Agenda packet — Monterey City Council, April 19, 2022 (part 2 of 2)

SECTION TWO - QUALIFYING EQUIPMENT OWNED/UTILIZED BY LAW ENFORCEMENT AGENCIES THE MPD COLLABORATES

AND/OR PARTICIPATES WITH AS PART OF THE MPRSRU FOR LAW ENFORCEMENT PURPOSES (1) A description of each type of military equipment, the quantity sought, its capabilities, expected lifespan, and product descriptions from the manufacturer of the military equipment (2) The purposes and authorized uses for which the law enforcement agency or the state agency proposes to use each type of military equipment
(3) The fiscal impact of each type of military equipment, including the initial costs of obtaining the equipment and estimated annual costs of maintaining the equipment
(4) The legal and procedural rules that govern each authorized use ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 22., Item Page 33, Packet Page 245 AB 481 Category
Govt Code §7070(c): (1) Unmanned, remotely piloted, powered aerial or ground vehicles Description: Unmanned, remotely piloted, powered arial and ground vehicles Quantity (existing/sought):
0 (owned by collaborating law enforcement agency for MPRSRU SWAT Team and Sheriff's Bomb Squad)
Capabilities:

Vehicles are capable of being remotely navigated to provide scene information and intelligence in the form of video and still images transmitted to first responders.

Expected lifespan: 5 years
Manufacturer's description:

Remotely operated land vehicles to support various mission areas such as explosive device remediation, hazardous materials operations, tactical law enforcement operations, search & rescue, and surveillance/detection. Examples include, but are not limited to rovers, scout vehicles, and surveillance platforms. Unmanned Aircraft System (UAS) comprises an unmanned aircraft and the equipment necessary for the safe and efficient operation of that aircraft. The system generally includes a fixed or rotary-wing (tethered or non-thethered) aircraft and a ground control station.

Purpose(s)/Authorized Use:

To enhance the safety of potentially dangerous situations by providing first responders with the ability to monitor video feed from vehicle cameras of hazardous areas prior to, or in lieu of, sending in personnel. Remotely piloted ground vehicles may be used to investigate and mitigate potential explosive devices. UAS/Drone/Arial platforms may be used for search and rescue; suspect apprehension crime scene documentation; tactical operations; scene security; hazard monitoring; identification and mitigation; response to emergency calls; crisis communications; legally authorized surviellance.

Initial cost: $0 (not owned by MPD)
Annual costs: $0 (not maintained by MPD)
Legal:

All applicable State, Federal and Local laws. Any use of UAS/Drone platforms will be in strict accordance with constitutional and privacy rights and Federal Aviation Administration (FAA) regulations.

Procedural: MPD Policies - 404 (Monterey Peninsula Regional Special Response Unit) Required training:

MPRSRU SWAT Team provides internal training for staff members prior to allowing them to operate the ground vehicle equipment. All MPRSRU members are required to complete an initial POST certified 80 hour basic SWAT course, 120 hours of annual training, and 24 hours of SWAT update training bi-annually. Prior to piloting any UAS/Drone staff members must secure an FAA Remote Pilot License and complete training required by FAA COA.

Other:

The Monterey Police Department participates in the Monterey Peninsula Regional Special Response Unit SWAT Team (MPRSRU). The Monterey County Sheriff's Office also provides the regional explosive mitigation team "bomb squad." This equipment is owned and operated by MPRSRU SWAT and the Monterey County Sheriff's Department. While the Monterey Police Department does not own this equipment, it could be used in Monterey by MPRSRU SWAT or the Monterey County Sheriff's Department if they are deployed to an incident within city limits.
(5) The training, including any course required by the Commission on Peace Officer Standards and Training, that must be completed before any officer, agent, or employee of the law enforcement agency or the state agency is allowed to use each specific type of military equipment to ensure the full protection of the public’s welfare, safety, civil rights, and civil liberties and full adherence to the military equipment use policy

SECTION TWO - QUALIFYING EQUIPMENT OWNED/UTILIZED BY LAW ENFORCEMENT AGENCIES THE MPD COLLABORATES

AND/OR PARTICIPATES WITH AS PART OF THE MPRSRU FOR LAW ENFORCEMENT PURPOSES (1) A description of each type of military equipment, the quantity sought, its capabilities, expected lifespan, and product descriptions from the manufacturer of the military equipment (2) The purposes and authorized uses for which the law enforcement agency or the state agency proposes to use each type of military equipment
(3) The fiscal impact of each type of military equipment, including the initial costs of obtaining the equipment and estimated annual costs of maintaining the equipment
(4) The legal and procedural rules that govern each authorized use ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 22., Item Page 34, Packet Page 246 Attachment
Monterey PD Policy Manual
Copyright Lexipol, LLC 2022/03/16, All Rights Reserved.

Published with permission by Monterey Police Department ***DRAFT*** MPD 706 - Sec 3 - MPD SRU Equip
Procurement.pdf - 8
MPD 706 - Sec 3 - MPD SRU Equip Procurement.pdf
MPD 706 - Sec 3 - MPD SRU Equip Procurement.pdf
ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 22., Item Page 35, Packet Page 247 AB 481 Category
Govt Code §7070(c):
(14) The following projectile launch platforms and their associated munitions: 40mm projectile launchers, “bean bag,” rubber bullet, and specialty impact munition (SIM) weapons Description: 40mm Less Lethal Launchers and Kinetic Energy Munitions Quantity (existing/sought): 12 (sought ‐ (1) for each police vehicle) Capabilities: The 40mm Less Lethal Launcher is capable of firing 40mm Kinetic Energy Munitions, known as sponge projectiles.

Expected lifespan: 15 years
Manufacturer's description: Penn Arms 40MM Single Shot Launcher, collapsing stock. L140‐3 – A 40mm single‐shot break‐ open frame launcher with a rifled barrel, collapsible stock and combo rail. Features include:

Double‐action trigger, trigger lock push button and hammer lock safeties.

Purpose(s)/Authorized Use:

The 40mm Less Lethal Launchers and Kinetic Energy Munitions are intended for use as a less‐ lethal use of force option.

Initial cost: $15,000
Annual costs: $3,000 (includes sponge projectiles for training) Legal: All applicable State, Federal and Local laws governing police use of force.

Procedural: MPD Policies ‐ 306 (Firearms), 303 (Control Devices and Techniques) Required training: Two (2) hours of initial training and (2) hours every (2) years (includes qualification) Other:
(12) additional single shot launchers will replace the current aged‐out less lethal shotguns.

These would be purchased in 2022.
(5) The training, including any course required by the Commission on Peace Officer Standards and Training, that must be completed before any officer, agent, or employee of the law enforcement agency or the state agency is allowed to use each specific type of military equipment to ensure the full protection of the public’s welfare, safety, civil rights, and civil liberties and full adherence to the military equipment use policy
SECTION THREE ‐ QUALIFYING EQUIPMENT THAT THE MPD WILL BE PROCURING WITH ANTICIPATED DATES OF PROCUREMENT (1) A description of each type of military equipment, the quantity sought, its capabilities, expected lifespan, and product descriptions from the manufacturer of the military equipment (2) The purposes and authorized uses for which the law enforcement agency or the state agency proposes to use each type of military equipment
(3) The fiscal impact of each type of military equipment, including the initial costs of obtaining the equipment and estimated annual costs of maintaining the equipment
(4) The legal and procedural rules that govern each authorized use ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 22., Item Page 36, Packet Page 248 AB 481 Category
Govt Code §7070(c):
(5) Command and control vehicles that are either built or modified to facilitate the operational control and direction of public safety units
Description: LDV Inc. Custom Specialty Vehicles ‐ Crisis Negotiation Team Command Vehicle Quantity (existing/sought): 1 (sought to be owned by MPD and utilized by MPRSRU ‐ CNT) Capabilities: Vehicles modified to act as Negotiations Operations Center at critical incidents.

Expected lifespan: 20 Years
Manufacturer's description: 2022 Ford E‐450 Cutaway ‐ Emergency Response Vehicle ‐ Mobile Command Vehicle Purpose(s)/Authorized Use:

This vehicle will provide a designated Negotitations Opersons Center (NOC) in a constant state of operational readiness for the MPRSRU Crisis Negotiations Team (CNT) that will aid in the resolution of crisis incidents. Also utilized for community outreach events such as National Night Out, Public Safety Outreach, etc.

Initial cost:
$200,000 initial outlay to be reimbursed through the Homeland Security Grant Program ‐ Urban Areas Security Initiative. This vehicle would not be procured until October 2023 in FY 24.

Annual costs: $2,500 / year maintenance and upkeep
Legal: All applicable State, Federal and Local laws.

Procedural: MPD Policies ‐ 404 (Monterey Peninsula Regional Special Response Unit) Required training:

MPRSU CNT team provides internal training for staff members prior to allowing them to operate these vehicles. All MPRSRU CNT members are required to complete an initial POST certified 40 hour basic Hostage Negotiation course AND 48 hours of annual training.

Other:

The Monterey Police Department participates in the Monterey Peninsula Regional Special Response Unit CNT Team (MPRSRU). This equipment will be registered to the Monterey Police and operated by MPRSRU CNT. This equipment could be used in Monterey by MPRSRU CNT if they are deployed to an incident within city limits.
(5) The training, including any course required by the Commission on Peace Officer Standards and Training, that must be completed before any officer, agent, or employee of the law enforcement agency or the state agency is allowed to use each specific type of military equipment to ensure the full protection of the public’s welfare, safety, civil rights, and civil liberties and full adherence to the military equipment use policy
SECTION THREE ‐ QUALIFYING EQUIPMENT THAT THE MPD WILL BE PROCURING WITH ANTICIPATED DATES OF PROCUREMENT (1) A description of each type of military equipment, the quantity sought, its capabilities, expected lifespan, and product descriptions from the manufacturer of the military equipment (2) The purposes and authorized uses for which the law enforcement agency or the state agency proposes to use each type of military equipment
(3) The fiscal impact of each type of military equipment, including the initial costs of obtaining the equipment and estimated annual costs of maintaining the equipment
(4) The legal and procedural rules that govern each authorized use ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 22., Item Page 37, Packet Page 249 Council
Agenda Report
№08/22
FROM: Kimberly Cole, AICP, Community Development Director Prepared By: Grant Leonard, AICP, Housing Analyst
SUBJECT: Recommend that the City Council Adopt the 2022/2023 Annual Action Plan for Community Development Block Grant Funds and Authorize Submittal to the U.S.

Department of Housing and Urban Development (Exempt from NEPA per 24 CFR Part 58 and from CEQA per Article 19, Section 15301, Class1, 15306, Class 6 and 15326, Class 26)
RECOMMENDATION:

That the City Council conduct a public hearing and receive public comments on the proposed 2022-2023 Annual Action Plan (Action Plan) for Community Development Block Grant Funds (CDBG), and adopt a resolution approving the Action Plan and authorize submission to the U.S.

Department of Housing and Urban Development (HUD).

VALUE DRIVERS:

Support efforts and policies that provide equitable access to affordable housing in Monterey and the region.

POLICY IMPLICATIONS:

The Action Plan is a one-year plan and budget that will implement year three of the City’s adopted 2020–2024 Five Year Consolidated Plan (Con Plan) for spending federal CDBG money on programs to benefit low- and moderate-income households residing in the City. Policies and programs identified in the Annual Action Plan will be funded in Fiscal Year 2022/2023 (Program Year 22) and are consistent with the goals and priorities set in the Consolidated Plan.

FISCAL IMPLICATIONS:

The City of Monterey’s 2022/2023 Annual Action Plan (Action Plan) is based on an estimated $1.16 million projected CDBG budget: The funds consist of federal entitlement, carryover from the previous year and program income generated from Hotel Pacific rent, loan payments and property sales as follows:
 $263,657 in estimated entitlement funds from CDBG/HUD  $900,000 in projected program income (funds that are generated from Hotel Pacific ground rent, pay off of rehabilitation loans and the sales of City owned deed restricted units).

The City will leverage CDBG funds with former Redevelopment Agency Housing funds (Housing Agency) and the Home Investment Partnerships Program (HOME) funds to help meet the housing and community service needs of the low income and disadvantaged. They include staff and administrative costs related to managing the various programs.

Date: 4/19/2022
Item No.: 23.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 1, Packet Page 250 Housing Agency and HOME funds are not included in the CDBG budget, but are referenced for information only. None of the proposed spending in these budgets will be taken from the General Fund.

ENVIRONMENTAL DETERMINATION:

The Action Plan is considered exempt under the Federal National Environmental Policy Act (NEPA) guidelines (24 CFR Part 58). The Action Plan is also determined to be exempt from the California Environmental Quality Act Guidelines (Article 19, Section 15301, Class 1, 15306, Class 6 and 15326, Class 26) because the projects proposed for funding including public service grant program, non-profit and City public infrastructure projects, housing preservation and planning and administration have been determined to not have a significant effect on the environment.

Furthermore, the project does not qualify for any of the exceptions to the categorical exemptions found at CEQA Guidelines Section 15300.2.

Exception a - Location. Classes 3, 4, 5, 6, and 11 are qualified by consideration of where the project is to be located - a project that is ordinarily insignificant in its impact on the environment may in a particularly sensitive environment be significant. Therefore, these classes are considered to apply in all instances, except where the project may impact on an environmental resource of hazardous or critical concern where designated, precisely mapped, and officially adopted pursuant to law by federal, state, or local agencies. The proposed action recommending the draft Action Plan for review and implementing budget includes the public service grant program, non-profit and City public infrastructure projects, housing preservation and planning and administration. There are no project sites referenced in the Action Plan and implementing budget that are located in a particularly sensitive environment. No impact is anticipated.

Exception b - Cumulative Impact. All exemptions for these classes are inapplicable when the cumulative impact of successive projects of the same type in the same place, over time is significant. The proposed action recommending the draft Action Plan for review and implementing budget includes the public service grant program, non-profit and City public infrastructure projects, housing preservation and planning and administration. No cumulative impacts are foreseeable.

Exception c - Significant Effect. A categorical exemption shall not be used for an activity where there is a reasonable possibility that the activity will have a significant effect on the environment due to unusual circumstances. The proposed action recommending the draft Action Plan for review and implementing budget includes the public service grant program, non-profit and City public infrastructure projects, housing preservation and planning and administration and no significant effect is anticipated.

Exception d - Scenic Highways. A categorical exemption shall not be used for a project which may result in damage to scenic resources, including but not limited to, trees, historic buildings, rock outcroppings, or similar resources, within a highway officially designated as a state scenic highway. This does not apply to improvements which are required as mitigation by an adopted negative declaration or certified EIR. There are no project sites referenced in the Action Plan and implementing budget that are located near scenic highways. No impacts are anticipated near scenic highways.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 2, Packet Page 251 Exception e - Hazardous Waste Sites. A categorical exemption shall not be used for a project located on a site which is included on any list compiled pursuant to Section 65962.5 of the Government Code. There are no project sites referenced in the Action Plan and implementing budget that are listed on any list compiled pursuant to Section 65962.5 of the Government Code.

Exception f - Historical Resources. A categorical exemption shall not be used for a project which may cause a substantial adverse change in the significance of a historical resource. The Action Plan does not reference any sites or locations identified as a historical resource.

ALTERNATIVES CONSIDERED:

The Council may make changes to the draft Action Plan if it determines that changes are necessary to better implement City policy. However, staff has evaluated these plans and programs and determined they implement policies contained in the General Plan Housing Element.

DISCUSSION:

To receive CDBG funds, the City must submit an Action Plan to HUD each year. The Action Plan describes the City’s planned investments for the coming program year, including proposed actions and CDBG projects. The Action Plan is the City’s application for federal funds and provides a yearly operating plan for activities. It outlines the City’s priorities for addressing the needs of the community’s disadvantaged and low-income households. A number of programs and activities are proposed in Program Year 2022 (PY22) to address community needs. These activities relate back to the goals and objectives presented in the Consolidated Plan (available on monterey.org/housing).

To continue the City’s efforts to comply with HUD CDBG spending regulations and implement approved priorities, the Action Plan projects a total estimated funding amount of $1,163,657 for PY22.

It is important to note that the CDBG entitlement portion of this projection is subject to U.S.

Congress approval of the Federal budget and it is possible CDBG entitlement grant funding may be reduced or modified. Therefore, the exact amount of CDBG entitlement funding that the City will actually receive from HUD is unknown at this time. Program revenue is also variable and may change during the program year dependent on market factors affecting the sale of deedrestricted low-income housing units and loan pay-offs. Therefore, staff has planned activities based on a generally conservative budget. If funding varies substantially within the program year, staff will amend the Action Plan accordingly.

Additionally, the Action Plan is limited in that Housing program funds are only allowed to be spent on activities that provide benefits to low-income and disadvantaged households in the community and that some of these activities are subject to caps that limit the amount of CDBG funding that can be authorized. If Council wishes to direct staff to provide additional services beyond those proposed in the Action Plan that exceeds spending caps or does not meet HUD eligibility standards, then alternative funding sources would be required.

The proposed activities support the Consolidated Plan goals and objectives. The draft Action Plan proposes funding a variety of housing and community services projects. Overall, there are Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 3, Packet Page 252 four major project areas including Public Services, Public Infrastructure, Housing Preservation Programs and Planning and Administration.

The Housing Programs Office typically begins the planning process in October by developing a calendar and preparing a Notice of Funding Availability (NOFA). Last year, Housing staff released the 2022/2023 NOFA for the CDBG program on December 1, 2021. The purpose of the notice and workshop was to solicit applications for viable affordable housing and public facilities projects through a competitive application process. City staff held a required grant application workshop on December 2, 2021. Applications were due to the City on January 6, 2022. A list of the applications received for public service and infrastructure grants are described below.

Planning and Administration ($232,731 budgeted)
During the 2022-23 Program Year, the Housing Programs Office will update its Five Year Consolidated Plan. Other planning and administration activities include monitoring and providing technical assistance to sub-recipients, professional planning on-call assistance as needed, and continuing outreach efforts to service providers and other jurisdictions in the area to identify new affordable housing projects and additional homeless services or facilities. The City strives to continue building upon its existing collaboration and coordination efforts with other public agencies, service organizations, and the community to work together to increase the availability of affordable housing and reduce homelessness.

Public Services ($172,000 budgeted)
Public Service grants provide funding to local non-profit agencies serving low and moderateincome households and individuals. The amount the Action Plan is able to award is determined by a HUD formula of 15% of current year entitlement and up to 15% of prior year program income. Award amounts are based on a proportionate percentage of the total available funding and the agency’s funding request. These grants support services for seniors, persons with disabilities, homeless persons, youth and families, and fair housing. Agencies that have applied for funding include:
 Alliance on Aging – senior employment, tax preparation, ombudsmen program  CASA – advocating for children in foster care and the court system  Community Human Services – homeless services provided at Safe Place and Casa De Noche Buena
 ECHO Fair Housing – fair housing services, legal advice, fair housing compliance  Food Bank for Monterey County – food distribution
 Gathering for Women – outreach and support services for homeless woman  Interim, Inc. – outreach and supportive services for homeless adults with a mental illness
 Josephine Kernes Memorial Pool – warm-water exercise programs for children and adults with disabilities
 Legal Services for Seniors – free legal services for seniors  Meals on Wheels – homebound meal service
These agencies were selected through an open and competitive request for proposals process that included a notice of funding availability, a mandatory technical assistance workshop, a community meeting on housing and community needs, and agency presentations of proposals to the community services committee (comprised of representatives from the Planning Commission, Police Department, Planning Office, and Housing Office).

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 4, Packet Page 253 Public Infrastructure ($100,000 budgeted)
In addition to the public service grants, the City released a notice of funding availability to solicit applications for viable public infrastructure projects through a competitive application process.

Projects are rated reviewed by staff for eligibility and compliance with HUD regulations, and then ranked with scoring weighted to give the highest points to projects that met the top Consolidated plan goals. Projects are also given preference for being construction-ready, having multiple, secured funded sources, and having project managers with experience with federally funded public works construction projects. The City received two applications:

Tier One:
 Meals on Wheels – $100,000 Community Kitchen Improvements Tier Two:
 Laguna Grande Regional Park Improvements - $60,000
The draft Action plan proposes to fully fund Meals on Wheels at $100,000 and the Laguna Grande Regional Park Improvements are a tier two project to be constructed if funding becomes available.

Housing Preservation Programs ($658,926 budgeted)
Another successful program that the Action Plan is continuing to pursue is the Housing Rehabilitation Grant program comprised of the Mr. Fix It grant, the Home Safety grant, and the Housing Accessibility grant. These grants provide emergency housing repairs, minor home repairs, and accessibility improvements for low-income homeowners. The Housing Rehabilitation Grant Program is intended to improve the condition of substandard owneroccupied single-family homes with special emphasis placed upon the remediation of health and safety housing issues to keep people in their homes. Additionally, the Action Plan supports the rehabilitation and repair of ownership units purchased for resale to low-income first-time homebuyers. The Action Plan proposes $658,926 total for Housing Preservation Programs.

Public Outreach and Citizen Participation
Public engagement is a vital element to the success of the CDBG program. In order to inform the public about the program and solicit comments on the Action plan, the City is implementing the following public outreach plan:
 December 1, 2021: The City released the Notice of Funding Availability (NOFA) for the CDBG program.
 December 2, 2021: City staff held a required grant application workshop.  December 13, 2021: City staff held a community workshop about the CDBG grant program.
 February 1, 2022: Thursday, 11:00 pm Required Meeting: Agency Presentations of Applications to grant committee.
 March 18, 2022: Friday, Draft action plan available and start of the 30-day public comment period.
 April 12, 2022: Tuesday, Planning Commission Public Hearing for draft Action Plan.  April 19, 2022: Tuesday, City Council Public Hearing to adopt Action Plan and end of the 30-day comment period.
 May 15, 2022: Action Plan due to HUD.

The draft 2022-2023 Annual Action Plan is available at: monterey.org/housing Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 5, Packet Page 254 In conclusion, staff recommends that the Council conduct a public hearing and receive public comments on the proposed Action Plan for CDBG funds, and adopt a resolution approving the Action Plan and authorize submission to HUD.

