949.20 2,478,337.23 152,910.65 2,326,445.27 147,054.74 151,891.96 5,855.91 1,465.81 1,018.58 8,340.30 Accounting Reports
CITY OF MODESTO: MCHENRY BUSINESS SERVICES LLC dba PLANET 8THS/HERBOLOGY
AMOUNT DUE CALCULATION
REVIEW PERIOD: JULY 1, 2024 THROUGH JUNE 30, 2025
Wholesale
City Tax Forms
Retail + Wholesale
City Tax Forms
Below is the calculation of amounts due. Penalties and interest were assessed pursuant to MMC Article 11, Section 8-2.1113.Retail City Tax Forms
Accounting Reports
Exhibit B
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City of Modesto
Attn: Christina Hernandez
Finance Department
P.O. Box 642
Modesto, CA 95353-0642
RE: Submission of Supporting Documentation and Formal Response McHenry Business Services LLC dba Planet 8ths/Herbology Audit Period: July 1, 2024 – June 30, 2025
Dear Ms. Hernandez,
Enclosed please find McHenry Business Services LLC’s formal written response to the Final Revenue Audit Report dated May 4, 2026, together with supporting METRC transfer documentation relating to the transactions discussed in the audit findings. Also, for you convenience, hard copies of the attached documents, the cover letter and our formal written response with notification of request for appeal will be delivered to your office 5-14-26.
The enclosed materials are being submitted for review by the City and legal counsel in connection with the disputed assessment regarding related-party inventory transfers and associated distribution tax treatment.
McHenry respectfully requests that the enclosed response also be accepted as a formal request for review and hearing within the applicable appeal period under the Modesto Municipal Code.
Thank you for your time and consideration.
Sincerely,
Mitchell Davis
McHenry Business Services LLC
1300 North Carpenter Road, Suite D
Modesto, CA 95351
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May 14, 2026
City of Modesto
Attn: DeAnna Christensen
P.O. Box 642
Modesto, CA 95353-0642
RE: Response to Final Revenue Audit Report – McHenry Business Services LLC dba Planet 8ths/Herbology
Audit Period: July 1, 2024 – June 30, 2025
Dear Ms. Christensen,
McHenry Business Services LLC respectfully disputes portions of the findings contained in the Final Revenue Audit Report dated May 4, 2026 relating to the assessment of distribution taxes on certain related-party inventory transfers.
This letter is submitted together with supporting METRC transfer documentation for review by the City and legal counsel.
At issue are inventory transfers involving products manufactured under a Manufacturing Services Agreement (“MSA”) between McHenry Business Services LLC and Kolaboration Ventures/Mission Nurseries. Under that arrangement, products were manufactured using McHenry’s licensed facility and licenses for the benefit of the contracting party. The manufactured products were invoiced to the contracting party, and applicable manufacturing taxes were reported and paid to the City on those transactions.
As partial consideration and compensation under the MSA, McHenry Business Services LLC periodically received limited quantities of finished product from the contracting party. Those products were then transferred from McHenry inventory to affiliated retail locations under common ownership and control.
The City’s audit position appears to treat these downstream inventory allocations as separate taxable “distribution revenues” despite the absence of:
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• any independent sale transaction,
• any third-party wholesale revenue,
• any distribution markup,
• any accounts receivable,
• or any actual compensation paid to McHenry for those subsequent transfers.
McHenry respectfully disagrees with the characterization that these transfers created new taxable distribution gross receipts.
The products at issue were not self-manufactured products sold into the stream of commerce by McHenry as an independent distributor. Rather, they represented in-kind compensation previously earned within the broader MSA manufacturing relationship, for which taxable manufacturing revenues had already been invoiced and reported.
The subsequent movement of inventory between commonly controlled entities did not generate additional realized revenue to McHenry Business Services LLC. The transfers reflected internal operational allocation of inventory among affiliated retail operations, not arm’s-length wholesale sales transactions generating new gross receipts.
The audit report acknowledges that the accounting records reflected these transfers at $0 and that HdL independently “assigned values” to the transfers using METRC information. McHenry respectfully questions whether the City’s ordinance authorizes the imputation of hypothetical distribution revenue in circumstances where no actual distribution consideration, receivable, or realized income existed.