KC/GL
Attachments: 1. Draft Resolution and Exhibit A: Action Plan e: Mariela Lopez, HUD, San Francisco Regional Office
Public Services Grant Applicants and Attendees
Coalition of Homeless Service Providers
Monterey Neighborhood Associations
Monterey Business Associations
David Hober, Police Chief
Housing Outreach List
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 6, Packet Page 255 RESOLUTION NO. __- ___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№08/22
ADOPT 2022/2023 ACTION PLAN FOR COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), AND AUTHORIZE SUBMITTAL TO THE U.S. DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT (HUD)
WHEREAS, since 1975, the City of Monterey has been an eligible metropolitan entitlement city under the CDBG programs;
WHEREAS, the Five Year (2020-2024) Consolidated Plan (the “Consolidated Plan”) adopted in Resolution No. 20-049 identified funding sources to provide housing and housing services and prioritized the use of local, state, and federal funds; WHEREAS, consistent with Consolidated Plan priorities for Housing and Community Services, the Fiscal Year 2022/2023 Budget and Action Plan (the “Program Year 2022 Action Plan”) provides resources to implement the Consolidated Plan to meet HUD National Objectives;
WHEREAS, the Planning Commission held a Public Hearing on April 12, 2022, and reviewed the Draft Program Year 2022 Action Plan and considered the priorities and programs contained therein;
WHEREAS, a public notice to announce the publication of the Draft Program Year 2022 Action Plan and initiate a 30-day period for review and comment was published March 18 and 29, 2022 in the Monterey Herald, a newspaper of area wide circulation; WHEREAS, the Draft Program Year 2022 CDBG Action Plan was published and made available for public review on March 18, 2021;
WHEREAS, public notice of a Planning Commission public hearing to review and provide a recommendation on the Draft Program Year 2022 Action Plan was published on March 18 and 29, 2022 in the Monterey Herald, a newspaper of area wide circulation; WHEREAS, the Planning Commission held a duly noticed public hearing on April 12, 2022, to review and provide a recommendation on the Draft Program Year 2022 Action Plan; and,
WHEREAS, the Action Plan is considered exempt under the Federal National Environmental Policy Act (NEPA) guidelines (24 CFR Part 58). The Action Plan is also determined to be exempt from the California Environmental Quality Act Guidelines (Article 19, Section 15301, Class 1, 15306, Class 6 and 15326, Class 26) because the projects proposed for funding including public service grant program, non-profit and City public infrastructure projects, housing preservation and planning and administration have been determined to not have a significant effect on the environment.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 7, Packet Page 256 2 Furthermore, the project does not qualify for any of the exceptions to the categorical exemptions found at CEQA Guidelines Section 15300.2.

Exception e - Hazardous Waste Sites. A categorical exemption shall not be used for a project located on a site which is included on any list compiled pursuant to Section 65962.5 of the Government Code. There are no project sites referenced in the Action Plan and implementing budget that are listed on any list compiled pursuant to Section 65962.5 of the Government Code.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby adopts the Program Year 2022 Action Plan for Community Development Block Grant Funds, and authorizes submittal of the Action Plan to the U.S.

Department of Housing and Urban Development as presented and discussed at the April 19, 2023 Public Hearing and reflected in Exhibit A.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 8, Packet Page 257 3 NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that the above recitals are true and correct and are hereby incorporated and adopted as findings of the City Council as if fully set forth herein.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this _____ day of _______, 202_, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 9, Packet Page 258

EXHIBIT A
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 10, Packet Page 259

EXHIBIT A
Annual Action Plan
2022- 2023
2 OMB Control No: 2506-0117 (exp. 09/30/2021)
Executive Summary
AP-05 Executive Summary - 24 CFR 91.200(c), 91.220(b)

1. Introduction
The City of Monterey, incorporated in 1850, is one of California’s oldest communities. Founded in 1770, the city served as California’s first capital and hosted the state’s first constitutional convention in the city’s historic Colton Hall, wherein 1849, the State of California’s Constitution was signed. The City of Monterey is located on Monterey Bay, now a National Marine Sanctuary.

The city is a regional and national tourist destination and is approximately 125 miles south of San Francisco and 345 miles north of Los Angeles. The city also boasts several institutions of higher learning, including the Defense Language Institute, which specializes in teaching foreign languages to military personnel; the Middlebury Institute of International Studies at Monterey, which provides graduate degrees with an emphasis on international affairs, their customs, languages, and business trends; the Naval Postgraduate School, which offers advanced degrees for military personnel; and Monterey Peninsula College, which offers general education for an associate’s degree student to transfer to a fouryear institution. These institutions attract many culturally diverse populations from across the globe.

This 2022 Annual Action Plan (AAP) is submitted to the U.S. Department of Housing and Urban Development (HUD) as the application for 2022-2023 funds from the Community Development Block Grant (CDBG) program. This Annual Action Plan encapsulates the third year of the 2020-2024 Consolidated Plan for Housing and Community Development. For program year 2022, the estimated CDBG entitlement amount is $263,657, and the estimated amount of program income is $900,000. To keep the Action Plan process on schedule and still comply with the required public participation and local approvals, the City used estimates to draft the action plan and obtain public comment and local government approvals. These estimates will be replaced with exact amounts once the US Department of Housing and Urban Development (HUD) releases the final allocation amounts. As program income receipts can be inconsistent, the City makes its best effort to estimate future income and executes ongoing program budget adjustments as necessary.

2. Summarize the objectives and outcomes identified in the Plan This could be a restatement of items, or a table listed elsewhere in the plan or a reference to another location. It may also contain any essential items from the housing and homeless needs assessment, the housing market analysis, or the strategic plan.

The PY 2022 Annual Action Plan describes the City’s planned CDBG related investments for the coming program year. It outlines the City’s proposed activities in several areas relative to the goals and strategies of the City’s Five-Year Consolidated Plan and will focus on public services, facility improvements, and housing preservation.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 11, Packet Page 260

EXHIBIT A
Annual Action Plan
2022- 2023
3 OMB Control No: 2506-0117 (exp. 09/30/2021)
The Action Plan includes the following CDBG budget projections:
 $263,657 in CDBG entitlement funds from HUD
 $900,000 in projected program income funds
All of the projects support the City’s 2020-2024 Consolidated Plan. Key projects proposed for PY 2022 include:
 Housing Rehabilitation Programs focusing on minor repairs, accessibility improvements, and emergency repairs
 Public Service Grants to groups serving youth, seniors, and homeless persons and families  Capital improvement grants for facility improvements for public service providers  Staffing and overhead for overall administration of the CDBG program  Monitoring subrecipients

3. Evaluation of past performance
This is an evaluation of past performance that helped lead the grantee to choose its goals or projects.

Each year, grantees are required to report on accomplishments and progress toward Consolidated Plan goals in the Consolidated Annual Performance and Evaluation Report (CAPER). The most recently completed CAPER was for PY 2020, and some of the accomplishments include the following:
 Allocated $172,000 in grant funds to assist eleven nonprofit public service agencies to provide direct services to low-income disadvantaged households in the community. These service agencies assisted 2,841 individuals, including the homeless and persons with special needs or disabilities.
 Rehabilitated six homeowner units to preserve existing housing stock.  Acquired, rehabilitated, and sold three housing units to low-moderate income persons.  Completed facility improvements at a local nonprofit to provide continuing access to the facility.  Provided rental assistance to 96 residents and workers of the City of Monterey.  Met HUD timeliness requirements for expenditures.

The PY 2021 CAPER will be completed after the end of the program year on June 30, 2022.

One of the obstacles that the City faced over recent years was the spread of COVID-19. The pandemic brought about many challenges, including how to administer activities and conduct public meetings while maintaining social distancing safety protocols. This is a situation that had never occurred before, and it therefore required quick thinking and flexible responses in order to overcome. The City was quick to setup and smoothly transition to virtual meetings in place of in-person meetings which allowed for Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 12, Packet Page 261

EXHIBIT A
Annual Action Plan
2022- 2023
4 OMB Control No: 2506-0117 (exp. 09/30/2021)
required processes to continue on schedule. The City also identified the new urgent needs of its residents that resulted from COVID and created programs to meet them. One such program was the Emergency Rental Assistance Program (ERAP) which provided Monterey residents with emergency rental payments to prevent them from becoming homeless. This program was such a success; the City has already drawn down all of its CDBG-CV CARES Act allocations.

4. Summary of Citizen Participation Process and consultation process Summary from citizen participation section of plan.

A number of meetings were held prior to the adoption of the PY 2022 Annual Action Plan in order to allow for citizens to participate in the process by providing their comments and suggestions on the community’s housing, public facility, and public service needs. The first meeting was held on December 2, 2021 and acted as a technical workshop to provide potential applicants with the knowledge necessary to complete the grant application. It also served to solicit public comment on community development needs. Nonprofit agencies played a crucial role in providing information and recommendations in the development of this Action Plan. Next, a meeting was held on January 18, 2022, for the Public Service Grant Review Committee to receive presentations on the grant proposals from the public service organizations. A 30-day public comment period for the draft PY 2022 Annual Action Plan commenced on March 18, 2022, and ended on April 19, 2022. On April 12, 2022, the third meeting was held as a public hearing before the Planning Commission to receive their advisory review and recommendations on the draft Action Plan. The City Council held a public hearing to adopt the Action Plan on April 19, 2022.

To ensure maximum participation, the draft Action Plan has been made available for public review online at the City’s website, with hard copies available at public counters at the following locations:
 Monterey Public Library – 625 Pacific Street, Monterey, CA 93940  Monterey City Hall: Planning Office, City Clerk’s Office, and Housing Programs Office – 580 Pacific Street, Monterey, CA 93940
Draft copies of the Action Plan have also been made available to local organizations and individuals representing neighborhood associations, special needs groups, and low-income constituencies. All entities were sent meeting notifications to solicit oral or written comments.

5. Summary of public comments
This could be a brief narrative summary or reference an attached document from the Citizen Participation section of the Con Plan.

All public comments are included in the attached public comment documentation.

6. Summary of comments or views not accepted and the reasons for not accepting them Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 13, Packet Page 262

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Annual Action Plan
2022- 2023
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All comments were accepted.

7. Summary
The City of Monterey has been able to successfully manage the ongoing timeliness obligations of the CDBG program and has identified programs and projects that will benefit the community.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 14, Packet Page 263

EXHIBIT A
Annual Action Plan
2022- 2023
6 OMB Control No: 2506-0117 (exp. 09/30/2021)
PR-05 Lead & Responsible Agencies – 91.200(b)

1. Agency/entity responsible for preparing/administering the Consolidated Plan Describe the agency/entity responsible for preparing the Consolidated Plan and those responsible for administration of each grant program and funding source.

Agency Role Name Department/Agency
CDBG Administrator MONTEREY Housing Programs Office
Table 1 – Responsible Agencies
Narrative (optional)
The City of Monterey’s Housing Programs office is the team that administers the City’s CDBG funds and serves as the lead agency in performing CDBG planning and administration tasks.

Consolidated Plan Public Contact Information
The City’s Housing Programs Office is the designated department responsible for planning and implementing the City’s Five-Year Consolidated Plan, each Annual Action Plan, and the City’s CDBG program. General inquiries regarding the Consolidated Plan or the CDBG program may be directed to the Housing Programs office at (831) 646-3995. Written correspondence regarding the Action Plan should be directed to the Housing Programs Office, City of Monterey, City Hall, 580 Pacific Street, Monterey, CA 93940.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 15, Packet Page 264

EXHIBIT A
Annual Action Plan
2022- 2023
7 OMB Control No: 2506-0117 (exp. 09/30/2021)
AP-10 Consultation – 91.100, 91.200(b), 91.215(l)

1. Introduction
The City consulted with many of the trusted organizations and agencies it has worked with in the past to learn the community’s priority needs and to learn ways to best deliver services to those in need. The table below describes these efforts. In addition, resilience-specific stakeholders have been working with Monterey County and all of the surrounding jurisdictions to update the Multi-Jurisdictional Hazard Mitigation Plan. The County is currently in the process of finalizing its 2022 Multi-Jurisdictional Hazard Mitigation Plan, and there are drafts currently available online.

The City of Monterey will continue to incorporate the mitigation efforts identified in the Plan and move toward achieving the goals established.

This will help to address the needs of residents who are vulnerable to both the effect of disasters and housing issues.

Provide a concise summary of the jurisdiction’s activities to enhance coordination between public and assisted housing providers and private and governmental health, mental health, and service agencies (91.215(l)) It is the City’s policy, as referenced in the Housing Element of the General Plan, to assist the Housing Authority, nonprofit agencies, and private developers in providing housing opportunities to extremely low, low, and very low-income households when such an opportunity is identified.

To address homelessness, since 2013, the City has participated in the Coalition of Homeless Service Providers (CHSP) Leadership Council’s oversight of the Lead Me Home Plan.

Describe coordination with the Continuum of Care and efforts to address the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans, and unaccompanied youth) and persons at risk of homelessness.

The Coalition of Homeless Service Providers (CHSP) is the Continuum of Care (CoC) for Monterey and San Benito Counties. The City of Monterey staff regularly attends monthly meetings held by the CHSP, which include the CHSP Board meeting, the Housing Pipeline meeting, the Leadership Council meeting, and the meeting of the CHSP Executive Committee.

The May 2019 Lead Me Home Update to the 10-year Plan was developed in collaboration with the Monterey County Board of Supervisors and San Benito County Board of Supervisors. The plan builds upon the successful relationships developed during the creation of the original plan.

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Annual Action Plan
2022- 2023
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These relationships are multi-organizational, multi-governmental, and multi-sectoral. Collaboratively, an approach has begun to identify successful practices, organize resources, scale up to the size of the problem, and produce public value by delivering meaningful results. This will require continued innovation by community-based organizations, advances in government policy practices, and meaningful private sector investment.

The Lead Me Home Plan Update is founded on a new vision of a system that starts with stabilizing existing tenancies to prevent homelessness, re-housing people before they enter the shelter, and linking people to appropriate community supports so that they may find and keep stable housing, as well as improve their economic position. It seeks to use housing opportunities as a vehicle to link families & individuals with employment or income programs.

The Lead Me Home 10-Year Plan for housing the homeless in Monterey and San Benito Counties was developed to meet the requirements of the Federal Governments Homeless, Emergency Assistance & Rapid Transition to Housing Act. The Plan lays out the priorities, strategies, and action steps for ending homelessness in the two counties. The City of Monterey’s Housing Programs Office is working to implement many of the key strategies identified in the Plan.

Describe consultation with the Continuum(s) of Care that serves the jurisdiction's area in determining how to allocate ESG funds, develop performance standards for and evaluate outcomes of projects and activities assisted by ESG funds, and develop funding, policies and procedures for the operation and administration of HMIS Not applicable. The City does not receive ESG funds.

2. Describe Agencies, groups, organizations, and others who participated in the process and describe the jurisdiction’s consultations with housing, social service agencies and other entities Table 2 – Agencies, groups, organizations who participated 1 Agency/Group/Organization Interim Inc
Agency/Group/Organization Type Services - Housing
Services - Persons with Disabilities
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Annual Action Plan
2022- 2023
9 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homelessness Strategy
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Salvation Army of the Monterey Peninsula Agency/Group/Organization Type Services - Housing
Services-homeless
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
2 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.
3 Agency/Group/Organization Community Human Services
Agency/Group/Organization Type Services - Housing
Services - Children
Services - Homeless
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 18, Packet Page 267

EXHIBIT A
Annual Action Plan
2022- 2023
10 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Non-Homeless Special Needs
Economic Development
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Legal Services for Seniors
Agency/Group/Organization Type Services-Elderly Persons Service-Fair Housing
What section of the Plan was addressed by Consultation? Housing Need Assessment Non-Homeless Special Needs
Economic Development
4 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Alliance on Aging
Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Housing Need Assessment Non-Homeless Special Needs
Economic Development
5 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 19, Packet Page 268

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Annual Action Plan
2022- 2023
11 OMB Control No: 2506-0117 (exp. 09/30/2021)
Agency/Group/Organization Veterans Transition Center
Agency/Group/Organization Type Housing
Services - Housing
Services-homeless
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homelessness Needs - Veterans
Homelessness Strategy
Economic Development
6 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Food Bank of Monterey County
Agency/Group/Organization Type Services-Health
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
7 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.
8 Agency/Group/Organization Meals on Wheels of the Monterey Peninsula Agency/Group/Organization Type Services-Elderly Persons Services-Persons with Disabilities
Services-Health
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 20, Packet Page 269

EXHIBIT A
Annual Action Plan
2022- 2023
12 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Non-Homeless Special Needs
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Josephine Kernes Memorial Pool Agency/Group/Organization Type Services-Elderly Persons Services-Persons with Disabilities
Services-Health
What section of the Plan was addressed by Consultation? Housing Need Assessment Non-Homeless Special Needs
9 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Monterey Police Department
Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Non-Homeless Special Needs
10 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 21, Packet Page 270

EXHIBIT A
Annual Action Plan
2022- 2023
13 OMB Control No: 2506-0117 (exp. 09/30/2021)
Agency/Group/Organization Community Development Department Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Housing Need Assessment Public facility needs
11 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Parks and Recreation
Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Housing Need Assessment Public facility needs
12 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.
13 Agency/Group/Organization The Coalition of Homeless Service Providers Agency/Group/Organization Type Services - Housing
Services- Persons with HIV/AIDS
Services- Victims of Domestic Violence
Services- Homeless
Services - Victims
Regional organization
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 22, Packet Page 271

EXHIBIT A
Annual Action Plan
2022- 2023
14 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Non-Homeless Special Needs
Economic Development
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.
14 Agency/Group/Organization Housing Authority of County of Monterey Agency/Group/Organization Type Services - Housing
Services-homeless
Other government - County
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 23, Packet Page 272

EXHIBIT A
Annual Action Plan
2022- 2023
15 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Public Housing Needs
Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Non-Homeless Special Needs
Market Analysis
Economic Development
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.
15 Agency/Group/Organization Eden Council for Hope and Opportunity (ECHO) Agency/Group/Organization Type Housing
Services - Housing
Service-Fair Housing
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 24, Packet Page 273

EXHIBIT A
Annual Action Plan
2022- 2023
16 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Non-Homeless Special Needs
Economic Development
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Gathering for Women
Agency/Group/Organization Type Services-homeless
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Chronically homeless
Homelessness Strategy
16 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Interfaith Homeless Emergency Lodging Program Agency/Group/Organization Type Services-homeless
Services-Health
17 What section of the Plan was addressed by Consultation? Homeless Needs - Chronically homeless Homeless Needs - Families with children
Homelessness Needs - Veterans
Homelessness Needs - Unaccompanied youth
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 25, Packet Page 274

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Annual Action Plan
2022- 2023
17 OMB Control No: 2506-0117 (exp. 09/30/2021)
Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Boys & Girls Clubs of Monterey County Agency/Group/Organization Type Services-Children
Services-Education
Services-Employment
What section of the Plan was addressed by Consultation? Housing Need Assessment Homeless Needs - Families with children
Homelessness Needs - Unaccompanied youth
Homelessness Strategy
Economic Development
Anti-poverty Strategy
18 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Avila Construction
Agency/Group/Organization Type Housing
What section of the Plan was addressed by Consultation? Housing Need Assessment Market Analysis
Economic Development
19 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 26, Packet Page 275

EXHIBIT A
Annual Action Plan
2022- 2023
18 OMB Control No: 2506-0117 (exp. 09/30/2021)
Agency/Group/Organization Silicon Constructors, Inc.

Agency/Group/Organization Type Housing
Services - Housing
What section of the Plan was addressed by Consultation? Housing Need Assessment Market Analysis
Economic Development
20 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) attended at least one community forum and provided input to help prioritize the City’s community needs in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization Viasat
Agency/Group/Organization Type Services - Broadband Internet Service Providers What section of the Plan was addressed by Consultation? Market Analysis 21 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
A representative from VSAT Systems was included in the survey undertaken by Monterey. In addition, VSAT Systems was included in the Stakeholder meetings for the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization AT&T
Agency/Group/Organization Type Services - Broadband Internet Service Providers What section of the Plan was addressed by Consultation? Market Analysis 22 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representatives from the local AT&T Store attended the Stakeholder Meeting and submitted a survey for the Con Plan, which has helped to inform this Action Plan.
23 Agency/Group/Organization County of Monterey
Agency/Group/Organization Type Other government - County Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 27, Packet Page 276

EXHIBIT A
Annual Action Plan
2022- 2023
19 OMB Control No: 2506-0117 (exp. 09/30/2021)
What section of the Plan was addressed by Consultation? Housing Need Assessment Briefly describe how the Agency/Group/Organization was
consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.

Agency/Group/Organization United Way Monterey County
Agency/Group/Organization Type Services - Housing
Services-Children
Services-Education
What section of the Plan was addressed by Consultation? Housing Need Assessment 24 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the
consultation or areas for improved coordination?
Representative(s) contributed narrative and data to answer questions relevant to the Consolidated Plan in the Con Plan, which has helped to inform this Action Plan.

Identify any Agency Types not consulted and provide rationale for not consulting The Community Hospital of Monterey Peninsula (CHOMP) was not consulted regarding the 2020-2024 Consolidated Plan and therefore did not help to provide information for this Action Plan. However, the Coalition of Homeless Service Providers (CHSP) was consulted regarding the provision of temporary shelter needs of homeless individuals following release from CHOMP. Specifically, the Salvation Army Monterey Peninsula Corps works in partnership with CHOMP to create housing plans and provide temporary shelter for homeless individuals. The City consulted with the Salvation Army of the Monterey Peninsula, Interim, Inc., and Community Human Services, all of whom assist in the process of placing homeless individuals after local medical or mental health facility discharge using vouchers and temporary housing.

Other local/regional/state/federal planning efforts considered when preparing the Plan Table 3 – Other local / regional / federal planning efforts Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 28, Packet Page 277

EXHIBIT A
Annual Action Plan
2022- 2023
20 OMB Control No: 2506-0117 (exp. 09/30/2021)
Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? Continuum of Care
Coalition of
Homeless Service
Providers
The City of Monterey attends all monthly meetings held by the Coalition of Homeless Service Providers and has been a contributor to the Lead Me Home Plan. Traditionally, the City has supported agencies and organizations the CHSP regular partner with to carry out the vision of the Plan by providing services to all homeless populations. The City will also comply with the Housing First approach, which requires removing barriers homeless individuals and families have faced in obtaining housing, such as income requirements. Additionally, as part of the Plan, training will be enhanced and replicated by Community Action officers in the City of Monterey to train police/law enforcement officers in other jurisdictions on homeless outreach strategies and goals of discharge planning policies.

Emergency Shelter
Overlay
City of Monterey To reference areas ideal for emergency shelters and supportive services.

General Plan and
Housing Element
City of Monterey
The General Plan Housing Element is the City policy guide to meeting the community housing needs. The Strategic Plan aligns with the goals and policies for implementation of the Housing Element.

Parks & Recreation
Master Plan
City of Monterey
To reference the most ideal areas in need of improvement according to City plans with a focus on low to moderate CDBG target areas.

City of Monterey, 2016
Climate Action Plan
City of Monterey
Development as related to the Consolidated Plan that occurs shall be primarily in the areas where environmental hazards can be properly mitigated.
2019 Analysis of
Impediments
City of Monterey
Assessment of impediments and fair housing challenges in Monterey with specific and measurable goals to help address fair housing problems.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 29, Packet Page 278

EXHIBIT A
Annual Action Plan
2022- 2023
21 OMB Control No: 2506-0117 (exp. 09/30/2021)
Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? 2020-2024 Consolidated
Plan
City of Monterey
Strategic Plan Goals: 1. The Housing Opportunities goal supports rehabilitating low to moderate rental units, production of low-income rental units and preserving low to moderate income Deed Restricted Ownership units and monitoring and rehabilitating low to moderate Ownership Housing units. 2. Services that support a suitable living environment, including services to homeless persons, seniors, youth, disabled persons, and low to moderate income households in the community. 3. Address the impacts of the health crisis and accompanying economic downturn through emergency housing assistance. 4. Public infrastructure in low to moderate income CDBG target areas. Needs include park upgrades, ADA accessibility, improvements to streets and other infrastructure. 5. Economic development because of the high number of low-income households combined with impacts of the recent COVID-19 health crisis and accompanying economic downturn. 6. Optimal program planning is a goal for administering the CDBG program at the City. 2022 Monterey County
Multi-Jurisdictional
Hazard Mitigation Plan
County of
Monterey
The Hazard Mitigation Plan helps to identify a wide range of natural and manmade hazards that the City must be aware of and take action to mitigate.

Resilience specific stakeholders have been working with Monterey County and all of the surrounding jurisdictions to update the MultiJurisdictional Hazard Mitigation Plan. The County is currently in the process of finalizing its 2022 Multi-Jurisdictional Hazard Mitigation Plan, and there are drafts currently available online. The City of Monterey will continue to incorporate the mitigation efforts identified in the Plan and move towards achieving the goals established.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 30, Packet Page 279

EXHIBIT A
Annual Action Plan
2022-23
22 OMB Control No: 2506-0117 (exp. 09/30/2021)
AP-12 Participation – 91.105, 91.200(c)

1. Summary of citizen participation process/Efforts made to broaden citizen participation Summarize citizen participation process and how it impacted goal setting A number of meetings were held prior to the adoption of the PY 2022 Annual Action Plan in order to allow for citizens to participate in the process by provide their comments and suggestions on the community’s housing, public facility, and public service needs. The first meeting was held on December 2, 2021 and acted as a technical workshop to provide potential applicants with the knowledge necessary to complete the grant application. It also acted to solicit public comment on community development needs. Nonprofit agencies played a key role in providing information and recommendations in the development of this Action Plan. Next, a meeting was held on January 18, 2022 to receive presentations on the grant proposals from the public service organizations. A 30-day public comment period for the draft PY 2022 Annual Action Plan commenced on March 19, 2022 and ended on April 18, 2022. A third meeting on April 12, 2022 was held as a public hearing before the Planning Commission to receive their advisory review and recommendations on the draft Action Plan. The City Council held a public hearing to adopt the Action Plan April 19, 2022.

To ensure maximum participation, the draft Action Plan has been made available for public review online at the City’s website, with hard copies available at public counters at the following locations:
 Monterey Public Library – 625 Pacific Street, Monterey, CA 93940  Monterey City Hall: Planning Office, City Clerk’s Office, and Housing Programs Office – 580 Pacific Street, Monterey, CA 93940 Draft copies of the Action Plan have also been made available to local organizations and individuals representing neighborhood associations, special needs groups, and low-income constituencies. All entities were sent meeting notifications to solicit oral or written comments.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 31, Packet Page 280

EXHIBIT A
Annual Action Plan
2022-23
23 OMB Control No: 2506-0117 (exp. 09/30/2021)
Citizen Participation Outreach
Sort
Order
Mode of
Outreach
Target of
Outreach
Summary of
response/attendance
Summary of
comments received
Summary of
comments not
accepted
and reasons
URL (If
applicable)
1 Public
Meeting
Nontargeted/broad
community
Public service
Providers,
Neighborhood
and Business
Associations
Technical workshop held on December
2, 2021. Attendance by public services
providers and residents. Intent to invite
comment on unmet community needs
and describe the City's CDBG public
services grant program and application
procedure.

Please refer to the
attached document
called Citizen
Participation Outreach
Comments and
Questions.

All comments
were accepted.
2 Newspaper
Ad
Nontargeted/broad
community
Newspaper notices informing the public
of the City's scheduled public meetings
and hearings on the Action Plan and
notifying the public of the opening
public comment period for the draft
Action Plan. The public comment
period opened on March 19, 2022, and
closed April 19, 2022.

Please refer to the
attached document
called Citizen
Participation Outreach
Comments and
Questions.

All comments
were accepted.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 32, Packet Page 281

EXHIBIT A
Annual Action Plan
2022-23
24 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Mode of
Outreach
Target of
Outreach
Summary of
response/attendance
Summary of
comments received
Summary of
comments not
accepted
and reasons
URL (If
applicable)
3 Internet
Outreach
Nontargeted/broad
community
Copies of the Action Plan were posted
on the City's website for the public
comment period.

Please refer to the
attached document
called Citizen
Participation Outreach
Comments and
Questions.

All comments
were accepted.
https://monte
rey.org/city_h
all/communit
y_developme
nt/housing_pr
ograms/plans
___reports/in
dex.php
4 Public
Hearing
Nontargeted/broad
community
On April 12, 2022, a public hearing was
held before the Planning Commission
to receive their advisory review and
recommendations on the draft Action
Plan
Please refer to the
attached document
called Citizen
Participation Outreach
Comments and
Questions.

All comments
were accepted.
5 Public
Hearing
Nontargeted/broad
community
The City Council held a public hearing
to adopt the Action Plan on April 19,
2022.

Please refer to the
attached document
called Citizen
Participation Outreach
Comments and
Questions.

All comments
were accepted.

Table 4 – Citizen Participation Outreach
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 33, Packet Page 282

EXHIBIT A
Annual Action Plan
2022-23
25 OMB Control No: 2506-0117 (exp. 09/30/2021)
Expected Resources
AP-15 Expected Resources – 91.220(c)(1,2)
Introduction
The City’s CDBG entitlement allocation of funding requires addressing the ratio of program income to entitlement that the City receives each year. While entitlement allocations have been stable, the amount of program income received each year is unpredictable and has ranged from less than $500,000 to more than $1,000,000. The average program income received over the last 10 years is about $677,000; however, due to rising housing costs, many loans are being repaid to the CDBG fund. To meet CDBG expenditure timeliness requirements and comply with HUD’s program funding reporting and public outreach requirements, it is important to make the best estimate regarding the total funding expected to roll over from the prior year and the amount of program income to be received. The City is budgeting for about $900,000 in program income for the 2022–2023 program year.

CDBG entitlement allocations also fluctuate slightly from year to year. For PY 2022, the City is expecting to receive $263,657 in CDBG entitlement funding from HUD.

The City anticipates receiving a little more than $2,327,000 in combined entitlement funding and program income over the remaining two years of the Consolidated Plan cycle from 2023-24 and 2024-

25. These funds will be used for activities similar to what the City has consistently funded over the past few years. Some examples of these activities are the purchase and/or rehabilitation of affordable housing, public services that assist low-moderate income persons or households including seniors, the homeless, and the disabled, and public facility/public infrastructure improvement projects that provide assistance and service in low-moderate income areas.

On January 29, 2021, the State of California passed the COVID-19 Tenant Relief Act which utilizes SB 91 and Federal stimulus dollars to extend eviction protections to COVID-19 impacted tenants and establish the state’s Emergency Rental Assistance Program. Monterey County was given $28 million for rent and utility assistance, with the United Way of Monterey County acting as the pass-through organization. The City of Monterey applied to the United Way for $2.5 million and ended up receiving an award of $1.25 million to be used for its Emergency Rental Assistance Program (ERAP). The City’s Emergency Rental Assistance Program was established in early 2020 due to the COVID-19 pandemic and was funded using CDBG-CV money allocated to the City through the U.S. Department of Housing and Urban Development.

The program will now be funded using the SB 91 and Federal stimulus dollars and will continue to help the residents of the City of Monterey. The City will continue to pursue potential funding for the program as they become available.

In 2017, the City established and contributed to a CDBG Revolving Loan Fund, which is made up of Program Income funds that are set-aside for specific housing acquisition and rehabilitation programs.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 34, Packet Page 283

EXHIBIT A
Annual Action Plan
2022-23
26 OMB Control No: 2506-0117 (exp. 09/30/2021)
The revenues of the Revolving Loan Fund are included in the total Program Income (PI) estimates for planning and budgeting purposes as estimated Revolving Loan Fund receipts can be difficult to project both in timing and in total amount. Revolving Loan Fund funds will be used as a resource for the City’s single-family housing acquisition, rehabilitation, and resale program that makes housing ownership available to qualifying low-income households. It may also be used for housing rehabilitation loans that address health and safety repairs for low-income homeowners, including seniors and persons with disability. The Revolving Loan Fund is budgeted in the Housing Programs project.

The table below includes the estimated CDBG revenues for the coming year. It includes the Former Redevelopment Agency Housing funds and the Revolving Loan Fund income that the City typically receives each year. These funds are used to help support affordable housing in the City and are reported or regulated like CDBG
Anticipated Resources
Progra Expected Amount Available Year 1
m
Sourc
e of
Funds
Uses of Funds
Annual
Allocatio
n: $
Progra
m
Income
: $
Prior
Year
Resource
s: $
Total:
$
Expected
Amount
Available
Remaind
er of
ConPlan
$
Narrative
Description
CDBG public
-
feder
al
Acquisition
Admin and
Planning
Economic
Developmen
t
Housing
Public
Improvemen
ts
Public
Services
263,657
900,00
0 0
1,163,65
7 2,327,31
4 Program
Income
includes
former
Redevelopme
nt Agency
Housing
funds and the
Revolving
Loan Fund
that the City
typically
receives each
year.

Table 1 - Expected Resources – Priority Table
Explain how federal funds will leverage those additional resources (private, state, and local funds), including a description of how matching requirements will be satisfied The City’s current housing resources do not have matching fund requirements. However, the City will be using PY 2022 funds to leverage other resources, including repayment of housing loans made by the Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 35, Packet Page 284

EXHIBIT A
Annual Action Plan
2022-23
27 OMB Control No: 2506-0117 (exp. 09/30/2021)
redevelopment agency. These resources are dedicated to affordable housing activities, while the City’s CDBG allocation provides support through infrastructure, public facility, and public services.

In 2021, the City was able to leverage CDBG-CV funding that it was using to administer its Emergency Rental Assistance Program to receive more funding for the program from the United Way of Monterey County through the COVID-19 Tenant Relief Act (SB 91 and Federal stimulus dollars) in the amount of $1.25 million dollars. This funding will be essential in keeping the Emergency Rental Assistance Program running and continuing to keep the residents of the City of Monterey housed.

The City will pursue other resources as they become available. Some examples of these resources are the CalHome Program, the Permanent Local Housing Allocation (PLHA), the Regional Early Action Planning (REAP) Grant, and the Local Early Action Planning (LEAP) Grant. The City has already been chosen to receive PLHA, REAP, and LEAP funds and will use the funds to meet local needs throughout the duration of the Consolidated Plan cycle. As the City receives more funding, it will be reported in future Annual Action Plans.

If appropriate, describe publicly owned land or property located within the jurisdiction that may be used to address the needs identified in the plan The City will be providing technical assistance from the CDBG planning and administration funds for Citysponsored parks projects in CDBG targeted low to moderate areas. Additionally, the City has a program to purchase and rehabilitate deed-restricted affordable homes and then resell them to low-income firsttime homeowners to ensure no inventory is lost. There are currently 540 Deed Restricted Affordable Units in the City. The budget allows for the purchase of up to three units should they come available.

The City also will continue outreach efforts and technical assistance to service providers and other jurisdictions in the area to identify new affordable housing projects and additional homeless services or facilities.

Ten units are now available for rent on City leased property at 595 Munras Avenue, two of which will be affordable. There are several other projects under development that will include affordable units through the inclusionary zoning ordinance. Other projects include 2200 North Fremont that will include 40 Dwelling Units with eight affordable units through a seven percent Density Bonus and Inclusionary Housing. Also, eight Dwelling Units with two affordable units with Inclusionary Housing at 300 Cannery Row has been approved. The City has also recently approved 155 units at 2000, 2300 and 2600 Garden Road. The City also has four sites that have been approved for the development of affordable housing:

Madison Street Buildings – 29 units, Calle Principal Garage – 50 units, Adams Street Parking Lot – 12 units, and Harbor Yard – 6 to 19 units.

Discussion
See above sections.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 36, Packet Page 285

EXHIBIT A
Annual Action Plan
2022-23
28 OMB Control No: 2506-0117 (exp. 09/30/2021)
Annual Goals and Objectives
AP-20 Annual Goals and Objectives
Goals Summary Information
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
1 Housing
opportunities
2020 2024 Affordable
Housing
Citywide Homelessness
Prevention
Production of New
Rental Units for
Extremely Low-Income
Production of New
Very Low-Income
Rental Units
Production of New
Low-Income Rental
Units
Production of New
Moderate-Income For
Sale and Rent
Preserve LMI Deed
Restricted Ownership
Units
Homeowner housing
rehabilitation
CDBG:
$658,926
Homeowner Housing
Rehabilitated: 10 Household
Housing Units
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 37, Packet Page 286

EXHIBIT A
Annual Action Plan
2022-23
29 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
2 Suitable living
environment
2020 2024 Affordable
Housing
Homeless
Non-Homeless
Special Needs
Non-Housing
Community
Development
Citywide Homelessness
Prevention
Public Service:

Emergency housing
assistance
Economic development
Public Services:

Homeless counseling
Landlord Tenant
Counseling/Legal
Assistance/Fair Housing
Public Service: Job
training
Public Service: Job
generating activities
Public Services:

Counseling for at-risk
youth
Public Services: After
school programs
Public Services:

Emergency
preparedness
Public Services:

Transportation
Public Services:

Healthcare
Public Services:

CDBG:
$172,000
Public service activities other
than Low/Moderate Income
Housing Benefit: 1,817
Persons Assisted
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 38, Packet Page 287

EXHIBIT A
Annual Action Plan
2022-23
30 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
Homeless outreach
Public Services:

Homeless mental
health
Public Services:

Homeless substance
abuse
3 Creating
affordability
2020 2024 Affordable
Housing
Homeless
Non-Homeless
Special Needs
Non-Housing
Community
Development
Citywide Homelessness
Prevention
Public Service:

Emergency housing
assistance
Economic development
CDBG: $0 Other: 0 Other
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 39, Packet Page 288

EXHIBIT A
Annual Action Plan
2022-23
31 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
4 Public
Infrastructure
2020 2024 Non-Housing
Community
Development
Del Monte -
Laguna
Grande
Historic
Downtown
Van Buren
Street Lower
Old Town
El Estero
Permanent and
Supportive Housing
Emergency Shelters
Public Facilities: Parks
Public Facilities:
recreational facilities
Public Facilities: Youth
centers
Public Facilities: senior
centers
Public Facilities:
neighborhood community
centers
Public Facilities:

Healthcare facilities
Infrastructure
improvements:

Sewer/street improvem
Infrastructure
improvements: Street
Improvements
Infrastructure
improvements: Safe
Routes to School
Infrastructure
improvements:

Sidewalk/Curb Improve
Infrastructure
improvements:

Infrastructure support
CDBG:
$100,000
Public Facility or
Infrastructure Activities other
than Low/Moderate Income
Housing Benefit: 150 Persons
Assisted
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 40, Packet Page 289

EXHIBIT A
Annual Action Plan
2022-23
32 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
Infrastructure
improvements: ADA
accessibility
Infrastructure
improvements: Bike lanes
with light
5 Economic
development
2020 2024 Non-Housing
Community
Development
Economic
development
Citywide Economic development CDBG: $0 Businesses assisted: 0 Businesses Assisted
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 41, Packet Page 290

EXHIBIT A
Annual Action Plan
2022-23
33 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
6 Program
administration
2020 2024 Affordable
Housing
Homeless
Non-Homeless
Special Needs
Non-Housing
Community
Development
Planning and
administration
Citywide Homelessness
Prevention
Public Service:

Emergency housing
assistance
Economic development
Low Barrier Homeless
Shelters
Public Services:

Homeless counseling
Landlord Tenant
Counseling/Legal
Assistance/Fair Housing
Production of New
Rental Units for
extremely low-i
Production of New
Very Low-Income
Rental Units
Production of New
Low-Income Rental
Units
Production of New
Moderate-Income For
sale and rent
Preserve LMI Deed
Restricted Ownership
Units
CDBG:
$232,731
Other: 1 Other
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 42, Packet Page 291

EXHIBIT A
Annual Action Plan
2022-23
34 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
Public Service: Job
training
Public Service: Job
generating activities
Public Services:

Counseling for at-risk
youth
Public Services: After
school programs
Public Services:

Emergency
preparedness
Public Services:

Transportation
Public Services:

Healthcare
Public Services:

Homeless outreach
Public Services:

Homeless mental
health
Public Services:

Homeless substance
abuse
Permanent and
Supportive Housing
Emergency Shelters
Public Facilities: Parks
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 43, Packet Page 292

EXHIBIT A
Annual Action Plan
2022-23
35 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
Public Facilities:
recreational facilities
Public Facilities: Youth
centers
Public Facilities: senior
centers
Public Facilities:
neighborhood
community centers
Public Facilities:

Healthcare facilities
Infrastructure
improvements:

Sewer/street
improvements
Infrastructure
improvements: Street
Improvements
Infrastructure
improvements: Safe
Routes to School
Infrastructure
improvements:

Sidewalk/Curb
Improvements
Infrastructure
improvements:

Infrastructure suppo
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 44, Packet Page 293

EXHIBIT A
Annual Action Plan
2022-23
36 OMB Control No: 2506-0117 (exp. 09/30/2021)
Sort
Order
Goal Name Start
Year
End
Year
Category Geographic
Area
Needs Addressed Funding Goal Outcome Indicator
Infrastructure
improvements: ADA
accessibility
Infrastructure
improvements: Bike
lanes with light
Homeowner housing
rehabilitation
Table 2 – Goals Summary
Goal Descriptions
1 Goal Name Housing opportunities
Goal
Description
Data and community outreach showed a need for housing. The Housing Opportunities goal supports rehabilitating low to moderate rental units, production of low-income rental units and preserving low to moderate income Deed Restricted Ownership units and monitoring and rehabilitating low to moderate Ownership Housing units. 2 Goal Name Suitable living environment
Goal
Description
Data and community outreach showed a great need for services that support a suitable living environment, including services to homeless persons, seniors, youth, disabled persons, and low to moderate income households in the community.
3 Goal Name Creating affordability
Goal
Description
Address the impacts of the health crisis and accompanying economic downturn through emergency housing assistance.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 45, Packet Page 294

EXHIBIT A
Annual Action Plan
2022-23
37 OMB Control No: 2506-0117 (exp. 09/30/2021)
4 Goal Name Public Infrastructure
Goal
Description
Data and community need showed a need for public infrastructure in low to moderate income CDBG target areas. Needs include park upgrades, ADA accessibility, improvements to streets and other infrastructure. 5 Goal Name Economic development
Goal
Description
Data and community outreach showed a need for economic development because of the high number of low-income households combined with impacts of the recent COVID-19 health crisis and accompanying economic downturn. 6 Goal Name Program administration
Goal
Description
Optimal program planning is a goal for administering the CDBG program at the City.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 46, Packet Page 295

EXHIBIT A
Annual Action Plan
2022-23
38 OMB Control No: 2506-0117 (exp. 09/30/2021)
Projects
AP-35 Projects – 91.220(d)
Introduction
The Needs Assessment revealed many findings related to the need for affordable housing, services to homeless and special needs populations, and needs for rental assistance to prevent homelessness. The City will continue to collaborate with the public service providers that have been traditionally funded by CDBG.

Projects
# Project Name
1 Planning and Administration
2 Public Services
3 Public Infrastructure Projects
4 Housing Preservation Programs
Table 3 - Project Information
Describe the reasons for allocation priorities and any obstacles to addressing underserved needs
The needs assessment portion of the Five-Year Consolidated Plan identified the lack of affordable housing as a key unmet need. The Consolidated Plan acknowledges that land constraints and limited water make it very difficult to provide sufficient new housing supply to address the lack of affordable housing. The City will focus funding on preserving as many low and moderate-income ownership units through rehabilitation and the retention of deed restricted units. The City will also focus funding on homelessness prevention and services to low-moderate income persons.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 47, Packet Page 296 Annual Action Plan
2022-23
39 OMB Control No: 2506-0117 (exp. 09/30/2021)
AP-38 Project Summary
Project Summary Information
Project Name Planning and Administration
Target Area Citywide
1 Goals Supported Program administration
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 48, Packet Page 297 Annual Action Plan
2022-23
40 OMB Control No: 2506-0117 (exp. 09/30/2021)
Needs Addressed Homelessness Prevention
Public Service: Emergency housing assistance
Economic Development
Low Barrier Homeless Shelters
Public Services: Homeless counseling
Landlord Tenant Counseling/Legal Assistance/Fair Housing Production of New Rental Units for Extremely Low-income Rental Units Production of New Very Low-Income Rental Units
Production of New Low-Income Rental Units
Production of New Moderate-Income For Sale and Rent
Preserve LMI Deed Restricted Ownership Units
Public Service: Job training
Public Service: Job generating activities
Public Services: Counseling for at-risk youth
Public Services: After school programs
Public Services: Emergency preparedness
Public Services: Transportation
Public Services: Healthcare
Public Services: Homeless outreach
Public Services: Homeless mental health
Public Services: Homeless substance abuse
Permanent and Supportive Housing
Emergency Shelters
Public Facilities: Parks
Public Facilities: recreational facilities
Public Facilities: Youth centers
Public Facilities: senior centers
Public Facilities: neighborhood community centers
Public Facilities: Healthcare facilities
Infrastructure improvements: Sewer/street improvements
Infrastructure improvements: Street Improvements
Infrastructure improvements: Safe Routes to School
Infrastructure improvements: Sidewalk/Curb Improvements Infrastructure improvements: Infrastructure support
Infrastructure improvements: ADA accessibility
Infrastructure improvements: Bike lanes with light
Homeowner housing rehabilitation
Funding CDBG: $232,731
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 49, Packet Page 298 Annual Action Plan
2022-23
41 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description Provide general staff administration of CDBG programs and activities, including Integrated Disbursement and Information System (IDIS) administration, program setup, reporting, planning, and subrecipient training and monitoring. A National Objective designation does not apply to activities completed under this project.

Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
Planning and Administration provides oversight to the CDBG program to ensure compliance with HUD regulations.

Location Description Citywide
Planned Activities General Planning and Administration. HUD Matrix Code: 21A General Administration. National objective: benefit to low- and moderateincome persons or households.