While McHenry understands that the City’s cannabis tax ordinance broadly defines gross receipts, the ordinance should not be interpreted in a manner that effectively taxes the same underlying economic activity multiple times through recharacterization of non-revenue inventory allocations as separate taxable distribution events.
McHenry further notes that:
1. The products were already subject to manufacturing-related taxation through invoiced transactions;
2. The downstream transfers occurred between commonly controlled entities;
3. The transfers did not involve public retail sales or third-party wholesale customers; #23..
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4. No additional value was created through separate distribution activity;
5. The transactions were operational in nature and incidental to vertically integrated business operations.
McHenry respectfully requests that the City and legal counsel reevaluate whether these transfers properly constitute taxable distribution gross receipts under the Modesto Municipal Code, particularly where:
• no independent economic gain was realized,
• no distribution revenue was earned,
• and the valuation used in the audit was not derived from actual consideration received by McHenry.
McHenry Business Services LLC further requests that this correspondence be accepted as a formal written request for review and hearing regarding the disputed assessment findings pursuant to the applicable provisions of the Modesto Municipal Code governing cannabis tax assessments and appeals. This submission is intended to preserve all administrative appeal rights within the applicable filing period while the City and its legal counsel review the enclosed information and supporting documentation.
Nothing in this response should be construed as a waiver of any rights, defenses, or remedies available to McHenry Business Services LLC under applicable law or municipal procedures.
Thank you for your consideration and review of the enclosed supporting documentation.
Sincerely,
Mitchell Davis
McHenry Business Services LLC
1300 North Carpenter Road, Suite D
Modesto, CA 95351
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Originating Entity MCHENRY BUSINESS SERVICES LLC For Agency Use Only Originating License Number C12-0000622-LIC
Address of Originating Entity 1300 N CARPENTER RD
E, F SUITE
MODESTO, CA 95351
County: STANISLAUS
APN: 029-50-08
Phone No. of Originating Entity 2095968031
1. Destination MCHENRY COMIC MANAGEMENT,
LLC
Destination Phone No. 2094046880
Invoice Number
Destination License Number C10-0000403-LIC Date and Approx. Time of Departure 4/17/2026 11:57 AM Address of Destination 2308 MCHENRY AVE
MODESTO, CA 95350
County: STANISLAUS Date and Approx. Time of Arrival 4/17/2026 1:00 PM Date/Time Received 4/17/2026 1:06 PM
Route to be Traveled Notes: details for extenuating circumstances (e.g., road closure, flat tire, etc.) NA
1. Outbound Transporter MCHENRY BUSINESS SERVICES LLC No Layover Scheduled Transporter License Number C12-0000622-LIC
Address of Transporter 1300 N CARPENTER RD
E, F SUITE
MODESTO, CA 95351
County: STANISLAUS
APN: 029-50-08
Contact Phone No. for Inquiries: 949 510 1185
Name of Person Transporting Mitchell Davis Employee ID of Driver 0002 State Driver's License No. D6241930 Signature of Person Transporting Make, Model, Lic No, Reg No.: Ford, Transit Connect, 76353X1, CN0072820250412
Leg of Layover Trip
1. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000161
Lab Test: TestPassed
Contains Retail IDs: No
GP THC Tincture 60ml - 60ml
(Tincture (volume - each))
Shp: 163 ea
Rcv: 163.0000 ea
Item Details Vol: 60 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H, 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG BX, Lemon Cherry Sherbert...
Source Package(s) 1A406030007EEDD000000145
Source Production Batch 1602
04/27/2026 10:24:04 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0010689269 Date Created 4/17/2026 11:59 AM #23..
- 901 -
2. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000162
Lab Test: TestPassed
Contains Retail IDs: No
SF THC Tincture 60ml - 60ml
(Tincture (volume - each))
Shp: 129 ea
Rcv: 129.0000 ea
Item Details Vol: 60 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H, 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG BX, Lemon Cherry Sherbert...