Project Name Public Services
Target Area Citywide
Goals Supported Housing opportunities
Suitable living environment
Needs Addressed Homelessness Prevention
Public Services: Homeless counseling
Landlord Tenant Counseling/Legal Assistance/Fair Housing Public Service: Job training
Public Service: Job generating activities
Public Services: Counseling for at-risk youth
Public Services: Homeless outreach
Public Services: Homeless mental health
Public Services: Homeless substance abuse
Permanent and Supportive Housing
Funding CDBG: $172,000
Description Provide public services to low- and moderate-income households and individuals, including services for seniors, persons with disabilities, and homeless persons, youth, and families.
2 Target Date 6/30/2023
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 50, Packet Page 299 Annual Action Plan
2022-23
42 OMB Control No: 2506-0117 (exp. 09/30/2021)
Estimate the number
and type of families
that will benefit from
the proposed
activities
About 1,817 individuals, including seniors, youth, persons with disabilities, homeless and households at risk of homelessness, and lowincome households.

Location Description Citywide
Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 51, Packet Page 300 Annual Action Plan
2022-23
43 OMB Control No: 2506-0117 (exp. 09/30/2021)
Planned Activities 1. Alliance on Aging: tax assistance and ombudsman services and referrals to assist 390 low-income seniors. Funding: $13,000 (CDBG). HUD Matrix Code: 05A Senior Services. National Objective: LMC.

2. Community Human Services Casa De Noche Buena: emergency shelter to serve an estimated 100 single women and families with children. Funding:
$20,000 (CDBG). HUD Matrix Code: 03T Operating Costs of Homeless/AIDS Patients Programs. National Objective: LMC with “homeless” presumed benefit.

3. Community Human Services Safe Place: homeless outreach and support to serve an estimated 120 homeless persons and at-risk youth. Funding: $20,000 (CDBG). HUD Matrix Code: 03T Operating Costs of Homeless/AIDS Patients Programs. National Objective: LMC with “homeless” presumed benefit.

4. Court Appointed Special Advocates (CASA): Court Appointed Special Advocates Program - advocating for children in foster care to assist an estimated 300 persons. Funding: $10,000 (CDBG). HUD Matrix Code: 05N Operating Costs of Abused/Neglected children. National Objective: LMC with “abused children” presumed benefit.

5. ECHO Fair Housing Support Services: fair housing support services to lowincome households in the city for an estimated 75 persons. Funding: $13,600 (CDBG). HUD Matrix Code 05J Fair Housing Activities (subject to Public Services cap). The National Objective will be LMC.

6. Food Bank of Monterey County: provide nutrition support to an estimated 150 persons. Funding: $20,000 (CDBG). HUD Matrix Code: 05W Food Banks.

National Objective: LMC with “homeless” presumed benefit.

7. Gathering for Women: case management and day-center services to homeless women to assist an estimated 200 persons. Funding: $20,000 (CDBG).

HUD Matrix Code: 03T Operating Costs of Homeless/AIDS Programs. National Objective: LMC with “homeless” presumed benefit.

8. Interim, Inc.: homeless services, emergency and temporary housing outreach, and case management for an estimated 20 persons with mental illnesses. Funding: $20,000 (CDBG). HUD Matrix Code: 03T Operating Costs of Homeless/AIDS Patients Programs. National Objective: LMC.

9. Josephine Kernes Memorial Pool: warm-water exercise and therapy for 12 senior and disabled persons. Funding: $9,000 (CDBG). HUD Matrix Code: 05B Handicapped Services. National Objective: LMC with “disabled” presumed benefit.

10. Legal Services for Seniors: legal advocacy and support for an estimated 250 low-income seniors. Funding: $11,400 (CDBG). HUD Matrix Code: 05C Legal Services. National Objective: LMC with “elderly” presumed benefit.

11. Meals on Wheels: meal delivery to homebound seniors and disabled persons; will serve an estimated 200 persons annually. Funding: $15,000 Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 52, Packet Page 301 Annual Action Plan
2022-23
44 OMB Control No: 2506-0117 (exp. 09/30/2021)
(CDBG). HUD Matrix Code: 05A Senior Services. National Objective: LMC with “elderly” presumed benefit.

Project Name Public Infrastructure Projects
Target Area Del Monte -Laguna Grande
Historic Downtown
Van Buren Street Lower Old Town
El Estero
Citywide
Goals Supported Suitable living environment
Public Infrastructure
Needs Addressed Public Facilities: Parks
Public Facilities: Recreational facilities
Public Facilities: Youth centers
Public Facilities: Senior centers
Public Facilities: Neighborhood community centers
Public Facilities: Healthcare facilities
Infrastructure improvements: Sewer/street improvements
Infrastructure improvements: Street improvements
Infrastructure improvements: Safe Routes to School
Infrastructure improvements: Sidewalk/Curb improvements Infrastructure improvements: Infrastructure support
Infrastructure improvements: ADA accessibility
Infrastructure improvements: Bike lanes with lighting
Funding CDBG: $100,000
Description Facility and infrastructure improvements to publicly funded facilities, nonprofit public service facilities, public facilities, parks, and public infrastructure in the CDBG target area.

Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
Approximately 150 persons will receive benefits, including seniors, youth, homeless persons, and low-income households. Additionally, some neighborhoods will experience area benefits from park and public infrastructure improvements.
3 Location Description Public facilities, parks, public infrastructure in the CDBG target area, publicly funded facilities, and nonprofit public service facilities citywide.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 53, Packet Page 302 Annual Action Plan
2022-23
45 OMB Control No: 2506-0117 (exp. 09/30/2021)
Planned Activities Public Infrastructure, Public Park, and Public Facility Improvements:

Accessibility and sustainability improvements for park and public facilities located in the CDBG target area or that predominantly serve low-income households; specific projects still to be determined. (See tiering below.) These projects will be funded by both program income and entitlement funds and will be budgeted to meet HUD's expenditure requirements and deadlines.

1. Tier 1 Improvements: projects that are ready for public bid or that are near shovel-ready and that can be completed prior to the completion of the program year – June 30, 2023.
 Meals on Wheels Community Kitchen: $100,000 for the
purchase of two 30-gallon filling machines and other equipment, HUD Matrix Code 03C Homeless Facilities. National Objective is LMC presumed benefit.

2. Tier 2 Improvements: projects that are in development for the following program year or that may be fast tracked for shovel-readiness within the first quarter of the program year and that could be completed prior to the end of the following calendar year – December 31, 2024 (Tier 2 projects will be considered for funding as funding is available or pending reallocation from delayed or canceled Tier 1 projects).
 Laguna Grande Park Improvements: $60,000 to correct major uplifts on the asphalt walkway parallel to the soccer field and improve the fencing around the field. HUD Matrix Code 03F Parks, Recreational Facilities. National Objective is LMA.

3. Tier 3 Improvements: projects that are in development that may be ready for implementation in the next two to three funding cycles, but that may be fast-tracked for shovel-readiness within the current program year for implementation in the next program year (Tier 3 projects will be considered for funding as funding is available or pending reallocation from delayed or canceled Tier 1 and 2 projects.

Project Name Housing Preservation Programs
Target Area Citywide
Goals Supported Housing opportunities
Needs Addressed Homeowner housing rehabilitation
4 Funding CDBG: $658,926
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Description Emergency housing repairs, minor home repairs, repairs of city owned inclusionary housing units, purchase and resale program, and administration of these activities.

Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
Approximately 10 low-income households will be assisted.

Location Description Citywide
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Planned Activities The national objective for all the Housing Rehabilitation Programs will be LMH.

1. Mr. Fix-It Grants: small grants to low-income households to make minor repairs to improve overall housing quality (estimated $35,000 in grants) HUD Matrix Code 14A Rehab: Single Unit

2. Home Safety Grants: small grants to low-income households to make emergency health and safety repairs to meet code (estimated $35,000 in grants) HUD Matrix Code 14A Rehab: Single Unit

3. Home Accessibility Grants: small grants to low-income households to make accessibility improvements for disabled household members (estimated $35,000 in grants) HUD Matrix Code 14A Rehab: Single Unit

4. Acquisition, rehabilitation, and repair of between 1 and 3 singlefamily ownership units purchased for resale to low-income first-time homebuyers (estimated $378,926) HUD Matrix Code 14G Rehab:

Acquisition

5. Housing Rehabilitation Activity Delivery: staff and project activity delivery costs (estimated $70,000) HUD Matrix Code 14H Rehab:

Administration

6. Lead Paint Testing: Provide funds for testing and clearance testing (including risk assessment) of units constructed prior to 1978 that participate in the City's Owner-Occupied Rehabilitation Program. (Estimated $5,000) HUD Matrix Code14I.

7. Lead Paint Abatement: This program will provide remediation of lead/asbestos hazards of units constructed prior to 1978 that participate in the City's Owner-Occupied Rehabilitation Program (estimated $10,000); HUD Matrix Code14I.

8. Major Rehabilitation Loan Program: This program provides lowinterest loans to eligible low-income homeowners for major rehabilitation or modernization of their home. (estimated $90,000 in grants) HUD Matrix Code 14A Rehab: Single Unit
These projects will be funded with both program income and entitlement funds to best meet HUD expenditure requirements and deadlines.

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AP-50 Geographic Distribution – 91.220(f)
Description of the geographic areas of the entitlement (including areas of low-income and minority concentration) where assistance will be directed CDBG funding will largely be used city-wide for income-eligible persons and households. If additional funding becomes available due to unexpected loan payoffs, the City expects to use CDBG funds in the CDBG target areas. The City has two target areas, Del Monte Grove–Laguna Grande and Downtown target areas. The target areas in downtown are located to the southeast of the City's old town area and includes some of the oldest housing in Monterey. Del Monte Avenue connects the target areas in downtown with the other CDBG target area, which consists of a series of neighborhoods to the southeast of Canyon Del Rey Blvd. This means that much of the area's housing is older, and vulnerable to the issues that typically face older units, like deferred maintenance, lead-based paint, and inefficient mechanical and building envelopes. The Downtown target areas are one of the most densely populated neighborhoods in the City, and while it does not have a minority concentration, it is 58 percent low- and moderate-income households. The Del Monte Grove area is less dense but has a much larger minority population with 55 percent of the population as low mod. A low- and moderate-income map is included in the attachments that shows the location and low-mod concentrations in the CDBG target areas.

Geographic Distribution
Target Area Percentage of Funds
Del Monte -Laguna Grande
Historic Downtown
Van Buren Street Lower Old Town
El Estero
Citywide 100
Table 4 - Geographic Distribution
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Rationale for the priorities for allocating investments geographically Traditionally, the City has committed to spending approximately 70 percent of CDBG funds as funding for housing and infrastructure projects in low- and moderate-income (LMI) census tract block groups.

This prioritization has included a portion of public services grant activity and public infrastructure funding that is targeted to LMI census tract block groups. The City does not have any racially or ethnically concentrated areas of poverty (R/ECAPS) and only has a handful of census block groups that qualify as low to moderate income according to HUD’s income data. The diversified distribution of the low-mod population across the city makes it necessary to split the use of CDBG funds between low-mod neighborhoods and low-mod needs citywide.

Discussion
The decision to distribute funding citywide is based on the limited number of low-income census tract block groups that will qualify for HUD’s Low-Mod Income Area benefit. Only a handful of census block groups are classified as low income based on the percentage of households with income at or below 80 percent of Area Median Income. For this reason, there is limited ability for the City to target CDBG funds to specific areas and receive Low Mod Area (LMA) benefit. Additionally, the City’s most significant unmet need for affordable housing is generally citywide in geographic distribution. In recognition of this housing need, the City Council has directed that affordable housing and homeless services should be placed above the priority for public infrastructure improvements and home repair programs for homeowners.

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Affordable Housing
AP-55 Affordable Housing – 91.220(g)
Introduction
Because the City is almost entirely built out and there is no water for new development, the area is infeasible for residential development creating a strong demand and an expensive housing market. Additionally, the City continues to be a very desirable place.

The cost of buying a home in the County of Monterey increases each year. According to multiple real estate websites, the median sale price for a home in Monterey County is currently near $900,000. Such an increase in the cost of purchasing a home at market rate can indicate a decrease in supply and an increase in demand. Both could be caused by a surplus of buyers due to the COVID-19 pandemic and people wanting to move away from big cities.

Fair Market Rents established by HUD tend to be exceeded by the real cost of rental housing in the City.

As discussed, the City’s desirability as a place to live due to the coastal environment and amenities combined with a severe lack of developable land keeps the cost of housing too costly for low- to moderate-income households.

According to HUD User for fiscal year 2019, the median family income is $74,100 for the Salinas Metropolitan Statistical Area. The affordable monthly cost of housing is $1,852, and the actual market costs exceed this amount by 18 to 100 percent (depending on unit size), making the City unaffordable for a household earning the median family income.

Table 6 - One Year Goals for Affordable Housing by Support Requirement One Year Goals for the Number of Households to be Supported Homeless 0
Non-Homeless 10
Special-Needs 0
Total 10
Table 7 - One Year Goals for Affordable Housing by Support Type One Year Goals for the Number of Households Supported Through Rental Assistance 0
The Production of New Units 0
Rehab of Existing Units 8
Acquisition of Existing Units 2
Total 10
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Discussion
Traditionally, the City has allocated CDBG federal funding to homeowner rehabilitation, to preserve existing housing stock, provided rental assistance through services providers, and assistance to incomeeligible first-time homebuyers. The City provides affordable ownership opportunities at a number of sites, through deed-restricted, price-controlled covenants. The Purchase and Resale Program provides for a small increase in value each year. It is an opportunity to gain all of the benefits of ownership, such as tax benefits, increased equity, and freedom from renting. The City will continue making these activities goals when opportunity allows.

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AP-60 Public Housing – 91.220(h)
Introduction
The Housing Authority of the County of Monterey (HACM) is a public agency that provides rental assistance and manages affordable housing throughout Monterey County. The HACM administers Housing Choice Vouchers (Section 8). The Housing Choice Voucher is a rent subsidy program that helps lower income (up to 50 percent AMI) families and seniors pay rents in private units. Voucher recipients pay a minimum of 30 percent of their income toward their contract rent, and the local housing authority pays the difference through federal funds up to the payment standard (fair market rent) established by the HACM.

The HACM currently has an allocation by HUD of 4,335 Housing Choice Vouchers (HCV) and 199 vouchers through the HUD Veterans Affairs Supportive Housing (VASH) for veterans. However, due to budget constraints, only 3,235 HCVs are in use in the County; 184 are in use in the City alone. The City will continue to coordinate with the HACM as the regional housing authority and public housing provider whenever possible.

Currently, there are 168 assisted housing units in the City’s managed by HACM. HACM has converted all its public housing units to Project-Based Rental Assistance. The conversion of HACM properties to Project-Based Rental Assistance might offer the City an opportunity to collaborate with the Housing Authority to provide funding assistance for the rehabilitation and repair of HACM units. These units are in five separate projects:
 Portola Vista at 20 Del Monte Avenue 64 units
 Casanova Plaza at 800 Casanova Avenue 86 units
 Montecito Apartments at 242 Montecito Street 8 units
 Watson Apartments at 531 Watson Street 5 units
 Oak Grove Apartments at 1100 Second Street 5 units
Actions planned during the next year to address the needs to public housing The City will continue to collaborate with the HACM to improve access to available public housing units using HCV. The City will also annually review opportunities to provide rehabilitation grant funding to the HACM for upgrading the condition of its public housing units located in the City.

Actions to encourage public housing residents to become more involved in management and participate in homeownership
The HACM has developed a plan for self-sufficiency of the households it assists that is part of the Family Self-sufficiency program and continually recruits households. The HACM also coordinates a Welfare to Work program as part of the Housing Choice Voucher program. The HACM also has an HCV Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 61, Packet Page 310 Annual Action Plan
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Homeownership program that attracts participants. Employment is also encouraged by the HACM through job posting and works with contractors to further employment of its participants.

If the PHA is designated as troubled, describe the manner in which financial assistance will be provided or other assistance
Not applicable.

Discussion
See sections above.

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AP-65 Homeless and Other Special Needs Activities – 91.220(i) Introduction
The Coalition of Homeless Service Providers (CHSP) is the Continuum of Care (CoC) for the Counties of Monterey and San Benito and includes the City. Every two years, in the month of January, communities across the United States conduct counts of the local population experiencing homelessness. These Point-in-Time counts collect information on individuals and families residing in temporary shelters and places not meant for human habitation and ultimately help the federal government to better understand the nature and extent of homelessness nationwide. As required by the US Department of Housing and Urban Development (HUD), jurisdictions receiving federal funding to provide homeless services, Continuums of Care must report the findings of their local Point-in-Time count to HUD.

Information gathered through the PIT survey is used by the CHSP to understand the issues associated with homelessness, including causes of homelessness, service needs of the homeless, the region’s unmet housing needs, and trends over time of homelessness in the region.

In 2019, a total of 2,422 homeless persons were counted in the County of Monterey. In the City of Monterey, a total of 204 homeless persons were counted, a 40 percent decrease from the count in 2017. The number of sheltered was 37 and the number of unsheltered was 167. The numbers show that the City is home to the third-highest homeless population in Monterey County. A Point-in-Time count was held in February of 2022, but the numbers and data have not yet been released.

Describe the jurisdiction’s one-year goals and actions for reducing and ending homelessness including:

Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs
The City continues to work closely and collaborate with the CoC. In partnership with jurisdictions and service providers, the CoC has launched the Coordinated Outreach and Resources for Encampments (CORE) team. This multi-disciplinary team is built of providers that specialize in mentally ill, substance abuse, Veterans, and youth. CORE outreach workers are paired with homeless guides to penetrate the most difficult encampment communities to 1) establish rapport with the inhabitants, 2) assess client needs and provide linkages to services, and 3) administer CARS assessments to those interested in homeless housing programs, like transitional housing or permanent supportive housing.

Additionally, Monterey Police Department’s Community Action Team (CAT) consists of a team of officers who patrol the downtown and waterfront areas of the City. This is done to create a closer bond between the community, including unsheltered homeless or persons in need, and officers. The officers patrolling the waterfront and downtown areas typically use bicycles and four-wheel drive beach vehicles to accomplish their duties. Such in-person interactions allow officers to better supply assistance and referrals to the appropriate agencies with the goal of long-term re-entry back to a productive member Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 63, Packet Page 312 Annual Action Plan
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of society.

The Monterey Police Department seeks to achieve these goals by actively participating in the MultiDisciplinary Outreach Team (MDOT), which is a new system allowing for collaboration to address community problems, including homelessness, domestic violence, and other chronic life-style challenges. Agencies with which the Monterey Police Department has partnered to implement MDOT include:
 Monterey Police Department
 Adult Protective Services
 Monterey County Behavioral Health
 Montage Health / Community Hospital of the Monterey Peninsula (CHOMP)  Young Women’s Christian Association (Domestic Violence)  Interim, Inc.

A social worker from each of these organizations is assigned a desk at the Monterey Police Department to provide services to MDOT, putting Monterey Police Officers in direct contact with referral services when the need arises. Close access to service agencies and organizations allows for direct outreach and intervention efforts with homeless individuals to quickly assist them with access to benefits and housing.

Addressing the emergency shelter and transitional housing needs of homeless persons The Continuum of Care (CoC) allocated over $7M to the construction of homeless shelters in the two jurisdictions that showed the most increase in homelessness per capita in the 2019 Homeless Census.

This dollar amount accounts for over half of the entire CoC’s Homeless Emergency Aid Program funding allocation and was used for the two proposed projects that met the immediate needs of our community.

Other strategies the City is using to address homelessness include:
 Safe Parking Ordinance
 Emergency Shelter Overlay District
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 and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again
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like rapid rehousing training, weekly e-newsletters listing open low-income housing waitlists, prioritizing permanent supportive housing projects in funding rankings, and dedicating rapid re-housing funds to vetted seasoned providers.

Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are: 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); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs.

The City continues collaboration with the regional Continuum of Care (CoC), the Coalition of Homeless Service Providers (CHSP). The CHSP is currently working to establish diversion programs and best practices among their provider network and are working on streamlining the CARS process to capture those at risk of becoming homeless to provide faster service.

In addition, to work with the CHSP, in PY 2021-2032, the City will provide public service grant funding to 11 organizations. Five of these organizations provide direct services to the homeless as well as services for homeless prevention: Food Bank of Monterey County, Gathering for Women, Interim, Inc., Community Human Services, and Court Appointed Special Advocates (CASA). The Food Bank of Monterey County provides food for individuals, families, homeless persons, seniors, persons with disabilities, and the working poor in the City of Monterey. Gathering for Women will aid homeless women, including intake, donated materials, a secure day center, and case management that focus on the unique challenges facing homeless women. Interim, Inc. focuses services on homeless persons experiencing a mental health crisis and assists with chronic and acute mental illness in the homeless population. Community Human Services focuses efforts on homeless youth with special attention on street outreach, family re-unification, and case management. Court Appointed Special Advocates (CASA) provide advocacy for children in foster care, provide services to move them out of foster care, and education on the importance of financial self-sufficiency.

The City’s Emergency Rental Assistance Program was established in early 2020 due to the COVID-19 pandemic and was funded using CDBG-CV money allocated to the City through the U.S. Department of Housing and Urban Development. The program is designed to mitigate potential homelessness and displacement of existing Monterey residents and workers who are experiencing a decrease in household income due to the COVID-19 pandemic, and thus, unable to pay their rent. On January 29, 2021, the State of California passed the COVID-19 Tenant Relief Act (SB 91 and Federal stimulus dollars) to extend eviction protections to COVID-19 impacted tenants and establish the state’s Emergency Rental Assistance Program. Monterey County was given $28 million for rent and utility assistance, with the United Way of Monterey County acting as the pass-through organization. The City of Monterey applied to the United Way for $2.5 million and ended up receiving an award of $1.25 million to be used for its Emergency Rental Assistance Program (ERAP). The program will now be funded using the SB 91 and Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 65, Packet Page 314 Annual Action Plan
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Federal stimulus dollars and will continue to help the residents of the City of Monterey stay housed.

Discussion
See sections above.

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AP-75 Barriers to affordable housing – 91.220(j)
Introduction:

A potential barrier to housing opportunities can be related to public policies. Such policies include tax policy, land use controls, zoning ordinances, building codes, fees and charges, growth limits, and other policies that affect the return on residential investment. Amending local zoning and land use laws or allocating funding for affordable housing through grants are mechanisms that can support the development of affordable units. Changes in policies can also help a community overcome disparities in access to opportunity by implementing plans that will revitalize areas with existing affordable housing by improving services, schools and other community assets, sidewalks, and other infrastructure.

Policies to guide future development and achieve a vision for the community are contained in the City’s General Plan. Two of the seven State-mandated General Plan elements—Housing and Land Use Elements—have a direct impact on the local housing market in terms of the amount and range of housing choices. The Zoning Ordinance, which implements the Land Use Element, is an important document that influences the amount and type of housing available in a community – the availability of housing choice.

A Housing Element found by HCD to be in compliance with State law is presumed to have adequately addressed its policy constraints. According to HCD, as of January 2022, the City’ Housing Element was found to comply.

Specific to the City, a primary barrier continues to be a shortage of available land with utilities.

Restrictions on water due to limited regional water supply also prevent residential development. All of the City’s water supply has already been allocated to projects. However, some existing properties have water credits that can be allocated to new housing development. The City has also identified underutilized sites with water credits and the location of these areas is mapped in the City’s specific plans.

Other factors make residential development a challenge, such as land feasible due to terrain, presence of endangered species, and financing development, wherein the costs are passed to the consumers.

Also, zoning density limitations and California legal decisions have prohibited requiring low and moderate-income inclusionary housing as a condition of rental housing entitlement approvals.

The City’s policies allow for the following types of housing for low income and special needs populations:
 Emergency shelters
 Accessory Dwelling Unit
 Transitional Housing
 Supportive Housing
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 Residential Care Facilities
 Single Room Occupancy
 Reasonable Accommodation
Actions it planned 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
City Policies
The City has traditionally acquired deed-restricted units to sell to income-eligible first-time homebuyers and makes every effort to continue this practice through its purchase and resale housing programs.

Currently, there are 540 deed-restricted units in the City—80 percent are rentals and 20 percent are for purchase and resale.

In addition to purchase and resale programs, the City has created policies to implement other tools that foster affordable housing that include:
•Inclusionary Housing Program
•Density Bonus Ordinance
•Accessory Dwelling Ordinance
•Short Term Rental Ban Enforcement
When possible, City-owned property will be utilized to accommodate affordable units with density bonuses or inclusionary zoning: 2200 North Fremont, 40 Dwelling Units with eight affordable; also, eight Dwelling Units, two affordable at 300 Cannery Row. 595 Munras is soon open for leasing and has 10 units, two of which are affordable.

Other City measures include the Garden Road Rezone, which would allow for 406 units, 81 of which would be affordable. The City has permitted 155 units in this area of which 31 will be affordable. And the Downtown Density Cap Overlay will have the potential to allow for 222 residential units.

The City plans to address the lack of water resources that has prevented residential development by requesting additional water allocations from the Monterey Peninsula Water District. California American Water Company (Cal Am) continues to pursue the development of a new water source, but at present Monterey Peninsula's water resources are limited. Development requiring a water permit is limited to the water credits associated with the site.

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The City has amended its Zoning Code to allow an Accessory Dwelling Unit (ADU) Ordinance in compliance with State law Government Code Section 65852.2. The ADU ordinance is a State effort to increase affordable housing.

The City has also placed a ban on short-term rental units.

Local and State Legislation
The State of California has enacted policies to help ameliorate barriers to affordable housing. In 2019, the State signed the following:
•California SB 330: The Housing Crisis Act of 2019. This bill suspends restrictions on housing developments and provides for expedited permitting for housing construction until January 1, 2025. •California AB 1763: amending the Density Bonus Law. This bill creates a density bonus and other concessions and incentives for affordable housing developments. •California AB 13: amending Section 65852.2 of the Government Code, among others, relating to land use. Revising existing legislation that allows ADUs in residential and mixed-use districts, this bill allows more than one ADU per lot.

Additionally, discrimination, including housing discrimination because of a protected class is a violation of federal law and the Fair Housing Act. Eden Council for Hope and Opportunity (ECHO Housing), uncovers increased housing discrimination yearly. Fair housing legal services and fair housing education can assist in the prevention of discrimination against such households.

Discussion:

The Needs Assessment and Housing Market Analysis sections of the Consolidated Plan identified the lack of affordable housing as a key unmet need. The Consolidated Plan acknowledges that land constraints and limited water will make it very difficult to provide enough new housing to address the lack of affordable housing. However, the Consolidated Plan identifies strategies that will support the development of housing with a focus to supply needed EL-I, VL-I, and L-I housing units.

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AP-85 Other Actions – 91.220(k)
Introduction:

This section describes the activities that are planned by the City to implement strategies to maintain and increase the supply of affordable housing, reduce lead-based paint (LBP) hazards, reduce the number of families at poverty level, develop institutional structure, and improve coordination among regional agencies and public service organizations so that identified community development needs might be effectively addressed during the five-year term of the Consolidated Plan.

Actions planned to address obstacles to meeting underserved needs The City continues to fund the Veterans Transition Center (VTC) in rehabilitating existing uninhabitable units on land owned by VTC to provide 18 permanent supportive housing units in the City of Marina for homeless veterans and their families.

As for new residential development in the City, with the use of density bonuses and the inclusionary zoning program, 2200 North Fremont providing 40 Dwelling Units with eight affordable units; and eight Dwelling Units with two affordable units at 300 Cannery Row. 595 Munras has 10 units, two of which are affordable. City-owned properties are also sites for opportunities for affordable housing, which include Madison Street Buildings, Adams Street Parking Lot, Calle Principal, and Harbor Yard. Additionally, the Garden Road Rezone would allow for 405 higher-density housing units. The City has approved 155 housing units of which 31 will be affordable.

As mentioned previously, the City provides grants to service organizations providing other types of important supportive services to low-income populations to assist in improving the quality of life for the populations they serve.

The City can support economic development, which would include providing support to small businesses; business retention, job training, commercial rehabilitation, and construction, and assisting private and for-profit business. Assistance may include grants, loans, loan guarantees, and technical assistance; and providing economic development services in connection economic development activities.

The City can also support local resources for unemployed persons. The Monterey County Workforce Development Board (WDB) is a one-stop career center operating under state and local Workforce Investment Boards.

Additionally, several outreach meetings are held in Monterey County to promote employment such as Prison to Employment Initiative and the Prison to Employment and Regional Plan. The outreach is in support of the Prison to Employment Initiative, a grant program that included in the Governor’s 2018 Budget proposal and includes $37 million over three budget years for the integration of workforce and Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 70, Packet Page 319 Annual Action Plan
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reentry services in the state’s 14 labor regions. The goal is to create partnerships between rehabilitative programs within California Department of Corrections and Rehabilitation (CDCR) and the state workforce system by bringing CDCR under the policy umbrella of the State Workforce Plan.

The City continues to support youths in preparing to enter the workforce through its summer job opportunities and volunteering programs. Youths can gain job skills and customer service experience through different jobs, which includes becoming a playground recreation leader, a day camp counselor, and other such positions.

Leveraging other financial resources is another way the City can support economic development. For example, the remaining tax increment finance tool still available under State law is the creation of Infrastructure Finance Districts. The current statute has been advocated due to its ability to support local economic development.

The City could also work to leverage grants from Federal, State and Regional Grant Programs. A variety of these grant sources are transportation related and flow to AMBAG and TAMC. With these funds, enhancements can be made to transit, including alternative modes of travel (both bicycle and pedestrian) as well as economic development
Actions planned to foster and maintain affordable housing As previously mentioned, the City will continue to support the Van Buren Senior Housing project (developed on City-owned land), the Monterey Hotel Apartments (a project solely funded with former redevelopment agency housing funds), and Estrella Apartment (funded by HOME grant), all of which provide housing affordable to low- to moderate-income households.

The City will work to preserve existing housing stock through its Mr. Fix-It grants to low-income households to make minor repairs to improve overall housing quality, Home Safety Grants to incomeeligible LMI households that apply.

Actions planned to reduce lead-based paint hazards
The City actively promotes its Mr. Fix-It grants to low-income households to make minor repairs to improve overall housing quality, Home Safety Grants to low-income households to make emergency health and safety repairs to meet code, and Home Accessibility Grants. Each rehabilitation project is tested for lead-based paint. When lead-based paint is discovered, the City uses the allocated CDBG funds to abate lead-based paint hazards in connection with these CDBG-funded housing rehabilitation projects. The City will continue to allocate CDBG funding to Mr. Fix-it, Home Safety, and Home Accessibility grant programs in PY 2022.

Actions planned to reduce the number of poverty-level families Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 71, Packet Page 320 Annual Action Plan
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The City will provide CDBG grant allocations in PY 2022 to service organizations providing important supportive services to homeless and low-income populations to assist in the following:
 Food donation from the Monterey Food Bank
 Court Appointed Special Advocates (CASA) helps children in foster care  Legal Services for low-income seniors in need
 Food delivery by Meals on Wheels for seniors and disabled seniors  Alliance on Aging that provides tax assistance to low-income seniors  Josephine Kernes Memorial Pool’s therapy program for low-income seniors and disabled persons, and
 Fair housing education and counseling on housing and home lending discrimination  Acquisition and rehabilitation of ownership units for resale to low-income first-time homebuyers
 Outreach and support for homeless persons and at-risk youth by CHS  Providing homeless services, emergency and temporary housing, and case management for persons with mental illnesses through Interim, Inc.
 Day-center services to homeless women in the city through Gathering for Women  Home rehabilitation to low- to moderate-income residents in the City Actions planned to develop institutional structure
The City is in the process of developing the implementation of plans for the SB2 grant. The SB2 grant will help the City to do the following:
 Accelerate housing production
 Streamline the approval of housing development affordable to owner and renter households at all income levels
 Facilitate housing affordability, particularly for lower- and moderate-income households  Promote development consistent with the State Planning Priorities (Government Code Section 65041.1)
 Ensure geographic equity in the distribution and expenditure of the funds In addition to SB2, the City will utilize funding from the Homeless Emergency Aid Program (HEAP) to provide the following:
 Emergency housing vouchers
 Rapid rehousing
 Emergency shelter construction, and
 Use of armories to provide temporary shelters, among other activities In addition to these efforts, the City will continue to work closely and collaborate with CHSP, the CoC, to Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 72, Packet Page 321 Annual Action Plan
2022-23
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implement the Lead Me Home Plan. CHSP partners with include a wide range of public and private entities that include CA-506—Salinas/Monterey, San Benito Counties CoC, affordable housing developers, community clinics and health centers, other health care providers, educational institutions, faith-based organizations, housing and homeless services providers, health plans, local government, probation/criminal justice, non-profit agencies, private foundations, public housing authorities, people with lived experience of homelessness, and service providers for families, seniors, survivors of domestic violence, veterans, and youth. Many of these partners mentioned are traditional recipients of the City’s CDBG program. The City continues to work closely and on a regular basis with these providers through the CDBG program’s yearly activities.

Actions planned to enhance coordination between public and private housing and social service agencies
The City will continue to coordinate and work closely with the agencies and organizations to deliver services to LMI households, special needs populations, and homeless families and individuals. Objectives and priorities for addressing homelessness in the Lead Me Home plan are and will continue to be, aligned with the City’s Consolidated Plan. As described, the CHSP works closely in coordination with the CDBG sub-recipients receiving allocations listed in the City’s plan: Community Human Services’ program, Safe Place in Monterey, that provides counseling, family reunification, temporary shelter and street outreach for homeless youth; Interim Inc. that provides homeless services, emergency and temporary housing outreach, and case management for persons with mental illnesses; Interim’s Manzanita House provides short-term crisis services as well as emergency placement in Monterey’s Laguna Grande; and the Veterans Transition Center that provides services for homeless Veterans and their families.

Additionally, the City’s Housing Programs office is proactive regarding opportunities to acquire new properties for the development of affordable housing. The City has an interest in ensuring that deedrestricted units remain affordable to low-income households.

Discussion:

See sections above.

Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 73, Packet Page 322 Annual Action Plan
2022-23
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Program Specific Requirements
AP-90 Program Specific Requirements – 91.220(l)(1,2,4)
Introduction:

The below section identifies other program-specific requirements. The City of Monterey plans to use a minimum 70% of CDBG funds to assist low- and moderate-income households.

Community Development Block Grant Program (CDBG)
Reference 24 CFR 91.220(l)(1)
Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out.

1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed 0

2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan. 0

3. The amount of surplus funds from urban renewal settlements 0

4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0

5. The amount of income from float-funded activities 0
Total Program Income: 0
Other CDBG Requirements

1. The amount of urgent need activities 0

2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan. 70.00% Council Regular Meeting, 4/19/2022, Item No. 23., Item Page 74, Packet Page 323 Council
Agenda Report
№08/22
FROM: Rafaela T. King, CPA, Finance Director
SUBJECT: Report on Public Banking and Receive Direction on Whether to Express Interest in Participation in Central Coast Public Banking Viability Study (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council receive a report on the current status of Public Banking to determine whether or not to formally express initial interest in a Central Coast Public Banking Viability Study.

VALUE DRIVER:

In collaboration with our community partners, work to improve the quality of life of all of our community members by fostering diversity, equity, and inclusion; championing equitable access to affordable housing; and maintaining a safe environment.

POLICY IMPLICATIONS:

This request is consistent with City Council’s direction to bring back additional information on Councilmembers’ requests to agendize a matter of business to the full Council for consideration.

FISCAL IMPLICATIONS:

There is no cost to present this report. The cost to participate in the Viability Study for Public Banking is likely to cost up to $6,000. The City does not have funds budgeted for this purpose.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (“CEQA Guidelines”), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

Date: 4/19/2022
Item No.: 24.

Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 1, Packet Page 324 ALTERNATIVES CONSIDERED:

The cost/benefit analysis regarding whether to establish a public bank should be done by professionals if the City Council wants to see what all is entailed with this endeavor. The Council can choose to participate in the Viability Study for the Central Coast Public Banking.

One alternative is for the City Council to decline to participate in the Viability Study. Declining to participate in this Viability Study does not preclude the City of Monterey from discussing or considering public banking in the future.

DISCUSSION:

Overview of Public Banking
In 2019, Governor Gavin Newsom signed AB 857, enabling California cities and counties to form public banks. These are locally-controlled financial institutions into which municipal revenues — such as taxes and fees — and other municipal reserves are deposited. AB 857 established a framework for state, regional, and local public banks in California. The creation of AB 857 was motivated by a political intent to create an alternative banking system to the existing “Wall Street” based banking system.

Under the provisions of AB 857, the first step toward establishing a public bank is a viability study that must include, among other things, a fiscal analysis of the costs associated with starting the public bank and an estimate of the collateral and initial investment or capitalization necessary for the success of such an enterprise. Some large local governments in California, including Oakland, Los Angeles, San Diego, and San Francisco, have begun taking the first steps to consider the creation of public banks for their communities. Because public banks do not compete with community credit unions or local commercial banks to provide services to individual residents, but do provide the financial backing (e.g., offering loans and credit to the community) required by such local institutions, the public banks are typically relatively large in scale.

At their February 11, 2020, Board of Supervisors regular meeting, Santa Cruz County proposed exploring the possibility of creating a Central Coast public bank that would require the support and financial buy-in of several local governmental agencies. As a first step in this process, the Chairman sent letters to the neighboring cities and counties, including the City of Monterey, regarding interest in partnering in a viability study. While it may be preferred to have a local (Central Coast) option, it is important to also see if joining with a larger Bay Area public bank might be more feasible.

Public Banking Interest on the Central Coast
On May 19, 2020, the Monterey City Council received an initial brief presentation on Public Banking by Brett Garrett (Representative, People for Public Banking Santa Cruz) and Daniel Zamora (Student Intern for Councilmember Williamson). Much of the movement for public banking simmered down during the early days of the COVID-19 pandemic. Now that the first two years of the pandemic have passed, interest in public banking has resurfaced.

Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 2, Packet Page 325 According to the latest online update from People for Public Banking Central Coast, a citizens’ advocacy group, ten out of 35 counties and cities on the Central Coast have expressed formal interest in participating in a viability study for a regional bank. The ten municipalities include:
 County of Santa Cruz
 County of Santa Barbara
 County of Monterey
 City of Santa Cruz
 City of Capitola
 City of Watsonville
 City of Scotts Valley
 City of Del Rey Oaks
 City of Salinas (pending)
 City of Seaside
On November 16, 2021, Vice Mayor Williamson’s request to agendize a discussion about expressing initial interest in a Central Coast Banking Viability Study was brought to City Council.

At that time, the Council was reluctant to spend money to participate in this viability study without further information and asked staff to return with additional information in spring 2022.

What is a Public Bank in California?
A public bank is a financial institution, in which a state, municipality, or public actors are the owners. It is an enterprise under government control and in California, pursuant to AB 857, it must either be a nonprofit mutual benefit corporation or a nonprofit public benefit corporation that is wholly owned by a local agency or group of local agencies and operated in the public interest. Public banks can exist at all levels, from cities to states to national. Any governmental body which can meet local banking requirements may, theoretically, create such a financial institution.

Public banks are lending and depository institutions owned by a government entity (“local agency”), like a city or county, with a non-profit public purpose governed by a public mandate responsive to local needs. Public banks leverage their deposit base and lending power to benefit residents by financing affordable housing, small business loans, modernization of public infrastructure, and other community needs. They differ from existing financial institutions in that the purpose of public banks is to serve the needs of the communities to which they are accountable rather than seeking the greatest profits for private shareholders.

Public banks are very new to the United States, including in California. According to our research, North Dakota is the only state where public banking has operated successfully since it launched 102 years ago to offer farmers loans at more favorable rates than those charged by commercial banks.

How do Public Banks Work?
A public bank is a bank that is controlled by and principally funded by a government body rather than by private investors. AB 857 allows municipalities to deposit their funds into public banks, thus removing those dollars from private banks. Government departments, such as a treasurer’s office, can deposit taxes, fees, fines, and funds from state and federal programs that they receive into the public bank.

Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 3, Packet Page 326 Public banks lend for needed community improvements such as affordable housing, climateresilient infrastructure, and small business support at low-interest rates due to their lower overhead. The added advantage is that profits earned can be returned to the municipality’s general fund.

Public banks will act as a “mini-Federal Reserve” for their region, assisting local banks and guaranteeing loans. They will be established as “banker’s banks,” meaning they will offer loans in concert with community banks and credit unions. When there are public banks, local banks will have greater lending ability and solvency. Due to the partnership with small banks, credit unions, and Community Development Financial Institutions (CDFIs), public banks will enable funding of local projects at a lower cost. Public banks' self-funding and self-sustaining nature means they will not imperil local agency funds or tax dollars.

Public banks will have to recruit, hire and retain experienced bank managers and boards of directors independent from political control to assure that they are not captured by special interests. Additionally, a public bank may choose to establish citizen advisories to monitor investments and ensure community concerns are represented.

Perspectives In Favor of Public Banks
 Proponents of public banking argue that policymakers can create public-sector banks to reduce the costs of government services and infrastructure; protect and aid local banks; offer banking services to people and entities underserved by private-sector banking; and promote particular kinds of economic development reflecting the community’s shared notions of social good.
 Public banks have the potential to enhance City revenue. More available capital may flow toward needed community development — particularly in historically under-invested neighborhoods. Flexible underwriting and reasonably priced capital can foster infrastructure improvements, encourage affordable housing markets, and help attract new business and retain existing businesses. In tandem with private investment, a city or regional public bank could be the catalyst to boost community reinvestment — especially in areas long overdue for such investment.
 Public banks may be advantageous if a feasibility study shows that establishing a public bank is viable. Previous studies are mixed on the costs and the returns to local agencies. If it is feasible, there are some benefits. It would provide financing for projects that might not normally be funded, including small businesses, community projects, neighborhood banks, and credit unions. There is a risk that politics would influence decisions, but the legislation has safeguards to minimize that.  Theoretically, a financial institution that deploys capital in alignment with local objectives makes sense. Without shareholders, a public bank could be profitable and facilitate funds for impactful projects. The significant challenges lie in striking the right balance of project selection and profit (making sound financial decisions), finding talented management, and remaining relatively apolitical. An alternative to a regional public bank on the Central Coast is to consider larger (California-wide) public banks as size broadens the scale of potential projects, attracts talent, and adds diversification.

Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 4, Packet Page 327 Perspectives In Opposition to Public Banking
 A public bank would require a significant investment by the City to provide the initial capital to start the bank. Since the institution could suffer operating losses, these funds would be at risk.
 On the surface, a well-run public bank seems like a good idea. Still, there is a significant risk associated with being in the money lending business in addition to startup costs and potentially sizable operating costs. Even major banks with decades of experience run into problems when recessions hit. A downturn in the economy leading to a few defaulted loans could potentially wipe out any profits realized by the public bank.  Public banks could put at risk the funds that have been set aside to fund critical infrastructure, social programs, and pension obligations. Loans to any business involve credit risk, but this is particularly true for small businesses and small nonprofits. These types of loans are subject to a higher level of default and require stringent underwriting to avoid costly losses. And in a recession, which many economists predict is on the horizon, small businesses are among the first to fail.
 Cities are ill-equipped to enter the banking business. Raising startup capital could be difficult, as will acquiring a banking license and deposit insurance. Feasibility studies for large cities, such as the City and County of San Francisco and the District of Columbia, suggest it could be decades before such a bank could break even. Politics could drive lending decisions. High deposit yields would require high lending rates, defeating the objective of low-interest loans. The costs and risks would likely dwarf any potential benefits to city residents and taxpayers.
 When a political organization ventures into areas like banking, with the thought of having more flexibility, that usually means, to help their constituents, the organization makes much riskier loans than are warranted under traditional financial institution best practices. Political agendas and not financial considerations might lead taxpayer dollars to be invested into projects otherwise not financially feasible or sustainable.

The key takeaways from supporters of public banking are serving the underserved in the community and possibly increasing economic development while putting safeguards to mitigate the political and credit risk.

The key takeaways from opponents are the politics, startup costs, risks, and lack of expertise in managing a bank.

RTK
Attachments: 1. AB 857

2. AB 857 FAQs
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 5, Packet Page 328 Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 6, Packet Page 329 Assembly Bill No. 857
CHAPTER 442
An act to amend Sections 5130 and 7130 of the Corporations Code, to amend Sections 119, 1004, and 1100 of, and to add Section 1008 to, the Financial Code, to amend Sections 6254.26, 23007, 53601, 53635, and 53635.2 of, to add Division 5 (commencing with Section 57600) to Title 5 of, and to add Sections 6254.35, 54956.97, and 54956.98 to, the Government Code, and to add Section 23701aa to the Revenue and Taxation Code, relating to public banks.
[Approved by Governor October 2, 2019. Filed with Secretary of State October 2, 2019.]
legislative counsel’s digest
AB 857, Chiu. Public banks.

Existing law, the Financial Institutions Law, regulates the activities of various financial entities, including commercial banks, industrial banks, trust companies, credit unions, and savings associations. The Banking Law defines and regulates state banks and commits the enforcement of banking laws to the Commissioner of Business Oversight.

Existing law prohibits a county from giving or loaning its credit to, or in aid of, any person or corporation. Existing law requires a local agency, as defined, to deposit all money belonging to, or in the custody of, that local agency into specified state or national banks, as defined. Existing law regulates the investment of public funds by local agencies.

Existing law, the Nonprofit Corporation Law, regulates the formation and conduct of a nonprofit mutual benefit corporation and a nonprofit public benefit corporation.

This bill would define the term “bank” for purposes of the Financial Institutions Law and the Banking Law to include a public bank. The bill would define the term “public bank” to mean a corporation, organized as either a nonprofit mutual benefit corporation or a nonprofit public benefit corporation for the purpose of engaging in the commercial banking business or industrial banking business, that is wholly owned by a local agency, as specified, local agencies, or a joint powers authority.