Source Package(s) 1A406030007EEDD000000146
Source Production Batch 1603
3. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000163
Lab Test: TestPassed
Contains Retail IDs: No
OG THC Tincture 60ml - 60ml
(Tincture (volume - each))
Shp: 110 ea
Rcv: 110.0000 ea
Item Details Vol: 60 ml
Source Harvest 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG BX, Lemon Cherry Sherbert, London, London 11/4, MC Fall 24, MC2 Fall 24, Menage, MOG, Moroccan Peaches Fall24, MP Fall24, MP1 Fall24, MP2 Fall24, MP3 Fall24, MP4 Fall 24, Oreo Blizzard, oreoz blizard 2024, Pablos Revenge, Pink Drink, Pinnacle 11/2, Pinnacle Fall24, Pinnacle2 Fall24, Pinnacle3 Fall24, Pinnacle4 Fall24, Pinnacle5 Fall 24, PM x PK, PM x PK 11/4, Project X, Pure Kush x Perm Marker, SCP, SDR, SDR 11/4, Shake Shack, Sherb Cream Pie, Sherbang, Sherbang 11/4, Sherbanger x OG x ZA, White Runtz, Z x SBT 11/4, Z x...
Source Package(s) 1A406030007EEDD000000140
Source Production Batch 1600
4. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000164
Lab Test: TestPassed
Contains Retail IDs: No
WM THC Tincture 60ml - 60ml
(Tincture (volume - each))
Shp: 126 ea
Rcv: 126.0000 ea
Item Details Vol: 60 ml
Source Harvest 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG BX, Lemon Cherry Sherbert, London, London 11/4, MC Fall 24, MC2 Fall 24, Menage, MOG, Moroccan Peaches Fall24, MP Fall24, MP1 Fall24, MP2 Fall24, MP3 Fall24, MP4 Fall 24, Oreo Blizzard, oreoz blizard 2024, Pablos Revenge, Pink Drink, Pinnacle 11/2, Pinnacle Fall24, Pinnacle2 Fall24, Pinnacle3 Fall24, Pinnacle4 Fall24, Pinnacle5 Fall 24, PM x PK, PM x PK 11/4, Project X, Pure Kush x Perm Marker, SCP, SDR, SDR 11/4, Shake Shack, Sherb Cream Pie, Sherbang, Sherbang 11/4, Sherbanger x OG x ZA, White Runtz, Z x SBT 11/4, Z x...
Source Package(s) 1A406030007EEDD000000141
Source Production Batch 1601
5. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000165
Lab Test: TestPassed
Contains Retail IDs: No
Herba-Lean - Indica -THC MCT Tincture
(Tincture (volume - each))
Shp: 438 ea
Rcv: 438.0000 ea
Item Details Vol: 30 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H 04/27/2026 10:24:04 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0010689269 Date Created 4/17/2026 11:59 AM #23..
- 902 -
Source Package(s) 1A406030007EEDD000000142
Source Production Batch 1529
6. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000166
Lab Test: TestPassed
Contains Retail IDs: No
Herba-Lean - Hybrid -THC MCT Tincture
(Tincture (volume - each))
Shp: 435 ea
Rcv: 435.0000 ea
Item Details Vol: 30 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H Source Package(s) 1A406030007EEDD000000144
Source Production Batch 1541
7. Package | Accepted Production Batch No. Item Name Quantity 1A406030007EEDD000000167
Lab Test: TestPassed
Contains Retail IDs: No
Herba-Lean - Sativa -THC MCT Tincture
(Tincture (volume - each))
Shp: 450 ea
Rcv: 450.0000 ea
Item Details Vol: 30 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H Source Package(s) 1A406030007EEDD000000143
Source Production Batch 1540
PRODUCT REJECTION (if only a portion of shipment is rejected, circle that portion above) Name of Person Receiving or
Rejecting Product
I confirm that the contents of this shipment match weight records entered above, and I agree to take custody of those portions of this shipment not circled above. Those portions circled were returned to the individual delivering this shipment.
Signature Date
Signature of individual taking receipt
of rejected portion of this shipment
04/27/2026 10:24:04 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0010689269 Date Created 4/17/2026 11:59 AM #23..