The bill would require a public bank to obtain a certificate of authorization to transact business as a bank from the commissioner and to obtain and maintain insurance, subject to specified requirements. The bill would prohibit the commissioner from issuing more than 2 public bank licenses, as defined, in a calendar year and would prohibit the commissioner from authorizing more than 10 public banks at one time. The bill would require a public bank to include a specified purpose statement in its articles of incorporation and make conforming changes. The bill would require a local agency to conduct 90 STATE OF CALIFORNIA

AUTHENTICATED

ELECTRONIC LEGAL MATERIAL
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 7, Packet Page 330 and approve, as specified, a study of the viability of a public bank containing specified elements before submitting an application to the commissioner to organize and establish a public bank and would require the local agency to include a copy of that study in the application submitted to the commissioner.

The bill would require a local agency that is not a charter city to obtain voter approval of a motion to submit an application to the commissioner, as specified. The bill would authorize a county to lend its available funds to a public bank. The bill also would authorize a local agency to deposit funds in a public bank, and to invest in a public bank, subject to certain requirements. The bill would authorize a public bank to make distributions to its members. The bill would require, as specified, a public bank to conduct retail activities in partnership with local financial institutions and would prohibit a public bank from competing with local financial institutions.

The Corporation Tax Law imposes a franchise tax on financial corporations, but provides that the tax is in lieu of all other state and local taxes and licenses, with certain exceptions. That law also exempts specified classes of entities from the franchise and income taxes imposed by that law, including state-chartered credit unions.

This bill would additionally exempt from those franchise and income taxes any public bank. This bill would also exempt a public bank from all other state and local taxes and licenses, with certain exceptions.

Existing law, the Ralph M. Brown Act, requires that all meetings of the legislative body, as defined, of a local agency be open and public and all persons be permitted to attend unless a closed session is authorized.

This bill would authorize the governing board of a public bank or a committee of that governing board to meet in a closed session to consider and take action on matters pertaining to a loan or investment decision, a decision of the internal audit committee, the compliance committee, or the governance committee, and a meeting with a state or federal regulator. The bill would authorize a public bank to make all information received by a shareholder, member, or owner of a public bank confidential, as specified.

Existing law, the California Public Records Act, requires that public records, as defined, be available to the public for inspection and made promptly available to any person.

This bill would exempt specified information and records of a public bank, and related decisions of the directors, officers, and managers of the public bank, from the disclosure requirements of the act, including, among others, records related to alternative investments of the bank, as specified, meeting materials of any closed session, a record containing information regarding a portfolio position in which the public bank invests, information related to a specific account in the bank, and specified correspondence related to meetings with, or a memorandum or letter received from, state and federal banking regulators.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. 90 Ch. 442 — 2 —
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 8, Packet Page 331 This bill would make legislative findings to that effect.

The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

This bill would make legislative findings to that effect.

The people of the State of California do enact as follows:

SECTION 1. It is the intent of the Legislature that this act authorize the lending of public credit to public banks and authorize public ownership of public banks for the purpose of achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities. It is the intent of the Legislature that public banks shall partner with local financial institutions, such as credit unions and local community banks, and shall not compete with local financial institutions.

SEC. 2. Section 5130 of the Corporations Code is amended to read:
5130. The articles of incorporation of a corporation formed under this part shall set forth:
(a)  The name of the corporation.
(b)  (1)  Except as provided in paragraph (2), the following statement:
“This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for (public or charitable [insert one or both]) purposes.”
[If the purposes include “public” purposes, the articles shall, and in all other cases the articles may, include a further description of the corporation’s purposes.]
(2)  If the corporation is a public bank, as defined in Section 57600 of the Government Code, the articles shall set forth a statement of purpose that is prescribed in subdivision (b) of Section 57601 of the Government Code. (c)  The name and street address in this state of the corporation’s initial agent for service of process in accordance with subdivision (b) of Section 6210.
(d)  The initial street address of the corporation.
(e)  The initial mailing address of the corporation, if different from the initial street address.

SEC. 3. Section 7130 of the Corporations Code is amended to read:
7130. The articles of incorporation of a corporation formed under this part shall set forth the following:
(a)  The name of the corporation.
90 — 3 — Ch. 442
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 9, Packet Page 332 (b)  (1)  Except as provided in paragraph (2) or (3), the following statement:
“This corporation is a nonprofit mutual benefit corporation organized under the Nonprofit Mutual Benefit Corporation Law. The purpose of this corporation is to engage in any lawful act or activity, other than credit union business, for which a corporation may be organized under such law.” (2)  In the case of a corporation formed under this part that is subject to the California Credit Union Law (Chapter 1 (commencing with Section 14000) of Division 5 of the Financial Code), the articles shall set forth a statement of purpose that is prescribed in the applicable provisions of the California Credit Union Law.
(3)  In the case of a corporation formed under this part that is a public bank, as defined in Section 57600 of the Government Code, the articles shall set forth a statement of purpose that is prescribed in subdivision (a) of Section 57601 of the Government Code.
(4)  The articles may include a further definition of the corporation’s purposes.
(c)  The name and street address in this state of the corporation’s initial agent for service of process in accordance with subdivision (b) of Section 8210.
(d)  The initial street address of the corporation.
(e)  The initial mailing address of the corporation, if different from the initial street address.

SEC. 4. Section 119 of the Financial Code is amended to read:
119. “Bank” or “banks” includes a public bank, as defined in Section 57600 of the Government Code, commercial banks, industrial banks, and trust companies unless the context otherwise requires. However, “bank” does not include a savings association or a credit union.

SEC. 5. Section 1004 of the Financial Code is amended to read:
1004. (a)  A California state bank is a corporation incorporated under Division 1 (commencing with Section 100) of Title 1 of the Corporations Code or, in the case of a public bank, a corporation incorporated under Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code, that is, with the approval of the commissioner, incorporated for the purpose of engaging in, or that is authorized by the commissioner to engage in, the commercial or industrial banking business.
(b)  (1)  All provisions of law applicable to corporations generally, including, but not limited to, the General Corporation Law (Division 1 (commencing with Section 100), Title 1 of the Corporations Code) shall apply to a bank that is not a public bank. However, whenever any provision of this division or any regulation or order issued under any provision (other than this section) of this division applicable to banks is inconsistent with any provision of law applicable to corporations generally, that provision of this division or that regulation or order shall apply and the provision of law applicable to corporations generally shall not apply.
90 Ch. 442 — 4 —
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 10, Packet Page 333 (2)  All provisions of law applicable to nonprofit corporations generally, including, but not limited to, the Nonprofit Corporation Law (Division 2 (commencing with Section 5000), Title 1 of the Corporations Code) shall apply to public banks. Whenever a provision of Division 5 of Title 5 of the Government Code applicable to public banks is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally, the provision of Division 5 of Title 5 of the Government Code applicable to public banks shall apply, and the inconsistent provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally shall not apply to a public bank.
(c)  As used in this section, public bank has the same meaning as defined in Section 57600 of the Government Code.

SEC. 6. Section 1008 is added to the Financial Code, to read:
1008. When applicable to a corporation organized as a public bank, as defined in Section 57600 of the Government Code, references in this division to share, shareholder, or stockholder shall mean membership or member in the public bank, as applicable.

SEC. 7. Section 1100 of the Financial Code is amended to read:
1100. The articles of each bank shall contain the applicable one of the following statements:
(a)  Except as provided in subdivision (f), if the bank is, or is proposed to be, a commercial bank not authorized to engage in trust business, that the purpose of the corporation is to engage in commercial banking business and any other lawful activities which are not, by applicable laws or regulations, prohibited to a commercial bank.
(b)  Except as provided in subdivision (f), if the bank is, or is proposed to be, a commercial bank authorized to engage in trust business, that the purpose of the corporation is to engage in commercial banking business and trust business and any other lawful activities which are not, by applicable laws or regulations, prohibited to a commercial bank authorized to engage in trust business.
(c)  Except as provided in subdivision (f), if the bank is, or is proposed to be, an industrial bank not authorized to engage in trust business, that the purpose of the corporation is to engage in industrial banking business and any other lawful activities which are not, by applicable laws or regulations, prohibited to an industrial bank.
(d)  Except as provided in paragraph (f), if the bank is, or is proposed to be, an industrial bank authorized to engage in trust business, that the purpose of the corporation is to engage in industrial banking business and trust business and any other lawful activities which are not, by applicable laws or regulations, prohibited to an industrial bank authorized to engage in trust business.
(e)  In case the bank is, or is proposed to be, a trust company (other than a commercial bank authorized to engage in trust business), that the purpose of the corporation is to engage in trust business and any other lawful 90 — 5 — Ch. 442
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 11, Packet Page 334 activities which are not, by applicable laws or regulations, prohibited to a trust company.
(f)  If the bank is, or is proposed to be, a public bank, the articles shall set forth a statement of purpose that is prescribed in subdivision (a) or (b) of Section 57601 of the Government Code.

SEC. 8. Section 6254.26 of the Government Code is amended to read:
6254.26. (a)  Notwithstanding any provision of this chapter or other law, the following records regarding alternative investments in which public investment funds invest shall not be subject to disclosure pursuant to this chapter, unless the information has already been publicly released by the keeper of the information:
(1)  Due diligence materials that are proprietary to the public investment fund or the alternative investment vehicle.
(2)  Quarterly and annual financial statements of alternative investment vehicles.
(3)  Meeting materials of alternative investment vehicles. (4)  Records containing information regarding the portfolio positions in which alternative investment funds invest.
(5)  Capital call and distribution notices.
(6)  Alternative investment agreements and all related documents. (b)  Notwithstanding subdivision (a), the following information contained in records described in subdivision (a) regarding alternative investments in which public investment funds invest shall be subject to disclosure pursuant to this chapter and shall not be considered a trade secret exempt from disclosure:
(1)  The name, address, and vintage year of each alternative investment vehicle.
(2)  The dollar amount of the commitment made to each alternative investment vehicle by the public investment fund since inception. (3)  The dollar amount of cash contributions made by the public investment fund to each alternative investment vehicle since inception. (4)  The dollar amount, on a fiscal yearend basis, of cash distributions received by the public investment fund from each alternative investment vehicle.
(5)  The dollar amount, on a fiscal yearend basis, of cash distributions received by the public investment fund plus remaining value of partnership assets attributable to the public investment fund’s investment in each alternative investment vehicle.
(6)  The net internal rate of return of each alternative investment vehicle since inception.
(7)  The investment multiple of each alternative investment vehicle since inception.
(8)  The dollar amount of the total management fees and costs paid on an annual fiscal yearend basis, by the public investment fund to each alternative investment vehicle.
(9)  The dollar amount of cash profit received by public investment funds from each alternative investment vehicle on a fiscal year-end basis. 90 Ch. 442 — 6 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 12, Packet Page 335 (c)  For purposes of this section, the following definitions shall apply:
(1)  “Alternative investment” means an investment in a private equity fund, venture fund, hedge fund, or absolute return fund. (2)  “Alternative investment vehicle” means the limited partnership, limited liability company, or similar legal structure through which the public investment fund invests in portfolio companies.
(3)  “Portfolio positions” means individual portfolio investments made by the alternative investment vehicles.
(4)  “Public investment fund” means any public pension or retirement system, any public endowment or foundation, or a public bank, as defined in Section 57600.

SEC. 9. Section 6254.35 is added to the Government Code, to read:
6254.35. (a)  For purposes of this section, the following definitions shall apply:
(1)  “Customer” means a person or entity that has transacted or is transacting business with or has used or is using the services of a public bank or a person or entity for whom the public bank has acted as a fiduciary with respect to trust property.
(2)  “Investment recipient” means an entity in which the public bank invests.
(3)  “Loan recipient” means an entity or individual which has received a loan from the public bank.
(4)  “Personal data” means social security numbers, tax identification numbers, physical descriptions, home addresses, home telephone numbers, statements of personal worth or any other personal financial data, employment histories, electronic mail addresses, and information that reveals any electronic network location or identity.
(5)  “Public bank” has the same meaning as defined in Section 57600. (b)  Notwithstanding another provision of this chapter, the following information and records of a public bank and the related decisions of the directors, officers, and managers of a public bank shall not be subject to disclosure pursuant to this chapter, unless the information has already been publicly released by the custodian of the information:
(1)  Due diligence materials that are proprietary to the public bank. (2)  A memorandum or letter produced and distributed internally by the public bank.
(3)  A commercial or personal financial statement or other financial data received from an actual or potential customer, loan recipient, or investment recipient.
(4)  Meeting materials of a closed session meeting, or a closed session portion of a meeting, of the board of directors, a committee of the board of directors, or executives of a public bank.
(5)  A record containing information regarding a portfolio position in which the public bank invests.
(6)  A record containing information regarding a specific loan amount or loan term, or information received from a loan recipient or customer pertaining to a loan or an application for a loan.
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 13, Packet Page 336 (7)  A capital call or distribution notice, or a notice to a loan recipient or customer regarding a loan or account with the public bank. (8)  An investment agreement, loan agreement, deposit agreement, or a related document.
(9)  Specific account information or other personal data received by the public bank from an actual or potential customer, investment recipient, or loan recipient.
(10)  A memorandum or letter produced and distributed for purposes of meetings with a federal or state banking regulator.
(11)  A memorandum or letter received from a federal or state banking regulator.
(12)  Meeting materials of the internal audit committee, the compliance committee, or the governance committee of the Board of Directors of a public bank.
(c)  Notwithstanding subdivision (b), the following information contained in records described in subdivision (b) shall be subject to disclosure pursuant to this chapter and shall not be considered a trade secret exempt from disclosure:
(1)  The name, title, and appointment year of each director and executive of the public bank.
(2)  The name and address of each current investment recipient in which the public bank currently invests.
(3)  General internal performance metrics of the public bank and financial statements of the bank, as specified or required by the public bank’s charter or as required by federal law.
(4)  Final audit reports of the public bank’s independent auditors, although disclosure to an independent auditor of any information described in subdivision (b) shall not be construed to permit public disclosure of that information provided to the auditor.

SEC. 10. Section 23007 of the Government Code is amended to read:
23007. Except as specified in this chapter, a county shall not, in any manner, give or loan its credit to or in aid of any person or corporation that is not a public bank, as defined in Section 57600. An indebtedness or liability incurred contrary to this chapter is void.

SEC. 11. Section 53601 of the Government Code is amended to read:
53601. This section shall apply to a local agency that is a city, a district, or other local agency that does not pool money in deposits or investments with other local agencies, other than local agencies that have the same governing body. However, Section 53635 shall apply to all local agencies that pool money in deposits or investments with other local agencies that have separate governing bodies. The legislative body of a local agency having moneys in a sinking fund or moneys in its treasury not required for the immediate needs of the local agency may invest any portion of the moneys that it deems wise or expedient in those investments set forth below.

A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the local agency, including those 90 Ch. 442 — 8 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 14, Packet Page 337 purchased for the agency by financial advisers, consultants, or managers using the agency’s funds, by book entry, physical delivery, or by third-party custodial agreement. The transfer of securities to the counterparty bank’s customer book entry account may be used for book entry delivery.

For purposes of this section, “counterparty” means the other party to the transaction. A counterparty bank’s trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement or securities lending agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment:
(a)  Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency.
(b)  United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest.
(c)  Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.
(d)  Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California.
(e)  Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.
(f)  Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises.
(g)  Bankers’ acceptances otherwise known as bills of exchange or time drafts that are drawn on and accepted by a commercial bank. Purchases of bankers’ acceptances shall not exceed 180 days’ maturity or 40 percent of the agency’s moneys that may be invested pursuant to this section. However, 90 — 9 — Ch. 442
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 15, Packet Page 338 no more than 30 percent of the agency’s moneys may be invested in the bankers’ acceptances of any one commercial bank pursuant to this section.

This subdivision does not preclude a municipal utility district from investing moneys in its treasury in a manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 11501) of the Public Utilities Code).
(h)  Commercial paper of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or (2):
(1)  The entity meets the following criteria:
(A)  Is organized and operating in the United States as a general corporation.
(B)  Has total assets in excess of five hundred million dollars ($500,000,000).
(C)  Has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO. (2)  The entity meets the following criteria:
(A)  Is organized within the United States as a special purpose corporation, trust, or limited liability company.
(B)  Has programwide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond. (C)  Has commercial paper that is rated “A-1” or higher, or the equivalent, by an NRSRO.

Eligible commercial paper shall have a maximum maturity of 270 days or less. Local agencies, other than counties or a city and county, may invest no more than 25 percent of their moneys in eligible commercial paper. Local agencies, other than counties or a city and county, may purchase no more than 10 percent of the outstanding commercial paper of any single issuer.

Counties or a city and county may invest in commercial paper pursuant to the concentration limits in subdivision (a) of Section 53635. (i)  Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposit do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the moneys are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or a person with investment decisionmaking authority in the administrative office manager’s office, 90 Ch. 442 — 10 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 16, Packet Page 339 budget office, auditor-controller’s office, or treasurer’s office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit.
(j)  (1)  Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of securities authorized by this section, as long as the agreements are subject to this subdivision, including the delivery requirements specified in this section.
(2)  Investments in repurchase agreements may be made, on an investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlie a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day.
(3)  Reverse repurchase agreements or securities lending agreements may be utilized only when all of the following conditions are met:
(A)  The security to be sold using a reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale.
(B)  The total of all reverse repurchase agreements and securities lending agreements on investments owned by the local agency does not exceed 20 percent of the base value of the portfolio.
(C)  The agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
(D)  Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty using a reverse repurchase agreement or securities lending agreement shall not be used to purchase another security with a maturity longer than 92 days from the initial settlement date of the reverse repurchase agreement or securities lending agreement, unless the reverse repurchase agreement or securities lending agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity date of the same security.
(4)  (A)  Investments in reverse repurchase agreements, securities lending agreements, or similar investments in which the local agency sells securities prior to purchase with a simultaneous agreement to repurchase the security may be made only upon prior approval of the governing body of the local agency and shall be made only with primary dealers of the Federal Reserve 90 — 11 — Ch. 442
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 17, Packet Page 340 Bank of New York or with a nationally or state-chartered bank that has or has had a significant banking relationship with a local agency. (B)  For purposes of this chapter, “significant banking relationship” means any of the following activities of a bank:
(i)  Involvement in the creation, sale, purchase, or retirement of a local agency’s bonds, warrants, notes, or other evidence of indebtedness. (ii)  Financing of a local agency’s activities.
(iii)  Acceptance of a local agency’s securities or funds as deposits. (5)  (A)  “Repurchase agreement” means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third-party custodial agreement. The transfer of underlying securities to the counterparty bank’s customer book-entry account may be used for book-entry delivery. (B)  “Securities,” for purposes of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (C)  “Reverse repurchase agreement” means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements.
(D)  “Securities lending agreement” means an agreement under which a local agency agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the local agency. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the local agency in return for the collateral.
(E)  For purposes of this section, the base value of the local agency’s pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pool by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements, securities lending agreements, or other similar borrowing methods. (F)  For purposes of this section, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds.
(k)  Medium-term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. Purchases of medium-term notes shall not include other instruments authorized by this section and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. (l)  (1)  Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and 90 Ch. 442 — 12 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 18, Packet Page 341 that comply with the investment restrictions of this article and Article 2 (commencing with Section 53630). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement or securities lending agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company’s board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement or securities lending agreement may be 100 percent of the sales price if the securities are marked to market daily.
(2)  Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.).
(3)  If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria:
(A)  Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.
(B)  Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by subdivisions (a) to (k), inclusive, and subdivisions (m) to (q), inclusive, and with assets under management in excess of five hundred million dollars ($500,000,000).
(4)  If investment is in shares issued pursuant to paragraph (2), the company shall have met either of the following criteria:
(A)  Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs.
(B)  Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). (5)  The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include commission that the companies may charge and shall not exceed 20 percent of the agency’s moneys that may be invested pursuant to this section. However, no more than 10 percent of the agency’s funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1).
(m)  Moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 19, Packet Page 342 (n)  Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank that is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted.
(o)  A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond. Securities eligible for investment under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and have a maximum remaining maturity of five years or less. Purchase of securities authorized by this subdivision shall not exceed 20 percent of the agency’s surplus moneys that may be invested pursuant to this section.
(p)  Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (r), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment adviser that meets all of the following criteria:
(1)  The adviser is registered or exempt from registration with the Securities and Exchange Commission.
(2)  The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (q), inclusive. (3)  The adviser has assets under management in excess of five hundred million dollars ($500,000,000).
(q)  United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO and shall not exceed 30 percent of the agency’s moneys that may be invested pursuant to this section. (r)  Commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600.

SEC. 12. Section 53635 of the Government Code is amended to read:
53635. (a) This section shall apply to a local agency that is a county, a city and county, or other local agency that pools money in deposits or investments with other local agencies, including local agencies that have 90 Ch. 442 — 14 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 20, Packet Page 343 the same governing body. However, Section 53601 shall apply to all local agencies that pool money in deposits or investments exclusively with local agencies that have the same governing body.

This section shall be interpreted in a manner that recognizes the distinct characteristics of investment pools and the distinct administrative burdens on managing and investing funds on a pooled basis pursuant to Article 6 (commencing with Section 27130) of Chapter 5 of Division 2 of Title 3.

A local agency that is a county, a city and county, or other local agency that pools money in deposits or investments with other agencies may invest in commercial paper pursuant to subdivision (h) of Section 53601, except that the local agency shall be subject to the following concentration limits:
(1)  No more than 40 percent of the local agency’s money may be invested in eligible commercial paper.
(2)  No more than 10 percent of the total assets of the investments held by a local agency may be invested in any one issuer’s commercial paper. (b)  Notwithstanding Section 53601, the City of Los Angeles shall be subject to the concentration limits of this section for counties and for cities and counties with regard to the investment of money in eligible commercial paper.
(c)  A local agency subject to this section may invest in commercial paper, debt securities, or other obligations of a public bank, as defined in Section 57600.

SEC. 13. Section 53635.2 of the Government Code is amended to read:
53635.2. As far as possible, all money belonging to, or in the custody of, a local agency, including money paid to the treasurer or other official to pay the principal, interest, or penalties of bonds, shall be deposited for safekeeping in state or national banks, public banks, savings associations, federal associations, credit unions, or federally insured industrial loan companies in this state selected by the treasurer or other official having legal custody of the money; or may be invested in the investments set forth in Section 53601. To be eligible to receive local agency money, a bank, savings association, federal association, or federally insured industrial loan company shall have received an overall rating of not less than “satisfactory” in its most recent evaluation by the appropriate federal financial supervisory agency of its record of meeting the credit needs of California’s communities, including low- and moderate-income neighborhoods, pursuant to Section 2906 of Title 12 of the United States Code. Sections 53601.5 and 53601.6 shall apply to all investments that are acquired pursuant to this section.

SEC. 14. Section 54956.97 is added to the Government Code, to read:
54956.97. Notwithstanding any provision of law, the governing board, or a committee of the governing board, of a public bank, as defined in Section 57600 of the Government Code, may meet in closed session to consider and take action on matters pertaining to all of the following:
(a)  A loan or investment decision.
(b)  A decision of the internal audit committee, the compliance committee, or the governance committee.
(c)  A meeting with a state or federal regulator.
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 21, Packet Page 344 SEC. 15. Section 54956.98 is added to the Government Code, to read:
54956.98. (a)  For purposes of this section, the following definitions shall apply:
(1)  “Shareholder, member, or owner local agency” or “shareholder, member, or owner” means a local agency that is a shareholder of a public bank.
(2)  “Public bank” has the same meaning as defined in Section 57600. (b)  The governing board of a public bank may adopt a policy or a bylaw or include in its governing documents provisions that authorize any of the following:
(1)  All information received by a shareholder, member, or owner of the public bank in a closed session related to the information presented to the governing board of a public bank in closed session shall be confidential.

However, a member of the governing board of a shareholder, member, or owner local agency may disclose information obtained in a closed session that has direct financial or liability implications for that local agency to the following individuals:
(A) Legal counsel of that shareholder, member, or owner local agency for purposes of obtaining advice on whether the matter has direct financial or liability implications for that shareholder local agency. (B) Other members of the governing board of the local agency present in a closed session of that shareholder, member, or owner local agency. (2) A designated alternate member of the governing board of the public bank who is also a member of the governing board of a shareholder, member, or owner local agency and who is attending a properly noticed meeting of the public bank governing board in lieu of a shareholder, member, or owner local agency’s regularly appointed member may attend a closed session of the public bank governing board.
(c) If the governing board of a public bank adopts a policy or a bylaw or includes provisions in its governing documents pursuant to subdivision (b), then the governing board of the shareholder, member, or owner local agency, upon the advice of its legal counsel, may conduct a closed session in order to receive, discuss, and take action concerning information obtained in a closed session of the public bank governing board pursuant to paragraph (1) of subdivision (b).

SEC. 16. Division 5 (commencing with Section 57600) is added to Title 5 of the Government Code, to read:

DIVISION 5. PUBLIC BANKS
57600. For purposes of this division:
(a) “Local financial institution” means a certified community development financial institution, a credit union, as defined in Section 165 of the Financial Code, or a small bank or an intermediate small bank, as defined in Section

25.12 of Title 12 of the Code of Federal Regulations.
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 22, Packet Page 345 (b)  (1)  “Public bank” means a corporation, organized under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) or the Nonprofit Public Benefit Corporation Law (Part 2 (commencing with Section 5110) of Division 2 of Title 1 of the Corporations Code) for the purpose of engaging in the commercial banking business or industrial banking business, that is wholly owned by a local agency, local agencies, or a joint powers authority formed pursuant to the Joint Exercise of Powers Act (Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1) that is composed only of local agencies.
(2)  A local agency located within a county with a population of less than 250,000 may organize a public bank only if it does so as part of a joint powers authority formed for those purposes.
(3)  For purposes of paragraph (2), population shall be based on the most recent estimate of population data determined by the Demographic Research Unit of the Department of Finance.
(c)  “Public bank license” means a certificate of authorization to transact business as a bank as described in Section 1042 of the Financial Code. 57601. (a)  If a public bank is organized as a nonprofit mutual benefit corporation, the articles of incorporation shall include the following purpose statement: “This corporation is a nonprofit mutual benefit corporation organized under the Nonprofit Mutual Benefit Corporation Law as a public bank. The purpose of the corporation is to engage in the commercial banking business or industrial banking business and any other lawful activities which are not prohibited to a public bank by applicable laws or regulations.” (b)  If a public bank is organized as a nonprofit public benefit corporation, the articles of incorporation shall include the following purpose statement:
“This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for the public purpose of engaging in the commercial banking business or industrial banking business as a public bank.”
(c)  Notwithstanding Sections 5410 and 7411 of the Corporations Code, a public bank may make distributions to its members.
(d)  All provisions of law applicable to nonprofit corporations generally, including, but not limited to, the Nonprofit Corporation Law (Division 2 (commencing with Section 5000) of Title 1 of the Corporations Code) shall apply to public banks. Whenever a provision of this division applicable to public banks is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally, the provision of this division shall apply, and the inconsistent provision of law applicable to nonprofit mutual benefit corporations or nonprofit public benefit corporations generally shall not apply to a public bank.
57602. (a)  A public bank shall obtain and maintain deposit insurance provided by the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act (12 U.S.C. Sec. 1811 et seq.).
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 23, Packet Page 346 (b)  In seeking and retaining insurance, a public bank may do all things and assume and discharge all obligations required of it that are not in conflict with state law.
57603. (a)  Before engaging in business, a public bank shall obtain a certificate of authorization to transact business as a bank pursuant to Division

1.1 of the Financial Code (commencing with Section 1000). (b)  A local agency shall comply with the requirements of Section 53638 with respect to its deposits in a public bank unless, with the prior approval of the Commissioner of Business Oversight, the public bank and the local agency depositor agree otherwise.
(c)  Notwithstanding Section 23010, a county may lend any of its available funds to any public bank.
(d)  Notwithstanding Section 53601, any local agency that does not pool money in deposits or investments with other local agencies that have separate governing bodies may invest in debt securities or other obligations of a public bank.
(e)  Notwithstanding Section 53635, any local agency that pools money in deposits or investments with other local agencies, including local agencies that have the same governing body, may invest in debt securities or other obligations of a public bank.
(f)  Notwithstanding Section 53635.2, a public bank shall be eligible to receive local agency money.
57604. (a)  As used in this section:
(1)  “Conducted in partnership with” means pursuant to a written agreement with a local financial institution to provide financial products and services to the public located within the jurisdiction of the public bank. (2)  “Infrastructure lending” means granting a loan or extending credit to a local agency for the purpose of building or improving public infrastructure, including housing projects, as defined in Section 34212 of the Health and Safety Code, and affordable housing, as defined in subdivision (a) of Section 62250.
(3)  “Local agency banking” means providing any of the following services to a local agency:
(A)  Accepting a deposit of any kind.
(B)  Granting a loan or extension of credit of any kind. (4)  “Participation lending” means purchasing or selling an interest in a loan or loans originated by or sold to a local financial institution, or originating, leading, or directing a loan transaction involving a local financial institution pursuant to a written agreement with the local financial institution. (5)  “Person” means a person as defined in Section 127 of the Financial Code, except that a person does not mean a local agency as defined in Section 50001 of the Government Code, but includes any individual employed by a local agency.
(6)  “Retail activities” means providing any kind of financial product or service to a person that is typically offered or provided by a local financial institution, including, but not limited to, all of the following:
90 Ch. 442 — 18 —
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Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 24, Packet Page 347 (A)  Accepting a deposit of any kind from a person, including the issuance of shares by a credit union.
(B)  Granting a loan or extension of credit, of any kind, to a person. (7)  “Wholesale lending” means granting a loan or extension of credit to a local financial institution.
(b)  Except as provided in paragraph (2) of subdivision (c), a public bank shall conduct retail activities in partnership with local financial institutions and shall not compete with local financial institutions. (c)  A public bank may do both of the following:
(1)  Engage in all of the following banking activities:
(A)  Local agency banking.
(B)  Infrastructure lending.
(C)  Wholesale lending.
(D)  Participation lending.
(2)  Engage in retail activities without partnering with a local financial institution, if those retail activities are not offered or provided by local financial institutions in the jurisdiction of the local agency or agencies that own the public bank.
57605. For the purposes of Section 1280 of the Financial Code, any person or entity, including a local agency, that owns, controls, or holds an ownership interest in a public bank is not a bank holding company by reason of that ownership interest.
57606. (a)  Before submitting an application to organize and establish a public bank pursuant to Section 1020 of the Financial Code, a local agency shall conduct a study to assess the viability of the proposed public bank.

The study shall include, but is not limited to, all of the following elements:
(1)  A discussion of the purposes of the bank including, but not limited to, achieving cost savings, strengthening local economies, supporting community economic development, and addressing infrastructure and housing needs for localities.
(2)  A fiscal analysis of costs associated with starting the proposed public bank.
(3)  An estimate of the initial amount of capital to be provided by the local agency to the proposed public bank.
(4)  Financial projections, including a pro forma balance sheet and income statement, of the proposed public bank for at least the first five years of operation. The financial projections shall include an estimate of the time period for when expected revenues meet or exceed expected costs and an estimate of the total operating subsidy that the local agency may be required to provide until the proposed public bank generates sufficient revenue to cover its costs. In addition to projections that assume favorable economic conditions, the analysis shall also include a downside scenario that considers the effect of an economic recession on the financial results of the proposed public bank. The projections may include the downside scenario of continuing to do business with the local government’s current banker or bankers.
90 — 19 — Ch. 442
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 25, Packet Page 348 (5)  A legal analysis of whether the proposed structure and operations of the public bank would likely comply with Section 6 of Article XVI of the California Constitution, but nothing herein shall compel the waiver of any attorney-client privilege attaching to that legal analysis. (6)  An analysis of how the proposed governance structure of the public bank would protect the bank from unlawful insider transactions and apparent conflicts of interest.
(b)  The study may include any of the following elements:
(1)  A fiscal analysis of benefits associated with starting the proposed public bank, including, but not limited to, cost savings, jobs created, jobs retained, economic activity generated, and private capital leveraged. (2)  A qualitative assessment of social or environmental benefits of the proposed public bank.
(3)  An estimate of the fees paid to the local agency’s current banker or bankers.
(4)  A fiscal analysis of the costs, including social and environmental, of continuing to do business with the local agency’s current banker or bankers. (c)  (1)  The study required by subdivision (a) shall be presented to and approved by the governing body of the local agency, and a motion to move forward with an application for a public banking charter shall be approved by a majority vote of the governing body at a public meeting prior to the local agency submitting an application pursuant to Section 1020 of the Financial Code. In addition, the local agency shall include a copy of the study required by subdivision (a) in the application submitted to the Commissioner of Business Oversight.
(2)  Before the local agency submits an application pursuant to Section 1020 of the Financial Code, the motion to move forward with an application for a public banking charter shall be subject to voter approval at the next regularly scheduled election held at least 180 days following the vote of the governing body.
(3)  The voter approval requirement described in paragraph (2) shall apply to a local agency entering into a joint powers authority formed pursuant to the Joint Exercise of Powers Act (Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1) after the study required in subdivision (a) has been completed and before submitting an application to organize and establish a public bank pursuant to Section 1020 of the Financial Code. (4)  As used in paragraphs (2) and (3), “local agency” does not include a charter city.
(d)  The local agency shall make available to the public the financial models and key assumptions used to estimate the elements described in paragraphs (2) through (4) of subdivision (a) before presenting the study to the governing body of the local agency as required by subdivision (c). 57607. (a)  The Commissioner of Business Oversight shall not issue more than two public bank licenses in a calendar year.
(b)  The Commissioner of Business Oversight shall not issue a public bank license if issuing that public bank license would cause there to be more 90 Ch. 442 — 20 —
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 26, Packet Page 349 than 10 public banks authorized to transact business pursuant to Division

1.1 (commencing with Section 1000) of the Financial Code. (c) The Commissioner of Business Oversight shall conduct a study of public banking in California within two years after the date upon which the commissioner issues the 10th public bank license.
(d) The Commissioner of Business Oversight shall not issue a public bank license after the expiration of a period of seven years from the date upon which the commissioner first promulgates regulations for the purpose of carrying out the commissioner’s duties under this division.

SEC. 17. Section 23701aa is added to the Revenue and Taxation Code, to read:
23701aa. A public bank as defined in Section 57600 of the Government Code. In addition, a public bank is exempt from all other taxes and licenses, state, county, and municipal, imposed upon a public bank, local utility user taxes, sales and use taxes, state energy resources surcharges, state emergency telephone users surcharges, motor vehicle and other vehicle registration license fees, and any other tax or license fee imposed by the state upon vehicles, motor vehicles, or the operation thereof.

SEC. 18. The Legislature finds and declares that Sections 8, 9, 14, and 15 of this act, which amend Section 6254.26 of, and add Sections 6254.34, 54956.97, and 54956.98 to, the Government Code, impose a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

Certain information collected by a public bank must be kept confidential because confidentiality is essential to a public bank’s relationships with its customers, lenders, regulators, and other banks. This confidentiality extends to portions of meetings of the board of directors relating to loan or investment decisions, to meetings with banking regulators, and to meetings of the internal audit committee, the compliance committee, or the governance committee of a public bank. This bill balances the interests of a public bank in keeping certain important information confidential with the interest of the public in accessing information concerning the conduct of the people’s business by allowing the public to monitor the performance of a public bank and allowing the public to know the identities of principals involved in management of a public bank so that conflicts of interest on the part of public officials can be avoided.

SEC. 19. The Legislature finds and declares that Sections 8, 9, 14, and 15 of this act, which amend Section 6254.26 of, and add Sections 6254.34, 54956.97, and 54956.98 to, the Government Code, further, within the meaning of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to 90 — 21 — Ch. 442
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 27, Packet Page 350 paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the Legislature makes the following findings:

This bill balances the interests of a public bank in keeping certain important information confidential with the interest of the public in accessing information concerning the conduct of the people’s business.

O
90 Ch. 442 — 22 —
ATTACHMENT 1
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 28, Packet Page 351 AB 857 and Public Bank Information & FAQs
● AB 857 would allow local governments the opportunity to establish a public bank. ○ AB 857 does not open a bank or invest any taxpayer money in a public bank. It is not a spending bill!
● AB 857 will enable a framework for state and regional public banks in California. ○ Public banks are financial institutions that are owned by one or more public entities, such as a city, county, or joint powers authority.
● California does not have any public banking options.
○ As a result, billions of taxpayer dollars are invested with commercial banks that have little incentive to use their assets for the betterment of the local community. ● Some key points about public banks
○ Address local issues: Public banks leverage their deposit base and lending power to benefit the public. This allows public banks to focus on pressing local needs, like affordable housing, small business loans, and public infrastructure projects such as rebuilding after wildfires.
○ Partnership with local banks: Public Banks bolster and enhance local bank and credit union activities, enabling lending capital for local businesses. ○ Address housing crisis: Public Banking under our legislation enables a viable means of publicly financing housing and infrastructure projects to remediate our statewide housing crisis.
○ Protection during downturns: A robust public banking network in California provides strong protections against insolvency of large banks in periods of economic duress ○ Builds assets for local constituents: Public Banks return interest and fee revenues to the communities they serve, creating value revenue reserves for local constituencies ○ Public accountability: Public Banks promote a transparent, independent and publicly governed finance system that is accountable to the people they serve. Unlike commercial banks which must prioritize shareholder returns over obligations to the public.
○ Provides a mechanism for divestment: Public Banks create a stable means of divestment of public deposited funds and investments from unethical banking organizations and industries.
● The Bank of North Dakota provides the best example of the long-term benefits of a fiscally prudent public bank that focuses on local needs alongside local partners. ○ Established by the North Dakota legislature in 1919, the Bank of North Dakota (BND) is the oldest publicly owned bank in the United States. BND, in partnership with local banks and credit unions, promotes economic development within the state and has ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 29, Packet Page 352 been profitable for many years. Recently, several states and cities across the nation have started exploring the feasibility of creating public banks.

General FAQs
(adapted from Mythbusters)
In an effort to educate legislators, public officials and finance staff assessing the proposed legislation advocated by the California Public Banking Alliance (CPBA), our organization would like to dispel some misunderstandings and misconceptions that have been communicated about our legislation.

We have noticed a number of ‘myths’ that have arisen from the public conversations, hearings and written correspondence our group has been involved in that we would like to address.

Myth: A public bank provides a backdoor
to unsecured deposits
Our legislation requires any public bank to utilize
FDIC.

Myth: Public Banking legislation guts
collateralization requirements for public
funds
Our legislation does not undermine the current,
stringent legal requirements for the
collateralization of deposits for public funds. We
have introduced legislation that creates a new
charter that relies on existing structures for
oversight by the Department of Business
Oversight.

Depositing funds in a public bank would be no
more risky than a deposit in an existing
commercial bank.

Myth: Public Banks increase the
likelihood of insolvency in the event of a
municipal bankruptcy
Technical objections to public banking have
invoked the Orange County bankruptcy with
concerns that a public bank would somehow
increase the risk of insolvency during a crisis.

Orange County sued Merrill Lynch in 1995 for $2
billion in damages, contending that the Wall
Street firm sold risky investments to OC’s former
treasurer which lead to the County’s bankruptcy.

Merrill Lynch settled for $400 Million and Orange
County subsequently barred the financial firm
from doing business for nearly a decade.

As public entities, public banks face increased
oversight. Our bill makes the financial structures
of public banks transparent, with the public
bank’s business model subject to continuing
oversight by the DBO. Our legislation also does
not increase risk for the investment of public
funds. We use all of the existing legal and
regulatory structures established by law in
California in the wake of the OC bankruptcy.

ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 30, Packet Page 353 Myth: Public Banking legislation is a
sneaky attempt to create a Cannabis
Bank
While the CPBA has much to say about the
findings of the recent Cannabis Banking Working
Group commissioned feasibility report for a
Public Bank designed specifically for Cannabis,
our organization does not include cannabis in
any of our legislation. From the CPBA’s
perspective, the advent of public banking is
about a just, equitable and ethical financial
services network for California public monies
and nothing more.

Myth: A Public Bank opens the door for
self-dealing and creates conflicts of
interest by allowing a municipality to lend
to itself
There have been some technical objections to
our legislation related to State and local
Constitutional clauses related to self-dealing and
self-issuance of credit.

Under our legislation, a public bank is an
independent corporation with its own
professional board and governance structures.

The municipality is the customer and does not
have direct governance capability. Self-dealing
and conflicts of interest within the governance
structures of a particular public banking business
plan would not survive the required review and
approval of the Department of Business
Oversight.

Myth: A Public Bank unfairly competes
with existing commercial banks
Because our legislation prevents Public Banks
from competing with retail consumer banking
entities, under the legislation, a public bank
would operate like a commercial bank, not a
retail consumer bank. In fact, our legislation
explicitly requires a public bank to actively
engage in partnerships with community banks
and credit unions to offer loans and financial
services wherever possible. By establishing a
public bank, a municipality has no obligation to
use it as its sole depository or to otherwise use it
to the exclusion of other banking relationship.

Myth: Public bank advocates fail to
identify how current mega-banks are not
meeting the needs of local communities.

Within the past few years, Los Angeles, Santa
Monica, Alameda, Santa Rosa and San
Jose have all voted to move its business away
from Wells Fargo after it received a “Needs to
Improve” on its Community Reinvestment Act
performance evaluation. Mega-banks profit from
financing and enabling precisely the same fossil
fuels, private prisons, destruction of
communities, and other reprehensible activities
that our Communities are actively fighting
against. Public banks can be a much-needed
alternative to the mega-banks, help
counteract the risky trend towards bank
consolidation, and serve as a source of
strength for local economies.

ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 31, Packet Page 354 Committee FAQs
Banking and Finance Committee
- How will taxpayer dollars be secured?
- All deposits in public banks will have FDIC. They will be collateralized like all public deposits. AB 857 makes no adjustment to collateral or capital requirements for public banks.
- Will public banks compete with credit unions, community banks, & local financial institutions? - No. AB 857 restricts public banks from consumer and commercial markets where local banks already adequately serve constituents. Public banks will partner with local banks and non-profit credit institutions to extend credit to communities and expand services to the underbanked.

Local Government Committee
- Will a public bank put municipal or county finances in jeopardy in the event of a bankruptcy? - Banks imagined by AB 857 will face increased oversight compared to current depositories because as public entities they will be subject to state sunshine laws and closer regulation by DBO. Public deposits will be FDIC insured and collateralized. Public investment in the bank will be secured by senior claims to the assets of the bank. - How will the lending activity of public banks be kept independent of political influence? - AB 857 requires public banks to submit a governance plan to DBO for approval, which will apply the law to prevent self dealing and conflicts of interest. - How will public banks impact the credit and borrowing power of municipalities and counties? - Municipal and county treasurers will be an integral part of conceiving, managing, and overseeing public banks in their jurisdictions. They will assess the credit impacts of public banks before investing or depositing public funds. Additionally, DBO will regulate these banks and ensure they do not over extend their lending and create undue risk for public depositors.
- Will pooled or pension funds be used to capitalize these banks? - Public banks will start small and operate only within the bounds of their charters, as approved by DBO. They will expand only after developing a track record of good management and returns. Existing standards and due diligence for public investments will always apply.

Appropriations Committee
- Will public banks cost the State money?
- AB857 does not open a bank or invest any State money in a public bank. Any financial impact of AB857 will be from the review of bank applications and regulation of new public banks, which may possibly be handled by existing DBO staff.

ATTACHMENT 2
Council Regular Meeting, 4/19/2022, Item No. 24., Item Page 32, Packet Page 355 Council
Agenda Report
№07/19
FROM: Nat Rojanasathira, Assistant City Manager
SUBJECT: Recognition of April 2022 as Fair Housing Month (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061) RECOMMENDATION:

That the Mayor and City Council recognize April 2022 as Fair Housing Month.

VALUE DRIVER:

This proclamation is consistent with the Council’s value driver: “Support efforts and policies that provide equitable access to affordable housing in Monterey and the region.” POLICY IMPLICATIONS:

None.

FISCAL IMPLICATIONS:

None.

ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA)(CCR, Title 14, Chapter 3 (CEQA Guidelines), Article 20, Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities that have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.

Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or any reasonably foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

The Council could choose not to present the proclamation and receive the presentation.

Date: 4/19/2022
Item No.: 25.

Council Regular Meeting, 4/19/2022, Item No. 25., Item Page 1, Packet Page 356 DISCUSSION:

National Fair Housing Month celebrates the passage of the Fair Housing Act in April 1968, a federal law that prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, and gender. The Act was later amended to include protections for people with disabilities and families with children. In the State of California, there are additional protections for marital status, sexual orientation, ancestry, source of income, and other characteristics, such as age or occupation.

Fair housing is essential to the ethical commitment of the City of Monterey and is critical to serving our community. The City of Monterey partners with ECHO Housing to offer fair housing and tenant-landlord counseling services to the public. This helps promote equal access to housing and provides support services to renters in the community. In March 2022, the Public Information Office and Housing Office developed flyers to promote this service. Interested parties can contact ECHO Housing at (831) 566-0824 or visit echofairhousing.org. In addition, the City’s Housing Office is an available resource, with more information online at monterey.org/housing.

Attachments: 1. Proclamation
Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 4/19/2022, Item No. 25., Item Page 2, Packet Page 357 ATTACHMENT 1
Proclamation declaring
April 2022

FAIR HOUSING MONTH
WHEREAS, the City of Monterey celebrates the month of April as the anniversary of the establishment of the Fair Housing Act. This Act outlines a national policy of fair housing for all individuals who live in the United States;
WHEREAS, the Fair Housing Act protects individuals from discrimination based on race, color, sex, disability, religion, family status, and national origin; WHEREAS, the City of Monterey also prohibits discrimination based on these characteristics when individuals are renting or buying a home, receiving a mortgage, seeking housing assistance, or engaging in other housing related activities as part of the City’s affordable housing program; and WHEREAS, fair housing is essential to the ethical commitment of the City of Monterey and is crucial to serving our community. Therefore, we at the City of Monterey recognize the month of April as Fair Housing Month and promote an inclusive community devoted to fair housing.