- 903 -
Originating Entity MCHENRY BUSINESS SERVICES LLC For Agency Use Only Originating License Number C12-0000382-LIC
Address of Originating Entity 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Phone No. of Originating Entity 2095968031
1. Destination MCHENRY COMIC MANAGEMENT,
LLC
Destination Phone No. 2094046880
Invoice Number
Destination License Number C10-0000403-LIC Date and Approx. Time of Departure 9/19/2025 8:57 AM Address of Destination 2308 MCHENRY AVE
MODESTO, CA 95350
County: STANISLAUS Date and Approx. Time of Arrival 9/19/2025 5:00 PM Date/Time Received 10/11/2025 10:34 AM
Route to be Traveled Notes: details for extenuating circumstances (e.g., road closure, flat tire, etc.)
SEE GOOGLE MAPS
1. Outbound Transporter MCHENRY BUSINESS SERVICES LLC No Layover Scheduled Transporter License Number C12-0000382-LIC
Address of Transporter 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Contact Phone No. for Inquiries: 2099858101
Name of Person Transporting Marlowe Mercado Employee ID of Driver 001 State Driver's License No. A4569875 Signature of Person Transporting Make, Model, Lic No, Reg No.: Toyota, Rave4, 48841V2, (blank) Leg of Layover Trip
1. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001581
Lab Test: TestPassed
Contains Retail IDs: No
GP THC Tincture 60 ml
(Tincture (volume - each))
Shp: 300 ea
Rcv: 300.0000 ea
Item Details Vol: 60 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H, 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG Bx, Lemon Cherry Sherbert...
Source Package(s) 1A40603000374C9000001602
Source Production Batch 1602
04/27/2026 10:24:50 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0009548221 Date Created 9/19/2025 8:58 AM
#23..
- 904 -
2. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001582
Lab Test: TestPassed
Contains Retail IDs: No
SF THC Tincture 60ml
(Tincture (volume - each))
Shp: 300 ea
Rcv: 300.0000 ea
Item Details Vol: 60 ml
Source Harvest 2020-11-27-Dry Room 1-H, 2020-12-05-Dry Room 1-H, 2020-12-11-Dry Room 1-H, 2021-06-05-Dry Room 1-H, 2021-06-12-Dry Room 1-H, 2021-06-13-Dry Room 1-H, 2021-06-14-Dry Room 1-H, 2021-06-18-Dry Room 1-H, 2021-08-11-Dry Room 1-H, 2021-08-22-Dry Room 1-H, 2021-08-23-Dry Room 1-H, 2021-11-18-Dry Room 1-H, 2021-11-19-Dry Room 1-H, 2021-12-09-Dry Room 1-H, 2022-07-24-Dry Room 1-H, 2022-11-30-Dry Room 1-H, 2024-02-14-Dry Room 1-H, 2024-02-15-Dry Room 1-H, 2024-07-03-Dry Room 1-H, 2024-07-04-Dry Room 1-H, 2024-10-29-Drying and Processing Building-H, 2024-11-19-Drying and Processing Building-H, 2024-11-22-DryingH, 2024-11-23-Drying-H, 2024-11-24-Drying-H, Applescotti, CA Lemming, Cakemera, Candy Runtz, Caramel Apple Lemmings, DB, Dr J, Dr J 11/4, G2D, Gelato - 11-06-24, GH4 S10 3.31.25, GH5 S10 3.12.25, GH6 S10
3.1.25, GH7 S10 5.6.25, GH9 S10 4.24.25, Gov Oasis, Gush Mints, ICC, ICC 11/4, Ice Cream Cake Harvest, Jelly Truffle, JT, Kush Krasher, LA Runtz, LC Sherb, LCG Bx, Lemon Cherry Sherbert...
Source Package(s) 1A40603000374C9000001603
Source Production Batch 1603
PRODUCT REJECTION (if only a portion of shipment is rejected, circle that portion above) Name of Person Receiving or
Rejecting Product
I confirm that the contents of this shipment match weight records entered above, and I agree to take custody of those portions of this shipment not circled above. Those portions circled were returned to the individual delivering this shipment.
Signature Date
Signature of individual taking receipt
of rejected portion of this shipment
04/27/2026 10:24:50 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0009548221 Date Created 9/19/2025 8:58 AM
#23..