NOW, THEREFORE, BE IT PROCLAIMED THAT I, Clyde Roberson, Mayor of the City of Monterey, on behalf of the City Council and citizens, hereby proclaim the month of April 2022 as Fair Housing Month, advocating for equal housing opportunities for all residents and prospective residents of the City of Monterey.

Dated: April 2022 ________________________
Clyde Roberson, Mayor
Council Regular Meeting, 4/19/2022, Item No. 25., Item Page 3, Packet Page 358 Council
Agenda Report
№08/22
FROM: Kimberly Cole, AICP, Community Development Director Prepared by: Chris Schmidt, Senior Associate Planner
SUBJECT: 1
st Reading by Title Only of an Ordinance Amending Chapter 38 of the Monterey City Code Related to Accessory Dwelling Unit Development Standards (MCC 38- 112.6) (Statutorily Exempt from CEQA per Article 18, 15282(h) and Public Resources Code Section 21080.17)
RECOMMENDATION:

That the City Council consider an ordinance amendment to regulations for accessory dwelling units.

VALUE DRIVER:

Support efforts and policies that provide equitable access to affordable housing in Monterey and the region. The Council embraces efforts that provide equitable access to affordable housing, including balanced approaches to increase housing supply, rental resources and assistance, and housing rehabilitation grants to homeless, low-income, senior and disabled individuals.

One of the City’s strategic priorities is to “support affordable housing through modern zoning policies/ordinances, ADU policies, housing grants, review of density requirements, and consideration of City-owned sites for affordable housing.” POLICY IMPLICATIONS:

Section 65852.2 of the Government Code does not limit the authority of local agencies to adopt less restrictive requirements for the creation of an accessory dwelling unit FISCAL IMPLICATIONS:

Construction of accessory dwelling units may affect property taxes.

ENVIRONMENTAL DETERMINATION:

The City of Monterey has determined that the adoption of these provisions is statutorily exempt from the California Environmental Quality Act (CEQA) as provided by Public Resources Code Section 21080.17 and by CEQA Guidelines Article 18, Section 15282.h, because it is the adoption of an ordinance by a city to implement the provisions of Section 65852.2 of the Government Code.

ALTERNATIVES CONSIDERED:

The purpose of the meeting is to consider proposed amendments to existing regulations for accessory dwelling units.

Date: 4/19/2022
Item No.: 26.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 1, Packet Page 359 DISCUSSION:

On August 24 and September 14, 2021, the Planning Commission considered the now-effective ADU ordinance. Since the ADU ordinance was adopted by the City Council, staff has recognized that certain provisions could be clarified. On March 8, 2022, the Planning Commission unanimously recommended City Council adoption of the proposed ADU ordinance amendments.

The proposed ADU ordinance amendments are detailed below (Attachments 1 and 2).

ADUs Above Garages or Carports
At the September 14, 2021 meeting, the Planning Commission recommended the height limit for “Second Story Attached/Above Garage” ADUs in the R-3 multifamily zoning district be increased from 20 feet to 25 feet subject to architectural review, to encourage the preservation of onsite parking within existing garages. The City Council adopted this recommendation.

The Planning Office has received inquiries if an ADU can be constructed over a carport instead of a garage. Staff is recommending that the ordinance be amended to allow construction of ADUs above carports, in addition to garages. As currently written, the adopted ordinance does not specifically allow construction above carports.

Development Standard Limits for ADUs Exceeding 16 Feet (R-3 District Only) As new inquiries into potential ADU projects have become more frequent, staff has identified certain development standards applicable to ADUs exceeding 16 feet in height that are considerable barriers for second-story attached/above garage (or carport) ADUs.

In the R-3 District, staff is recommending an amendment that would allow second-story ADUs, up to 25 feet in height, 800 square feet in floor area, and with minimum 4-foot rear and side yard setbacks, to be exempt from lot coverage, floor area ratio, open space, and size requirements, similar to the Statewide exemption for ADUs.

The proposed amendment to Monterey City Code (MCC) section 38-112.6(2)(e) states:

Limits on lot coverage, floor area ratio, open space, and size must permit or shall be waived to allow aan 800 square foot detached or attached Accessory Dwelling Unit, with a maximum floor area of 800 square feet, maximum height of 16 25 feet, and high with minimum four-foot side and rear yard setbacks, if the proposed Accessory Dwelling Unit is in compliance with all other development standards, including but not limited to front yard setbacks.

Staff has observed that second-story attached/above garage ADU proposals are infeasible because they cannot meet the lot coverage or floor area ratio requirements. As such, applicants and property owners may opt to convert existing garages, resulting in a loss of onsite parking and increased demand for street parking. Staff is proposing MCC 38-112.6(2)(e) be amended to exempt ADUs up to 25 feet in height from the lot coverage, floor area ratio, open space, and size limitations, in order to preserve onsite covered parking. This amendment would allow reasonable development of second-story ADUs, which are still required to be reviewed by the Architectural Review Committee.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 2, Packet Page 360 In nearly all recent inquiries, R-3 lots had already exceeded floor area ratio. The current provision would preclude the construction of a second-story attached ADU or detached ADU above a garage or carport if the floor area ratio or lot coverage exceeds the standard requirement.

Staff recommends this change to preserve existing parking spaces while allowing the new ADU above a garage.

Properties with Historic Overlay Zoning or Historic Zoning Staff is recommending a minor change to MCC sec. 38-112.6(2)(h) to clarify that the ministerial requirements for historic-zoned properties does not constitute a historic review. This section header would be changed to read as follows:

8. Historic Review Properties with Historic Overlay Zoning or Historic Zoning.

Attached or detached Accessory Dwelling Units on a parcel with an H-1 or H-2 designation shall …
ARC Discretionary Review of Roof Pitch/Form
The current ADU ordinance includes ministerial provisions that the proposed ADU shall match the roof pitch and form of the primary dwelling onsite. Staff has recently recognized that it may be difficult or undesirable for applicants to match the main structure’s roof design. Staff is recommending an amendment to MCC Sec. 38-112.6(3)(b) that would allow applicants to apply for an exception to this requirement by allowing the ARC to approve alternative roof pitch and form designs if the committee can make the finding that the design is compatible with the primary structure and neighborhood. The amendment is written below:
b. Roof Pitch. The Accessory Dwelling Unit shall match the roof pitch and roof form of the primary dwelling in order to blend with the architecture of the primary dwelling.

The applicant may apply for an exception through the discretionary architectural review process pursuant to Municipal Code Chapter 38, Article 25. The Architectural Review Committee may grant such an exception if it finds that the alternative roof pitch and form design are compatible with the primary structure and neighborhood.

Sewer Lateral
Lastly, the City Building and Safety Division and Public Works Department have identified the need to further clarify the requirements for ADU sewer lateral connections, and allow new ADUs to utilize an existing sewer lateral if an applicant can demonstrate that it meets City standards and specifications. The proposed amendment to MCC sec. 38-112.6(5)(a) reads as follows:

A. Except as provided in subsection (5)(bd), below, an accessory dwelling unit may be required to have shall provide a new or separate utility connection, including a separate sewer lateral, between the accessory dwelling unit and the utility, unless the applicant has obtained a sewer lateral inspection performed by a licensed plumber demonstrating that the sewer lateral meets the City’s standards and specifications. Proof that the sewer lateral meets the City’s standards shall be submitted on a form provided by the City and completed by the professional who completed the inspection.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 3, Packet Page 361 Public Comments
Prior to the March 8, 2022, Planning Commission meeting, two public comments were submitted (Attachment 3).

Sharon Dwight expressed concerns for the visual effect of 25-foot tall ADU additions above garages and carports, allowing roof designs to differ from the existing primary structure, and requested notification of ADU projects to adjacent properties. Nancy and Gari Soule requested that the exceptions to development standard (MCC Sec. 38-112.6(2)(e)) amendment be further amended to only allow the exceptions to be granted when the proposed ADU does not eliminate covered parking spaces.

Conclusion
Staff’s recommendation is approval of the ordinance amendments.

KC/CS
Attachments: 1. Draft Ordinance Amending Chapter 38 of the City of Monterey Code Related to Accessory Dwelling Units

2. Draft Ordinance Amendment Text with Strikethrough/Underline

3. Public Comments from Sharon Dwight and Nancy/Gari Soule Writings distributed for discussion or consideration on this matter within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, will be made available at the following link:
https://monterey.org/Submitted-Comments
Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 4, Packet Page 362 ORDINANCE NO. ____ C.S.

AN ORDINANCE OF THE COUNCIL OF THE CITY OF MONTEREY
AMENDING CHAPTER 38 OF THE CITY OF MONTEREY CODE
RELATED TO ACCESSORY DWELLING UNITS (MCC SEC. 38-112.6) WHEREAS, California is experiencing a housing crisis, with housing demands outstripping supply. The California State Legislature brought forward several bills in 2019 relating to the planning and permitting of Accessory Dwelling Units (ADUs) to address the housing supply crisis. In October 2019, the Governor signed into law Assembly Bill (AB) 68, AB 881, and Senate Bill (SB) 13. Additionally, AB 68 amended standards for Junior ADUs (JADUs), and SB 13 made additions to the State Health and Safety Code (added new Section 17980.12).

The new laws took effect on January 1, 2020;
WHEREAS, Government Code sections 65852.2 and 65852.22 require cities to adopt ADU zoning regulations consistent with the new state law. In the absence of a valid local ordinance, the new state law provides a set of default standards governing local agencies’ regulation and approval of ADUs;
WHEREAS, on November 2, 2021, the City Council adopted Ordinance No. 3641, to amend the City Code to include ADU zoning regulations consistent with Government Code sections 65852.2 and 65852.22;
WHEREAS, City staff has identified opportunities to clarify the ADU zoning regulations and to allow development standard exemptions for ADUs up to 25’ that are constructed above garages and carports;
WHEREAS, ADUs may share a sewer lateral line with the main residence as long as the sewer lateral meets City standards and specifications, at a substantially reduced cost; WHEREAS, the 2015-2023 Housing Element Goal b is to broaden the choice of rental housing types available to residents of Monterey in all price ranges and for all family sizes while maintaining neighborhood compatibility and, where possible, using second units to encourage owner opportunities;
WHEREAS, the Planning Commission finds that the amendment is consistent with the purposes of the General Plan, the purposes of the Municipal Code, and other applicable City ordinances;
WHEREAS, on March 8, 2022, the Planning Commission held a duly noticed public hearing, took public testimony, and recommended that the City Council adopt the ordinance amendments;
WHEREAS, the City Council held a duly public hearing on April 19, 2022, took public testimony, and considered the ordinance amendments; and WHEREAS, the City of Monterey City Council has determined that the adoption of those provisions is statutorily exempt from the California Environmental Quality Act (CEQA) as Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 5, Packet Page 363 2 provided by Public Resources Code Section 21080.17 and by CEQA Guidelines Article 18, Section 15282.h, because it is the adoption of an ordinance by a city to implement the provisions of Section 65852.2 of the Government Code.

NOW, THEREFORE, the Monterey City Council does ordain as follows:

SECTION 1. The above recitals are true and correct and are hereby incorporated and adopted as findings of the City Council as if fully set forth herein.

SECTION 2. Monterey City Code, Section 38-112.6(2)(d)(ii), Second Story Attached Accessory Dwelling Unit/Above Garage is hereby amended to read as follows:
ii. Second Story Attached Accessory Dwelling Unit/Above Garage or Carport. If an Accessory Dwelling Unit exceeds the maximum permitted height set forth in subsection (2)(d)(i) above, the applicant may apply for an exception through the discretionary architectural review process pursuant to Municipal Code Chapter 38, Article 25 if:
(1) The total height of the building, as defined in Section 38-11 (Height, Building), is 25 feet or less;
(2) The parcel is within the R-3 zone;
(3) The garage or carport is at the ground level
(4) No windows or openings are permitted for that portion of the building that is closer than four feet to a property line; and
(5) Any window parallel to an adjoining property line and closer than 10 feet shall be either:
a. Opaque and inoperable; or
b. Clerestory windows with a minimum height no less than six feet above floor level.

SECTION 3. Monterey City Code, Section 38-112.6(2)(e) is hereby amended to read as follows:
e. Limits on lot coverage, floor area ratio, open space, and size must permit or shall be waived to allow a detached or attached Accessory Dwelling Unit, with a maximum floor area of 800 square feet, maximum height of 25 feet, and minimum four-foot side and rear yard setbacks, if the proposed Accessory Dwelling Unit is in compliance with all other development standards, including but not limited to front yard setbacks.

SECTION 4. Monterey City Code, Section 38-112.6(2)(h), Historic Review is hereby amended to delete the heading “Historic Review” and replace it with the heading “Properties with Historic Overlay Zoning or Historic Zoning.” The remainder of the subsection remains unchanged.

SECTION 5. Monterey City Code, Section 38-112.6(3)(b), Roof Pitch is hereby amended to read as follows:
b. Roof Pitch. The Accessory Dwelling Unit shall match the roof pitch and roof form of the primary dwelling in order to blend with the architecture of the primary dwelling. The applicant may apply for an exception through the discretionary architectural review process pursuant to Municipal Code Chapter 38, Article 25. The Architectural Review Committee may grant such an exception if it finds that an alternative roof pitch and form design are compatible with the primary structure and neighborhood.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 6, Packet Page 364 3 SECTION 6. Monterey City Code, Section 38-112.6(5)(a) is hereby amended to read as follows:
a. Except as provided in subsection (5)(b), below, an accessory dwelling unit shall provide a new or separate utility connection, including a separate sewer lateral, between the accessory dwelling unit and the utility, unless the applicant has obtained a sewer lateral inspection performed by a licensed plumber which demonstrating that the sewer lateral meets the City’s standards and specifications. Proof that the sewer later meets the City’s requirements shall be submitted on a sewer lateral inspection form provided by the City and completed by the professional who completed the inspection. A connection fee or capacity charge may be charged that is proportionate to the size in square feet of the accessory dwelling unit or its drainage fixture unit (DFU) values. Separate electric and water submeters shall be required for the accessory dwelling unit, except that separate water meters shall be required for accessory dwelling units if and when California American Water is allowed to connect new water meters.

SECTION 7. Monterey City Code, Section 38-112.6(6)(a)(iii) is hereby amended to read as follows:
iii. The applicant requests discretionary architectural review for an accessory dwelling unit more than 16 feet high and/or for alternative roof pitch/form, as provided in Section 112- 6(2)(d)(ii) or (6)(3)(b), above.

SECTION 8. All ordinances and parts of ordinances in conflict herewith are hereby repealed.

SECTION 9. Severability. If any section, sub-section, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of the Ordinance. The City Council hereby declares that it would have adopted the Ordinance and each section, sub-section, sentence, clause, phrase or portion thereof, irrespective of the fact that any one or more sections, sub-sections, sentences, clauses, phrases or portions to be declared invalid or unconstitutional.

SECTION 10. This ordinance shall be in full force and effect thirty (30) days from and after its final passage and adoption.

SECTION 11. Publication. Pursuant to Charter section 4.4, this ordinance shall be published in the Monterey County Herald, a newspaper printed and published in the County of Monterey, at least three days before its adoption.

SECTION 12. The City Clerk shall send a copy of this Ordinance to the Department of Housing and Community Development within 60 days after adoption, as required by State law.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 7, Packet Page 365 4 PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this ____ day of _____, 20__, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 8, Packet Page 366 ATTACHMENT 2
1 DRAFT ORDINANCE AMENDMENTS WITH STRIKETHROUGH/UNDERLINE SECTION 1. Monterey City Code, Section 38-112.6(2)(d)(ii), Second Story Attached Accessory Dwelling Unit/Above Garage is hereby amended to read as follows:
ii. Second Story Attached Accessory Dwelling Unit/Above Garage or Carport. If an Accessory Dwelling Unit exceeds the maximum permitted height set forth in subsection (2)(d)(i) above, the applicant may apply for an exception through the discretionary architectural review process pursuant to Municipal Code Chapter 38, Article 25 if:
(1) The total height of the building, as defined in Section 38-11 (Height, Building), is 25 feet or less;
(2) The parcel is within the R-3 zone;
(3) The garage or carport is at the ground level
(4) No windows or openings are permitted for that portion of the building that is closer than four feet to a property line; and
(5) Any window parallel to an adjoining property line and closer than 10 feet shall be either:
a. Opaque and inoperable; or
b. Clerestory windows with a minimum height no less than six feet above floor level.

SECTION 2 Monterey City Code, Section 38-112.6(2)(e) is hereby amended to read as follows:
e. Limits on lot coverage, floor area ratio, open space, and size must permit or shall be waived to allow an 800 square foot a detached or attached Accessory Dwelling Unit, with a maximum floor area of 800 square feet, maximum height of 16 25 feet, and high with minimum four-foot side and rear yard setbacks, if the proposed Accessory Dwelling Unit is in compliance with all other development standards, including but not limited to front yard setbacks.

SECTION 3 Monterey City Code, Section 38-112.6(2)(h), Historic Review is hereby amended to delete the heading “Historic Review” and replace it with the heading “Historically Zoned.” The remainder of the subsection remains unchanged.

SECTION 4 Monterey City Code, Section 38-112.6(3)(b), Roof Pitch is hereby amended to read as follows:
b. Roof Pitch. The Accessory Dwelling Unit shall match the roof pitch and roof form of the primary dwelling in order to blend with the architecture of the primary dwelling. The applicant may apply for an exception through the discretionary architectural review process pursuant to Municipal Code Chapter 38, Article 25. The Architectural Review Committee may grant such an exception if it finds that an alternative roof pitch and form design are compatible with the primary structure and neighborhood.

SECTION 5 Monterey City Code, Section 38-112.6(5)(a) is hereby amended to read as follows:
a. Except as provided in subsection (5)(bd), below, of this section, an accessory dwelling unit may be required to have shall provide a new or separate utility connection, including a separate sewer lateral, between the accessory dwelling unit and the utility, unless the Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 9, Packet Page 367 ATTACHMENT 2
2 applicant has obtained a sewer lateral inspection performed by a licensed plumber demonstrating that the sewer lateral meets the City’s standards and specifications. Proof that the sewer later meets the City’s requirements shall be submitted on a sewer lateral inspection form provided by the City and completed by the professional who completed the inspection. A connection fee or capacity charge may be charged that is proportionate to the size in square feet of the accessory dwelling unit or its drainage fixture unit (DFU) values. Separate electric and water submeters shall be required for the accessory dwelling unit, except that separate water meters shall be required for accessory dwelling units if and when California American Water is allowed to connect new water meters.

Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 10, Packet Page 368

SHARON DWIGHT
Monterey, CA 93940
March 5, 2022
Planning Commission
City Hall
Monterey, California 93940
Dear Planning Commissioners:

As a long-time resident of Monterey, involved for many years in helping to develop city policy that protects neighborhood context, I am concerned that the proposed amendments are abandoning what little local design control is left to us by the State.
1) I am concerned with the potential visual effect of allowing 25’ height atop carports or garages close to the street.

New Monterey Area Plan and the City’s Single-Family Design Guidelines directed that two-story elements be set back from the front wall of the building to retain pedestrian scale of architecture. If the carport or garage upon which the ADU is proposed to be constructed is positioned at the front of the property, is this policy not allowing the two-story element to defy the architectural principle we adopted for our city? I believe location of the carport or garage matters. I oppose such a change at the front of a property. Architecturally, it will loom over the street and be out of character with the built environment.

Let us not forget that much of our city is built on hillsides. Not all ADUs will be built on flat lots. 2) Allowing roof design that differs from that of the existing structure is also a slippery slope.

I immediately think of an ADU constructed in Pacific Grove that is behind a charming house – the new unit is a two-story box with flat roof. It bears no resemblance whatsoever to the original house and is an aberration in the neighborhood.

There needs to be guidance in our policy.
3) As you consider amendments to the ADU ordinance, I request that you also incorporate language that requires notification to adjacent properties, informing them of the addition of an ADU on the property.

So far, creation of some ADUs may be reviewed and approved by staff without requiring disclosure to neighbors and the community. The staff report for ARC review of an ADU does not always disclose that an ADU is being constructed within a ‘remodel.’
When our local government is discussing legalizing an intensification of use on a property, an increase of density on the block, near-by owners who have invested significant funds to purchase properties deserve to know of the change. It is a courtesy. It is expected that our city would not keep secret a legally-required development review from its citizens.

Thank you for your consideration of these concerns.

Sharon Dwight
Monterey Resident
3-8-22
Agenda
Item 3.

Consider Recommending an Ordinance Amendment to the City Council Amending Chapter 38 of the City of Monterey Code Related to Accessory Dwelling Unit Development Standards (MCC 38-112.6) (Statutorily Exempt from CEQA per Article 18, 15282(h) and Public Resources Code Section 21080.17) ATTACHMENT 3
Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 11, Packet Page 369 1 Oncall Planning
From: Nancy Soulé < >
Sent: Friday, March 4, 2022 3:54 PM
To: Oncall Planning
Cc: Gari Soulé
Subject: Planning Meeting March 8, 2022 - ADUs
[NOTICE: This message originated outside of the City of Monterey mail system ‐‐ DO NOT CLICK on links or open attachments unless you are sure the content is safe.] While we understand the reasons for considering an extension of height above garages and carports to accommodate parking needs, the proposed wording in section 38-112.6(2)(e) should therefore allow the increase in height and floor area of 800 square feet to only be allowed when above an existing or new garage or carport, therefore insuring that the intent to preserve parking is actually part of the new code. Parking issues are already extremely impacted in the R1-3 neighborhoods. We must ensure that parking is included when we allow further height considerations. We strongly recommend the section should read:
"Limits on lot coverage, floor area ratio, open space, and size must permit or shall be waived to allow a detached or attached Accessory Dwelling Unit, with a maximum floor area of 800 square feet, maximum height of 25 feet, minimum four-foot side and rear yard setbacks, only in cases where the ADU is built above a new or existing garage or carport, does not eliminate the parking space, and if the proposed Accessory Dwelling Unit is in compliance with all other development standards, including but not limited to front yard setbacks." Additionally, when reviewing the proposals, I hope the planning commission does ensure that the size and height do not block views and is compatible with the neighboring properties.

Thank you for considering this and your hard work for our community.

Nancy and Gari Soulé
Monterey, CA 93940

ATTACHMENT 3
Council Regular Meeting, 4/19/2022, Item No. 26., Item Page 12, Packet Page 370

Monterey City CouncilApril 19, 2022

Monterey City Council
April 19, 2022