- 905 -
Originating Entity MCHENRY BUSINESS SERVICES LLC For Agency Use Only Originating License Number C12-0000382-LIC
Address of Originating Entity 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Phone No. of Originating Entity 4086487378
1. Destination MCHENRY COMIC MANAGEMENT,
LLC
Destination Phone No. 2093455360
Invoice Number
Destination License Number C10-0000403-LIC Date and Approx. Time of Departure 7/26/2024 10:10 AM Address of Destination 2308 MCHENRY AVE
MODESTO, CA 95350
County: STANISLAUS Date and Approx. Time of Arrival 7/26/2024 3:00 PM Date/Time Received 7/26/2024 1:04 PM
Route to be Traveled Notes: details for extenuating circumstances (e.g., road closure, flat tire, etc.)
SEE GOOGLE MAPS
1. Outbound Transporter MCHENRY BUSINESS SERVICES LLC No Layover Scheduled Transporter License Number C12-0000382-LIC
Address of Transporter 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Contact Phone No. for Inquiries: 2099858101
Name of Person Transporting Marlowe Mercado Employee ID of Driver 001 State Driver's License No. A4569875 Signature of Person Transporting Make, Model, Lic No, Reg No.: Toyota, Rave4, 48841V2, (blank) Leg of Layover Trip
1. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001275
Lab Test: TestPassed
Contains Retail IDs: No
Hash Burger - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, BR0537-231102-Hashburger Source Package(s) 1A406030004869C000006304
Source Production Batch HERB.HB.030124
04/27/2026 10:32:28 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0007366696 Date Created 7/26/2024 10:11 AM #23..
- 906 -
2. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001276
Lab Test: TestPassed
Contains Retail IDs: No
Lavender Cake - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, F17 11212023
Source Package(s) 1A406030004869C000006305
Source Production Batch HERB.LAV.030124
3. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001277
Lab Test: TestPassed
Contains Retail IDs: No
Sherbanger - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, F17 11212023
Source Package(s) 1A406030004869C000006306
Source Production Batch HERB.SHB.030124
4. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001278
Lab Test: TestPassed
Contains Retail IDs: No
Gelato 33 - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, F17 11212023
Source Package(s) 1A406030004869C000006307
Source Production Batch HERB.G33.030124
5. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001279
Lab Test: TestPassed
Contains Retail IDs: No
LP x Coldsnap - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
04/27/2026 10:32:28 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0007366696 Date Created 7/26/2024 10:11 AM #23..
- 907 -
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, F1 11212023
Source Package(s) 1A406030004869C000006308
Source Production Batch HERB.LPC.030124
6. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001280
Lab Test: TestPassed
Contains Retail IDs: No
Lemon Cherry Gelato - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, F8 122023
Source Package(s) 1A406030004869C000006309
Source Production Batch HERB.LCG.030124
7. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001281
Lab Test: TestPassed
Contains Retail IDs: No
LA Kush Cake - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, BR0537-230829-LAKush Source Package(s) 1A406030004869C000006310
Source Production Batch HERB.LAC.030124
8. Package | Accepted Production Batch No. Item Name Quantity 1A40603000374C9000001282
Lab Test: TestPassed
Contains Retail IDs: No
Cherry Bubblegum - 1g - Concentrate
(Extract (weight - each))
Shp: 100 ea
Rcv: 100.0000 ea
Item Details Wgt: 1 g
Source Harvest 10.20.23 CP HB 1, 10.20.23 CP HB 10, 10.20.23 CP HB 11, 10.20.23 CP HB 2, 10.20.23 CP HB 3, 10.20.23 CP HB 4, 10.20.23 CP HB 5, 10.20.23 CP HB 6, 10.20.23 CP HB 7, 10.20.23 CP HB 8, 10.20.23 CP HB 9, 10.20.23 GM HB 10, 10.20.23 GM HB 11, 10.20.23 GM HB 2, 10.20.23 GM HB 3, 10.20.23 GM HB 4, 10.20.23 GM HB 5,
10.20.23 GM HB 6, 10.20.23 GM HB 7, 10.20.23 GM HB 8, 10.20.23 GM HB 9, 10.20.23 GOA HB 1, 10.21.23 GOA HB 10, 10.21.23 GOA HB 11, 10.21.23 GOA HB 12, 10.21.23 GOA HB 13, 10.21.23 GOA HB 2, 10.21.23 GOA HB 3, 10.21.23 GOA HB 4, 10.21.23 GOA HB 5, 10.21.23 GOA HB 6, 10.21.23 GOA HB 7, 10.21.23 GOA HB 8, 10.21.23 GOA HB 9, 10.21.23 LCG HB 1, 10.21.23 LCG HB 10, 10.21.23 LCG HB 11, 10.21.23 LCG HB 12,
10.21.23 LCG HB 13, 10.21.23 LCG HB 2, 10.21.23 LCG HB 3, 10.21.23 LCG HB 4, 10.21.23 LCG HB 5, 10.21.23 LCG HB 6, 10.21.23 LCG HB 7, 10.21.23 LCG HB 8, 10.21.23 LCG HB 9, 2023-10-20-Drying Container-H, SBWC2591-091823-CAK-FPK Source Package(s) 1A406030004869C000006311
04/27/2026 10:32:28 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0007366696 Date Created 7/26/2024 10:11 AM #23..
- 908 -
Source Production Batch HERB.CHB.030124
PRODUCT REJECTION (if only a portion of shipment is rejected, circle that portion above) Name of Person Receiving or
Rejecting Product
I confirm that the contents of this shipment match weight records entered above, and I agree to take custody of those portions of this shipment not circled above. Those portions circled were returned to the individual delivering this shipment.
Signature Date
Signature of individual taking receipt
of rejected portion of this shipment
04/27/2026 10:32:28 AM -07:00
Transfer Form (CA)
METRC®
CANNABIS TRANSPORTATION MANIFEST
All sales transactions are to be completed prior to transportation of any cannabis. The receiving entity may reject product delivered, but amount delivered must be limited to amount agreed upon in prior sales transaction.
Manifest No. 0007366696 Date Created 7/26/2024 10:11 AM #23..
- 909 -
Originating Entity MCHENRY BUSINESS SERVICES LLC For Agency Use Only Originating License Number C12-0000382-LIC
Address of Originating Entity 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Phone No. of Originating Entity 4086487378
1. Destination MCHENRY COMIC MANAGEMENT,
LLC
Destination Phone No. 2093455360
Invoice Number
Destination License Number C10-0000403-LIC Date and Approx. Time of Departure 8/3/2024 8:00 AM Address of Destination 2308 MCHENRY AVE
MODESTO, CA 95350
County: STANISLAUS Date and Approx. Time of Arrival 8/3/2024 1:00 PM Date/Time Received 8/3/2024 1:23 PM
Route to be Traveled Notes: details for extenuating circumstances (e.g., road closure, flat tire, etc.)
SEE GOOGLE MAPS
1. Outbound Transporter MCHENRY BUSINESS SERVICES LLC No Layover Scheduled Transporter License Number C12-0000382-LIC
Address of Transporter 500 EAST GLENN AVE
MODESTO, CA 95358
County: STANISLAUS
Contact Phone No. for Inquiries: 2099858101
Name of Person Transporting Marlowe Mercado Employee ID of Driver 001 State Driver's License No. A4569875 Signature of Person Transporting Make, Model, Lic No, Reg No.: Toyota, Rave4, 48841V2, (blank) Leg of Layover Trip
1. Package | Accepted Production Batch No. Item Name Quantity 1A4060300033131000038755
Lab Test: TestPassed
Contains Retail IDs: No
Kaloua 1000mg Tincture - Ole 4 Fingers
(Tincture (weight - each))
Shp: 30 ea
Rcv: 30.0000 ea
Item Details Wgt: 1,000 g
Source Harvest HB10B_PipeDream_3228_081023, HB5C_CheetaPiss_3118_092923, HB5C_LemonKushMintsxOreosRV2,3_3118_092923, HB7B_AnimalFacexKushMints_3121_102623, HB9B_WCAutoXLCG_3229_82523, HBC3_GaryPaytonxoreosRV2,4_3168_101623 Source Package(s) 1A40603000374C9000000926
Source Production Batch 0926
04/27/2026 10:32:02 AM -07:00
Transfer Form (CA)